<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 27, 1998
LAMALIE ASSOCIATES, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
FLORIDA
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(State of Other Jurisdiction of Incorporation)
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59-2776441
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(Commission File Number) (I.R.S. Employer Identification Number)
200 Park Avenue, New York, New York 10166-0136
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(Address of principal executive offices) (Zip Code)
(212) 953-7900
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(Registrant's Telephone Number, Including Area Code)
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<PAGE> 2
This Report on Form 8-K contains forward-looking statements that are based on
the current beliefs and expectations of the Company's management, as well as
assumptions made by, and information currently available to, the Company's
management. Such statements include those regarding general economic and
executive search industry trends. Because such statements involve risks and
uncertainties, actual actions and strategies and the timing and expected results
thereof may differ materially from those expressed or implied by such
forward-looking statements, and the Company's future results, performance, or
achievements could differ materially from those expressed in, or implied by, any
such forward-looking statements. Future events and actual results could differ
materially from those set forth in or underlying the forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. These potential risks and uncertainties
include dependence on attracting and retaining qualified executive search
consultants, portability of client relationships, restrictions imposed by
blocking arrangements, competition, relationship with Amrop International
alliance of executive search firms, implementation of acquisition strategy,
reliance on information processing systems, and employment liability risk. In
addition to the factors noted above, other risks, uncertainties, assumptions,
and factors that could affect the Company's financial results are described in
the Company's Registration Statement on Form S-1 (File No. 333-26027),
originally filed with the Securities and Exchange Commission April 29, 1997, as
amended and as effective July 1, 1997.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Ward Howell International, Inc.
On February 27, 1998, the Company completed the acquisition by merger of Ward
Howell International, Inc. ("WHI"), the eighth largest executive search firm in
the United States. WHI was merged into a wholly-owned subsidiary of the Company
and WHI was the surviving corporation in the merger. The purchase price was
determined through arms-length negotiations by the parties and is subject to
adjustment based on transaction expenses and certain other items as detailed in
the plan of merger. Prior to this transaction, neither the Company, WHI nor any
of their affiliates had a material relationship. In connection with the merger,
the Company entered into employment agreements with substantially all of the
former WHI shareholders.
The purchase consideration was valued at approximately $20 million and consisted
of $8.7 million in cash, $7.6 million in notes payable over three years with
interest payable at 5 percent per annum, and approximately 190,000 shares of the
Company's common stock. Approximately $8.7 million of the purchase consideration
was derived from the proceeds of the Company's initial public offering which had
been invested in short-term investment securities since July 1997. The
acquisition was accounted for as a stock purchase.
Chartwell Partners International, Inc.
On January 13, 1998, the Company filed a report on Form 10-Q with respect to the
acquisition of Chartwell Partners International, Inc. ("CPI"). At that time, the
Company was in the process of compiling financial statements and related
information to determine whether the assets acquired from CPI constituted a
"significant amount of assets" within the meaning of Item 2 of Form 8-K. The
Company stated in such Form 10-Q that it intended to file any required financial
statements under applicable regulations as soon as practicable, but in any
event, no later than 60 days after January 20, 1998, the date on which a Current
Report on Form 8-K would have been due to have been filed in respect of the CPI
acquisition. The Company has determined that the assets acquired from CPI
constitute a "significant amount of assets" within the meaning of Item 2 of Form
8-K and is therefore including the required financial statements and pro forma
financial information in this Form 8-K.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
WHI AUDITED HISTORICAL FINANCIAL STATEMENTS
Independent Auditors' Report
Balance Sheets as of December 31, 1996 and 1995
Statements of Operations for the years ended December 31, 1996,
1995 and 1994
Statements of Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994
Notes to Financial Statements
WHI UNAUDITED INTERIM FINANCIAL STATEMENTS
Condensed Balance Sheets as of September 30, 1997
and December 31, 1996
Condensed Statements of Operations for the nine months
ended September 30, 1997 and 1996
Condensed Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996
Notes to Condensed Financial Statements
CPI AUDITED HISTORICAL FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants
Balance Sheet as of December 31, 1996
Statement of Income for the year ended December 31, 1996
Statement of Stockholder's Equity for the year
ended December 31, 1996
Statement of Cash Flows for the year ended December 31, 1996
Notes to Financial Statements
CPI UNAUDITED INTERIM FINANCIAL STATEMENTS
Condensed Balance Sheets as of September 30, 1997
and December 31, 1996
Condensed Statements of Income for the nine months
ended September 30, 1997 and 1996
Condensed Statements of Cash Flows for the nine months
ended September 30, 1997 and 1996
Notes to Condensed Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION.
Introduction to Unaudited Pro Forma Combined Financial
Statements
Unaudited Pro Forma Combined Balance Sheet as
of November 30, 1997
Unaudited Pro Forma Combined Statement of Operations for the
year ended February 28, 1997
Unaudited Pro Forma Combined Statement of Operations for the
nine months ended November 30, 1997
Notes to Unaudited Pro Forma Combined Financial Statements
</TABLE>
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(Continued)
(c) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated February 27, 1998,
by and among Lamalie Associates, Inc., LAI Mergersub,
Inc. and Ward Howell International, Inc.
2.2 Asset Purchase Agreement dated December 29, 1997, by
and among Lamalie Associates, Inc., Chartwell
Partners International, Inc. and David M. DeWilde
10.14 Form of Employment Agreement for former Ward Howell
International, Inc. Shareholders
23.9 Consent of Arthur Andersen LLP
23.10 Consent of KPMG Peat Marwick LLP
</TABLE>
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Ward Howell International, Inc.:
We have audited the accompanying balance sheets of Ward Howell International,
Inc. (the "Company") as of December 31, 1996 and 1995, and the related
statements of operations, shareholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ward Howell International, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
August 1, 1997
<PAGE> 6
WARD HOWELL INTERNATIONAL, INC.
Balance Sheets
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,437,234 149,487
Accounts receivable including client
disbursements, net of allowance for
doubtful accounts of approximately
$726,000 in 1996 and $512,000 in 1995 7,226,873 4,636,791
Employee advances 346,149 338,800
Due from joint venture -- 29,600
Deferred income taxes (note 6) 136,817 436,451
Prepaid income taxes 107,984 142,780
Prepaid expenses and other current assets 107,174 45,835
------------ ---------
Total current assets 9,362,231 5,779,744
------------ ---------
Fixed assets, at cost:
Furniture, fixtures and equipment 1,598,374 1,564,232
Computers and related costs 1,821,307 1,682,682
Leasehold improvements 262,769 250,023
Assets acquired under capital leases 103,746 110,156
------------ ---------
3,786,196 3,607,093
Less accumulated depreciation and amortization (3,179,067) (2,965,279)
------------ ---------
Net fixed assets 607,129 641,814
Investment in joint ventures 67,028 52,693
Noncurrent deferred income taxes -- --
Other 344,698 301,731
------------ ---------
Total assets $ 10,381,086 6,775,982
============ =========
</TABLE>
<PAGE> 7
WARD HOWELL INTERNATIONAL, INC.
Balance Sheets, Continued
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
---- ----
<S> <C> <C>
Current liabilities:
Current portion of notes payable to related
parties (note 2) $ 33,021 85,337
Current portion of installment notes
payable (note 2) 50,069 57,636
Due to joint venture (note 2) 25,022 109,799
Accounts payable and accrued liabilities 1,608,144 358,404
Accrued profit-sharing contribution
and bonuses (note 4) 3,578,531 2,408,181
Accrued commissions 3,117,336 2,538,013
Current portion of obligations under capital leases -- 10,107
------------ ---------
Total current liabilities 8,412,123 5,567,477
Notes payable to related parties, net of current
portion (note 2) 42,967 75,987
Installment notes payable, net of current
portion (note 2) 78,565 131,268
Deferred rent (note 3) 305,418 338,796
Noncurrent deferred income taxes (note 6) 52,104 15,077
Other long-term liabilities -- 3,227
------------ ---------
Total liabilities 8,891,177 6,131,832
Shareholders' equity:
Common stock, $1 par value; 5,000 shares
authorized; 2,136 shares and 1,664 shares issued
and outstanding in 1996 and 1995, respectively (note 7) 2,136 1,664
Additional paid-in capital 1,170,248 681,728
Retained earnings 487,599 149,662
------------ ---------
1,659,983 833,054
Less:
Shareholders' notes receivable (note 5) (170,074) (188,904)
------------ ---------
Total shareholders' equity 1,489,909 664,150
Commitments and contingencies (notes 3 and 8)
------------ ---------
Total liabilities and shareholders'
equity $ 10,381,086 6,775,982
============ =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
WARD HOWELL INTERNATIONAL, INC.
Statements of Operations
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Fee revenues $ 25,137,840 17,063,083 16,484,312
Operating expenses:
Compensation and benefits 22,370,604 15,318,795 14,191,257
General and administrative expenses
(notes 3 and 4) 2,078,613 2,271,293 2,144,007
------------ ---------- ----------
Total operating expenses 24,449,217 17,590,088 16,335,264
------------ ---------- ----------
Earnings (loss) from operations 688,623 (527,005) 149,048
Equity in net income of joint ventures 14,335 8,193 70,548
Other income (expense):
Interest income (note 5) 33,936 31,021 22,595
Interest expense (note 2) (16,512) (5,868) (48,240)
------------ ---------- ----------
17,424 25,153 (25,645)
------------ ---------- ----------
Earnings (loss) before income taxes 720,382 (493,659) 193,951
Income tax expense (benefit) (note 6) 382,445 (111,980) 133,720
------------ ---------- ----------
Net earnings (loss) $ 337,937 (381,679) 60,231
============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
WARD HOWELL INTERNATIONAL, INC.
Statements of Shareholders' Equity
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Additional Shareholders' Total
Common paid-in Retained Treasury notes shareholders'
stock capital earnings stock receivable equity
------- --------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $1,612 625,178 471,110 (22,134) (215,487) 860,279
Repurchase of 116 shares of
treasury stock -- -- -- (120,176) 101,231 (18,945)
Issuance of 140 shares of
treasury stock -- -- -- 142,310 (136,539) 5,771
Issuance of 52 shares of
common stock 52 56,550 -- -- -- 56,602
Net earnings -- -- 60,231 -- -- 60,231
------ ------- ------- ------ -------- ---------
Balance at December 31, 1994 1,664 681,728 531,341 -- (250,795) 963,938
Repurchase of 320 shares of
treasury stock -- -- -- (331,520) 219,483 (112,037)
Issuance of 320 shares of
treasury stock -- -- -- 331,520 (200,000) 131,520
Payment from shareholders -- -- -- -- 42,408 42,408
Net loss -- -- (381,679) -- -- (381,679)
------ --------- ------- ------ -------- ---------
Balance at December 31, 1995 1,664 681,728 149,662 -- (188,904) 644,150
Payment from shareholders -- -- -- -- 60,270 60,270
Issuance of 472 shares of
common stock 472 488,520 -- -- (41,440) 447,552
Net earnings -- -- 337,937 -- -- 337,937
------ --------- ------- ------ -------- ---------
Balance at December 31, 1996 $2,136 1,170,248 487,599 -- (170,074) 1,489,909
====== ========= ======= ====== ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
WARD HOWELL INTERNATIONAL, INC.
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
---------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 337,937 (381,679) 60,231
---------- -------- --------
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating
activities:
Equity in net income of joint venture (14,335) (8,193) (70,548)
Depreciation and amortization 213,787 233,514 230,610
Provision for doubtful accounts 965,625 361,564 684,421
Deferred rent (78,971) 30,210 86,353
Deferred income taxes 336,661 (203,430) 19,056
Changes in operating assets and liabilities:
Accounts receivable (3,555,707) (1,145,366) (548,326)
Employee advances (7,349) (49,121) 53,610
Due from joint venture 29,600 (29,600) --
Prepaid expenses and other current assets (61,339) 80,189 (56,296)
Prepaid income taxes 34,796 (67,252) (75,528)
Other (42,967) (25,445) (119,099)
Accounts payable and accrued liabilities 1,295,333 57,643 (254,744)
Accrued commissions 579,323 769,694 322,425
Accrued profit sharing contribution
and bonuses 1,170,350 159,535 518,962
Income taxes payable -- -- (164,526)
Due to joint ventures (84,777) (161,881) 211,482
Other long-term liabilities (3,227) (67,162) (67,162)
---------- ---------- --------
Total adjustments 776,803 (65,101) 770,690
---------- ---------- --------
Net cash provided by (used in)
operating activities 1,114,740 (446,780) 830,921
---------- ---------- --------
Cash flows from investing activities:
Distributions from ventures -- -- 56,048
Purchases of fixed assets (179,102) (175,082) (397,120)
---------- -------- --------
Net cash used in investing activities (179,102) (175,082) (341,072)
</TABLE>
<PAGE> 11
WARD HOWELL INTERNATIONAL, INC.
Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Sales of treasury stock $ -- 131,520 5,771
Purchases of stock for treasury -- (112,037) (18,945)
Payments on notes payable, net (145,606) (51,215) 43,921
Shareholders' payment on notes receivable 18,830 42,408 --
Payments on capital lease obligations (10,107) (10,737) (20,267)
Sale of common stock 488,992 -- 56,602
----------- ------- -------
Net cash provided by (used in)
financing activities 352,109 (61) 67,082
----------- ------- -------
Net increase (decrease) in cash and
cash equivalents 1,287,747 (621,923) 556,931
Cash and cash equivalents, beginning of year 149,487 771,410 214,479
----------- ------- -------
Cash and cash equivalents, end of year $ 1,437,234 149,487 771,410
=========== ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 18,170 9,424 25,000
=========== ======= =======
Taxes $ 71,062 177,600 355,000
=========== ======= =======
Noncash financing activities:
Shareholder notes receivable, net $ (41,440) 19,483 --
=========== ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 12
WARD HOWELL INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 1996, 1995 and 1994
(1) ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Ward Howell International, Inc. (the "Company") was incorporated in 1951
in the State of Connecticut. The Company is part of the Ward Howell
International Group, which unites 20 autonomous firms worldwide into one
organization for the purpose of sharing resources, information and
conducting international executive searches. These searches relate to all
management disciplines in business, industry, government, education,
health care and foundations. The Company has offices in New York,
Barrington, Chicago, Dallas, Encino, Houston, Stamford, Atlanta, Phoenix
and Wisconsin.
During 1993, the Company entered into two corporate joint ventures, Ward
Howell Russia, Inc. and Ward Howell Technologies, Inc., in which it
initially acquired a 33% and a 50% equity interest, respectively. These
two join ventures were established to penetrate the Eastern Europe and
high-tech markets for executive search. The Company accounts for its
investments in joint ventures using the equity method of accounting. At
December 31, 1996, 1995 and 1994, the Company had a 30% interest in Ward
Howell Russia, Inc. Ward Howell Technologies, Inc. had been dissolved and
the Company's investment was written off in 1994.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company generates substantially all of its revenues from fees for
professional services, which are recognized as fee revenue as clients are
billed, generally over a 60- to 90-day period commencing with the initial
acceptance of a search. Fee revenue is presented net of adjustments to
original billings.
DEPRECIATION AND AMORTIZATION
Depreciation is provided using the straight-line method over the
estimated useful lives of the assets, which generally approximate five
years.
Leasehold improvements are amortized over the terms of the related leases
or the estimated useful lives of the improvements, whichever is less.
INCOME TAXES
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
<PAGE> 13
WARD HOWELL INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(1), CONTINUED
CASH EQUIVALENTS
The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make a number of
estimates and assumptions that affect the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(2) RELATED PARTY TRANSACTIONS
Notes payable to related parties represent amounts due to former
shareholders for repurchases of common stock. The notes are payable in
annual installments with maturities from 1996 through 2000, and bear
interest at rates ranging from 5.8% to 7.94% at December 31, 1996.
Interest expense on notes payable aggregated approximately $8,000, $6,000
and $21,000 in 1996, 1995 and 1994, respectively, including approximately
$3,000, $5,000 and $9,000 that was accrued at December 31, 1996, 1995 and
1994, respectively. In addition, the Company has outstanding installment
notes payable that have been guaranteed by certain shareholders. These
notes are payable in monthly installments through 1999 and bear interest
at the prime rate plus one and one-half percent. At December 31, 1996,
the prime rate was 8.25%.
Aggregate future maturities of notes payable as of December 31, 1996 are
approximately as follows:
<TABLE>
<CAPTION>
Year ending December 31 Amount
----------------------- ------
<S> <C>
1997 $ 83,000
1998 69,000
1999 48,000
2000 5,000
--------
$205,000
========
</TABLE>
Included in due to joint ventures are commissions owed to the joint
ventures and fees collected on behalf of the joint ventures.
<PAGE> 14
WARD HOWELL INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(3) RENT EXPENSE AND COMMITMENTS
The Company leases its office facilities under agreements that provide
for scheduled rent increases and rent abatements. Rent expense is
recognized on a straight-line basis, rather than in accordance with lease
payment schedules, for purposes of recognizing a consistent annual rent
expense. Scheduled base rent increases and the effects of rent abatements
are spread evenly over the terms of the respective leases in order to
effect a straight-line rent expense amount over the term of the related
leases.
Noncancelable leases for office space expire on various dates through
2003. The following is a schedule of approximate future minimum lease
payments:
<TABLE>
<CAPTION>
Year Amount
---- -------
<S> <C>
1997 $ 955,000
1998 810,000
1999 758,000
2000 635,000
2001 535,000
Thereafter 669,000
----------
$4,362,000
==========
</TABLE>
The leases provide for additional payments for real estate taxes and
other costs.
In 1996, 1995 and 1994, rent expense aggregated approximately $1,028,000,
$1,057,000, and $1,039,000, respectively.
(4) PROFIT SHARING 401(K) PLAN
The Company has a profit-sharing 401(k) plan that covers substantially
all employees. Contributions to the plan by the Company are limited to
15% of participants' aggregate annual compensation with limitations on
contributions for each participant of 25% of compensation not to exceed
$30,000. Excess amounts (amounts in excess of $30,000) may be paid in the
form of bonuses. Profit-sharing expense pertaining to the 401(k) plan for
1996, 1995 and 1994, net of forfeitures, was approximately $1,156,600,
$1,057,000 and $1,386,000, respectively, and is included in the
accompanying statements of operations in profit sharing contribution and
general and administrative expenses.
(5) SHAREHOLDERS' NOTES RECEIVABLE
Shareholders' notes receivable represent amounts due for the purchase by
shareholders of common stock. The notes are due in annual installments
with maturities from 1995 through 1998, and bear interest at 5.88% per
annum.
<PAGE> 15
WARD HOWELL INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(6) INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 1996 and
1995 is composed of the following components:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 9,734 -- 95,087
State 36,050 66,900 19,577
Deferred 336,661 (178,880) 19,056
--------- -------- -------
$ 382,445 (111,980) 133,720
========= ======== =======
</TABLE>
Deferred income taxes included in the respective balance sheets reflect
the net tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amounts reported for income tax purposes. A schedule of the temporary
differences and the related tax effect follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Allowance for doubtful accounts $ 148,830 104,960
Depreciation and amortization (52,104) (20,500)
Accrued lease termination costs 1,323 27,134
Tax credit/other carryforward (13,336) 309,780
--------- -------
$ 84,713 421,374
========= =======
</TABLE>
The Company's deferred tax assets and liabilities as of December 31, 1996
and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------------------- -----------------------
Current Noncurrent Current Noncurrent
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Assets $150,153 -- 436,451 126,658
Liabilities (13,336) (52,104) -- (141,735)
-------- ------- ------- --------
Net deferred tax assets
(liabilities) $136,817 (52,104) 436,451 (15,077)
======== ======= ======= ========
</TABLE>
In 1996 and 1995, the difference between the effective tax rate and the
Federal statutory rate is due primarily to Federal graduated rates, state
and local taxes and certain meals and entertainment expenses that are not
deductible for tax purposes.
<PAGE> 16
WARD HOWELL INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(7) COMMON STOCK
Common stock is issued at a price of $1,036 per share or book value per
share, as defined, whichever is greater. The book value per share at
December 31, 1996 and 1995 was $777 and $501, respectively. For purposes
of calculating book value per share, shareholders' notes receivable are
not deducted from shareholders' equity. Upon a shareholder's termination
of employment or the occurrence of certain other events, the Company has
the first right and option to purchase the common stock held by the
shareholder at a price of $1,036 per share or book value per share, as
defined, whichever is greater.
(8) SHORT-TERM BORROWINGS
The Company had available a line of credit with a bank in the amount of
$800,000. Borrowings under this line of credit were secured by the
Company's accounts receivable and carried interest at the rate of prime
plus 1%. There were no such borrowings at December 31, 1996 and 1995.
<PAGE> 17
WARD HOWELL INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
As of
------------------------------
ASSETS 9/30/97 12/31/96
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,002,443 $ 1,437,234
Accounts receivable 8,139,765 7,226,873
Employee advances 993,716 346,149
Deferred income taxes 136,817 136,817
Prepaid income taxes 120,494 107,984
Prepaid expenses and other current assets 43,618 107,174
------------- -------------
Total current assets 10,436,853 9,362,231
Fixed assets, net 956,870 607,129
Investment in joint venture 99,728 67,028
Other assets 345,345 344,698
------------- -------------
Total assets $ 11,838,796 $ 10,381,086
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable to related parties $ 33,021 $ 33,021
Current portion of installment notes payable 50,069 50,069
Due to joint venture 53,588 25,022
Accounts payable and accrued liabilities 617,430 1,608,144
Accrued compensation 9,017,403 6,695,867
------------- -------------
Total current liabilities 9,771,511 8,412,123
Notes payable to related parties, net of current portion 50,350 42,967
Installment notes payable, net of current portion 36,037 78,565
Deferred rent 273,463 305,418
Deferred income taxes 52,104 52,104
------------- -------------
Shareholders' equity:
Common stock, $1 par value; 5,000 shares authorized; 2,146 and
2,136 shares issued and outstanding, respectively 2,146 2,136
Additional paid-in capital 1,180,598 1,170,248
Retained earnings 558,693 487,599
Less: subscriptions receivable (86,106) (170,074)
------------- -------------
Total shareholders' equity 1,655,331 1,489,909
------------- -------------
Total liabilities and shareholders' equity $ 11,838,796 $ 10,381,086
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 18
WARD HOWELL INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Fee revenue, net $ 19,394,195 $ 18,611,302
Operating expenses:
Compensation and benefits 16,958,109 16,259,327
General and administrative expenses 2,383,985 1,793,215
------------- -------------
Total operating expenses 19,342,094 18,052,542
------------- -------------
Income from operations 52,101 558,760
Equity in net income from joint venture 37,303 10,751
Other income (expense):
Interest income 49,179 15,849
Interest expense (9,581) (10,448)
------------- -------------
Income before income taxes 129,002 574,912
Income tax expense 57,908 305,255
------------- -------------
Net income $ 71,094 $ 269,657
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 19
WARD HOWELL INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71,094 $ 269,657
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 213,788 151,831
Equity in net income of joint venture (37,303) (10,751)
Changes in operating assets and liabilities (178,024) 1,329,967
------------ ------------
Net cash provided by operating activities 69,555 1,740,704
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (563,529) (70,891)
------------ ------------
Net cash used in investing activities (563,529) (70,891)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt (35,145) (87,911)
Proceeds from issuance of common stock 94,328 507,821
------------ ------------
Net cash provided by financing activities 59,183 419,910
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (434,791) 2,089,723
CASH AND CASH EQUIVALENTS, at beginning of period 1,437,234 149,487
------------ ------------
CASH AND CASH EQUIVALENTS, at end of period $ 1,002,443 $ 2,239,210
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 20
WARD HOWELL INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
Note 1.
Interim Financial Information
The interim financial data is unaudited; however, in the opinion of Ward Howell
International, Inc. ("WHI"), the interim data includes all adjustments,
consisting only of normal recurring accruals, necessary for a fair statement of
the results of the interim periods. The results of operations for the nine
months ended September 30, 1997, are not necessarily indicative of the results
that can be expected for the entire fiscal year ending December 31, 1997.
<PAGE> 21
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholder of
Chartwell Partners International, Inc.:
We have audited the accompanying balance sheet of Chartwell Partners
International, Inc. (a California corporation) as of December 31, 1996, and the
related statements of income, stockholder's equity and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chartwell Partners
International, Inc. as of December 31, 1996, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
Tampa, Florida,
February 27, 1998
<PAGE> 22
CHARTWELL PARTNERS INTERNATIONAL, INC.
BALANCE SHEET -- DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 14,664
Accounts receivable 591,247
--------
Total current assets 605,911
PROPERTY AND EQUIPMENT, net 119,165
OTHER ASSETS 6,259
--------
Total assets $731,335
========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 33,017
Accrued compensation 274,867
Current maturities of long-term debt 20,000
--------
Total current liabilities 327,884
--------
LONG-TERM DEBT, less current maturities 31,667
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, no par value, 100,000 shares authorized, 10,000 shares issued
and outstanding 100,000
Retained earnings 271,784
--------
Total stockholder's equity 371,784
--------
Total liabilities and stockholder's equity $731,335
========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE> 23
CHARTWELL PARTNERS INTERNATIONAL, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
FEE REVENUE, net $2,618,264
OPERATING EXPENSES:
Compensation and benefits 1,896,098
General and administrative expenses 547,030
----------
Total operating expenses 2,443,128
----------
OPERATING INCOME 175,136
INTEREST INCOME, net 19,850
----------
INCOME BEFORE PROVISION FOR INCOME TAXES 194,986
PROVISION FOR INCOME TAXES 6,300
----------
NET INCOME $ 188,686
==========
NET INCOME PER SHARE $18.87
==========
WEIGHTED AVERAGE SHARES OUTSTANDING 10,000
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 24
CHARTWELL PARTNERS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Common Stock Total
----------------------- Retained Stockholder's
Shares Amount Earnings Equity
------ -------- --------- ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 10,000 $100,000 $ 278,012 $ 378,012
Dividends -- -- (194,914) (194,914)
Net income -- -- 188,686 188,686
------ -------- --------- ---------
BALANCE, December 31, 1996 10,000 $100,000 $ 271,784 $ 371,784
====== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 25
CHARTWELL PARTNERS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $188,686
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization 12,194
Changes in assets and liabilities-
Accounts receivable (73,695)
Other current assets 8,058
Accounts payable and accrued liabilities 25,897
Other current liabilities (2,667)
Accrued compensation 134,495
--------
Net cash provided by operating activities 292,968
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (103,541)
--------
Net cash used in investing activities (103,541)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (20,000)
Dividends paid (194,914)
--------
Net cash used in financing activities (214,914)
--------
NET DECREASE IN CASH AND CASH EQUIVALENTS (25,487)
CASH AND CASH EQUIVALENTS, beginning of year 40,151
--------
CASH AND CASH EQUIVALENTS, end of year $ 14,664
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 6,153
Income taxes $ 6,300
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 26
CHARTWELL PARTNERS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
Organization
Chartwell Partners International, Inc. (the Company) is an executive search firm
specializing in the recruitment of executives on behalf of its clients. The
Company contracts with its clients, primarily on a retainer basis, to provide
consulting advice on the identification, evaluation, attraction, and
recommendation of qualified candidates for specific positions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investment instruments with original
maturities of three months or less to be cash equivalents.
Property and Equipment
Office furniture and equipment is stated at cost less accumulated depreciation
using the straight-line method of depreciation over its estimated useful lives
of five years. Computer equipment is stated at cost less accumulated
depreciation using the straight-line method of depreciation over its estimated
useful lives of two and one-half years. Repair and maintenance costs which do
not extend the useful lives of the related assets are expensed as incurred.
Revenue Recognition
The Company derives substantially all of its revenues from professional
services, which are recognized as fee revenue as clients are billed, generally
over a 60- to 90-day period commencing with the initial acceptance of a search.
Fee revenue is presented net of adjustments to original billings.
<PAGE> 27
Income Taxes
The Company reports its earnings under the provisions of Subchapter S of the
Internal Revenue Code. Accordingly, net income is reported through the
stockholder's individual income tax return, and the resulting federal tax
liability is the responsibility of the individual stockholder.
The provision for income taxes relates to state income taxes owed by the Company
for the year ended December 31, 1996.
Net Income Per Share
Net income per share is determined by dividing the net income by the weighted
average number of shares of common stock outstanding during the period. There
were no common equivalent shares outstanding during the year ended December 31,
1996.
Concentration of Credit Risk
Financial instruments which potentially expose the Company to concentration of
credit risk consist primarily of accounts receivable. Credit risk arising from
accounts receivable is minimal due to the large number of customers comprising
the Company's customer base. The customers are concentrated primarily in the
Company's United States market area.
For the year ended December 31, 1996, the Company derived approximately 17
percent of its revenues from a single customer.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial assets and liabilities,
including cash and cash equivalents, accounts receivable, accounts payable and
accrued liabilities, accrued compensation and current maturities of long-term
debt at December 31, 1996, approximate fair value because of the short
maturities of these instruments. The carrying amount of the Company's long-term
debt approximates fair value at December 31, 1996, based on current market rates
of interest and maturities.
<PAGE> 28
Newly Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share"
(SFAS 128). SFAS 128 establishes new standards for computing and presenting
earnings per share (EPS). Specifically, SFAS 128 replaces the presentation of
primary EPS with a presentation of basic EPS, requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. SFAS 128 is effective for financial statements issued
for periods ending after December 15, 1997; earlier application is not
permitted. EPS computed under SFAS 128 would have been the same as reflected on
the accompanying statement of income.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits" (SFAS 132). SFAS 132 revises
employers' disclosures about pension and other postretirement benefit plans.
SFAS 132 is effective for fiscal years beginning after December 15, 1997;
earlier application is encouraged. Management has implemented SFAS 132 for the
year ended December 31, 1996.
2. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following as of December 31, 1996:
<TABLE>
<CAPTION>
Amount
---------
<S> <C>
Office furniture and equipment $ 84,284
Computer equipment 65,715
--------
149,999
Less- Accumulated depreciation (30,834)
--------
$119,165
========
</TABLE>
<PAGE> 29
3. LONG-TERM DEBT:
Long-term debt consisted of a Term Loan (the Loan) bearing interest at the
bank's reference rate plus 1.5 percent (9.75 percent at December 31, 1996). The
Loan requires monthly principal payments of $1,667 plus accrued interest. The
Loan matures on June 1, 1999.
Aggregate principal amounts due under the Loan as of December 31, 1996, are as
follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ -------
<S> <C>
1997 $20,000
1998 20,000
1999 11,667
-------
$51,667
=======
</TABLE>
The Company maintains a revolving Line of Credit (the Line) which provides for
maximum borrowings of $200,000, bearing interest at the bank's reference rate
plus 1.5 percent (9.75 percent at December 31, 1996). The Line expires on May
15, 1997. No amounts were outstanding under the Line as of December 31, 1996.
Under the terms of the Loan and the Line, the Company is required to maintain,
among other restrictions, minimum net income levels, current ratio and
liabilities to net worth ratios. In addition, the Loan and the Line contain
restrictions on asset dispositions, additional debt and changes in ownership. As
of December 31, 1996, the Company was in compliance with the terms and covenants
of the Loan and the Line.
4. EMPLOYEE BENEFIT PLANS:
Defined Contribution 401(k) Profit Sharing Plan
The Company maintains a defined contribution 401(k) profit sharing plan. For the
year ended December 31, 1996, the Company did not make a contribution to this
plan.
Money Purchase Pension Plan
The Company maintains a money purchase pension plan. For the year ended December
31, 1996, the Company has accrued for contributions totaling approximately
$65,986, which are reflected in accrued compensation in the accompanying balance
sheet.
<PAGE> 30
5. COMMITMENTS AND CONTINGENCIES:
Operating Leases
The Company leases certain office space under a non-cancelable operating lease.
Aggregate future minimum lease payments under this lease are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ---------
<S> <C>
1997 $ 98,796
1998 98,796
---------
$ 197,592
=========
</TABLE>
Rent expense totaled $98,796 for the year ended December 31, 1996.
6. SUBSEQUENT EVENT:
On January 2, 1998, the Company entered into an asset sale agreement with
Lamalie Associates, Inc. (LAI) to sell certain assets of the Company. The sales
price was approximately $3.1 million and was paid with approximately $1.4
million of cash, a $1.25 million convertible subordinated note and LAI's common
stock.
<PAGE> 31
CHARTWELL PARTNERS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
As of
-----------------------------
9/30/97 12/31/96
---------- --------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $1,023,635 $ 14,664
Accounts receivable 544,307 591,247
Prepaid expenses 9,019 --
---------- --------
Total current assets 1,576,961 605,911
---------- --------
Property and equipment, net 132,714 119,165
Other assets 6,259 6,259
---------- --------
Total assets $1,715,934 $731,335
========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 107,721 $ 33,017
Accrued compensation 889,692 274,867
Current maturities of long-term debt 20,000 20,000
---------- --------
Total current liabilities 1,017,413 327,884
Long-term debt, less current maturities 16,667 31,667
Commitments and contingencies
Stockholder's equity:
Common stock; no par value; 100,000 shares authorized; 100,000 100,000
10,000 shares issued and outstanding
Retained earnings 581,854 271,784
---------- --------
Total stockholder's equity 681,854 371,784
---------- --------
Total liabilities and stockholder's equity $1,715,934 $731,335
========== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 32
CHARTWELL PARTNERS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Fee revenue, net $2,803,653 $1,863,371
Operating expenses:
Compensation and benefits 2,192,543 1,422,074
General and administrative expenses 317,857 342,148
---------- ---------
Total operating expenses 2,510,400 1,764,222
---------- ---------
Operating income 293,253 99,149
Interest income, net 18,459 15,823
---------- --------
Income before provision for income taxes 311,712 114,972
Provision for income taxes 1,642 3,347
---------- ---------
Net income $ 310,070 $ 111,625
========== =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 33
CHARTWELL PARTNERS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $ 310,070 $111,625
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 42,628 24,008
Changes in operating assets and liabilities 727,450 800,297
---------- --------
Net cash provided by operating activities 1,080,148 935,930
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (56,177) (42,798)
---------- --------
Net cash used in investing activities (56,177) (42,798)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt (15,000) (15,000)
Dividends paid -- (104,914)
---------- --------
Net cash used in financing activities (15,000) (119,914)
---------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 1,008,971 773,218
CASH AND CASH EQUIVALENTS, at beginning of period 14,664 40,151
---------- --------
CASH AND CASH EQUIVALENTS, at end of period $1,023,635 $813,369
========== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 34
CHARTWELL PARTNERS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
Note 1.
Interim Financial Information
The interim financial data is unaudited; however, in the opinion of Chartwell
Partners International, Inc. ("CPI"), the interim data includes all adjustments,
consisting only of normal recurring accruals, necessary for a fair statement of
the results of the interim periods. The results of operations for the nine
months ended September 30, 1997, are not necessarily indicative of the results
that can be expected for the entire fiscal year ending December 31, 1997.
<PAGE> 35
LAMALIE ASSOCIATES, INC.
INTRODUCTION TO UNAUDITED
PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements for the year
ended February 28, 1997, and the nine months ended November 30, 1997, have been
prepared to reflect the financial position of Lamalie Associates, Inc. ("LAI" or
"the Company") as if the acquisitions of Chartwell Partners International, Inc.
("CPI") in January 1998, and Ward Howell International, Inc. ("WHI") in February
1998, had occurred effective March 1, 1996.
WHI Acquisition
The acquisition was treated as a purchase for financial reporting purposes. The
Company acquired WHI for approximately $20 million. The purchase consideration
consisted of (1) approximately $8.7 million cash, (2) $7.6 million in notes
payable over three years, accruing interest on the unpaid balance at the rate of
5.0 percent per annum, and (3) approximately 190,000 shares of the Company's
common stock. Approximately $8.7 million of the purchase consideration was
derived from the proceeds of the Company's initial public offering which had
been invested in short-term investment securities since July 1997.
CPI Acquisition
The acquisition was treated as a purchase for financial reporting purposes. The
Company acquired CPI for approximately $3.1 million. The purchase consideration
consisted of (1) approximately $1.4 million cash, (2) a convertible subordinated
promissory note of the Company in the principal amount of $1.2 million, payable
over three years, accruing interest on the unpaid balance at the rate of 6.75
percent per annum and convertible into shares of the Company's common stock at
each anniversary date at the prices specified in the asset purchase agreement,
and (3) approximately 26,000 shares of the Company's common stock. Approximately
$1.4 million of the purchase consideration was derived from the proceeds of the
Company's initial public offering which had been invested in short-term
investment securities since July 1997.
The Company believes that the assumptions used in preparing the unaudited pro
forma combined financial statements contained herein provide a reasonable basis
on which to present the unaudited pro forma combined financial data. The
unaudited pro forma combined financial statements are provided for informational
purposes only and should not be construed to be indicative of the results of
operations or financial position of the Company had the transactions occurred on
the date indicated and are not intended to project the Company's results of
operations or its financial position for any future period or as of any future
date. The unaudited pro forma combined financial statements should be read in
conjunction with the separate historical financial statements of the Company,
CPI and WHI and in conjunction with the related assumptions and notes to these
<PAGE> 36
unaudited pro forma combined financial statements. The historical financial
statements of CPI and WHI for the year ended December 31, 1996, were used in
preparing the unaudited pro forma combined statement of operations for the year
ended February 28, 1997. The unaudited pro forma combined financial statements
as of and for the nine months ended November 30, 1997, were prepared using the
unaudited condensed financial statements of CPI and WHI as of and for the nine
months ended September 30, 1997.
The unaudited pro forma combined financial statements do not reflect the effect
of expected decreases in expenses as a result of cost savings which may be
achieved through facilities, technology and administrative integration.
Likewise, these statements do not reflect expected increases in levels of
expenses as a result of planned upgrades to CPI's and WHI's management
information systems. Such items are not reflected because they are not factually
determinable or estimable.
<PAGE> 37
LAMALIE ASSOCIATES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF NOVEMBER 30, 1997
(In thousands)
<TABLE>
<CAPTION>
Businesses Acquired
---------------------
Acquisition Pro Forma
LAI CPI WHI Adjustments Combined
-------- -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $21,739 $ 1,024 $ 1,002 ($9,910) (a),(b) $ 13,855
Accounts receivable, net 14,920 544 8,140 (544) (a) 23,060
Employee advances -- -- 994 (974) (b) 20
Prepaid expenses 1,445 9 44 (9) (a) 1,489
Refundable income taxes 1,419 -- 120 -- 1,539
Deferred tax assets 376 -- 137 -- 513
------- -------- -------- ------- --------
Total current assets 39,899 1,577 10,437 (11,437) 40,476
Property and equipment, net 4,901 133 957 (964) (a) 5,027
Non-current deferred tax assets 2,949 -- -- (52) (a) 2,897
Goodwill -- -- -- 24,233 (a) 24,233
Other assets 3,878 6 445 (19) (a) 4,310
------- -------- -------- ------- -------
Total assets $51,627 $ 1,716 $ 11,839 $11,761 $76,943
======= ======== ======== ======= =======
</TABLE>
<PAGE> 38
LAMALIE ASSOCIATES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF NOVEMBER 30, 1997
(In thousands)
(Continued)
<TABLE>
<CAPTION>
Businesses Acquired
---------------------
Acquisition Pro Forma
LAI CPI WHI Adjustments Combined
-------- --------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,122 $ 107 $ 617 $ (61) (a) $ 1,785
Accrued compensation 11,740 890 9,017 (890) (a) 20,757
Current maturities of long-term debt 114 20 83 2,864 (a),(b) 3,081
Other current liabilities 192 -- 55 2,500 (a) 2,747
-------- -------- -------- --------- --------
Total current liabilities 13,168 1,017 9,772 4,413 28,370
-------- -------- -------- --------- --------
Accrued rent 1,015 -- 273 (273) (a) 1,015
Long-term debt, less current maturities 140 17 86 5,802 (a),(b) 6,045
Deferred compensation 6,676 -- -- -- 6,676
Deferred taxes -- -- 52 (52) (a) --
-------- -------- -------- --------- --------
Stockholders' equity:
Common stock 54 100 2 (100) (a) 56
Additional paid-in capital 29,138 -- 1,181 3,026 (a) 33,345
Subscriptions receivable -- -- (86) 86 (b) --
Retained earnings 1,436 582 559 (1,141) (a) 1,436
-------- -------- -------- --------- --------
Total stockholders' equity 30,628 682 1,656 1,871 34,837
-------- -------- -------- --------- --------
Total liabilities and stockholders' equity $ 51,627 $ 1,716 $ 11,839 $ 11,761 $ 76,943
======== ======== ======== ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 39
LAMALIE ASSOCIATES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
Businesses Acquired
-------------------
Compensation Pro Forma Acquisition Pro Forma
LAI Adjustments LAI CPI WHI Adjustments Combined
------- ------------ --------- ------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fee revenue, net $46,437 $ -- $46,437 $ 2,618 $ 25,138 $ -- $74,193
Operating expenses:
Compensation and benefits 39,928 (4,575) (c) 35,353 1,896 22,370 (2,341) (d) 57,278
General and administrative expenses 6,685 -- 6,685 547 2,079 -- 9,311
Goodwill amortization -- -- -- -- -- 808 (e) 808
------- ------- ------- ------- -------- -------- -------
Total operating expenses 46,613 (4,575) 42,038 2,443 24,449 (1,533) 67,397
------- ------- ------- ------- -------- -------- -------
Operating income (loss) (176) 4,575 4,399 175 689 1,533 6,796
Interest income (expense), net (376) -- (376) 20 31 (901) (f) (1,226)
------- ------- ------- ------- -------- -------- -------
Income (loss) before provision for (552) 4,575 4,023 195 720 632 5,570
income taxes
Provision for income taxes 15 1,675 (c) 1,690 6 382 558 (g) 2,636
------- ------- ------- ------- -------- -------- -------
Net income (loss) $ (567) $ 2,900 $ 2,333 $ 189 $ 338 $ 74 $ 2,934
======= ======= ======= ======= ======== ======== =======
Net income (loss) per common and
common equivalent share $ (0.18) $ 0.73 $ 0.86
======= ======= =======
Weighted average common and
common equivalent shares
outstanding 3,199 3,199 3,415
======= ======= =======
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 40
LAMALIE ASSOCIATES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
Businesses Acquired
----------------------- Acquisition Pro Forma
LAI CPI WHI Adjustments Combined
------- -------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Fee revenue, net $45,847 $ 2,804 $19,394 $ -- $ 68,045
Operating expenses:
Compensation and benefits 35,152 2,192 16,958 (2,240) (d) 52,062
General and administrative expenses 5,872 318 2,384 -- 8,574
Goodwill amortization -- -- -- 606 (e) 606
-------- -------- ------- -------- ----------
Total operating expenses 41,024 2,510 19,342 (1,634) 61,242
-------- -------- ------- -------- ----------
Operating income 4,823 294 52 1,634 6,803
Interest income (expense), net 45 18 77 (676) (f) (536)
-------- -------- ------- -------- ----------
Income before provision for income taxes 4,868 312 129 958 6,267
Provision for income taxes 2,094 2 58 768 (g) 2,922
-------- -------- ------- -------- ----------
Net income $ 2,774 $ 310 $ 71 $ 190 $ 3,345
======== ======== ======= ======== ==========
Net income per common and
common equivalent share $ 0.63 $ 0.72
======== ==========
Weighted average common and common
equivalent shares outstanding 4,413 4,629
======== ==========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 41
LAMALIE ASSOCIATES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) To reflect purchase accounting adjustments for allocation of purchase price
and to reflect the use of cash, borrowing and issuance of common stock by
the Company to finance the transactions.
(b) To reflect settlement of WHI employee and related party receivables and
payables required as a condition to completing the transaction.
(c) To reflect the elimination of that portion of consultant compensation that
exceeds the amount which would have been paid to the Company's consultants
had the Company's revised compensation plan for consultants, adopted March
1, 1997, been in effect for all of fiscal 1997 and the related increase in
provision for income taxes.
(d) To reflect the elimination of that portion of consultant compensation that
exceeds the amount which would have been paid had the WHI consultants been
paid under the Company's revised compensation plan for consultants, adopted
March 1, 1997.
(e) To reflect the increase in amortization expense related to the goodwill
recorded under the purchase method of accounting. The Company amortizes
goodwill over 30 years.
(f) To reflect the elimination of interest income foregone in connection with
the cash used in the acquisitions and the increase in interest expense for
the notes payable issued in connection with the acquisitions bearing
interest at rates ranging from 5 to 6.75 percent.
(g) To reflect the increase in income tax expense based on the pro forma
adjustments to income before provision for income taxes based on the
Company's effective tax rate after consideration of certain portions of
goodwill which are not deductible for income tax purposes.
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, Registrant's principal financial officer, thereunto duly
authorized.
LAMALIE ASSOCIATES, INC.
------------------------
(Registrant)
March 13, 1998
/s/ JACK P. WISSMAN
------------------------
Jack P. Wissman
Executive Vice President
(Authorized officer of
Registrant and principal
financial officer)
<PAGE> 1
EXHIBIT 2.1
================================================================================
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
LAMALIE ASSOCIATES, INC.,
LAI MERGERSUB, INC.
and
WARD HOWELL INTERNATIONAL, INC.
February 27, 1998
================================================================================
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS...........................................................1
(A) CERTAIN TERMS................................................1
(B) GENERAL......................................................4
2. PLAN OF ACQUISITION...................................................4
(A) MERGER.......................................................4
(B) THE CLOSING..................................................5
(C) CERTAIN EFFECTS OF THE MERGER................................5
(D) APPROVAL BY WARD HOWELL STOCKHOLDERS.........................7
3. MERGER CONSIDERATION; MANNER OF CONVERTING SHARES.....................7
(A) MERGER CONSIDERATION.........................................7
(B) ADJUSTMENTS TO MERGER CONSIDERATION..........................8
(C) DISSENTING SHARES...........................................12
(D) ANTI-DILUTION PROVISIONS....................................13
(E) FRACTIONAL SHARES...........................................13
4. PROCEDURE FOR PAYMENT OF MERGER CONSIDERATION........................13
(A) EXCHANGE PROCEDURES.........................................13
(B) RIGHTS OF WARD HOWELL STOCKHOLDERS..........................14
5. REPRESENTATIONS AND WARRANTIES OF WARD HOWELL........................14
(A) ORGANIZATION, STANDING, AND POWER...........................14
(B) AUTHORITY...................................................14
(C) CORPORATE APPROVAL..........................................15
(D) NO CONFLICT.................................................15
(E) CONSENTS REQUIRED...........................................15
(F) CAPITALIZATION..............................................15
(G) NO SUBSIDIARIES.............................................16
(H) FINANCIAL STATEMENTS........................................16
(I) ABSENCE OF CERTAIN CHANGES OR EVENTS........................16
(J) NO UNDISCLOSED LIABILITIES..................................17
(K) TAX MATTERS.................................................17
(L) ASSETS......................................................18
(M) LAKE GENEVA OFFICE..........................................18
(N) CONDUCT OF BUSINESS.........................................18
(O) CLIENT LIST; ENGAGEMENT LETTERS.............................19
(P) ACCOUNTS RECEIVABLE.........................................19
(Q) INSURANCE...................................................20
(R) ENVIRONMENTAL MATTERS.......................................20
(S) COMPLIANCE WITH LAWS; NO VIOLATIONS.........................20
(T) EMPLOYEES...................................................21
(U) LABOR MATTERS...............................................21
(V) EMPLOYEE BENEFIT PLANS......................................21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
(W) COMMITMENTS AND CONTRACTS...................................22
(X) MATERIAL CONTRACT DEFAULTS..................................23
(Y) LEGAL PROCEEDINGS...........................................23
(Z) INTELLECTUAL PROPERTY.......................................23
(AA) BROKERS AND FINDERS.........................................24
(BB) WARD HOWELL STOCKHOLDER MERGER MATERIALS; OTHER
INFORMATION.................................................24
(CC) CONDUCT OF BUSINESS BY WARD HOWELL SINCE DATE OF
FINANCIAL STATEMENTS........................................24
(DD) FORBEARANCE FROM CERTAIN ACTIONS BY WARD HOWELL
SINCE DATE OF FINANCIAL STATEMENTS..........................24
(EE) AFFILIATE TRANSACTIONS......................................26
(FF) WARD HOWELL RUSSIA, INC.....................................26
6. REPRESENTATIONS AND WARRANTIES OF LAI................................26
(A) ORGANIZATION, STANDING, AND POWER...........................26
(B) AUTHORITY...................................................26
(C) CORPORATE APPROVAL..........................................27
(D) NO CONFLICT.................................................27
(E) CONSENTS REQUIRED...........................................28
(F) CAPITALIZATION..............................................28
(G) NO SUBSIDIARIES.............................................28
(H) FINANCIAL STATEMENTS........................................28
(I) ABSENCE OF CERTAIN CHANGES OR EVENTS........................29
(J) NO UNDISCLOSED LIABILITIES..................................29
(K) TAX MATTERS.................................................29
(L) CONDUCT OF BUSINESS.........................................30
(M) COMPLIANCE WITH LAWS; NO VIOLATIONS.........................30
(N) BROKERS AND FINDERS.........................................30
(O) WARD HOWELL STOCKHOLDER MERGER MATERIALS; OTHER INFORMATION.30
(P) EMPLOYEE BENEFIT PLANS......................................31
(Q) MATERIAL CONTRACT DEFAULTS..................................31
(R) LEGAL PROCEEDINGS...........................................31
(S) LABOR MATTERS...............................................32
7. TRANSACTIONS AND OBLIGATIONS OF THE PARTIES..........................32
(A) CONDUCT OF BUSINESS BY WARD HOWELL..........................32
(B) FORBEARANCE FROM CERTAIN ACTIONS BY WARD HOWELL.............32
(C) DISSENTING SHARES...........................................34
(D) CERTAIN COVENANTS OF LAI....................................34
(E) NOTIFICATION OF ADVERSE CHANGES IN CONDITION................35
(F) GOVERNMENT FILINGS AND REPORTS..............................35
(G) HCC MERGER..................................................35
(H) ISSUANCE OF BONUS SHARES....................................35
(I) OWNERSHIP OF WARD HOWELL COMMON STOCK.......................35
(J) DUE DILIGENCE INVESTIGATION; CONFIDENTIALITY................35
(K) AGREEMENTS AS TO EFFORTS TO CONSUMMATE......................36
(L) NO PURSUIT OF COMPETING TRANSACTIONS........................36
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
(M) EMPLOYEE BENEFITS...........................................37
(N) TERMINATION OF STOCKHOLDERS AGREEMENT.......................37
(O) CURRENT INFORMATION.........................................37
(P) OTHER ACTIONS...............................................38
(Q) PRESS RELEASES..............................................38
(R) CORPORATE GOVERNANCE PROVISIONS.............................38
(S) EXTENSION OF EXCLUSIVITY LETTER.............................38
(T) EMPLOYMENT AGREEMENTS.......................................38
(U) LAI POST-CLOSING PAYMENT OBLIGATIONS........................39
(V) CERTAIN AGREEMENTS WITH RESPECT TO LEO......................39
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES...............39
(A) CONDITIONS TO OBLIGATIONS OF EACH PARTY.....................39
(B) CONDITIONS TO OBLIGATIONS OF LAI TO EFFECT THE MERGER.......40
(C) CONDITIONS TO OBLIGATION OF WARD HOWELL TO EFFECT THE
MERGER......................................................42
9. INDEMNIFICATION......................................................42
(A) GENERAL - INDEMNIFICATIONS BY WARD HOWELL AND THE WARD
HOWELL STOCKHOLDERS ........................................42
(B) GENERAL - INDEMNIFICATIONS BY LAI AND MERGERSUB.............43
(C) CLAIMS FOR INDEMNIFICATION..................................44
(D) RIGHT TO DEFEND.............................................44
(E) COOPERATION.................................................44
(F) LIMITATION..................................................45
(G) OFFSET......................................................45
(H) TERMINATION OF SUBSIDIARY OBLIGATIONS.......................46
10. TERMINATION..........................................................46
(A) TERMINATION.................................................46
(B) EFFECT OF TERMINATION.......................................47
11. MISCELLANEOUS........................................................47
(A) SURVIVAL OF CERTAIN PROVISIONS..............................47
(B) RESOLUTION OF DISPUTES......................................47
(C) EXPENSES....................................................48
(D) ENTIRE AGREEMENT............................................48
(E) AMENDMENT AND MODIFICATION..................................48
(F) WAIVERS.....................................................48
(G) NO ASSIGNMENT...............................................49
(H) NOTICES.....................................................49
(I) CONSTRUCTION AND INTERPRETATION.............................50
(J) ENFORCEMENT OF AGREEMENT....................................50
(K) COUNTERPARTS................................................50
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 27, 1998 by and among LAMALIE ASSOCIATES, INC., a
Florida corporation ("LAI"), LAI MERGERSUB, a Connecticut corporation and a
wholly-owned subsidiary of LAI ("MergerSub"), WARD HOWELL INTERNATIONAL, INC., a
Connecticut corporation ("Ward Howell") and those owners of shares of common
stock of Ward Howell who have executed and entered into this Agreement by
executing a Joinder Agreement as further described below (the "Ward Howell
Stockholders").
RECITALS
WHEREAS, the respective Boards of Directors of LAI, MergerSub, and Ward
Howell and the Ward Howell Stockholders have approved the acquisition of Ward
Howell by LAI through the merger of Ward Howell with MergerSub (the "Merger")
upon the terms and subject to the conditions set forth herein, and have
determined that the Merger and the other transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
goals and in the best interests of their respective stockholders; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, the parties acknowledge that the transactions contemplated by
this Agreement are subject to the satisfaction of certain other conditions
described in this Agreement;
NOW, THEREFORE, in consideration of the above and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS.
(A) CERTAIN TERMS. Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings when used in
this Agreement:
"Affiliate" means, with respect to any person (the "first person"), any
other person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the first person.
"Consent" means any consent, approval, authorization, clearance,
exemption, waiver, ratification or similar affirmation of or by any person.
"Effective Time" means the date and time as of which the Merger and the
other transactions contemplated by this Agreement shall become effective, as
more fully set forth in Section 2(b).
"Environmental Law" means (i) any Law that (A) relates to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or
1
<PAGE> 6
subsurface strata) and (B) is administered, interpreted or enforced by the
United States Environmental Protection Agency or any state or local agency with
jurisdiction over pollution or protection of the environment, and (ii) any other
Law relating to emissions, discharges, releases or threatened releases of any
Hazardous Material or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Material, including the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq., and the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Hazardous Material" means (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance or toxic substance (including as
those terms are defined by any applicable Environmental Law) and (ii) any
chemical, pollutant, contaminant, petroleum, petroleum product or oil, and
specifically shall include asbestos requiring abatement, removal or
encapsulation pursuant to the requirements of Regulatory Authority and any
polychlorinated biphenyls ("PCBs").
"Internal Revenue Code" mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Knowledge" means, as of the date relating thereto, (i) as to an
individual, actual knowledge after an investigation (including, as appropriate,
a review of documents and consultation with counsel) that, under the
circumstances (including such person's title, position or status), is reasonably
diligent, (ii) as to a person not an individual, the knowledge (as defined in
the preceding clause (i)) of such person's Chief Executive Officer and Chief
Financial Officer and the knowledge (without any special investigation) of the
Executive Committee of such person's Board of Directors (or, as to a person not
a corporation, the individuals holding positions of corresponding
responsibility) or (iii) in the case of Ward Howell with respect to personnel
and employment matters only, the knowledge (as defined in the preceding clause
(i)) of the Chief Executive Officer and the Chief Financial Officer and the
knowledge (without any special investigation) of the Executive Committee of the
Board of Directors or any of the directors.
"LAI Common Stock" means the Common Stock, $.01 par value per share, of
LAI.
"Law" means any code, law, ordinance, regulation, reporting or
licensing requirement, rule or statute applicable to a person or to a person's
assets, properties, liabilities or business, including those promulgated,
interpreted or enforced by any Regulatory Authority, including any judicial or
regulatory interpretation of any of the same and including the common law.
"LGO" means the office division of Ward Howell located in Lake Geneva,
Wisconsin.
2
<PAGE> 7
"LGO Accounts Receivable" means any accounts receivable of Ward Howell
which are outstanding immediately prior to the Effective Time and which would
have been governed by the LGO Agreement if such agreement were not terminated in
connection with the Merger (as defined in Section 7(g) hereof).
"LGO Agreement" means that certain letter agreement dated as of June
21, 1995 by and among Ward Howell, CSG International, Inc., Michael J. Corey and
Patrick Corey.
"LGO Stockholders" means Michael J. Corey, Patrick Corey, Paul Hanson
and Thomas Moran.
"Material Adverse Effect" or "Material Adverse Change" means, as to any
person, a material adverse effect or impact on (i) the financial position,
business, results of operations or prospects of such person and its Affiliates,
taken as a whole, or (ii) the ability of such person or any Affiliate of such
person to perform its obligations under this Agreement or to consummate the
Merger or the other transactions or actions contemplated by this Agreement.
"Nasdaq" means the Nasdaq Stock Market (National Market System).
"Non-LGO Accounts Receivable" means any accounts receivable of Ward
Howell which are outstanding immediately prior to the Effective Time and are not
LGO Accounts Receivable.
"Permit" means any permit, license, variance, certificate,
authorization, filing, franchise, notice, right, Consent or approval of or from
any Regulatory Authority.
"Regulation S-X" means Regulation S-X as promulgated and amended from
time to time by the SEC.
"Regulatory Authority" means, as to any subject matter or person, any
court, any governmental, regulatory or administrative agency, any commission,
authority or instrumentality or any other public body, domestic or foreign,
having jurisdiction over such subject matter or person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Laws" means the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and other federal and
state securities Laws.
"Tax" means any federal, state, local or foreign income, payroll,
franchise, property, sales, excise or other tax, tariff, duty, assessment or
governmental charge of any nature whatsoever, including any interest, penalty or
addition thereon or thereto, imposed, assessed, charged or levied by any
Governmental Authority.
3
<PAGE> 8
"Tax Return" means any return, report or similar statement (including
any schedules, statements or attachments thereto) required to be filed with
respect to any Tax, including any information return, claim for refund, amended
return or declaration of estimated Tax.
"Ward Howell Common Stock" means the Common Stock, $1.00 par value per
share, of Ward Howell.
(B) GENERAL.
(i) Inclusive Statements. Whenever any of the words
"include," "includes" or "including" is used in this Agreement, such word shall
be construed to indicate explanation, clarification and/or the presentation of
one or more examples, and not with limitation.
(ii) Number. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular.
(iii) Person. Unless the context clearly indicates
otherwise, the term "person" includes an individual or natural person and also
any entity or artificial person, including any corporation, partnership, joint
venture, trust or other incorporated or unincorporated association or
organization.
2. PLAN OF ACQUISITION.
(A) MERGER.
(i) General. At the Effective Time, MergerSub shall be
merged (the "Merger") with and into Ward Howell, with Ward Howell being the
surviving corporation and thereby becoming a wholly-owned subsidiary of LAI
(Ward Howell as it exists after the Effective Time being sometimes referred to
in this Agreement as the "Surviving Corporation").
(ii) Conversion of and Consideration for Ward Howell
Common Stock. At the Effective Time, subject to the terms and conditions of this
Agreement, each of those shares of Ward Howell Common Stock (other than
Dissenting Shares (as defined below)) that are issued and outstanding
immediately prior to the Effective Time ("Surrendered Ward Howell Shares")
shall, by virtue of the Merger, automatically and without any action on the part
of the holder thereof, be converted into and represent the right to receive,
upon surrender of the certificate representing such share, that percentage of
the aggregate Merger Consideration equal to the percentage of all shares of Ward
Howell Common Stock issued and outstanding immediately prior to the Effective
Time (including Dissenting Shares) represented by such share. Shares of Ward
Howell Common Stock, if any, held by Ward Howell as treasury stock shall for the
purposes of this Agreement be deemed issued but not outstanding, and no Merger
Consideration shall be payable with respect to any such shares.
(iii) Effective Time. The Merger and the other transactions
contemplated by this Agreement shall become effective at and as of the Effective
Time, which shall be the date and time as of which the Merger is effective under
and in accordance with the Connecticut Business
4
<PAGE> 9
Corporation Act and other general corporate Laws of the State of Connecticut
("Connecticut Corporate Law"), as reflected in the official records of the
Secretary of the State of Connecticut after the filing, on or as of the Closing
Date (as hereinafter defined), by or on behalf of each of Ward Howell and
MergerSub, of the Certificate of Merger (as hereinafter defined) with respect to
the Merger with the Secretary of State of the State of Connecticut, or such
other date and time as may be determined by LAI and Ward Howell and not
inconsistent with Connecticut Corporate Law.
(iv) Connecticut Corporate Law. The Merger shall be
effectuated under and in accordance with the Connecticut Corporate Law by the
filing with the Secretary of State of the State of Connecticut of a Certificate
of Merger containing the provisions required by, and executed in accordance
with, Connecticut Corporate Law and otherwise in substantially the same form as
is attached as Exhibit 2(a)(iv) (the "Certificate of Merger") hereto. The
Surviving Corporation shall continue to be governed by the Laws of the State of
Connecticut.
(B) THE CLOSING.
(i) Time and Place. Consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New York,
commencing at 10:00 a.m., local time, on the second business day immediately
following the Ward Howell Stockholders' Meeting (as hereinafter defined) and
shall proceed promptly to conclusion, or at such other place, time, and date as
shall be fixed by mutual agreement of LAI and Ward Howell, but in any event no
later than February 28, 1998. The day on which the Closing shall occur is
referred to herein as the "Closing Date." All actions taken at the Closing shall
be deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
(ii) Actions Taken. At the Closing, (i) Ward Howell and
the Ward Howell Stockholders will deliver to LAI and MergerSub the various
certificates, instruments, and documents required under this Agreement to be
delivered by them, (ii) LAI and MergerSub will deliver to Ward Howell the
various certificates, instruments, and documents required under this Agreement
to be delivered by them, (iii) MergerSub and Ward Howell will cause to be
prepared, executed and delivered the Certificate of Merger and the same to be
filed with the Secretary of State of the State of Connecticut effective as of
the Closing, (iv) the parties will cause to be prepared, executed and delivered
any and all other appropriate and customary documents as any party hereto or its
counsel may reasonably request for the purpose of consummating the transactions
contemplated by this Agreement, and (v) LAI will cause the Merger Consideration
to be delivered to the Ward Howell Stockholders in the manner provided below.
(C) CERTAIN EFFECTS OF THE MERGER.
(i) General. The Merger shall have the effects provided
for under Connecticut Corporate Law and, subject thereto, this Agreement and the
Certificate of Merger.
(ii) Continuation of Existence. Except as may otherwise be
set forth herein, (a) the corporate existence and identity of Ward Howell, with
all its purposes, powers, franchises, privileges, rights and immunities, shall
continue unaffected and unimpaired by the Merger, and (b)
5
<PAGE> 10
the corporate existence and identity of MergerSub, with all its purposes,
powers, franchises, privileges, rights and immunities, at the Effective Time
shall be merged with and into that of Ward Howell, and the Surviving Corporation
shall be vested fully therewith, and the separate corporate existence and
identity of MergerSub shall thereafter cease. The Surviving Corporation may, at
any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either Ward Howell or
MergerSub necessary to carry out and effectuate the transactions contemplated by
this Agreement.
(iii) Corporate Names. From and after the Effective Time,
the corporate name of the Surviving Corporation shall be changed to LAI Ward
Howell, Inc. Both LAI and the Surviving Corporation shall then begin conducting
business under the name "LAI Ward Howell," in addition to any other name under
which such business may be conducted.
(iv) Certificate of Incorporation. The Certificate of
Incorporation of Ward Howell, as in effect at the Effective Time, shall continue
in full force and effect and shall be the Certificate of Incorporation of the
Surviving Corporation.
(v) Bylaws. The Bylaws of Ward Howell, as in effect at
the Effective Time, shall continue in full force and effect and shall be the
Bylaws of the Surviving Corporation.
(vi) Officers and Directors. The officers and directors of
MergerSub, in office at the Effective Time, shall continue as the officers and
directors of the Surviving Corporation (unless otherwise elected or appointed at
or after the Effective Time), each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation. On the
Closing Date, the Board of Directors of LAI will be expanded to appoint David
Witte to serve as a member until the next annual meeting of LAI's stockholders.
LAI shall then use its best efforts to cause David Witte to be elected for a
three-year term at its next annual stockholders meeting, and, in that
connection, will include Mr. Witte on its slate of nominees and will recommend
Mr. Witte to its stockholders at that meeting. If David Witte ceases to serve as
a Board member for any reason during that three year term, the LAI Board will
elect a former stockholder of Ward Howell to fill his Board position during the
remainder of the term.
(vii) Cancellation of Ward Howell Common Stock. After the
Effective Time, no share of Ward Howell Common Stock shall be deemed to be
outstanding or to have any rights other than as specifically set forth in this
Agreement or as required under Connecticut Corporate Law.
(viii) Conversion of MergerSub Common Stock. At and as of
the Effective Time, each issued and outstanding share of common stock of
MergerSub shall be converted into one share of common stock of the Surviving
Corporation.
(ix) Closing of Transfer Records. At the Effective Time,
the stock transfer books of Ward Howell shall be closed as to Ward Howell
Stockholders immediately prior to the Effective Time and no transfers of Ward
Howell Common Stock by any Ward Howell Stockholder shall thereafter be made or
recognized.
6
<PAGE> 11
(D) APPROVAL BY WARD HOWELL STOCKHOLDERS. This Agreement and the
Merger have been approved by vote of the Ward Howell Stockholders at a meeting
of the Ward Howell Stockholders duly called and held immediately prior to the
execution of this Agreement (the "Stockholders' Meeting," as more fully
described below), and the parties hereto have cooperated in the preparation of
materials with which to solicit such approval by the Ward Howell Stockholders
(the "Ward Howell Stockholder Merger Materials," as more fully described below).
3. MERGER CONSIDERATION; MANNER OF CONVERTING SHARES.
(A) MERGER CONSIDERATION. The Merger Consideration, subject to
adjustment as set forth below, shall consist of:
(i) Cash Consideration. $8,762,000 in cash (the "Cash
Consideration");
(ii) LAI Notes. $7,962,000 in original principal amount
promissory notes of LAI, each in substantially the same form as set forth as
Exhibit 3(a)(ii) hereto (the "LAI Notes"), each of which shall bear interest at
the rate of 5% per annum and be payable in three equal annual payments; and
(iii) LAI Stock. 200,000 shares of LAI Common Stock (the
"LAI Stock").
(iv) Allocation among Ward Howell Stockholders. A Ward
Howell Stockholder who is entitled to receive pursuant to this Agreement a
percentage of the Merger Consideration shall be entitled to receive (1) that
same percentage of the Cash Consideration, (2) that same percentage of the
aggregate original principal amount of LAI Notes, reflected in a single LAI Note
payable to such Ward Howell Stockholder, and (3) that same percentage of the
aggregate number of shares of LAI Common Stock included in the Merger
Consideration, reflected in a single stock certificate (subject to adjustments
for fractional shares pursuant to Section 3(e)).
(v) Payment of Withholding Taxes. An amount equal to the
aggregate amount of taxes required to be withheld by Ward Howell as set forth on
Exhibit 3(a)(v) in connection with the issuance of the Bonus Shares (as
hereinafter defined) will be withheld at Closing from the Cash Consideration
portion of the Merger Consideration payable to the Ward Howell Stockholders with
respect to whom there exists a withholding obligation as set forth on Exhibit
3(a)(v).
(vi) No Securities Law Registration. Neither the LAI Notes
nor the LAI Stock will be registered under the Securities Act or under any state
Securities Laws, because it is believed that their issuance in connection with
the Merger will qualify for applicable exemptions from the securities
registration requirements of such laws. Accordingly, a legend substantially to
the following effect will be placed on each LAI Note and on each certificate
evidencing the LAI Stock: "THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES ACT OF ANY STATE. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH STATE LAWS AS
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MAY BE APPLICABLE, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED."
(B) ADJUSTMENTS TO MERGER CONSIDERATION.
(i) Adjusted Pro Forma EBIT Shortfall.
(1) General. The aggregate amount of Merger
Consideration shall be reduced by $8 for each $1 of Ward Howell's Adjusted Pro
Forma EBIT Shortfall for the year ending December 31, 1997. "Ward Howell's
Adjusted Pro Forma EBIT Shortfall for the year ending December 31, 1997" means
the amount, if any, by which $2.5 million exceeds the greater of (A) Ward
Howell's actual Adjusted Pro Forma EBIT for the year ending December 31, 1997 or
(B) $2.2 million. Ward Howell's Adjusted Pro Forma EBIT Shortfall for the year
ending December 31, 1997 may not be more than $300,000 nor less than $0.
(2) Adjusted Pro Forma EBIT. Adjusted Pro Forma
EBIT for the year ending December 31, 1997 means:
(A) Pro Forma EBIT. Earnings before
interest and taxes for the year ending December 31, 1997, determined by
reference to an audited statement of earnings of Ward Howell for such period to
be prepared and presented in accordance with GAAP by Ward Howell and reviewed by
Arthur Andersen LLP, LAI's accounting firm, prior to the Closing; plus
(B) Excess Profit Distribution. An
amount, consistent with past practices, with respect to any excess profit
distribution expensed by Ward Howell in respect of its operations for the year
ending December 31, 1997, mutually agreed to by the parties prior to the
Closing, which amount Ward Howell has estimated to be approximately $1.6
million;
(C) LGO Fee Revenue. An amount equal to
19.1 percent (19.1%) of the fee revenues from Ward Howell's Lake Geneva,
Wisconsin office for the year ending December 31, 1997, determined in accordance
with GAAP; plus
(D) Compensation System Adjustment. An
amount equal to $191,000, which represents the effect of certain differences
between the compensation systems of Ward Howell and LAI for the year ending
December 31, 1997; plus
(E) Transaction Expenses. The actual
amount of those direct expenses of Ward Howell in effecting the Merger described
on Exhibit 3(b)(ii)(A) hereto ("Ward Howell Transaction Expenses"), that
otherwise would reduce Ward Howell's Pro Forma EBIT for the year ending December
31, 1997; plus
(F) Pre-Closing Transactions Charges.
The actual amount of compensation expense charged by Ward Howell in connection
with the issuance of the Bonus Shares (as hereinafter defined) that would
otherwise reduce Ward Howell's Pro Forma EBIT for the year ending December 31,
1997.
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(ii) Other Adjustments to Merger Consideration. The aggregate
amount of Merger Consideration shall be reduced by:
(A) Ward Howell's Excess Transaction Expenses. The
amount, if any, by which the aggregate amount of Ward Howell Transaction
Expenses exceeds $500,000; and further reduced by
(B) Uncollectible Accounts Receivable.
1) Non-LGO Accounts Receivable
a) Stockholders. The amount of Merger
Consideration payable to a Ward Howell Stockholder responsible for generating
Non-LGO Accounts Receivable (each, an "Originating Stockholder") shall be
reduced by the amount calculated as set forth below if any Non-LGO Accounts
Receivable generated by such Originating Stockholder has not been collected in
full on or prior to that date which is 180 days after the Closing Date. LAI
shall attempt to collect all Non-LGO Accounts Receivable in accordance with
LAI's normal and customary practices. Exhibit 3(b)(ii)(B) sets forth an
allocation of Ward Howell's allowance for doubtful accounts among the Ward
Howell Stockholders and other originators ("Non-Stockholder Originators"). No
adjustment to the Merger Consideration payable to any Originating Stockholder
pursuant to this Section 3(b)(ii)(B)1) will be made unless: (i) the aggregate
amount of uncollected Non-LGO Accounts Receivable exceeds the sum of (x) the
aggregate amount of the allowance for doubtful Non-LGO Accounts Receivable as of
the Closing Date, plus (y) the aggregate accrued compensation expense relating
to the uncollected Non-LGO Accounts Receivables (the amount of such excess minus
the amount of the Excess Non-Stockholder Allowance (as hereinafter defined) is
referred to herein as the "Aggregate Reduction Amount"); and (ii) the aggregate
amount of uncollected Non-LGO Accounts Receivable of an Originating Stockholder
exceeds the sum of (a) the allowance for doubtful accounts allocated to such
Originating Stockholder on Exhibit 3(b)(ii)(B) plus (b) the accrued compensation
expense relating to such uncollected Non-LGO Accounts Receivable (the amount of
such excess is referred to herein as the "Originating Stockholder's Excess
Amount"). In such an event, the Merger Consideration payable to each Originating
Stockholder to whom an Originating Stockholder's Excess Amount is attributable
shall be reduced by such Originating Stockholder's "Pro Rata Reduction Amount."
An Originating Stockholder's Pro Rata Reduction Amount shall equal the product
obtained by multiplying the Aggregate Reduction Amount by a fraction, the
numerator of which is the Originating Stockholder's Excess Amount and the
denominator of which is the sum of all Originating Stockholder's Excess Amounts.
b) Non-Stockholder Originators. The
amount of Merger Consideration payable to the Ward Howell Stockholders (other
than the LGO Stockholders) shall be reduced by the amount calculated as set
forth below if any Non-LGO Accounts Receivable which are generated by
Non-Stockholder Originators have not been collected in full on or prior to that
date which is 180 days after the Closing Date. If: (i) the aggregate amount of
uncollected Non-LGO Accounts Receivable exceeds the sum of (x) the aggregate
amount of the allowance for doubtful Non-LGO Accounts Receivable as of the
Closing Date, plus (y) the aggregate accrued compensation expense relating to
the uncollected Non-LGO Accounts Receivable; (ii) the aggregate amount of
uncollected Non-LGO Accounts Receivable of Non-Stockholder Originators exceeds
the
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<PAGE> 14
sum of (a) the allowance for doubtful accounts allocated to the Non-Stockholder
Originators on Exhibit 3(b)(ii)(B) plus (b) the aggregate accrued compensation
expense relating to such uncollected Non-LGO Accounts Receivable (the amount of
such excess is referred to herein as the "Non-Stockholders' Excess Amount"); and
(iii) the Non-Stockholders' Excess Amount exceeds the Excess Ward Howell
Stockholder Allowance (as hereinafter defined); then the Merger Consideration
payable to the Ward Howell Stockholders (other than the LGO Stockholders) shall
be reduced by an aggregate amount equal to the Ward Howell Excess Amount (as
hereinafter defined). Any such reduction shall be made among the Ward Howell
Stockholders (other than the LGO Stockholders) on a pro rata basis in proportion
to the amount of Merger Consideration received by such stockholders.
c) Certain Definitions. For purposes
hereof: (i) the term "Ward Howell Excess Amount" shall mean the amount by which
the Non-Stockholders' Excess Amount exceeds the sum of (A) the aggregate
allowance for doubtful accounts allocated to Non-Stockholder Originators, plus
(B) the aggregate accrued compensation expense relating to the uncollected
Non-LGO Accounts Receivable generated by the Non-Stockholder Originators, plus
(C) the Excess Ward Howell Stockholder Allowance; (ii) the term "Excess Ward
Howell Stockholder Allowance" shall mean the remainder obtained by subtracting
(x) the aggregate amount of uncollected Non-LGO Accounts Receivable of all
Originating Stockholders from (y) the sum of (A) the allowance for doubtful
accounts allocated to all Originating Stockholders plus (B) the accrued
compensation expense relating to such uncollected Non-LGO Accounts Receivable;
and (iii) the term "Excess Non-Stockholder Allowance" shall mean the remainder
obtained by subtracting (A) the aggregate amount of uncollected Non-LGO Accounts
Receivable of all Non-Stockholder Originators from (B) the sum of (1) the
allowance for doubtful accounts allocated to all Non-Stockholder Originators
plus (2) the accrued compensation expense relating to such uncollected Non-LGO
Accounts Receivable.
2) LGO Accounts Receivable. The Merger
Consideration payable to Michael J. Corey shall be reduced by an amount equal to
4% of the aggregate amount by which the uncollected LGO Accounts Receivable
(determined as of that date which is 180 days after the Closing Date) exceeds
the allowance for doubtful LGO Accounts Receivable as of the Closing Date. LAI
shall attempt to collect all LGO Accounts Receivable in accordance with LAI's
normal and customary practices.
3) Use of Excess Allowance. If, as of
the date which is 180 days after the Closing Date (i) (a) the sum of the
allowance for doubtful LGO Accounts Receivable plus the accrued compensation
expense relating to uncollected LGO Accounts Receivable exceeds the amount of
uncollected LGO Accounts Receivable (the amount of such excess is referred to
hereinafter as the "Excess LGO Allowance"), or (b) the allowance for doubtful
Non-LGO Accounts Receivable exceeds the amount of uncollected Non-LGO Accounts
Receivable, and (ii) the sum of the aggregate allowance for one such category of
accounts receivable plus accrued compensation expense related to the uncollected
accounts receivable of such category is less than the aggregate amount of such
accounts receivable which are uncollected, then the excess allowance with
respect to the other category of accounts receivable shall be added to the
allowance with respect to the category of accounts receivable for which a
shortfall exists for purposes of the
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calculations set forth in Sections 3(b)(ii)(B)(1), (2) and (3) hereof. The
Excess LGO Allowance shall be applied first to increase the allowance for
doubtful accounts allocated to the Non-Stockholder Originators to the extent
necessary to eliminate any Non-Stockholders' Excess Amount and thereafter an
equal portion of the remaining Excess LGO Allowance shall be applied to increase
the allowance for doubtful accounts allocated to each Originating Stockholder to
whom an Originating Stockholder's Excess Amount is attributable.
4) Assignment of Uncollectible
Accounts Receivable. After any reduction in Merger Consideration is effected
pursuant to this Section 3(b)(ii)(B), the uncollected portion of any accounts
receivable will be assigned on a pro rata basis to the Ward Howell
Stockholder(s) whose Merger Consideration was reduced in connection therewith in
accordance with this Section 3(b)(ii)(B). Following this assignment, LAI shall
continue to attempt to collect such accounts receivable in accordance with LAI's
normal and customary practices; and further reduced by
(C) Costs to Obtain Certain Consents. The cost
of obtaining any consents required in order for LAI to satisfy its obligations
to provide financial information regarding the Merger pursuant to Item 7 of SEC
Current Report on Form 8-K and Regulation S-X.
(D) Retired Partners. An amount equal to that
portion of any Merger Consideration which otherwise would have been allocated to
a Retiree Stockholder (as hereinafter defined) in respect of the Bonus Shares
that would have been issued to the Retiree Stockholder if there had been no
retirement..
(iii) Procedures for Determining Adjustment Amounts
(1) ADJUSTMENTS TO CASH CONSIDERATION, LAI STOCK
AND PRINCIPAL AMOUNTS OF LAI NOTES. Any adjustment to the aggregate amount of
the Merger Consideration made pursuant to this Section 3(b) shall be reflected
(A) if made at or prior to the Closing, by adjusting on a pro rata basis the
aggregate Cash Consideration, the aggregate number of shares of LAI Stock
(valued for this purpose at the average of the closing price of LAI Common Stock
as reported by the Nasdaq Stock Market (National Market System) for the five
trading days ending two days before the Closing Date (the "Fair Market Value"))
and the aggregate original principal amount of the LAI Notes, or (B) if made
after the Closing, by adjusting the aggregate original principal amount of the
LAI Notes.
(2) PRE-CLOSING DETERMINATIONS. At or prior to
the Closing, the parties shall enter into a written agreement (the "Preliminary
Pricing Agreement") (A) referring to each of the adjustment items described in
Sections 3(b)(i) and 3(b)(ii) and setting forth, as to each such item, a dollar
amount that is identified as either a preliminary estimate or a final binding
statement of the amount of such item (provided that each of the dollar amounts
set forth in the Preliminary Pricing Agreement referring to adjustment items
described in Section 3(b)(i) shall be a final binding statement of the amount of
such items), and (B) setting forth the corresponding preliminary adjustments to
be made to and a preliminary determination of the Merger Consideration. Subject
to the other provisions of this Agreement, the parties shall then proceed with
the Closing as if the
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actual final Merger Consideration were the amount preliminarily determined under
the Preliminary Pricing Agreement.
(3) POST-CLOSING DETERMINATIONS. As promptly as
practicable after the Closing, the parties shall enter into one or more written
agreements (the "Final Pricing Agreements") (A) collectively referring to each
of the adjustment items described in Section 3(b)(ii) not finally agreed to
pursuant to the Preliminary Pricing Agreement and setting forth, as to each such
item, a dollar amount identified as the final binding statement of the amount of
such item, and (B) setting forth the corresponding adjustments to be made to the
Merger Consideration. Subject to the other provisions of this Agreement, the
Merger Consideration shall then be adjusted as provided above.
(4) RESOLUTION OF PRICING DISPUTES. At any time
on or after the date thirty (30) days after the Effective Time, (but, as to
wholly or partially uncollectible account receivable of Ward Howell referred to
in Section 3(b)(ii)(D), not before the date 210 days after the Closing Date),
any party to this Agreement may assert the existence of a dispute as to the
determination of the amount of any adjustment item described in Section 3(b)(ii)
not then already finally agreed to pursuant to the Preliminary Pricing Agreement
or a Final Pricing Agreement, and such party may thereupon submit such dispute
and the determination of such amount to binding arbitration in accordance with
the provisions of Section 12(b).
(5) REDUCTIONS IN MERGER CONSIDERATION. The
Merger Consideration payable to the LGO Stockholders shall not be reduced
pursuant to Section 3(b) except as expressly set forth in Section 3(b)(ii)(B)2).
(iv) Risk of Market Fluctuations; No Other Adjustments.
Ward Howell and the Ward Howell Stockholders understand that the LAI Common
Stock is publicly traded on Nasdaq and that the market price of such stock may
increase or decrease from time to time. Ward Howell and the Ward Howell
Stockholders acknowledge that the number of shares of LAI Stock to be received
by the Ward Howell Stockholders as part of the Merger Consideration pursuant to
the consummation of the Merger has been fixed at the time of execution of this
Agreement, is subject to adjustment only as specifically provided in this
Agreement, and that no other adjustments to the number of shares of LAI Common
Stock to be received by the Ward Howell Stockholders as part of the Merger
Consideration will be made as a result of market fluctuations or otherwise.
(C) DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, and except as provided in this paragraph, each Dissenting Share
(as hereinafter defined) shall not be converted into or be exchangeable for the
right to receive any portion of the Merger Consideration, but instead shall be
converted into the right to receive payment with respect thereto in accordance
with the provisions of Sections 33-855 through 33-872 of the Connecticut
Business Corporation Act (the "Connecticut Dissenters' Rights Law"); provided,
however, that if, at any time after the Effective Time, the owner of record of
such Dissenting Share (a "Dissenting Stockholder"), without having received any
payment under or pursuant to the Connecticut Dissenters' Rights Law, shall have
failed to perfect or shall have effectively withdrawn or lost such person's
right to obtain payment of the fair value of such Dissenting Share under
Connecticut Dissenters' Rights Law, then such Dissenting Share shall be treated
as if it were not a Dissenting Share and as if it had been converted at the
Effective Time into the right to receive the applicable percentage of the Merger
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Consideration, but with no interest thereon except as provided for under the LAI
Notes. "Dissenting Share" means a share of Ward Howell Common Stock, issued and
outstanding immediately prior to the Effective Time, owned of record by a person
who has not voted such share in favor of the Merger and who has delivered,
within the time and in the manner provided by Connecticut Dissenters' Rights
Law, a written demand for payment of the fair value of such share in accordance
with the Connecticut Dissenters' Rights Law and other applicable provisions of
Connecticut Corporate Law. Each Dissenting Stockholder that becomes entitled,
pursuant to the Connecticut Dissenters' Rights Law, to payment for any
Dissenting Shares shall receive payment therefor from LAI (but only after the
amount thereof shall have been agreed upon or at the times and in the amounts
required by the Connecticut Dissenters' Rights Law) and all of the Dissenting
Shares shall be canceled. Ward Howell shall not, except with the prior written
consent of LAI, voluntarily make any payment with respect to, or settle or offer
to settle, any demand for payment for or with respect to any Dissenting Shares
(or shares that would be Dissenting Shares but for the Effective Time then not
yet having occurred).
(D) ANTI-DILUTION PROVISIONS. In the event that LAI changes the
number of shares of LAI Common Stock issued and outstanding after the date of
this Agreement but prior to the Effective Time as a result of a stock split,
stock dividend, recapitalization, reclassification or other similar transaction
and the record or effective date thereof shall be prior to the Effective Time,
the number of shares (and, if appropriate) classification of the shares of
capital stock of LAI included in the Merger Consideration shall be
correspondingly adjusted so as to prevent any dilutive effect to the holders of
Ward Howell Common Stock issued and outstanding immediately prior to the
Effective Time.
(E) FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each Ward Howell Stockholder who would otherwise have been entitled
to receive a fraction of a share of LAI Common Stock pursuant to the Merger
(after taking into account all certificates delivered by such Ward Howell
Stockholder) shall instead be entitled to receive, in lieu thereof, cash
(without any interest thereon) in an amount equal to such fraction multiplied by
the Fair Market Value of LAI Common Stock; and, no person will be entitled to
dividends, voting rights or any other rights with respect to any such fractional
share of LAI Common Stock except as provided in this paragraph.
4. PROCEDURE FOR PAYMENT OF MERGER CONSIDERATION.
(A) EXCHANGE PROCEDURES. At Closing immediately after the
Effective Time, each Ward Howell Stockholder as of the Effective Time (other
than Dissenting Stockholders) shall surrender the certificate or certificates
representing the shares of Ward Howell Common Stock owned by such person, duly
endorsed, to LAI, and shall receive in exchange therefor such person's pro rata
share of the Merger Consideration. The Ward Howell Common Stock certificates so
surrendered shall forthwith be canceled. LAI shall not be obligated to deliver
the Merger Consideration to any Ward Howell Stockholder until such Ward Howell
Stockholder surrenders such stockholder's certificate or certificates
representing shares of Ward Howell Common Stock for exchange as provided herein.
No certificate for LAI Stock, no LAI Note and no check representing the Cash
Consideration or cash in lieu of fractional shares and/or declared but unpaid
dividends or distributions shall be issued in a name other than that in which
the certificate surrendered for exchange is issued.
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(B) RIGHTS OF WARD HOWELL STOCKHOLDERS. Until surrendered for
exchange in accordance with this Agreement, each certificate representing shares
of Ward Howell Common Stock (other than Dissenting Shares) shall from and after
the Effective Time represent for all purposes only the right to receive a pro
rata share of the Merger Consideration as set forth in this Agreement (without
any interest thereon). Whenever a dividend or other distribution is declared by
LAI on LAI Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of LAI Common Stock at or
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Ward Howell Common Stock issued and
outstanding at the Effective Time until such holder physically surrenders such
certificate for exchange as provided in this Agreement, promptly after which
time all such dividends or distributions shall be paid (without any interest
thereon).
5. REPRESENTATIONS AND WARRANTIES OF WARD HOWELL.
Ward Howell and each Ward Howell Stockholder does hereby represent and
warrant to LAI and MergerSub as follows:
(A) ORGANIZATION, STANDING, AND POWER. Ward Howell is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Connecticut, and has the requisite corporate power and
authority to own, lease, and operate its properties and to carry on its business
as it is now being conducted. Ward Howell is qualified or licensed to do
business as a foreign corporation in each other jurisdiction in which Ward
Howell is required to be so qualified or licensed, except to the extent that the
failure to be so qualified or licensed would not have a Material Adverse Effect
on Ward Howell. Ward Howell has provided to LAI true, complete, and correct
copies of the Certificate of Incorporation and Bylaws of Ward Howell, in each
case as in effect on the date of this Agreement.
(B) AUTHORITY. Ward Howell has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by Ward Howell and the
consummation by Ward Howell of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Ward Howell. The affirmative vote of the holders of two-thirds of
the outstanding shares of Ward Howell Common Stock is the only vote required of
Ward Howell's capital stock necessary in connection with the consummation of the
Merger or the other transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by Ward Howell and, assuming due
authorization, execution and delivery by LAI and MergerSub, constitutes a legal,
valid and binding obligation of Ward Howell enforceable against Ward Howell in
accordance with its terms (except in all cases to the extent such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting the enforcement of creditors' rights and remedies
generally and except that the availability of the equitable remedy of specific
performance and injunctive relief is subject to the discretion of the court
before which any proceedings may be brought).
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(C) CORPORATE APPROVAL. At a meeting duly called and held, the
Board of Directors of Ward Howell has (i) approved and adopted this Agreement
and the transactions contemplated hereby, and (ii) recommended approval and
adoption of this Agreement to the Ward Howell Stockholders. Further, at a
meeting duly called and held, the Ward Howell Stockholders have approved and
adopted this Agreement and the transactions contemplated thereby.
(D) NO CONFLICT. Neither the execution and delivery of this
Agreement by Ward Howell, nor the consummation by Ward Howell of the
transactions contemplated hereby, nor compliance by Ward Howell with any of the
terms or provisions hereof, will (i) conflict with or violate any provision of
the Certificate of Incorporation or Bylaws of Ward Howell, (ii) violate,
conflict with or constitute or result in a breach of any term, condition or
provision of, or constitute a default (with or without notice or the lapse of
time, or both) under, or give rise to any right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, or, except as set
forth on Exhibit 5(d) hereto, require a Consent pursuant to, or result in the
creation of any claim, lien, pledge, security interest, charge or other
encumbrance of any kind whatsoever ("Lien") upon any assets or properties of
Ward Howell pursuant to any of the terms, provisions or conditions of any loan
or credit agreement, note, bond, mortgage, indenture, deed of trust, license,
agreement, contract, lease, Permit, concession, franchise, plan or other
instrument or obligation to which Ward Howell is a party, or by which any of its
assets or properties may be bound or affected, except for such violations,
conflicts, breaches, defaults, creation of Liens or failure to obtain such a
Consent that would not, individually or in the aggregate, have a Material
Adverse Effect on Ward Howell or the Surviving Corporation or materially
threaten, impede or impair the consummation of the transactions contemplated by
this Agreement, or (iii) subject to receipt of the requisite approvals and
Consents referred to in this Agreement, conflict with or violate any judgment,
order, writ, injunction, decree or Law applicable to Ward Howell or any of its
assets or properties, which conflict or violation, individually or in the
aggregate, would have a Material Adverse Effect on Ward Howell.
(E) CONSENTS REQUIRED. Other than as listed on Exhibit 5(e)
hereto, no notice to, registration, declaration or filing with, order,
authorization or Permit of, exemption or waiver by, Consent of or any action by
any Regulatory Authority is necessary or required as a condition to the
execution and delivery of this Agreement by Ward Howell or the consummation by
Ward Howell of the Merger and the other transactions contemplated hereby, other
than such notices, registrations, declarations or filings which, if not made or
obtained, would not have, individually or in the aggregate, a Material Adverse
Effect on Ward Howell or the Surviving Corporation.
(F) CAPITALIZATION.
(i) General. The authorized capital stock of Ward Howell
consists of 10,000 shares of Ward Howell Common Stock, $1.00 par value per
share, of which 4481.1604 shares are issued and outstanding and owned of record
by the Ward Howell Stockholders as reflected on Exhibit 5(f) hereto. Ward Howell
does not hold any shares of Ward Howell Common Stock as treasury stock. All of
the issued and outstanding shares of Ward Howell Common Stock are duly and
validly issued, fully paid and nonassessable. No preemptive rights exist or have
at any time existed with respect to the Ward Howell Common Stock, and none of
the outstanding shares of Ward Howell Common Stock has been issued in violation
of any preemptive rights. No shares of Ward
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Howell Common Stock are issuable pursuant to any options, warrants or other
outstanding rights to purchase shares of Ward Howell Common Stock.
(ii) No Other Securities Outstanding. Except as set forth
in the preceding paragraph, there are no shares of capital stock or other voting
or equity securities of Ward Howell outstanding and Ward Howell has not granted
and there are not outstanding any options, warrants, scrip, rights to subscribe
to or acquire, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of Ward Howell or any contracts, commitments, undertakings or other
arrangements of any kind to which Ward Howell is a party or by which Ward Howell
may be bound to issue, deliver or sell additional shares of its capital stock or
other voting securities of Ward Howell, or any options, warrants, scrip or
rights to purchase or acquire any additional shares of its capital stock. Except
as described on Exhibit 5(f), there are no outstanding obligations of Ward
Howell to repurchase, redeem or otherwise acquire any shares of the capital
stock of Ward Howell.
(iii) Compliance with Law. All shares of capital stock of
Ward Howell and all options, warrants, scrip or rights to purchase or acquire
any additional shares of Ward Howell capital stock have at all times been
offered or issued in accordance with all applicable state and federal securities
laws.
(G) NO SUBSIDIARIES. Except as set forth on Exhibit 5(g) hereto,
Ward Howell does not have any wholly or partially owned subsidiary and does not
own any equity or voting interest in any other entity.
(H) FINANCIAL STATEMENTS. Exhibit 5(h) sets forth copies of Ward
Howell's unaudited financial statements (including related notes and schedules,
if any) as of and for the nine months ended September 30, 1996 and September 30,
1997, and copies of its audited financial statements (including related notes
and schedules, if any) for each of the four years ended December 31, 1994, 1995,
1996 and 1997 (collectively, the "Ward Howell Financial Statements"). The Ward
Howell Financial Statements have been prepared in accordance with GAAP, and all
audited Ward Howell Financial Statements are accompanied by the unqualified
audit opinion of KPMG Peat Marwick and all related management letters. Each of
the Ward Howell Financial Statements, including, in each case, any related
notes: (1) is true, complete, and correct in all material respects as of its
respective date, (2) is in accordance with and supported by and consistent with
the books and records of Ward Howell, including a general ledger and detailed
trial balances, which books and records have been made available to LAI and
which have been maintained in accordance with good business practices and (3)
presents fairly the financial position and the results of operations, changes in
stockholders' equity, and statements of cash flows of Ward Howell as of the
dates and for the periods indicated.
(I) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Exhibit 5(i) hereto, since December 31, 1997: (i) Ward Howell has conducted its
business in all material respects only in the ordinary course and in a manner
consistent with past practices, (ii) there have been no events, changes,
developments or occurrences that have had, or that would have, individually or
in the aggregate, a Material Adverse Effect on Ward Howell, and (iii) Ward
Howell has not taken any action, or failed to take any action (whether or not in
the ordinary course and consistent with past practices), prior to the date of
this Agreement, which action or failure, if taken after the date of this
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Agreement, would represent or result in a material breach or violation of the
covenants and agreements of Ward Howell set forth in this Agreement.
(J) NO UNDISCLOSED LIABILITIES. Except as disclosed in Exhibit
5(j) hereto, Ward Howell does not have any material obligations or liabilities,
and has not incurred or paid any obligation or liability (contingent or
otherwise, and whether accrued or reserved), and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such obligation or liability, except obligations and liabilities (i) which
are fully accrued or reserved against in the Ward Howell Financial Statements,
(ii) obligations to perform services under the engagement letters identified on
Exhibit 5(o), or (iii) which were fully incurred or paid after December 31, 1997
in the ordinary course of business consistent with past practices and which in
the aggregate will not have a Material Adverse Effect on Ward Howell or the
Surviving Corporation.
(K) TAX MATTERS.
(i) Returns. Except as disclosed in Exhibit 5(k) hereof,
all Tax Returns required to be filed by or on behalf of Ward Howell have been
timely filed, or requests for extensions have been timely filed, granted and
have not expired; all such Tax Returns filed are true, complete and accurate in
all material respects; and, all Taxes shown to be due on such Tax Returns have
been timely paid by Ward Howell. There is no audit examination, deficiency or
refund litigation or matter in controversy in which Ward Howell has been joined
as a party with respect to any Taxes, except as reserved against in the Ward
Howell Financial Statements or as disclosed in the Exhibits hereto. All Taxes
and other liabilities due with respect to completed and settled examinations or
concluded litigation have been paid, accrued or provided for.
(ii) No Extension or Waiver. Ward Howell has not executed
an extension or waiver of any statute of limitations on the assessment or
collection of any Tax due which extension or waiver is currently in effect.
(iii) Provision for Taxes Due. Adequate provision for any
Taxes due or to become due for Ward Howell for any period or periods through
December 31, 1997 has been made and is reflected on the December 31, 1997
financial statements included in the Ward Howell Financial Statements.
(iv) Deferred Taxes. Deferred Taxes of Ward Howell have
been provided for in the Ward Howell Financial Statements in accordance with
GAAP.
(v) Withholding. All Taxes that Ward Howell is required
by Law to withhold or to collect for payment have been duly withheld and
collected, and have been paid to the proper Regulatory Authority or are held by
Ward Howell pending such payment, except for such failures which are not,
individually or in the aggregate, material in amount. Ward Howell is in
compliance with, and its records contain all information and documents necessary
to comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such
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omissions which would not have, individually or in the aggregate, a Material
Adverse Effect on Ward Howell.
(vi) No Tax Liens. There are no Liens with respect to
Taxes upon any of the material assets or properties of Ward Howell.
(vii) Tax Elections. All material elections with respect to
Taxes affecting Ward Howell as of the date of this Agreement have been timely
made. After the date hereof, no election with respect to Taxes will be made
without the prior written consent of LAI, which consent will not be unreasonably
withheld.
(viii) Stock Sale; No Section 338(h)(10) Election. The
parties agree that the Merger shall be treated as a sale of stock for federal
income tax purposes. Neither Ward Howell nor the Ward Howell Stockholders shall
make an election pursuant to Section 338(h)(10) of the Internal Revenue Code.
(L) ASSETS. A true, complete and correct list of all real property
owned or leased by Ward Howell is set forth on Exhibit 5(l) hereto. Except as
set forth on Exhibit 5(l), Ward Howell has good, valid and marketable title to
all of its assets and properties, whether tangible or intangible, real, personal
or mixed, free and clear of all Liens, mortgages, conditional and installment
sale agreements and secondary interests, of any kind whatsoever, except for
Liens for current taxes and assessments not yet due and payable and except for
Liens, mortgages, conditional and installment sale agreements and secondary
interests which in each case do not involve an unpaid balance of $5,000 or more.
All leasehold interests and all fixtures, equipment and other assets and
properties that are material or necessary to the business of Ward Howell held
under leases or subleases by Ward Howell are held under valid instruments
generally enforceable in accordance with their respective terms, and each such
instrument is in full force and effect. Substantially all of the equipment and
other assets regularly used in the business of Ward Howell is in good and
serviceable condition, reasonable wear and tear excepted.
(M) LAKE GENEVA OFFICE. The HCC Merger (as hereinafter defined),
when consummated prior to the Effective Time of the Merger, will operate to
terminate all of the rights and obligations of the parties under that certain
Letter Agreement dated June 21, 1995 regarding the Combination of Operations
between Ward Howell and CSG International, Inc., Michael J. Corey and Patrick M.
Corey (the "LGO Letter Agreement") as of the Effective Time . Without limiting
any other representation and warranty herein regarding the assets of Ward
Howell, as of the Effective Time all assets associated with the Lake Geneva
Office, including without limitation all client lists, customer lists, accounts
receivable and the proceeds thereof, will be the sole property of Ward Howell or
its wholly-owned subsidiary, free and clear of all Liens, encumbrances or claims
of any other party, including without limitation Michael J. Corey, Patrick M.
Corey, and Howell-Corey Consulting, Ltd. a Delaware corporation (formerly
operating under the assumed name CSG International, Inc.). It shall be
specifically understood that all references herein to Ward Howell and to the
Ward Howell Stockholders includes the LGO and any Ward Howell Stockholders
affiliated with the LGO.
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(N) CONDUCT OF BUSINESS. The business of Ward Howell has been
conducted in all material respects in compliance with the AESC Code of Ethics
and other standards applicable to executive search firms.
(O) CLIENT LIST; ENGAGEMENT LETTERS. Exhibit 5(o) hereto lists all
of the existing clients of Ward Howell. True and correct copies of all
engagement letters of Ward Howell for searches which are in progress as of the
date of this Agreement have been delivered to LAI prior to the execution of this
Agreement. True and correct copies of all engagement letters of Ward Howell for
searches entered into after the date of this Agreement and prior to the Closing
Date will be delivered to LAI prior to the Closing Date. Except as set forth on
Exhibit 5(o), each such engagement letter is in full force and effect; all
amounts due to date with respect to such engagement letters have been paid; no
party is in default thereunder; and there exists no event, occurrence, condition
or act which, with the giving of notice, the lapse of time or the happening of
any further event or condition would become a default by any party under such
agreement. Ward Howell is not in violation of any of the material terms or
conditions under any of such engagement letters, all of the material covenants
required to have been performed by any party to such engagement letters through
the date hereof have been performed in all material respects in accordance with
past practices, and all of the material covenants required to be performed as of
the Closing Date by any party to such engagement letters will have been
performed in all material respects in accordance with past practices. Except as
set forth on Exhibit 5(o), all searches have been billed by Ward Howell in
accordance with the terms of the engagement letters. Ward Howell will take all
reasonable and necessary steps to ensure that a good relationship is maintained
with each of its clients between the date of this Agreement and the Effective
Date, whether or not listed on Exhibit 5(o) hereto, and will also take all
reasonable and necessary steps to encourage its clients to continue doing
business with the Surviving Corporation and LAI after the Closing Date. Since
December 31, 1997, and except in the ordinary course of business and as in the
aggregate has not had and would not reasonably be expected to have a Material
Adverse Effect on Ward Howell or the Surviving Corporation, there has been no
termination, cancellation, limitation, modification or change in Ward Howell's
business relationship with any client.
(P) ACCOUNTS RECEIVABLE. All accounts receivable of Ward Howell
shown on the Ward Howell Financial Statements represent services actually
performed in the ordinary course of business in bona fide transactions completed
in accordance with the applicable client or customer requirements and any terms
and provisions contained in any applicable client contracts or engagement
letters and any documents related thereto. The accounts receivable outstanding
reflected on the Ward Howell Financial Statements are collectible in full, net
of (i) any reserves shown on the December 31, 1997 Ward Howell Financial
Statements, plus (ii) accrued compensation expense relating to such accounts
receivable reflected on the December 31, 1997 Ward Howell Financial Statements.
Exhibit 5(p) hereto details the accrued compensation expense relating to such
accounts receivable as of January 31, 1998, including the name of each person to
whom such accrued compensation expense relates and the amount payable to such
person. Such information will be updated and provided to LAI as of the Closing
Date. There are no setoffs, counterclaims or disputes asserted against, and no
discounts or allowances from, the accounts receivable other than in amounts
which, in the aggregate, are not in excess of the amounts thereof reserved
against in the Ward Howell Financial Statements, nor on the Closing Date will
there be any such setoffs, counterclaims,
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and disputes asserted against, or discounts or allowances from, the accounts
receivable in amounts which, in the aggregate, are in excess of the amounts
reserved.
(Q) INSURANCE. Set forth on Exhibit 5(q) hereto is a true,
complete, and correct list of all insurance policies maintained by Ward Howell,
including professional malpractice, life, casualty, fire, general liability,
employers' liability, workers' compensation, title, directors' and officers'
liability, credit, fidelity, business interruption, errors and omissions and all
other forms of insurance, in each case indicating the name of the insurer, and
the amount, scope, and coverage of such policies (including the effective dates
of the policy, deductibles, and any aggregate limits). All material policies are
in full force and effect, and with respect to all policies, all premiums payable
with respect to all periods up to and including the date of Closing have been,
or will be, fully paid. Ward Howell has not received any notice from any
insurance carrier or otherwise that: (i) such insurance will be canceled or
terminated or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed on Exhibit 5(q) hereto, there are no claims
pending under such policies of insurance and no notices have been given by Ward
Howell under such polices.
(R) ENVIRONMENTAL MATTERS.
(i) Compliance. Except as disclosed Exhibit 5(r) hereto,
to the actual knowledge of Ward Howell's Executive Committee members, Chief
Executive Officer and Chief Financial Officer without any duty to investigate,
there have been no releases of Hazardous Material in violation of any
Environmental Law in, on, under or affecting any current or previously owned or
leased real properties of Ward Howell, and Ward Howell has not released into the
environment any Hazardous Materials in violation of any Environmental Law in,
on, under or affecting any current or previously owned or leased real properties
of Ward Howell.
(ii) No Proceedings. To the Knowledge of Ward Howell,
there is no suit, claim, action or proceeding pending or threatened before any
Regulatory Authority or other forum in which Ward Howell has been named as a
defendant or a potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or (ii) relating to
the release into the environment by Ward Howell of any Hazardous Material in
violation of applicable Environmental Law, whether or not occurring at, on,
under or involving a site owned, leased or operated by Ward Howell. To the
Knowledge of Ward Howell, no notice, notification, demand, request for
information, citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation or review is pending
or, to the actual knowledge of Ward Howell's Executive Committee members and
Chief Executive Officer and Chief Financial Officer, without any duty to
investigate, threatened, by any Regulatory Authority or other person relating to
any violation of any Environmental Law by Ward Howell.
(iii) Environmental Audits. Ward Howell has not heretofore
engaged or retained any person to conduct, and does not have in its possession
any document relating to, any environmental audit, assessment or study with
respect to any real property currently or previously owned or leased by Ward
Howell.
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(S) COMPLIANCE WITH LAWS; NO VIOLATIONS.
(i) Permits. Ward Howell has in effect and holds all
Permits necessary for it to own, lease, and operate its assets and properties
and to carry on its business as now conducted, except in cases where the failure
to hold such Permits would not, in the aggregate, have a Material Adverse Effect
on Ward Howell.
(ii) No Conflict. Except as set forth on Exhibit 5(s)(ii)
hereto, Ward Howell is not in conflict with, or in default under or in violation
of, (A) its Articles of Incorporation, Bylaws or comparable organizational
documents, or (B) any Law, Permit, order, judgment, writ, injunction or decree
applicable to its businesses or to its employees conducting such business or by
which its assets or properties are bound or affected, except conflicts, defaults
or violations which would not have a Material Adverse Effect on Ward Howell.
(T) EMPLOYEES. To the Knowledge of Ward Howell, no executive, key
employee or group of employees has any plans to terminate employment with Ward
Howell. Exhibit 5(t) hereto identifies the parties to, amount and general terms
of each Ward Howell Insider Loan. "Ward Howell Insider Loan" means any
indebtedness, loan, advance, monetary obligation or credit, or any oral or
written arrangement pursuant to which any amount is outstanding, owed, accrued
or to be accrued, from Ward Howell to any employee of Ward Howell or any Ward
Howell Stockholder, or from any employee of Ward Howell or any Ward Howell
Stockholder to Ward Howell. All Ward Howell Insider Loans shall have been paid
in full prior to the Effective Time, without the necessity of incurring any
other indebtedness.
(U) LABOR MATTERS. Ward Howell is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with any labor union or labor organization, nor has Ward Howell been joined as a
party in any action, suit, claim or proceeding asserting that Ward Howell has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel Ward Howell to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike, work stoppage or other labor dispute involving Ward Howell
pending or, to the Knowledge of Ward Howell, threatened. To the Knowledge of
Ward Howell, there is no activity involving employees of Ward Howell seeking to
certify a collective bargaining unit or engaging in any other organizing
activity. Except as set forth on Exhibit 5(u) hereto, no material employment
related dispute, arbitration, action, suit, claim or proceeding is pending or,
to the Knowledge of Ward Howell, threatened.
(V) EMPLOYEE BENEFIT PLANS.
(i) General. Ward Howell has delivered to LAI, prior to
the execution of this Agreement, true, complete and correct copies of, and
financial data with respect to, all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or other incentive plans, all other material written employee
programs, arrangements or agreements, all medical, vision, dental or other
health plans, all life insurance plans and all other material employee benefit
plans or fringe benefit plans, including all "employee benefit plans" (as that
term is defined in Section 3(3) of ERISA) currently adopted,
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maintained by, sponsored in whole or in part by or contributed to by Ward Howell
or any Affiliate thereof for the benefit of Ward Howell's employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
who are eligible to participate (collectively, the "Ward Howell Benefit Plans").
Any of the Ward Howell Benefit Plans which is an "employee pension benefit plan"
(as that term is defined in Section 3(2) of ERISA) is referred to herein as a
"Ward Howell ERISA Plan." No Ward Howell Benefit Plan is or has been a
multi-employer plan within the meaning of Section 3(37) of ERISA. Ward Howell
does not have any ERISA Plans which are a "defined benefit pension plan" (as
defined in Section 4140 of the Internal Revenue Code). No Ward Howell Benefit
Plan provides death or medical benefits (whether or not insured) to any
individual beyond their retirement or other termination of service, other than
(i) coverage mandated under applicable Law, including but not limited to the
continuation of group health plan coverage requirements of Section 4980B of the
Internal Revenue Code and ERISA Section 601 et seq. (ii) death benefits or
retirement benefits under any "employee pension plan" (as that term is defined
in Section 3(2) of ERISA), or (iii) benefits the full cost of which is borne by
current or former employee (or his or her beneficiary). A true, complete, and
correct list of all Ward Howell Benefit Plans is set forth on Exhibit 5(v)(i)
hereto.
(ii) Compliance with Law. All Ward Howell Benefit Plans
are and at all times have been in compliance in all material respects with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, the breach or violation of which would be reasonably likely to have a
Material Adverse Effect on Ward Howell or the Surviving Corporation.
(iii) No Extraordinary Benefit. Except as disclosed on
Exhibit 5(v)(iii) hereto, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (A) result in
any payment (including severance or golden parachute payments) becoming due to
any director or any employee of Ward Howell from Ward Howell under any Ward
Howell Benefit Plan or otherwise, except as may result from the payment of
unemployment insurance premiums or similar payments required by applicable Law
as a result of the termination of the employment of one or more employees of
Ward Howell, (B) increase any benefits otherwise payable under any Ward Howell
Benefit Plan, or (C) result in any acceleration of the time of payment or
vesting of any such benefits.
(iv) Termination of Profit Sharing Plan. Ward Howell will
adopt appropriate resolutions of its Board of Directors terminating the Ward
Howell International, Inc. Profit Sharing Plan (the "Profit Sharing Plan") and
will take all other steps necessary to terminate the Profit Sharing Plan
immediately prior to the Effective Time.
(W) COMMITMENTS AND CONTRACTS. Except as disclosed on Exhibit 5(w)
hereto, Ward Howell is not a party or subject to any of the following (whether
written or oral, expressed or implied): (i) any employment, severance,
termination, consulting or retirement agreement, contract, arrangement or
understanding or other obligation or understanding (including any understandings
or obligations with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director or employee, (ii)
any contract, agreement, arrangement or other instrument containing
noncompetition covenants which limits the ability of Ward Howell to compete in
any line of business or which involves any restriction of the geographical area
in which Ward Howell or any of its affiliates may carry on their business, (iii)
any agreement, contract or other
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instrument or commitment relating to the borrowing of money by Ward Howell or
the guarantee by Ward Howell of any such obligation, (iv) any agreement,
contract, personal property or equipment lease or other document or instrument
requiring payments in excess of $25,000 or which cannot be terminated in less
than one year without violation of its terms and without cost to Ward Howell,
and (v) any other agreement, contract, lease, commitment or other instrument or
understanding or amendment thereto as of the date of this Agreement material to
the assets, business, conditions or prospects of Ward Howell or not made in the
ordinary course of business to which Ward Howell is a party or by which it is
bound (all of the foregoing collectively referred to as the "Ward Howell
Contracts").
(X) MATERIAL CONTRACT DEFAULTS. Except as set forth on Exhibit
5(x) hereto, Ward Howell is not, and Ward Howell has not received any notice and
does not have any Knowledge that any other party is, in default in any material
respect under any Ward Howell Contract, except for those defaults which would
not have, individually or in the aggregate, a Material Adverse Effect on Ward
Howell; and, there has not occurred any event that, with the lapse of time or
the giving of notice or both, would constitute such a default. Each Ward Howell
Contract, except as disclosed on Exhibit 5(x) hereto: (i) is in full force and
effect, and (ii) Ward Howell has not repudiated or knowingly waived any material
provision thereof. All of the indebtedness of Ward Howell for money borrowed may
be prepaid at any time by Ward Howell without a penalty or premium.
(Y) LEGAL PROCEEDINGS. Except as disclosed on Exhibit 5(y) hereto,
there are no actions, suits or proceedings instituted or pending or, to the
Knowledge of Ward Howell, threatened against Ward Howell, or against any asset,
property, employee benefit plan, interest or right of any of them, that would
have, individually or in the aggregate, a Material Adverse Effect on Ward Howell
or that would reasonably be expected to materially threaten, impede or impair
the consummation of the transactions contemplated by this Agreement. Except as
disclosed on Exhibit 5(y) hereto, Ward Howell is not a party to any agreement,
contract or other instrument or subject to any restriction under its Articles of
Incorporation or Bylaws, or to any other corporate restriction, nor is there any
judgment, order, writ, injunction or decree of any Regulatory Authority or
arbitrator that would have, individually or in the aggregate, a Material Adverse
Effect on Ward Howell or that would reasonably be expected to materially
threaten, impede or impair the consummation of the transactions contemplated by
this Agreement. Exhibit 5(y) includes a summary report of all actions, suits or
proceedings as of the date of this Agreement to which Ward Howell is a party and
which names Ward Howell as a defendant or a cross-defendant, and where the
estimated maximum exposure is $15,000 or more.
(Z) INTELLECTUAL PROPERTY. Ward Howell owns or possesses all
material licenses or other rights necessary to use all material software,
computer programs, trade secrets, trademarks, trademark rights, copyrights,
service marks, service names, trade names, proprietary processes, patents,
inventions or similar rights, or applications for any of the foregoing
(collectively, the "Intellectual Property"), which are necessary to operate or
conduct the business of Ward Howell, free and clear of any Lien and without
infringing upon or otherwise acting adversely to the Intellectual Property
rights of any other person, except for those Intellectual Property rights as to
which the absence of ownership rights or existence of infringement would not,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect on Ward Howell. Ward Howell has not received notice
claiming that it is infringing upon or otherwise acting adversely to any
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Intellectual Property of any other person. Ward Howell has entered into the
License Agreements set forth on Exhibit 5(z) (the "License Agreements") with
respect to the service marks "Ward Howell" and "Ward Howell International";
provided, however, that the License Agreements can be terminated without cost to
Ward Howell upon one year's written notice, except the License Agreement with
Ward Howell International Group, Inc., which can be terminated without cost to
Ward Howell upon two year's written notice. The License Agreements are the only
agreements pursuant to which Ward Howell has licensed any of its Intellectual
Property which exists as of the date hereof or which will exist as of the
Closing Date.
(AA) BROKERS AND FINDERS. Except for Coopers & Lybrand Securities
("Coopers"), no broker or finder has acted directly or indirectly for Ward
Howell in connection with this Agreement or the transactions contemplated
hereby.
(BB) WARD HOWELL STOCKHOLDER MERGER MATERIALS; OTHER INFORMATION.
None of the information supplied or to be supplied by Ward Howell in (i) the
Ward Howell Stockholder Merger Materials or (ii) any document to be filed with
any Regulatory Authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed and, with respect to the
Ward Howell Stockholder Merger Materials, when such materials are delivered to
the Ward Howell Stockholders, contain any untrue statement of or be false or
misleading with respect to a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which such statements are made, not misleading. All
documents that Ward Howell is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form and substance in all material respects with the provisions of applicable
Law, including applicable provisions of the Securities Laws.
(CC) CONDUCT OF BUSINESS BY WARD HOWELL SINCE DATE OF FINANCIAL
STATEMENTS. Since December 31, 1997, except as LAI may have consented to in
writing or as otherwise expressly contemplated by this Agreement, Ward Howell
has (i) operated its business only in the usual, regular and ordinary course
consistent with past practice, (ii) used its reasonable commercial efforts to
maintain and preserve intact its business organization, assets and properties
and maintain its rights and franchises, (iii) used its reasonable efforts to
maintain its current employee, client and other advantageous business
relationships and retain the services of its officers and key employees
(DD) FORBEARANCE FROM CERTAIN ACTIONS BY WARD HOWELL SINCE DATE OF
FINANCIAL STATEMENTS. Since December 31, 1997, and except as LAI may have
consented to in writing or as otherwise expressly contemplated by this
Agreement, Ward Howell has not:
(i) Incurred Additional Indebtedness. (A) Incurred any
additional indebtedness or other obligation for borrowed money, (B) assumed,
guaranteed, endorsed or otherwise as an accommodation become responsible for the
obligations of any person, or (C) imposed, or suffered the imposition, on any
material asset or property of Ward Howell of any Lien, or permit any such Lien
to exist (other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and any Liens in effect as of the date hereof that are disclosed in
the Exhibits to this Agreement), or (D) or made any
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loan or advance which would be reasonably likely to have a Material Adverse
Effect on Ward Howell or the Surviving Corporation; or
(ii) Modified Any Indebtedness. Cancelled, released or
assigned any indebtedness to any person or any claims held by any such person,
except in the ordinary course of business consistent with past practice or
pursuant to contracts, agreements or other instruments in force at the date of
this Agreement; or
(iii) Issued Securities. Issued, sold, pledged, encumbered,
authorized the issuance of, entered into any contract, agreement or other
instrument to issue, sell, pledge, encumber or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Ward Howell
Common Stock or any other capital stock of Ward Howell (or permitted the
exercise of any option, warrant or other right requiring the issuance of any
securities by Ward Howell), or any stock appreciation, option, warrant or
conversion or other right to acquire any such stock or any security convertible
into any such stock; or
(iv) Repurchased Securities, Etc. Repurchased, redeemed or
otherwise acquired or exchanged, directly or indirectly, any shares, or any
securities convertible into any shares, of Ward Howell Common Stock; or
(v) Declared or Paid Dividends. Made, declared or paid
any dividend or made any other distribution with respect to shares of Ward
Howell Common Stock, whether payable in cash, stock or property, including but
not limited to any excess profit distribution; or
(vi) Adjusted Capitalization. Except in connection with
the Pre-Closing Transactions (as hereinafter defined), adjusted, split, combined
or reclassified any capital stock of Ward Howell or authorized the issuance of
any other securities with respect to or in substitution for shares of Ward
Howell Common Stock; or
(vii) Disposition of Assets. Sold, transferred, leased,
mortgaged or otherwise disposed of or encumbered any property or asset other
than in the ordinary course of business for reasonable and adequate
consideration; or
(viii) Made Investments. Purchased any securities or made
any material investment, either by purchase of stock or securities, contribution
to capital, asset transfer or purchase of any assets or property, in any person,
or otherwise acquired direct or indirect control over any person, except for
transactions in the ordinary course of business consistent with past practice;
or
(ix) Modified Employment Relationships. Entered into or
amended any employment agreement, relationship or similar contract or other
instrument, whether written or oral; or
(x) Modified Employee Benefits. Adopted any new employee
benefit plan or similar arrangement, or made any material change in or to any
existing Ward Howell Benefit Plan unless necessary or advisable to maintain the
Tax qualified status of any such plan or to accelerate vesting of employer
contributions under any profit sharing plans; or
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(xi) Modified Tax or Accounting Procedures. Made any
significant change in any Tax or accounting methods or procedures or in any
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws, regulatory accounting requirements or GAAP; or
(xii) Entered Into Litigation. Commenced any action, suit,
proceeding or litigation, other than in accordance with past practice, or
settled any action, suit, proceeding or litigation involving any liability of
Ward Howell for material money damages or material restrictions upon the
operations of Ward Howell; or
(xiii) Modified or Terminated Contracts. Except in the
ordinary course of business consistent with past practice, modified, amended or
terminated any material contract, agreement or other instrument, other than
renewals without material adverse change of terms, or waived, released,
compromised or assigned any material rights or claims; or
(xiv) Unusual Expenditures. Made any expenditure in excess
of $10,000, other than in the ordinary course of business and professional fees
payable in connection with the transactions contemplated by this Agreement; or
(xv) Agreed to Take Prohibited Action. Agreed to, or made
any commitment to, take any of the actions referred to in this Section 5(dd).
(EE) AFFILIATE TRANSACTIONS. Other than as set forth on Exhibit
5(ee) hereto, Ward Howell has not entered into any contract or arrangement,
whether written or oral, with a Ward Howell Stockholder or other Affiliate of
Ward Howell which involves the payment of more than $10,000 by Ward Howell or
which cannot be terminated within one year with no cost to Ward Howell.
(FF) WARD HOWELL RUSSIA, INC.. Ward Howell has no liability to any
third party, including but not limited to any joint ventures partners, with
respect to its investment in or involvement with Ward Howell Russia, Inc. or its
ownership of the shares of Ward Howell International Holdings, Ltd. (Cyprus).
6. REPRESENTATIONS AND WARRANTIES OF LAI.
LAI and MergerSub do hereby represent and warrant to Ward Howell and to
the Ward Howell Stockholders as follows:
(A) ORGANIZATION, STANDING, AND POWER. LAI is a corporation duly
organized, validly existing, and of active status under the laws of the State of
Florida, MergerSub is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Connecticut, and each has the
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as it is now being conducted. LAI is
qualified or licensed to do business as a foreign corporation in each other
jurisdiction in which LAI is required to be so qualified or licensed. LAI has
provided to Ward Howell true, complete, and correct copies of the Articles of
Incorporation
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and Bylaws of LAI and the Certificate of Incorporation and Bylaws of MergerSub,
in each case as in effect on the date of this Agreement.
(B) AUTHORITY. Each of LAI and MergerSub has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement and consummate the transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
by LAI and MergerSub and the consummation by LAI and MergerSub of the
transactions contemplated hereby, including the issuance of the LAI Stock and
the LAI Notes, have been duly and validly authorized by all necessary corporate
action in respect thereof. This Agreement has been duly executed and delivered
by LAI and MergerSub and (assuming due authorization, execution and delivery by
Ward Howell and the Ward Howell Stockholders), constitutes a legal, valid and
binding obligation of LAI and MergerSub enforceable against each of them in
accordance with its terms (except in all cases to the extent such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting the enforcement of creditors' rights and remedies
generally and except that the availability of the equitable remedy of specific
performance and injunctive relief is subject to the discretion of the court
before which any proceedings may be brought). When the LAI Stock has been issued
as provided for in this Agreement and the Certificate of Merger, such shares
will be validly issued, fully paid and nonassessable, free and clear of any
Liens or other restrictions whatsoever except as contemplated by this Agreement
or imposed by applicable Law or by act of the recipient of such shares. When the
LAI Notes have been issued as provided for in this Agreement, such promissory
notes will be free and clear of any Liens or other restrictions whatsoever
except as contemplated by this Agreement or imposed by applicable Law or by act
of the recipient of any such promissory note, and each LAI Note will constitute
a legal, valid and binding obligation of LAI enforceable against LAI in
accordance with its terms (except in all cases to the extent such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting the enforcement of creditors' rights and remedies
generally and except that the availability of the equitable remedy of specific
performance and injunctive relief is subject to the discretion of the court
before which any proceedings may be brought).
(C) CORPORATE APPROVAL. At a meeting duly called and held, the
respective Boards of Directors of LAI and MergerSub have (A) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are fair to and in the best interests of their respective stockholders, and (B)
approved and adopted this Agreement and the transactions contemplated hereby.
(D) NO CONFLICT. Other than as set forth on Exhibit 6(d), neither
the execution and delivery of this Agreement by LAI and MergerSub, nor the
consummation by them of the transactions contemplated hereby, nor compliance by
them with any of the terms or provisions hereof, will (i) conflict with or
violate any provision of their Articles or Certificate of Incorporation or
Bylaws, (ii) violate, conflict with or constitute or result in a breach of any
term, condition or provision of, or constitute a default (with or without notice
or the lapse of time, or both) under, or give rise to any right of termination,
cancellation or acceleration of any obligation or the loss of a benefit under,
or require a Consent pursuant to, or result in the creation of any Lien upon any
assets or properties of LAI or MergerSub pursuant to any of the terms,
provisions or conditions of any loan or credit agreement, note, bond, mortgage,
indenture, deed of trust, license, agreement, contract,
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lease, Permit, concession, franchise, plan or other instrument or obligation to
which either of them is a party, or by which any of their respective assets or
properties may be bound or affected, except for such violations, conflicts,
breaches, defaults, creation of Liens or failure to obtain such a Consent that
would not, individually or in the aggregate, have a Material Adverse Effect on
LAI or the Surviving Corporation or materially threaten, impede or impair the
consummation of the transactions contemplated by this Agreement, or (iii)
subject to receipt of the requisite approvals and Consents referred to in this
Agreement, conflict with or violate any judgment, order, writ, injunction,
decree or Law applicable to LAI or any of its assets or properties, which
conflict or violation, individually or in the aggregate, would have or be
reasonably likely to have a Material Adverse Effect on LAI.
(E) CONSENTS REQUIRED. Other than as listed on Exhibit 6(e)
hereto, no notice to, registration, declaration or filing with, order,
authorization or Permit of, exemption or waiver by, Consent of or any action by
any Regulatory Authority is necessary or required as a condition to the
execution and delivery of this Agreement by LAI and MergerSub or the
consummation by them of the Merger and the other transactions contemplated
hereby, other than such notices, registrations, declarations or filings which,
if not made or obtained, would not have, individually or in the aggregate, a
Material Adverse Effect on LAI or the Surviving Corporation.
(F) CAPITALIZATION.
(i) General. The authorized capital stock of LAI consists
of 35,000,000 shares of Common Stock, $.01 par value per share, of which
5,377,868 shares were issued and outstanding as of February 2, 1998, and
3,000,000 shares of Preferred Stock, $.01 par value per share, of which no
shares are issued and outstanding. The authorized capital stock of MergerSub
consists of 1,000 shares of Common Stock, $.01 par value per share, of which 100
shares are issued and outstanding and owned by LAI. All of the issued and
outstanding shares of LAI Common Stock and MergerSub's Common Stock are duly and
validly issued, fully paid and nonassessable. No preemptive rights exist with
respect to the LAI Common Stock or MergerSub's Common Stock, and none of the
outstanding shares of LAI Common Stock or MergerSub's Common Stock has been
issued in violation of any preemptive rights.
(ii) Compliance with Law. All shares of capital stock of
LAI and MergerSub and all options, warrants, scrip or rights to purchase or
acquire any additional shares of LAI Common Stock have at all times been offered
or issued in accordance with all applicable state and federal securities laws.
(G) NO SUBSIDIARIES. LAI does not have any wholly or partially
owned subsidiary and does not own any equity or voting interest in any other
entity, other than MergerSub.
(H) FINANCIAL STATEMENTS. LAI is subject to the reporting
provisions of Section 12 of the Exchange Act, and the rules and regulations of
the SEC promulgated under Section 12 of the Exchange Act. Since LAI first became
subject to the reporting provisions of the Exchange Act, LAI has filed all
required forms, reports, and documents with the SEC required to be filed by it
pursuant to the Exchange Act and the SEC rules and regulations thereunder, all
of which (collectively, the "LAI SEC Reports") have complied in all material
respects with all applicable requirements of the Exchange Act and the rules
promulgated thereunder. None of the LAI SEC Reports, including any
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financial statements or schedules included therein (the "LAI Financial
Statements"), contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the LAI Financial Statements, including, in each
case, any related notes: (i) has been prepared in accordance with GAAP, (ii) is
true, complete and correct in all material respects as of its respective date,
(iii) is in accordance with and supported by and consistent with the books and
records of LAI, including a general ledger and detailed trial balances, which
books and records have been maintained in accordance with good business
practices, and (iv) presents fairly the financial position and the results of
operations, changes in stockholders' equity, and statements of cash flow of LAI
as of the dates and for the periods indicated thereon.
(I) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Exhibit 6(i) hereto, since November 30, 1997 (the date of the LAI Financial
Statements included in LAI's Quarterly Report on Form 10-Q for the Quarter ended
November 30, 1997): (i) LAI has conducted its business in all material respects
only in the ordinary course and in a manner consistent with past practices, (ii)
there have been no events, changes, developments or occurrences that have had,
or that would have, individually or in the aggregate, a Material Adverse Effect
on LAI, and (iii) LAI has not taken any action, or failed to take any action
(whether or not in the ordinary course and consistent with past practices),
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of the covenants and agreements of LAI set forth in this Agreement.
(J) NO UNDISCLOSED LIABILITIES. Except as disclosed in Exhibit
6(j) hereto, LAI does not have any material obligations or liabilities, and has
not incurred or paid any obligation or liability (contingent or otherwise, and
whether accrued or reserved), and there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such
obligation or liability, except obligations and liabilities (i) which are fully
accrued or reserved against in LAI's financial statements filed with the SEC, or
(ii) which were fully incurred or paid after November 30, 1997 in the ordinary
course of business consistent with past practices and which in the aggregate
will not have a Material Adverse Effect on LAI or the Surviving Corporation.
(K) TAX MATTERS.
(i) Returns. All Tax Returns required to be filed by or
on behalf of LAI have been timely filed, or requests for extensions have been
timely filed, granted and have not expired; all such Tax Returns filed are true,
complete and accurate in all material respects; and, all Taxes shown to be due
on such Tax Returns have been timely paid by LAI. Other than as set forth on
Exhibit 6(k) hereto, there is no audit examination, deficiency or refund
litigation or matter in controversy in which LAI has been joined as a party with
respect to any Taxes, except as reserved against in the LAI Financial Statements
or as disclosed in the Exhibits hereto. All Taxes and other liabilities due with
respect to completed and settled examinations or concluded litigation have been
paid, accrued or provided for.
(ii) No Extension or Waiver. LAI has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due which extension or waiver is currently in effect.
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(iii) Provision for Taxes Due. Adequate provision for any
Taxes due or to become due for LAI for any period or periods through November
30, 1997 has been made and is reflected on the November 30, 1997 financial
statements included in the LAI Financial Statements.
(iv) Deferred Taxes. Deferred Taxes of LAI have been
provided for in the LAI Financial Statements in accordance with GAAP.
(v) Withholding. All Taxes that LAI is required by Law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid to the proper Regulatory Authority or are held by LAI pending
such payment, except for such failures which are not, individually or in the
aggregate, material in amount. LAI is in compliance with, and its records
contain all information and documents necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal, state, and
local Tax Laws and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions which would not have,
individually or in the aggregate, a Material Adverse Effect on LAI.
(vi) No Excess Compensation. LAI has not made any
payments, is not obligated to make any payments, and is not a party to any
contract, agreement or other arrangement that could obligate LAI to make any
payments that reasonably could be disallowed as a deduction under Section 280G
or 162(m) of the Internal Revenue Code.
(vii) No Tax Liens. There are no Liens with respect to
Taxes upon any of the material assets or properties of LAI.
(viii) Tax Elections. All material elections with respect to
Taxes affecting LAI as of the date of this Agreement have been timely made.
(L) CONDUCT OF BUSINESS. The business of LAI has been conducted in
all material respects in compliance with the AESC Code of Ethics and other
standards applicable to executive search firms.
(M) COMPLIANCE WITH LAWS; NO VIOLATIONS.
(i) Permits. LAI has in effect and holds all Permits
necessary for it to own, lease, and operate its assets and properties and to
carry on its business as now conducted.
(ii) No Conflict. Neither LAI nor MergerSub is in conflict
with, or in default under or in violation of, (A) its Articles or Certificate of
Incorporation, Bylaws or comparable organizational documents, or (B) any Law,
Permit, order, judgment, writ, injunction or decree applicable to its businesses
or to its employees conducting such business or by which its assets or
properties are bound or affected.
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(N) BROKERS AND FINDERS. Except for Robert W. Baird & Co.
Incorporated ("Baird"), no broker or finder has acted directly or indirectly for
LAI in connection with this Agreement or the transactions contemplated hereby.
(O) WARD HOWELL STOCKHOLDER MERGER MATERIALS; OTHER INFORMATION.
None of the information supplied or to be supplied by LAI for inclusion in the
Ward Howell Stockholder Merger Materials or any document to be filed with any
Regulatory Authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed and, with respect to the
Ward Howell Stockholder Merger Materials, when such materials are delivered to
the Ward Howell Stockholders, contain any untrue statement of or be false or
misleading with respect to a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which such statements are made, not misleading. All
documents that LAI or MergerSub is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form and substance in all material respects with the provisions of applicable
Law, including applicable provisions of the Securities Laws. The LAI Stock and
the shares of LAI Common Stock issuable upon exercise of the LAI Options (as
hereinafter defined), when issued in accordance with the terms hereof, shall be
duly authorized, validly issued, fully paid and non-assessable. The issuance of
the LAI Options (as hereinafter defined), has been approved by the Board of
Directors of LAI, and, subject to the approval by the stockholders of LAI of the
1998 Omnibus Stock and Incentive Plan at the next annual meeting of
stockholders, will be incentive stock options for tax purposes to the fullest
extent permitted by the Internal Revenue Code. If for any reason such
stockholder approval is not forthcoming, the LAI Options shall be non-incentive
stock options for tax purposes. When issued in accordance with the terms of this
Agreement and the Employment Agreement referred to in Section 7(r) hereof, the
LAI Options will be issued in accordance with applicable Law and, to the extent
applicable, the terms of the 1997 or 1998 Omnibus Stock and Incentive Plan.
(P) EMPLOYEE BENEFIT PLANS.
(i) General. LAI has delivered to Ward Howell, prior to
the execution of this Agreement, true, complete and correct copies of, all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plans, all medical, vision, dental or other health plans, all life insurance
plans and all other material employee benefit plans or fringe benefit plans,
including all "employee benefit plans" (as that term is defined in Section 3(3)
of ERISA) currently adopted, maintained by, sponsored in whole or in part by or
contributed to by LAI or any Affiliate thereof for the benefit of LAI's
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries who are eligible to participate (collectively, the "LAI
Benefit Plans").
(ii) Compliance with Law. All LAI Benefit Plans are and at
all times have been in compliance in all material respects with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, the
breach or violation of which would be reasonably likely to have a Material
Adverse Effect on LAI.
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(Q) MATERIAL CONTRACT DEFAULTS. Except as set forth on Exhibit
6(q) hereto, LAI is not, and LAI has not received any notice and does not have
any Knowledge that any other party is, in default in any material respect under
any material contract or agreement to which it is a party, except for those
defaults which would not have, individually or in the aggregate, a Material
Adverse Effect on LAI; and, there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
Except as set forth on Exhibit 6(q), each of LAI's material contracts or
agreements (i) is in full force and effect, and (ii) LAI has not repudiated or
knowingly waived any material provision thereof.
(R) LEGAL PROCEEDINGS. Except as disclosed on Exhibit 6(r) hereto,
there are no actions, suits or proceedings instituted or pending or, to the
Knowledge of LAI, threatened against LAI, or against any asset, property,
employee benefit plan, interest or right of any of them, that would have,
individually or in the aggregate, a Material Adverse Effect on LAI or that might
reasonably be expected to materially threaten, impede or impair the consummation
of the transactions contemplated by this Agreement. Except as disclosed on
Exhibit 6(r) hereto, LAI is not a party to any agreement, contract or other
instrument or subject to any restriction under its Articles of Incorporation or
Bylaws, or to any other corporate restriction, nor is there any judgment, order,
writ, injunction or decree of any Regulatory Authority or arbitrator that would
have, individually or in the aggregate, a Material Adverse Effect on LAI or that
might reasonably be expected to materially threaten, impede or impair the
consummation of the transactions contemplated by this Agreement. Exhibit 6(r)
includes a summary report of all actions, suits or proceedings as of the date of
this Agreement to which LAI is a party and which names LAI as a defendant or a
cross-defendant, and where the estimated maximum exposure is $15,000 or more.
(S) LABOR MATTERS. LAI is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with any labor union or labor organization, nor has LAI been joined as a party
in any action, suit, claim or proceeding asserting that LAI has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel LAI to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike,
work stoppage or other labor dispute involving LAI pending or, to the Knowledge
of LAI, threatened. To the Knowledge of LAI, there is no activity involving
employees of LAI seeking to certify a collective bargaining unit or engaging in
any other organizing activity. Except as set forth on Exhibit 6(p) hereto, no
material employment related dispute, arbitration, action, suit, claim or
proceeding is pending or, to the Knowledge of LAI, threatened.
7. TRANSACTIONS AND OBLIGATIONS OF THE PARTIES.
(A) CONDUCT OF BUSINESS BY WARD HOWELL. During the period from the
date of this Agreement until the Effective Time or the earlier termination of
this Agreement, and except as LAI may otherwise consent in writing or as
otherwise expressly contemplated by this Agreement, Ward Howell shall: (i)
operate its business only in the usual, regular and ordinary course consistent
with past practice, (ii) use its reasonable commercial efforts to maintain and
preserve intact its business organization, assets and properties and maintain
its rights and franchises, (c) use its reasonable efforts to maintain its
current employee, client and other advantageous business relationships and
retain the services of its officers and key employees, and (d) take no action
that would adversely
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affect or delay the ability of any party (i) to obtain any necessary Consents
required for the Merger and other transactions contemplated hereby or (ii) to
perform its covenants and agreements under this Agreement.
(B) FORBEARANCE FROM CERTAIN ACTIONS BY WARD HOWELL. During the
period from the date of this Agreement until the Effective Time or the earlier
termination of this Agreement, and except as LAI may otherwise consent in
writing, as otherwise expressly contemplated by this Agreement or as required by
Law, Ward Howell shall not:
(i) Amend Governing Documents. Amend, or permit the
amendment of, its Certificate of Incorporation, Bylaws, or other governing
instruments, except as necessary in connection with the Pre-Closing
Transactions; or
(ii) Incur Additional Indebtedness. (A) Incur any
additional indebtedness or other obligation for borrowed money, (B) assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any person, or (C) impose, or suffer the imposition, on any
material asset or property of Ward Howell of any Lien, or permit any such Lien
to exist (other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and any Liens in effect as of the date hereof that are disclosed in
the Exhibits to this Agreement), or (D) or make any loan or advance which would
be reasonably likely to have a Material Adverse Effect on Ward Howell or the
Surviving Corporation; or
(iii) Modify Any Indebtedness. Cancel, release or assign
any indebtedness to any person or any claims held by any such person, except in
the ordinary course of business consistent with past practice or pursuant to
contracts, agreements or other instruments in force at the date of this
Agreement; or
(iv) Issue Securities. Except in connection with the
Pre-Closing Transactions, issue, sell, pledge, encumber, authorize the issuance
of, enter into any contract, agreement or other contract, agreement, commitment
or other instrument to issue, sell, pledge, encumber or authorize the issuance
of, or otherwise permit to become outstanding, any additional shares of Ward
Howell Common Stock or any other capital stock of Ward Howell (or permit the
exercise of any option, warrant or other right requiring the issuance of any
securities by Ward Howell), or any stock appreciation any option, warrant or
conversion or other right to acquire any such stock or any security convertible
into any such stock; or
(v) Repurchase Securities, Etc. Repurchase, redeem or
otherwise acquire or exchange, directly or indirectly, any shares, or any
securities convertible into any shares, of Ward Howell Common Stock; or
(vi) Declare or Pay Dividends. Make, declare or pay any
dividend or make any other distribution with respect to shares of Ward Howell
Common Stock, whether payable in cash, stock or property, including but not
limited to any excess profit distribution; or
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(vii) Adjust Capitalization. Except in connection with the
Pre-Closing Transactions, adjust, split, combine or reclassify any capital stock
of Ward Howell or authorize the issuance of any other securities with respect to
or in substitution for shares of Ward Howell Common Stock; or
(viii) Dispose of Assets. Sell, transfer, lease, mortgage or
otherwise dispose of or encumber any property or asset other than in the
ordinary course of business for reasonable and adequate consideration; or
(ix) Make Investments. Purchase any securities or make any
material investment, either by purchase of stock or securities, contribution to
capital, asset transfer or purchase of any assets or property, in any person, or
otherwise acquire direct or indirect control over any person, except for
transactions in the ordinary course of business consistent with past practice;
or
(x) Modify Employment Relationships. Enter into or amend
any employment agreement or similar contract or other instrument; or
(xi) Modify Employee Benefits. Adopt any new employee
benefit plan or similar arrangement, or make any material change in or to any
existing Ward Howell Benefit Plan unless necessary or advisable to maintain the
Tax qualified status of any such plan or to accelerate vesting of employer
contributions under any profit sharing plans; or
(xii) Modify Tax or Accounting Procedures. Make any
significant change in any Tax or accounting methods or procedures or in any
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws, regulatory accounting requirements or GAAP; or
(xiii) Enter Into Litigation. Commence any action, suit,
proceeding or litigation, other than in accordance with past practice, or settle
any action, suit, proceeding or litigation involving any liability of Ward
Howell for material money damages or material restrictions upon the operations
of Ward Howell; or
(xiv) Modify or Terminate Contracts. Except in the ordinary
course of business consistent with past practice, modify, amend or terminate any
material contract, agreement or other instrument, other than renewals without
material adverse change of terms, or waive, release, compromise or assign any
material rights or claims; or
(xv) Unusual Expenditures. Make any expenditure in excess
of $10,000, other than in the ordinary course of business; or
(xv) Agree to Take Prohibited Action. Agree to, or make
any commitment to, take any of the actions prohibited by this Section 7(b).
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(C) DISSENTING SHARES. During the period from the date of this
Agreement until the Effective Time or the earlier termination of this Agreement,
Ward Howell shall give LAI and MergerSub prompt notice upon receipt by Ward
Howell of any written objection to the Merger and any written demand for payment
for shares of Ward Howell Common Stock, any withdrawal of any such objection or
demand, and any notice or instrument provided to Ward Howell pursuant to the
Connecticut Dissenters' Rights Law.
(D) CERTAIN COVENANTS OF LAI. During the period from the date of
this Agreement until the Effective Time or the earlier termination of this
Agreement, LAI and MergerSub covenant and agree that they shall (i) conduct
their affairs in a manner designed, in their reasonable judgment, to enhance the
long-term value of the LAI Common Stock and the business prospects of LAI, (ii)
take no action which would (A) materially adversely affect the ability of any
party to this Agreement to obtain any Consents required for the transactions
contemplated hereby, or (B) Materially Adversely Affect the ability of any party
to perform its covenants and agreements under this Agreement, (iii) not pay any
dividend, make any distribution with respect to or redeem any shares of LAI
Common Stock, and (iv) make all material filings required under applicable
Securities Laws.
(E) NOTIFICATION OF ADVERSE CHANGES IN CONDITION. During the
period from the date of this Agreement until the Effective Time or the earlier
termination of this Agreement, each party shall promptly advise the other
parties to this Agreement, orally and in writing, upon becoming aware of the
occurrence or pending occurrence of any event or circumstance that is (i)
reasonably likely to have a Material Adverse Effect on such party or (ii) which
would cause or constitute a material breach of any of the representations,
warranties, covenants or agreements of such party contained herein, and shall
use its reasonable commercial efforts to prevent or promptly remedy the same.
(F) GOVERNMENT FILINGS AND REPORTS. During the period from the
date of this Agreement until the Effective Time or the earlier termination of
this Agreement, each party shall use its commercial efforts to file all
applications, reports or other documents, including filings pursuant to state
securities Laws, required to be filed by such person with any Regulatory
Authority between the date of this Agreement and the Effective Time and shall
deliver to the other parties copies of all such applications, reports or other
documents promptly after the same are filed.
(G) HCC MERGER. Immediately prior to the Effective Time:
Howe-Corey Consulting Group Ltd., a Delaware corporation ("HCC"), will be merged
with and into WH-Corey Mergersub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Ward Howell, pursuant to and in accordance with the
terms of the Merger Agreement attached hereto as Exhibit 7(g) (the "HCC
Merger").
(H) ISSUANCE OF BONUS SHARES. Prior to the Effective Time, Ward
Howell shall issue the shares of its Common Stock set forth on Exhibit 7(h) to
the Ward Howell Stockholders set forth on such Exhibit (collectively, the "Bonus
Shares"). Consummation of the HCC Merger and the issuance of the Bonus Shares
shall constitute the "Pre-Closing Transactions" for purposes of this Agreement.
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(I) OWNERSHIP OF WARD HOWELL COMMON STOCK. Exhibit 7(h) hereto
sets forth the names of the Ward Howell Stockholders, the residence and business
address of each Ward Howell Stockholder, the number of shares of Ward Howell
Common Stock owned by each Ward Howell Stockholder as of the date of this
Agreement, and the number of shares of Ward Howell Common Stock to be owned by
each Ward Howell Stockholder after the Pre-Closing Transactions.
(J) DUE DILIGENCE INVESTIGATION; CONFIDENTIALITY. During the
period from the date of this Agreement until the Effective Time or the earlier
termination of this Agreement, upon reasonable notice and subject to applicable
Laws, each of LAI and Ward Howell shall afford each other, and each other's
accountants, counsel, and other representatives, during normal business hours
during the period of time prior to the Effective Time, reasonable access to all
of its properties, books, contracts, commitments, records, business premises,
officers, employees and professional advisors, in each case to the extent
relevant to the transactions contemplated hereby. Each party hereto shall, and
shall cause its advisors and representatives to, (i) conduct its investigation
in such a manner as will not unreasonably interfere with the normal operations,
customers or employee relations of the other, and (ii) refrain from using for
any purposes other than as set forth in this Agreement and treat as confidential
all information obtained hereunder or in connection herewith and not otherwise
known to such party. The parties hereby confirm that the terms and provisions of
the Confidentiality Letter Agreement between LAI and Ward Howell dated July 21,
1997, as amended on October 13, 1997 (the "Confidentiality Letter"), remain in
full force and effect.
(K) AGREEMENTS AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
reasonable commercial efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the Merger and other
transactions contemplated by this Agreement as expeditiously as practicable
after the date of this Agreement, including the use of their respective
reasonable commercial efforts to lift or rescind any judgment, order, writ,
injunction or other decree adversely affecting the ability of the parties to
consummate the transactions contemplated hereby and to cause to be satisfied the
conditions referred to in Section 8; provided, however, that nothing herein
shall preclude any party from exercising its rights under this Agreement. LAI
and Ward Howell shall use their reasonable commercial efforts to obtain all
Consents and Permits of all third parties and Regulatory Authorities necessary
or desirable for the consummation of the transactions contemplated by this
Agreement. Each party hereto agrees that, to the extent practicable, it will
consult with the other parties to this Agreement with respect to obtaining all
such Permits and Consents of third parties and Regulatory Authorities and each
will keep the other parties apprized of the status of matters relating to the
completion of the transactions contemplated hereby.
(L) NO PURSUIT OF COMPETING TRANSACTIONS. Prior to termination of
this Agreement, Ward Howell will not (i) initiate, solicit or encourage
(including by way of furnishing non-public information or assistance), or take
any other action intended or designed, directly or indirectly, to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as hereinafter defined), or
(ii) enter into discussions or negotiate with any person or entity or otherwise
cooperate in any way to obtain a Competing Transaction or otherwise in
furtherance of such inquiries, or (iii) agree to or endorse any Competing
Transaction, or (iv) authorize any of the directors, officers, employees,
agents, representatives or
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stockholders of Ward Howell to take any such action. Further, Ward Howell shall
direct and instruct and use its reasonable commercial efforts to cause all
directors, officers, employees, agents, representatives and stockholders of Ward
Howell (including any investment banker, financial advisor, attorney, or
accountant retained or engaged by Ward Howell) to not take any such action. Ward
Howell shall use its reasonable commercial efforts to remain aware of, and shall
promptly notify LAI of, any such inquiries or proposals received by Ward Howell
or any of its officers, directors, employees, agents, representatives or
stockholders, and Ward Howell shall promptly inform LAI in writing as to the
material terms of any such inquiry or proposal and, if such inquiry or proposal
is reflected or summarized in writing, promptly deliver or cause to be delivered
to LAI a copy thereof, and also shall keep LAI informed, on a current basis, of
the nature of any such inquiries and the status and terms of any such proposals;
provided, however, that nothing contained in this paragraph shall prohibit Ward
Howell or any of its directors, officers, employees, or agents from (i)
reviewing or confirming receipt of an unsolicited bona fide proposal, or inquiry
that could lead to such a proposal, to acquire Ward Howell pursuant to a merger,
consolidation, share exchange, business combination, or other similar
transaction (a "Bona Fide Proposal"), provided that Ward Howell shall promptly
provide written notice to LAI of such Bona Fide Proposal and a copy of any
communication confirming receipt thereof, or (ii) furnishing information to, or
discussing or negotiating with, any person or entity that makes a Bona Fide
Proposal if, but only to the extent that, (A) the Board of Directors of Ward
Howell, after consultation with legal counsel, determines in good faith that
such action is required or may reasonably be required for the Board of Directors
of Ward Howell to comply with its duties to imposed by Law, (B) prior to
furnishing such information to such person or entity, Ward Howell provides
written notice to LAI to the effect that Ward Howell is furnishing information
to, or entering into discussions or negotiations with, such person or entity,
(C) prior to furnishing such information to such person or entity, Ward Howell
receives from such person or entity an executed confidentiality agreement with
terms similar to the collective confidentiality terms between Ward Howell and
LAI and (D) Ward Howell keeps LAI informed, on a current basis, of the status of
any such discussions or negotiations. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following (other than the transactions
contemplated by this Agreement): (1) any merger, consolidation, share exchange,
business combination, or other similar transaction; (2) any sale, lease,
exchange, mortgage, pledge, transfer, or other disposition of ten percent or
more of the assets of Ward Howell or issuance of ten percent or more of the
outstanding voting securities of Ward Howell in a single transaction or series
of transactions; (3) any tender offer or exchange offer for ten percent or more
of the outstanding shares of capital stock of Ward Howell or the filing of a
registration statement under the Securities Act in connection therewith; (4) any
solicitation of proxies in opposition to approval of the Merger by the
stockholders of Ward Howell; (5) the acquisition by any person or group of
persons of beneficial ownership or the right to acquire beneficial ownership of
ten percent or more of the then outstanding shares of capital stock of Ward
Howell; (6) the acquisition by any person or group of persons of control of Ward
Howell; or (7) any agreement to, or public announcement by Ward Howell or any
other person of a proposal, plan or intention to, do any of the foregoing.
(M) EMPLOYEE BENEFITS. Following the Effective Time, LAI shall
provide generally to officers and employees of Ward Howell employee benefits,
including pension benefits, health and welfare benefits, life insurance and
vacation on terms and conditions provided from time to time by LAI to its
similarly situated officers and employees. For purposes of participation and
vesting under any employee benefit plan of LAI, the service of the employees of
Ward Howell prior to the
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Effective Time shall be treated as service with LAI to the fullest extent
permitted under applicable Law. If and to the extent that Ward Howell (i) amends
the Profit Sharing Plan to incorporate the changes therein required by the Small
Business Job Protection Relief Act of 1996, the Taxpayer Relief Act of 1997 and
any other recent acts of Congress that require amendments to the Profit Sharing
Plan in order to maintain its qualified status prior to the Effective Time and
(ii) obtains an appropriate determination letter from the Internal Revenue
Service with respect to its qualified status, then Ward Howell's former
employees who become participants in LAI's defined contribution plan will be
entitled to rollover their balances from the Profit Sharing Plan into LAI's
defined contribution plan.
(N) TERMINATION OF STOCKHOLDERS' AGREEMENT. The Ward Howell
Stockholders and Ward Howell agree that, at and as of the Effective Time, the
Stockholders Agreement entered into as of January 1, 1992 by and among Ward
Howell and the Ward Howell Stockholders (in some cases, as executed at a later
date by a Ward Howell Stockholder), and any other stockholders' agreement or
other agreement of similar effect and all rights of first refusal contained
therein or otherwise applicable to the Ward Howell Common Stock shall be void
and of no further force and effect.
(O) CURRENT INFORMATION. During the period from the date of this
Agreement until the Effective Time or the earlier termination of this Agreement,
each of LAI and Ward Howell shall, and shall cause its representatives to,
confer on a regular and frequent basis with representatives of the other. Each
of Ward Howell and LAI shall promptly notify the other of (i) any material
change in its business or operations, (ii) any material complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) of any Regulatory Authority, (iii) the institution or the overt
threat of any material action, suit, claim or proceeding involving such party,
or (iv) the occurrence, or nonoccurrence, of any event or condition the
occurrence, or nonoccurrence, of which would be reasonably expected to cause any
of such party's representations or warranties set forth herein to become untrue
or inaccurate in any respect as of the Closing; and in each case shall keep the
other fully informed with respect thereto.
(P) OTHER ACTIONS. During the period from the date of this
Agreement until the Effective Time or the earlier termination of this Agreement,
no party shall take any action, except in every case as may be required by
applicable Law, intended to or that would result in (i) any of its
representations and warranties set forth in this Agreement being or becoming
untrue, or (ii) any of the conditions set forth in this Agreement not being
satisfied or a violation of any provision of this Agreement.
(Q) PRESS RELEASES. During the period from the date of this
Agreement until the Effective Time or the earlier termination of this Agreement,
Ward Howell and LAI shall consult with each other as to the form and substance
of any press release or other public disclosure materially related to this
Agreement, the Merger or any other transaction contemplated hereby; provided,
however, that nothing in this paragraph shall prohibit any party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such party's disclosure obligations imposed by Law.
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(R) CORPORATE GOVERNANCE PROVISIONS. Ward Howell shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do not
and will not restrict or impair the ability of LAI or MergerSub to vote, or
otherwise to exercise the rights of a stockholder with respect to, shares of
Ward Howell Common Stock.
(S) EXTENSION OF EXCLUSIVITY LETTER. The terms of the exclusivity
letter agreement dated November 4, 1997 between LAI and Ward Howell, as amended
on December 8, 1997 to extend the term thereof (collectively, the "Exclusivity
Letter Agreement"), remain in full force and effect in all respects, are
incorporated by reference herein, and are amended to extend the date of January
31, 1998 (the "Expiration Date") to the Effective Time.
(T) EMPLOYMENT AGREEMENTS. Each Ward Howell Stockholder identified
on Exhibit 7(r)-1 hereto shall enter into an Employment Agreement with the
Surviving Corporation in one of the forms attached hereto as Exhibit 7(r), as
LAI, the relevant Ward Howell Stockholder and Ward Howell shall have agreed
given the level of such consultant's business. In connection with the execution
of such Employment Agreements, LAI shall grant to the consultants entering into
such agreements options to purchase, in the aggregate, 400,000 shares of LAI
Common Stock (the "LAI Options"), such options to be allocated among such
consultants as set forth on Exhibit 7(r)-1. LAI in its discretion may waive the
requirement for all Ward Howell Stockholders to enter into Employment Agreements
with respect to a small number of Ward Howell Stockholders who determine to
retire from the executive search business on terms and conditions acceptable to
LAI (a "Retiree Stockholder"), and who agree to enter into a Retired Partner
Consulting Agreement in the form attached hereto as Exhibit 7(r). Bonus Shares
will not be issued to a Retiree Stockholder.
(U) LAI POST-CLOSING PAYMENT OBLIGATIONS. As the outstanding
accounts receivables of Ward Howell reflected on the Ward Howell Financial
Statements are collected, LAI shall pay to the former Ward Howell Stockholders
entitled thereto, the accrued compensation expense relating to such accounts
receivable, including without limitation the stockholder bonus component
thereof, as reflected on the December 31, 1997 Ward Howell Financial Statements.
Further, LAI shall distribute the accrued excess profits reflected on the
December 31, 1997 Ward Howell Financial Statements in the aggregate amount of
$1, 260,054.72 in accordance with the prior practices of Ward Howell. LAI shall
also pay all accrued research and employee bonuses reflected on the Ward Howell
Financial Statements as of December 31, 1997 in accordance with the past
practices of Ward Howell.
(V) CERTAIN AGREEMENTS WITH RESPECT TO LGO.
(i) Distribution of Cash. Notwithstanding anything in
this Agreement to the contrary, in accordance with the LGO Agreement and in
conformity with the past practice of the LGO, all cash held by Ward Howell in
the bank account utilized by the LGO prior to March 1, 1998, or received by Ward
Howell with respect to the accounts receivable of the LGO prior to March 1, 1998
and not needed to pay LGO expenses for the period prior to such date, shall be
distributed as Michael J. Corey may direct as soon as reasonably practicable
after the Closing Date, based upon a Closing Date Balance Sheet of LGO to be
prepared by LAI for this purpose to the satisfaction of Michael Corey and in
accordance with the LGO Agreement.
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(ii) Loan to Gary DeMarlie. Prior to the Closing, the loan
in the amount of $10,050 made by Ward Howell shall be assigned to Michael J.
Corey.
(iii) Accounts Receivable. Notwithstanding the termination
of the LGO Agreement as of the Effective Time or any provision of this Agreement
to the contrary, the LGO Accounts Receivable shall be allocated and distributed
as provided in the LGO Agreement (with the Surviving Corporation succeeding to
all of the rights of Ward Howell pursuant to the LGO Agreement for this
purpose), provided that the LGO Accounts Receivable were billed in the ordinary
course of business and in conformity to the engagement letters to which they
relate. In this connection, LAI shall provide Michael J. Corey with information
relating to the collection on the LGO Accounts Receivable on a monthly basis. In
addition, LAI will provide the LGO Stockholders with sufficient support at the
LGO to facilitate the efficient collection of the LGO Accounts Receivable and
their distribution in accordance with this provision.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES.
(A) CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby shall be subject to the
satisfaction of the following conditions, unless waived by both parties in
writing as of the Closing Date:
(i) Stockholder Approval. The Ward Howell Stockholders
shall have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law.
(ii) Legal Proceedings. No Law, judgment, order,
injunction, writ , decree, ruling or other legal restraint or prohibition,
whether temporary, preliminary or permanent, which prohibits, restricts or makes
illegal the consummation of the Merger or any other action or transaction
contemplated hereby shall have been enacted, entered, promulgated or enforced by
any Regulatory Authority, and no action or proceeding seeking any of the
foregoing shall be pending.
(iii) Adjusted Pro Forma EBIT. The Adjusted Pro Forma EBIT
of Ward Howell for the year ending December 31, 1997 shall be not less than $2.2
million.
(B) CONDITIONS TO OBLIGATIONS OF LAI TO EFFECT THE MERGER. The
obligations of LAI to perform this Agreement and to consummate the Merger and
the other transactions contemplated hereby are subject to the satisfaction of
the following additional conditions, unless waived by LAI in writing as of the
Closing Date:
(i) Representations and Warranties. The representations
and warranties of Ward Howell and the Ward Howell Stockholders set forth in this
Agreement shall be true and correct in all material respects both as of the date
of this Agreement and as of the Effective Time as though then made.
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(ii) Performance of Covenants and Agreements. Each and all
of the agreements and covenants of Ward Howell and the Ward Howell Stockholders
to be performed or complied with pursuant to this Agreement and the other
agreements contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(iii) No Material Adverse Change. There shall have been no
Material Adverse Change in the financial condition, business or prospects of
Ward Howell.
(iv) Consents and Approvals. Ward Howell shall have
obtained any and all Consents required for consummation of the Merger and the
other transactions contemplated hereby, or for preventing any default under any
agreement, contract, other instrument or Permit to which Ward Howell is a party,
which, if not obtained or made, would be reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Ward Howell or the Surviving
Corporation.
(v) Certificates. Ward Howell shall have delivered to LAI
(i) a certificate, dated as of the Closing Date, signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions to its obligations under this Agreement to be satisfied prior to the
Effective Time have been satisfied, and (ii) copies of all documents that LAI
may reasonably request relating to the existence of Ward Howell and certified
copies of resolutions or written consents duly adopted by Ward Howell's Board of
Directors and the Ward Howell Stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as LAI and its counsel may reasonably request.
(vi) Dissenters' Rights. Owners of record of no more than
ten percent (10%) of the issued and outstanding shares of Ward Howell Common
Stock shall have effectively exercised rights under the Connecticut Dissenters'
Rights Law with respect to the Merger.
(vii) Employment Agreements. Each Ward Howell Stockholder
identified on Exhibit 7(r)-1 hereto shall have entered into an Employment
Agreement or a Retired Partner Consulting Agreement with the Surviving
Corporation as contemplated by Section 7(r).
(viii) Joinder Agreements; Lockup Agreements. Each of the
Ward Howell Stockholders shall have executed and delivered to LAI a Joinder
Agreement substantially in the form of that attached hereto as Exhibit
8(b)(viii) hereto. Each of the Ward Howell Stockholders shall have executed and
delivered to Baird a Lockup Agreement in substantially the same form as is
attached as Exhibit 8(b)(viii) hereto.
(ix) Ownership of Ward Howell Common Stock. The
Pre-Closing Transactions shall have been effected immediately prior to the
Effective Time, and therefore each Ward Howell Stockholder shall own that number
of shares of Ward Howell Common Stock indicated on Exhibit 8(b)(ix) hereto. No
other person shall own any Ward Howell Common Stock.
(x) Net Worth of Ward Howell. Ward Howell shall have (i)
total stockholders' equity as of December 31, 1997 as determined with reference
to the December 31, 1997 audited
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balance sheet of Ward Howell (the "December 31, 1997 Net Worth") of not less
than $1,600,000, and (ii) total stockholders' equity as of immediately prior to
the Effective Time, determined in accordance with GAAP and Regulation S-X (the
"Closing Net Worth"), of not less than $1,400,000, determined in each case
without regard to any effect on the stockholders' equity of Ward Howell
resulting from (1) the reasonable direct expenses of Ward Howell in effecting
the Merger which do not exceed $500,000, (2) the Pre-Closing Transactions or (3)
any item referred to in Section 3(b)(ii) of this Agreement that reduced the
aggregate Merger Consideration).
(xi) Opinion of Counsel. LAI shall have received a written
opinion of Paul, Hastings, Janofsky & Walker LLP, counsel to Ward Howell, dated
as of the Closing Date, to the effect set forth in Exhibit 8(b)(xii) hereto.
(xii) Ward Howell Stockholder Information. LAI shall have
received from each Ward Howell Stockholder representations as to the suitability
for such Ward Howell Stockholder of an investment in the LAI Stock, and from
each Ward Howell Stockholder who is an "accredited investor" (within the meaning
of Regulation D promulgated by the SEC under the Securities Act) representations
to that effect, and such other or additional assurances from the Ward Howell
Stockholders and/or Ward Howell as LAI may reasonably require to assure itself
that the issuance of the LAI Stock and the LAI Notes pursuant to this Agreement
will comply with applicable Securities Laws, in each case in form and substance
reasonably satisfactory to LAI.
(xiii) Ward Howell Insider Loans. All Ward Howell Insider
Loans shall have been paid in full as contemplated by this Agreement.
(C) CONDITIONS TO OBLIGATION OF WARD HOWELL TO EFFECT THE MERGER.
The obligations of Ward Howell to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Ward Howell in
writing as of the Closing Date:
(i) Representations and Warranties. The representations
and warranties of LAI and MergerSub set forth in this Agreement shall be true
and correct in all material respects both as of the date of this Agreement and
as of the Effective Time as though then made.
(ii) Performance of Covenants and Agreements. Each and all
of the agreements and covenants of LAI and MergerSub to be performed or complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied with in
all material respects.
(iii) Consents and Approvals. LAI and MergerSub shall have
obtained any and all Consents required for consummation of the Merger and the
other transactions contemplated hereby, or for preventing any default under any
agreement, contract, other instrument or Permit to which LAI or MergerSub is a
party, which, if not obtained or made, would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on LAI or the
Surviving Corporation.
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(iv) Certificates. LAI shall have delivered to Ward Howell
(i) a certificate, dated as of the Closing Date, signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions to its obligations under this Agreement to be satisfied prior to the
Effective Time have been satisfied, and (ii) copies of all documents that Ward
Howell may reasonably request relating to the existence of LAI and certified
copies of resolutions or written consents duly adopted by LAI's Board of
Directors evidencing the taking of all corporate action necessary to authorize
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as Ward
Howell and its counsel may request.
(v) Material Adverse Change. There shall have been no
Material Adverse Change in the financial conditions, business, or prospects of
LAI.
(vi) Opinion of Counsel. Ward Howell shall have received a
written opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
counsel to LAI, dated as of the Effective Time, to the effect set forth in
Exhibit 8(c)(vii) hereto.
(vii) Payment of Consideration. LAI shall have delivered to
the Ward Howell Stockholders the aggregate Merger Consideration.
9. INDEMNIFICATION.
(A) GENERAL - INDEMNIFICATIONS BY WARD HOWELL AND THE WARD HOWELL
STOCKHOLDERS. Ward Howell and each of the Ward Howell Stockholders, severally on
a pro rata basis in proportion to the aggregate Merger Consideration received by
such Ward Howell Stockholder but not jointly, does hereby agree to indemnify and
hold harmless LAI and MergerSub from, for and against any actual claim, loss,
damage, liability or expense (including without limitation, attorneys' and legal
assistants' fees and other costs and expenses incident to any suit, action,
investigation or other proceeding), arising in connection with, from, under or
out of:
(i) Failure to Perform. Any failure of Ward Howell or
such Ward Howell Stockholder duly to perform or observe any term, provision,
covenant, agreement or condition required by this Agreement to be performed or
observed by either of them prior to Closing;
(ii) Failure to Pay. Any failure of Ward Howell or such
Ward Howell Stockholder to pay, discharge or comply with any obligation,
liability or commitment of Ward Howell or a Ward Howell Stockholder arising
under this Agreement prior to Closing;
(iii) Breach of Warranty. Any inaccuracy in, or breach by
Ward Howell or a Ward Howell Stockholder of, any representation, warranty,
covenant or agreement made by either of them in this Agreement, the Exhibits
hereto or any document or paper delivered in connection with the transactions
contemplated hereby; or
(iv) Litigation. Any action, suit, proceeding, assessment
or judgment arising out of or incident to any of the matters indemnified against
by Ward Howell and the Ward Howell Stockholders in this Section 9, including
reasonable fees and disbursements of counsel.
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(B) GENERAL - INDEMNIFICATIONS BY LAI AND MERGERSUB. Each of LAI
and MergerSub, jointly and severally, does hereby agree to indemnify and hold
harmless Ward Howell and the Ward Howell Stockholders from, for and against any
actual claim, loss, damage, liability or expense (including without limitation,
attorneys' and legal assistants' fees and other costs and expenses incident to
any suit, action, investigation or other proceeding), arising in connection
with, from, under or out of:
(i) Failure to Perform. Any failure of LAI or MergerSub
duly to perform or observe any term, provision, covenant, agreement or condition
required by this Agreement to be performed or observed by either of them;
(ii) Failure to Pay. Any failure by LAI or MergerSub to
pay, discharge or comply with any obligation, liability or commitment of LAI or
MergerSub;
(iii) Breach of Warranty. Any inaccuracy in, or breach by
LAI or MergerSub of, any representation, warranty, covenant or agreement made by
any of them in this Agreement, the Exhibits hereto or any document or paper
delivered in connection with the transactions contemplated hereby; or
(iv) Litigation. Any action, suit, proceeding, assessment
or judgment arising out of or incident to any of the matters indemnified against
by LAI and MergerSub in this Section 9, including reasonable fees and
disbursements of counsel.
(C) CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 9, the party or parties entitled to be
indemnified, whether one party or more (such party or parties being referred to
in this Agreement as the "Indemnified Party") shall notify the party or parties
(as the case may be) against whom indemnification is sought, whether one party
or more (such party or parties being referred to in this Agreement as the
"Indemnifying Party") of the facts constituting the basis for such claim. Such
notice shall specify all material facts known to the Indemnified Party giving
rise to such indemnification right and the amount or an estimate of the amount
of the liability arising therefrom.
(D) RIGHT TO DEFEND. If any action, proceeding or investigation
for which indemnification is sought hereunder is brought against any Indemnified
Party and it notifies the Indemnifying Party of the commencement thereof as
required pursuant to Section 9(c) above, the Indemnifying Party will be entitled
to participate in, and, to the extent that it may wish, jointly with any other
Indemnifying Party, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to the Indemnified Party,
and after notice from the Indemnifying Party to such Indemnified Party of its
election so to assume the defense thereof, then notwithstanding anything to the
contrary contained herein, the Indemnifying party will not be liable under this
Section 9 for any legal or other expenses subsequently incurred by such
Indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The Indemnified Party will have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel will not be at the expense of the
Indemnifying Party if the Indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the Indemnified Party. No
settlement of any action against an Indemnified
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Party will be made without the consent of the Indemnifying Party and the
Indemnified Party, which consent shall not be unreasonably withheld or delayed
in light of all factors of importance to such party and no Indemnifying Party
shall be liable to indemnify any person for any settlement of any such claim
effected without such Indemnifying Party's consent. Notwithstanding the
foregoing, an Indemnifying Party may, without the consent of the Indemnified
Party, consent to the entry of a judgment or enter into the settlement of an
action if such judgment or settlement (i) includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release of all liability in respect of such claim or litigation, and (ii)
involves money damages only and does not include a statement as to an admission
of fault, culpability or a failure to act on behalf of an Indemnified Party. The
Ward Howell Stockholders hereby appoint Ken Lanno or his designee to act as
their agent (the "Agent") for all purposes relating to this Section 9 and LAI
and MergerSub are hereby instructed to send all notices required or permitted to
be given or made under or pursuant to this Section 9 to the Agent in lieu of any
notices to the Ward Howell Stockholders individually.
(E) COOPERATION. The parties to this Agreement shall execute such
powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably be
related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business hours
to all properties, personnel, books, tax records, contracts, commitments and all
other business records of such other party and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested).
(F) LIMITATION. An Indemnifying Party shall be obligated to
indemnify an Indemnified Party, and a claim for indemnification under this
Section 9 may be brought, only to the extent that the aggregate net amount of
any damages, losses, liabilities, costs and expenses, as determined in
accordance with the next following sentence of this paragraph, actually paid or
suffered by the Indemnified Party as to which a right of indemnification is
provided under this Section 9 exceeds $150,000, except that no such $150,000
limitation shall apply with respect to any damages, loses, liabilities, costs
and expenses arising out of or based upon (i) any violation of the
representation set forth in Sections 5(f)(i) or Section 5(f)(ii) here or (ii)
the failure to obtain any consent of a landlord of Ward Howell required to be
obtained under Section 8(b)(iv) hereof and the cost of obtaining consents to
Merger from any such landlord (including additional rental costs until the end
of the term of any such lease resulting from the failure to obtain such consent
but not including moving costs caused by the failure to obtain any such consent.
Further, in no event shall the aggregate liability of Ward Howell and the Ward
Howell Stockholders on the one hand, or LAI and MergerSub on the other hand,
under this Section 9 exceed the aggregate Merger Consideration, and in no event
shall the liability of any individual Ward Howell Stockholder under this Section
9 exceed the Merger Consideration received by that Stockholder. In addition,
there shall be no right to indemnification for LAI or MergerSub from Ward Howell
or the Ward Howell Stockholders pursuant to this Section 9 for a breach or
violation by Ward Howell or any of the Ward Howell Stockholders of the
representation and warranty set forth in Section 5(p) unless such breach or
violation constitutes fraud on the part of Ward Howell or any of the Ward Howell
Stockholders, and the sole remedy for such a breach or violation not involving
fraud shall be a reduction in the Merger Consideration as set forth in Section
3(b)(ii)(B). For these purposes, the aggregate Merger Consideration shall be
deemed to be the amount of the Cash Consideration, plus the aggregate original
principal amount of the LAI
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<PAGE> 50
Notes, plus the number of shares of LAI Stock multiplied by the Fair Market
Value per share of LAI Common Stock. In determining the net amount of such
damages, losses, liabilities, costs or expenses for which indemnification is
required hereunder, the gross amount of such damages, losses, liabilities, costs
or expenses shall be reduced by any proceeds of insurance, related claims,
crossclaims, counterclaims and the like actually collected by the Indemnified
Party in connection therewith, and by any tax benefits received by the
Indemnified Party in connection therewith.
(G) OFFSET. With respect to any claims by LAI against Ward Howell
or a Ward Howell Stockholder for indemnification under this Section 9, in
furtherance and not in limitation of its rights under this Agreement, LAI, at
its option, shall be entitled to a right of offset against any amounts owed by
LAI to the Ward Howell Stockholders under the LAI Notes. This right of offset
shall be exercised in the following manner. Immediately after a claim for
indemnification is made by LAI against Ward Howell or a Ward Howell Stockholder
for indemnification under this Section 9, a reasonable good faith estimate (the
"Estimate") of the claim shall be made by LAI. Thereafter, any outstanding
amounts owed by LAI to the Ward Howell Stockholders pursuant to the LAI Notes
shall be paid to the Ward Howell Stockholders only to the extent that the amount
of any payments outstanding on the LAI Notes (determined on a pro rata basis
with respect to each Ward Howell Stockholder) exceeds the Ward Howell
Stockholder's pro rata portion of the Estimate. The payments remaining under the
LAI Notes in the amount of the Estimate shall be paid to an escrow agent to be
mutually agreed upon by the parties, shall be deposited in an interest bearing
account once the amount remaining to be paid thereunder is equivalent to the
Estimate, and shall be held in escrow until such time as the amount of such
indemnification has been determined by mutual agreement of the parties or by an
arbitrator as set forth in Section 12(b) hereof. Interest on amounts deposited
in escrow pursuant to this Section 9(g) shall be paid to the party or parties
entitled to receive the principal thereof on a pro rata basis.
(H) TERMINATION OF SUBSIDIARY OBLIGATIONS. From and after the
Effective Time, the Surviving Corporation shall have no obligation under this
Agreement to LAI.
10. TERMINATION.
(A) TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time by action taken or authorized by the Board of
Directors of the terminating party or parties:
(i) Mutual Agreement. By mutual written agreement of LAI
and Ward Howell, with or without the agreement, consent or participation of any
Ward Howell Stockholder; or
(ii) For Material Breach.
(1) By Ward Howell. By Ward Howell in the event
of any inaccuracy in any representation or warranty or any breach of any
covenant or agreement of LAI or MergerSub contained in this Agreement, which
inaccuracy or breach cannot be or has not been cured within thirty (30) days
after the giving of written notice thereof and which would provide Ward Howell
or any Ward Howell Stockholder with the right under Section 8 of this Agreement
to refuse to consummate the Merger, but only if neither Ward Howell nor any Ward
Howell Stockholder is then
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<PAGE> 51
in material breach of any representation, warranty, covenant or agreement of any
of them contained in this Agreement; or
(2) By LAI. By LAI in the event of any
inaccuracy in any representation or warranty or any breach of any covenant or
agreement of Ward Howell or any Ward Howell Stockholder contained in this
Agreement, which inaccuracy or breach cannot be or has not been cured within
thirty (30) days after the giving of written notice thereof and which would
provide LAI with the right under Section 8 of this Agreement to refuse to
consummate the Merger, but only if neither LAI nor MergerSub is then in material
breach of any representation, warranty, covenant or agreement of either of them
contained in this Agreement; or
(iii) Upon Significant Exercise of Dissenters' Rights. By
LAI, in the event that owners of record of more than 10% of the then issued and
outstanding shares of Ward Howell Common Stock indicate an intention to exercise
rights under the Connecticut Dissenters' Rights Law; or
(iv) Passage of Time. By either LAI or Ward Howell, in the
event that the Effective Time shall not have occurred, or it shall have become
highly likely that the Effective Time shall not occur, or it shall be the case
that any of the conditions precedent to the obligations of such party to
consummate the Merger is highly unlikely to be satisfied or fulfilled, on or
before February 28, 1998; provided, however, that the right to terminate this
Agreement pursuant to this paragraph shall not be available to any party whose
breach of its obligations under this Agreement has been the cause of or resulted
in the failure of the Effective Time to occur or a condition to be satisfied on
or before such date.
(B) EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 10(a) of this Agreement, this Agreement shall
become void and have no effect and no party shall have any obligation to the
other parties hereto with respect to this Agreement, except that (i) the
provisions of Sections 7(i), 7(o), 10(b), 11(a), 11(b) and 11(c) of this
Agreement shall survive any such termination, and (ii) termination shall not
relieve or release a breaching party from liability for an uncured willful
breach of a representation, warranty, covenant or agreement giving rise to such
termination.
11. MISCELLANEOUS.
(A) SURVIVAL OF CERTAIN PROVISIONS. Each of the representations,
warranties, obligations, covenants and agreements of LAI, MergerSub, Ward Howell
and the Ward Howell Stockholders included or provided for in this Agreement or
in any Exhibit to this Agreement or in any agreement, certificate or other
document or instrument executed and delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement for a period of eighteen months
after the Closing Date, except that each of the representations and warranties
set forth in Sections 5(k), 5(v), 5(bb), 6(k) and 6(o)of this Agreement and all
of the representations and warranties set forth in this Agreement, only to the
extent that they relate in any way to employment or personnel matters, shall
survive the Closing Date and continue in full force and effect for so long as,
under applicable law, there may be asserted and maintained in a court of
competent jurisdiction a claim against the party making such representation
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<PAGE> 52
or warranty that, if successful, would cause such representation or warranty to
have been false or incorrect when made, plus sixty (60) days.
(B) RESOLUTION OF DISPUTES. Should any dispute arise among or
between one or more of the parties to this Agreement relating to this Agreement,
the interpretation of any provision hereof, or any of the rights or obligations
hereunder of any of the parties to this Agreement, then at the election of any
party involved in such dispute such dispute shall be resolved finally by a
single arbitrator in an arbitration proceeding conforming to the rules of the
American Arbitration Association applicable to commercial arbitrations. Said
arbitrator shall be appointed as follows: of LAI (and, if prior to the Effective
Time, MergerSub) on the one hand, and the Ward Howell Stockholders (and, if
prior to the Effective Time, Ward Howell) on the other hand, the party not
electing to submit the matter to arbitration (the "Non-Electing Party") shall
provide to the other (the "Electing Party") a list of three proposed
arbitrators, each of whom shall be knowledgeable as to matters that are the
subject of the dispute and each of whom shall be completely independent of and
with no prior affiliation or direct or indirect relationship with any party or
any of their Affiliates. The Electing Party shall then select the arbitrator
from such list or, if all such proposed arbitrators are reasonably unacceptable
to such party, so advise the Non-Electing Party whereupon such party shall
prepare a new list of three proposed arbitrators and the selection process shall
begin anew. The arbitration shall take place in Tampa, Florida, New York, New
York, Los Angeles, California or Chicago, Illinois and the decision of such
arbitrator shall be final and binding upon the parties, and such decision shall
be enforceable as a judgment in a court of competent jurisdiction. Other than
the right to seek specific performance by way of injunctive relief to enforce
the provisions of this Agreement, each party to this Agreement covenants not to
institute any suit or other proceeding in any court with respect to any matter
arising under or pursuant to or directly or indirectly relating to this
Agreement, the subject matter hereof or the other agreements, documents and
instruments delivered or required to be delivered hereunder or in connection
herewith unless the intended subject matter thereof has first been submitted for
arbitration in accordance with the foregoing procedure and such arbitration
proceeding has been completed. In order to maintain the confidentiality of the
dispute intended to be resolved by arbitration as provided in this Agreement as
well as the information adduced and contentions asserted in any such
arbitration, the parties agree to maintain in strict confidence and agree to
neither make nor suffer any public disclosure of the fact of, contentions or
evidence, discovered, developed or introduced in and the result of any such
arbitration; provided, however, the foregoing to the contrary notwithstanding,
that LAI may make public disclosures regarding the existence of the arbitration,
the nature of the dispute and the results thereof as may be necessary or
appropriate to satisfy its disclosure obligations under applicable Securities
Laws or other Laws.
(C) EXPENSES. Except as otherwise specifically provided in this
Agreement, each party hereto shall bear and pay its own costs and expenses
incident to preparing, entering into and carrying out this Agreement and
pursuing and consummating the Merger. The expenses of preparing and printing the
portion of the Ward Howell Stockholder Merger Materials prepared by Ward Howell,
including mailing, shall be borne by Ward Howell. The cost of preparing and
printing the portion of the Ward Howell Stockholder Merger Materials prepared by
LAI shall be borne by LAI.
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<PAGE> 53
(D) ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement, which includes all Exhibits hereto, and the other
documents, agreements, and instruments, executed and delivered pursuant to or in
connection with this Agreement, contain the entire agreement between the parties
hereto with respect to the transactions contemplated hereby, and this Agreement
supersedes all prior arrangements or understandings with respect to the subject
matter hereof, both written and oral. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties to this
Agreement, any rights, remedies, obligations or liabilities.
(E) AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by an agreement in writing signed by each of the
parties to this Agreement, including each of the Ward Howell Stockholders.
(F) WAIVERS. Prior to or at the Effective Time, each of LAI on the
one hand and Ward Howell on the other hand, shall have the right to waive
(including, in the case of Ward Howell, on behalf of all Ward Howell
Stockholders) any default in the performance of any provision of this Agreement
by the other, to waive or extend the time for the compliance or fulfillment by
the other of any and all of the other's obligations under this Agreement, and to
waive any or all of the conditions precedent to its obligations under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law, which violation would have a Material Adverse Effect on
the party purporting or attempting to make such waiver. The failure of any party
at any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the same or any
other provision of this Agreement. No waiver of any condition or the breach of
any provision of this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of any breach of any other provision of this
Agreement.
(G) NO ASSIGNMENT. None of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement to any other
person and any such purported assignment or delegation that is made without the
prior written consent of the other parties to this Agreement shall be void and
of no force or effect whatsoever.
(H) NOTICES. Any notice, request, demand or other communication
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been duly given: upon receipt if personally
delivered; upon successful completion of transmission if transmitted by
telecopy, electronic telephone line facsimile transmission or other similar
electronic or digital transmission method; at the close of business on the next
business day after it is sent, if sent by recognized overnight delivery service
with all fees paid in advance by the sender; or at the close of business on the
fifth business day after it is sent, if mailed, first class mail, proper postage
prepaid, in each case transmitted or addressed to:
49
<PAGE> 54
LAI or MergerSub: Lamalie Associates, Inc.
3903 Northdale Blvd.
Tampa, Florida 33624
ATTN: Jack P. Wissman
Executive Vice President
Copy to Counsel: Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis
2700 Barnett Plaza
101 East Kennedy Blvd.
Post Office Box 1102
Tampa, Florida 33601-1102
ATTN: Richard M. Leisner, Esquire
Ward Howell or any Ward Howell Stockholder:.
Ward Howell International, Inc.
99 Park Avenue
20th Floor
New York, New York 10016-1690
ATTN: David L. Witte
Copy to Counsel: Paul, Hastings, Jannosky & Walker, L.L.P.
55 South Flower Street
Los Angeles, CA 90071-2371
ATTN: Anna M. Graves
Morrison, Cohen, Singer & Weinstein, L.L.P.
750 Lexington Avenue
New York, New York 10022
ATTN: Brian B. Snarr
or to such other address as any recipient party may have specified in writing to
the other parties in accordance with the foregoing.
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(I) CONSTRUCTION AND INTERPRETATION
(i) Florida Law Applies. This Agreement shall be governed
by and construed in accordance with the laws of the State of Florida (except
that any provision of Florida law shall not apply if the effect of such
provision would be to result in the application of the substantive law of a
state or jurisdiction other than Florida).
(ii) Headings. The headings of the various sections in
this Agreement are inserted for the convenience of the parties and shall not
affect the meaning, construction or interpretation of this Agreement or any
provision hereof.
(iii) Severability. Any provision of this Agreement which
is determined by a court of competent jurisdiction to be prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction. In any such case, such determination shall not affect any
other provision of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect. If any provision or term of
this Agreement is susceptible to two or more constructions or interpretations,
one or more of which would render the provision or term void or unenforceable,
the parties agree that a construction or interpretation which renders the term
or provision valid shall be favored.
(J) ENFORCEMENT OF AGREEMENT. Each party hereto agrees that
irreparable damage will occur if any of the provisions of this Agreement is not
performed in accordance with its specific terms or is otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States of any state
having jurisdiction, this being in addition to any other remedy to which such
party may be entitled at law or in equity. The prevailing party in any action
brought to enforce this Agreement shall be entitled to recover all reasonable
costs and expenses of enforcement (including reasonable attorneys' fees and
reasonable expenses during investigation, before litigation or arbitration, and
at trial and in appellate proceedings). The parties' costs of enforcing this
Agreement shall include prejudgment interest. Additionally, if any party incurs
any out-of-pocket expenses in connection with the enforcement of this Agreement,
all such amounts shall accrue interest at 10% per annum (or such lower rate as
may be required to avoid any limit imposed by applicable law) commencing 30 days
after any such expenses are incurred.
(K) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement, with knowledge of its contents and meaning and intending to be bound
hereby, as of the date first written above.
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ATTEST: LAMALIE ASSOCIATES, INC.
By: By:
---------------------------- --------------------------------
Jack P. Wissman, Secretary Robert L. Pearson, President
ATTEST: WARD HOWELL INTERNATIONAL, INC.
By: By:
---------------------------- --------------------------------
David L. Witte, Secretary
ATTEST: LAI MERGERSUB, INC.
By: By:
---------------------------- --------------------------------
Jack P. Wissman, Secretary Robert L. Pearson, President
52
<PAGE> 1
EXHIBIT 2.2
================================================================================
================================================================================
ASSET PURCHASE AGREEMENT
by and among
LAMALIE ASSOCIATES, INC.,
CHARTWELL PARTNERS INTERNATIONAL, INC.
and
DAVID M. DEWILDE
December 29, 1997
================================================================================
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. PURCHASE AND SALE OF ASSETS; CLOSING.................................1
(a) Purchase and Sale of Assets -- Generally....................1
(b) Assets......................................................1
(i) Generally..........................................1
(ii) Specified Items....................................2
(c) Excluded Assets.............................................3
(d) Procedure for Closing.......................................3
(e) Closing Costs...............................................3
2. PURCHASE PRICE; ASSUMPTION OF LIABILITIES............................4
(a) Purchase Price..............................................4
(b) Payment of Purchase Price...................................4
(c) Legend on Note..............................................5
(d) Acceleration of Note........................................5
(e) Tangible Book Value; Proration of Certain Expenses..........5
(f) Assumption of Liabilities...................................5
(g) Allocation of Purchase Price................................6
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE STOCKHOLDER.....6
(a) Organization and Standing...................................6
(b) Stock Ownership.............................................6
(c) Authority Relative to this Agreement........................6
(d) No Violations...............................................6
(e) Compliance with Agreements..................................7
(f) Tax Matters.................................................7
(g) Litigation..................................................7
(h) Title to and Condition of Assets............................7
(i) Client List; Engagement Letters.............................8
(j) Real Property Leases........................................8
(k) Customers/Clients...........................................8
(l) Employees...................................................8
(m) Employee Benefits...........................................9
(n) Owned Personal Property.....................................9
(o) Leased Personal Property....................................9
(p) Financial Statements.......................................10
(q) Insurance..................................................10
(r) Absence of Certain Changes or Events.......................10
(s) Compliance With Applicable Laws............................10
(t) Approvals and Consents.....................................11
(u) Disclosure.................................................11
(v) No Undisclosed Changes.....................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
(w) Investment Representations.................................11
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ....................12
(a) Organization and Standing..................................12
(b) Authority Relative to this Agreement.......................12
(c) No Violations..............................................12
(d) LAI Stock..................................................12
(e) Financial Statements.......................................12
(f) Compliance with Agreements.................................13
(g) Compliance With Applicable Laws............................13
(h) Nasdaq.....................................................13
(i) Disclosure.................................................13
5. DUE DILIGENCE INVESTIGATION.........................................13
6. TRANSACTIONS PENDING CLOSING........................................13
(a) Business in the Ordinary Course............................13
(b) Notification of Change.....................................14
(c) Corporate Action; Approvals and Consents...................14
(d) Other Transactions Prohibited..............................14
(e) Disclosure of Transactions.................................14
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER............14
(a) Accuracy of Representations and Warranties.................15
(b) Employment Agreement.......................................15
(c) Lock-Up Agreement..........................................15
(d) Barnett Consent............................................15
(e) Compliance.................................................15
(f) No Material Adverse Change Prior to Closing................15
(g) Consents and Waivers.......................................15
(h) Active Status Certificate; Certified Copy of Articles......16
(i) Certificate................................................16
(j) Instruments of Transfer....................................16
(k) Opinion of Seller's Counsel................................16
(l) Litigation.................................................16
(m) Casualty...................................................16
(n) Termination of Financing Statements........................16
(o) Actions, Proceedings, Etc..................................17
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
SELLER AND THE STOCKHOLDER..........................................17
(a) Accuracy of Representations and Warranties.................17
(b) Compliance.................................................17
(c) Certificate of the Purchaser...............................17
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
(d) Employment Agreement.......................................18
(e) Opinion of Purchaser's Counsel.............................18
9. SURVIVAL OF REPRESENTATIONS, WARRANTIES,
OBLIGATIONS, COVENANTS AND AGREEMENTS...............................18
10. INDEMNIFICATION.....................................................18
(a) Indemnifications by the Seller and the Stockholder.........18
(b) Indemnification by the Purchaser...........................19
(c) Claims for Indemnification.................................19
(d) Right to Defend; Third-Party Claims, Etc...................19
(e) Cooperation................................................20
(f) Offset.....................................................20
11. OBLIGATIONS AFTER THE CLOSING.......................................20
(a) Distribution of Consideration..............................20
(b) Transition of Business.....................................21
(c) Post Closing Access to Financial Records...................21
(d) Employment of Employees; Benefit Plans.....................21
12. RESTRICTIVE COVENANTS...............................................21
(a) Noncompetition.............................................21
(b) Nonsolicitation of Clients and Employees...................21
(c) Extension of Time..........................................22
(d) Essential Elements.........................................22
(e) Severability...............................................22
(f) Termination Without Good Cause.............................23
13. GENERAL.............................................................23
(a) No Brokers.................................................23
(b) Waivers....................................................23
(c) Remedies...................................................23
(i) General...........................................23
(ii) Mandatory Arbitration.............................23
(d) Expenses...................................................24
(e) Press Releases.............................................24
(f) Confidentiality............................................24
(g) Notices....................................................25
(h) Entire Agreement; Amendment................................25
(i) Assignability..............................................25
(j) Venue; Process.............................................25
(k) Further Assurances.........................................25
(l) Counterparts...............................................25
(m) Section and Other Headings.................................25
(n) Governing Law..............................................26
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS prevailing ASSET PURCHASE AGREEMENT is made and entered into this
29th of December, 1997, by and among LAMALIE ASSOCIATES, INC., a Florida
corporation, (the "Purchaser"); CHARTWELL PARTNERS INTERNATIONAL, INC., a
California corporation, (the "Seller"); and DAVID M. DEWILDE, an individual
resident of the State of California (the "Stockholder").
WITNESSETH:
WHEREAS, the Seller is engaged in the executive search business (the
"Business"); and
WHEREAS, the Stockholder is the owner of one hundred percent (100%) of
the issued and outstanding stock of the Seller; and
WHEREAS, the Purchaser desires to purchase certain of the assets used
in the operation of the Business of the Seller, and the Seller desires to sell
such assets, all upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, and in order to consummate
the purchase and sale of the property aforementioned, it is hereby agreed as
follows:
1. PURCHASE AND SALE OF ASSETS; CLOSING.
(a) Purchase and Sale of Assets -- Generally. In reliance
upon the warranties, representations and covenants contained in this Agreement
and on the terms and subject to the conditions of this Agreement, Seller hereby
agrees that at the Closing (as defined below) it will, in the manner specified
in this Agreement, sell, convey, transfer, assign and deliver to Purchaser, and
Purchaser hereby agrees that at the Closing it will purchase from Seller, the
Business as a going concern and all of the right, title and interest of Seller
in and to all of the "Assets" (as defined below), free and clear of all
liabilities (fixed or contingent), obligations, security interests, liens,
claims or encumbrances of any nature or kind whatsoever except "Assumed
Liabilities" (as defined below).
(b) Assets.
(i) Generally. For purposes of this Agreement,
"Assets" shall mean all of the right, title and interest of Seller in and to any
and all of the assets, properties, and rights (of every type, kind, nature and
description whatsoever, tangible and intangible, real and personal, wherever
located and whether or not reflected on the books of Seller) that, as of the
date of this Agreement (the "Effective Date") or at any time between the
Effective Date and the "Closing Date" (as defined below), constitute the
Business or part thereof or are used by Seller in the operation of the Business.
Notwithstanding the foregoing, Seller shall not sell and Purchaser shall not
purchase
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<PAGE> 6
or acquire and the Assets shall not include any "Excluded Assets" (as defined
below) or any other assets, properties and rights specifically excluded from the
Assets by this Agreement.
(ii) Specified Items. By way of explanation and
not in limitation of the foregoing, the "Assets" shall include all of the right,
title and interest of Seller in and to any and all of the following (other than
Excluded Assets) that, as of the Effective Date or at any time between the
Effective Date and the "Closing Date" (as defined below), constitute the
Business or part thereof or are used by Seller in the operation of the Business:
(1) the name "Chartwell Partners
International" and all rights and benefits associated therewith;
(2) all rights as lessee in, to, and
under all real estate leases to which Seller is a party as lessee (the "Real
Property Leases"), together with all of Seller's right, title and interest in
the fixtures and improvements, including construction-in-progress, and
appurtenances thereto, located on the real property subject to such leases (all
such parcels of real property being collectively referred to as the "Leased Real
Property"), and any and all assignable warranties of third parties with respect
thereto;
(3) all machinery, equipment (including
office equipment and machines), tools, computers, telephones and telephone
systems, parts, accessories, and the like and any and all assignable warranties
of third parties with respect thereto (the "Equipment");
(4) all of the contracts, personal
property leases, warranties, commitments, agreements, arrangements, and credit
guaranties, whether oral or written, pursuant to which Seller enjoys any right
or benefit or undertakes any liability or obligation, together with the right to
receive income in respect of such contracts, leases, warranties, commitments,
agreements, and arrangements on and after the "Closing Date" (as defined below)
(the "Assigned Contracts");
(5) all rights of Seller pursuant to
engagement letters, contracts, agreements or otherwise, whether written or oral,
to perform searches on behalf of clients or prospective clients, together with
all rights of Seller against clients to collect fees for work-in-process billed
after the Closing Date, excluding those items of work-in-process which are
specifically designated in writing by the parties hereto as Excluded Assets (as
defined below) (the "Work-in-Process");
(6) all designs, trademarks, trade
names, trade styles, service marks, and copyrights; all registrations and
applications therefor, both registered and unregistered, foreign and domestic;
all trade secrets or processes; all confidential or proprietary information; and
all computer software and any modifications thereof, both source and object
code, together with all documentation, manuals, flow charts and logic diagrams
related thereto, all to the extent either owned or licensed by Seller (the
"Intellectual Property");
(7) all data and data bases,
correspondence, business plans and projections, client lists, client records,
historical personnel records of each of the employees of
2
<PAGE> 7
Seller, manuals and printed instructions related to the Assets and the Business,
and all other books, records, files and papers of Seller relating to the Assets
and to the operation of the Business (the "Books and Records");
(8) to the extent permitted under
applicable law or regulation, all licenses, permits, certificates, and
governmental authorizations of Seller (the "Permits");
(9) all fixtures and leasehold
improvements owned by Seller and located at or on the Leased Real Property and
any and all assignable warranties covering such fixtures and leasehold
improvements, owned by Seller (the "Fixtures"), and all furniture and
furnishings other than Fixtures and any and all assignable warranties covering
such furniture and furnishings (the "Furniture"); and
(10) all causes of action, claims and
demands of Seller related to other Assets (the "Assigned Claims").
(c) Excluded Assets. The Assets being purchased and sold
hereunder shall not include the items identified on EXHIBIT A to this Agreement
(collectively, the "Excluded Assets").
(d) Procedure for Closing.
(i) The closing of the transactions contemplated
by this Agreement (the "Closing") shall be held on January 2, 1998 commencing at
9:00 a.m., at the offices of Greene, Radovsky, Maloney & Share LLP, Four
Embarcadero Center, Suite 4000, San Francisco, California 94111-4100, or at such
other place or time as the parties to this Agreement may agree (the "Closing
Date").
(ii) At the Closing, in accordance with the terms
of this Agreement, the Seller shall deliver to the Purchaser a bill or bills of
sale, assignments and all other documents or instruments necessary or
appropriate in the opinion of counsel to the Purchaser to convey all right,
title and interest in or to the Assets to the Purchaser and to effectuate the
terms of this Agreement, and the Purchaser shall deliver the consideration for
the purchase of the Assets as provided in Section 2 of this Agreement.
(e) Closing Costs. The Seller shall be responsible for
and shall pay all the fees, taxes (including sales taxes), expenses and other
costs, including any documentary or intangible taxes or stamps, on any documents
required to effect transfer of title to the Assets, or any other item or amount
required to be paid on account of or in connection with the transfer of title to
the Assets to the Seller pursuant to this Agreement, excluding the payment of
any legal and accounting fees of the Purchaser and any State of Florida
documentary stamp taxes due and payable upon the issuance of the Note (as
defined below).
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2. PURCHASE PRICE; ASSUMPTION OF LIABILITIES.
(a) Purchase Price. In consideration of the purchase,
sale, conveyance, transfer and delivery of the Assets, and upon the terms and
subject to the conditions of this Agreement, the Purchaser shall pay to the
Seller at the Closing the sum of Three Million Dollars ($3,000,000), plus the
Tangible Book Value of the Assets (as defined below)(the "Purchase Price").
(b) Payment of Purchase Price. The Purchase Price shall
be paid at the Closing, as follows:
(i) One Million Two Hundred and Fifty Thousand
Dollars ($1,250,000), plus the Tangible Book Value of the Assets (as defined
below), shall be paid in cash, by wire transfer or check;
(ii) One Million Two Hundred and Fifty Thousand
Dollars ($1,250,000) shall be paid in the form of a note (the "Note"), the
principal balance of which shall be payable in three equal annual installments
of $416,667 each, bearing interest payable annually at the rate of 6.75% on the
unpaid principal balance thereof, and the unpaid principal balance and accrued
interest of which shall be convertible at the election of the Stockholder on
each of the first three anniversary dates of its delivery, into common stock of
Purchaser (the "LAI Stock"), at the following conversion prices:
(1) on the first anniversary date, if
the Stockholder elects to convert the Note, the unpaid principal balance and
accrued interest then due thereon shall be converted into a number of shares of
LAI Stock which shall be equal in value (as hereinafter determined) to the
unpaid principal balance and accrued interest then due, and the LAI Stock shall
be valued for this purpose at One Hundred and Fifteen Percent (115%) of its fair
market value (defined as the average of the closing price of LAI common stock as
reported by the NASDAQ National Market System for the ten trading days
immediately preceding the Closing Date);
(2) on the second anniversary date, if
the Stockholder elects to convert the Note, the unpaid principal balance and
accrued interest thereon then due shall be converted into a number of shares of
LAI Stock which shall be equal in value (as hereinafter determined) to the
unpaid principal balance and accrued interest then due, and the LAI Stock shall
be valued for this purpose at One Hundred and Thirty-two Percent (132%) of its
fair market value (defined as the average of the closing price of LAI common
stock as reported by the NASDAQ National Market System for the ten trading days
immediately preceding the Closing Date); and
(3) on the third anniversary date, if
the Stockholder elects to convert the Note, the unpaid principal balance and
accrued interest thereon then due shall be converted into a number of shares of
LAI Stock which shall be equal in value (as hereinafter determined) to the
unpaid principal balance and accrued interest then due, and the LAI Stock shall
be valued for this purpose at One Hundred and Fifty-two Percent (152%) of its
fair market value (defined as the average of the closing price of LAI common
stock as reported by the NASDAQ National Market System for the ten trading days
immediately preceding the Closing Date).
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(iii) Five Hundred Thousand Dollars ($500,000)
shall be paid in LAI Stock, which shall be valued for this purpose at fair
market value (defined as the average of the closing price of LAI common stock as
reported by the NASDAQ National Market System for the ten trading days
immediately preceding the Closing Date).
(c) Legend on Note. The Note shall be substantially in
the form of EXHIBIT A(1) hereto and shall be imprinted with a legend
substantially in the following form:
The payment of principal and interest on this Note is subject
to certain recoupment provisions set forth in an Asset
Purchase Agreement dated December __, 1997 (the "Agreement")
among the issuer of this Note, the person to whom this Note
originally was issued, and certain other persons. This Note
was originally issued on January __, 1998, and has not been
registered under the Securities Act of 1933, as amended. The
issuer of this Note will furnish a copy of these provisions to
the holder hereof without charge upon written request.
(d) Acceleration of Note. In the event that the
Stockholder is terminated by the Purchaser without good cause as defined in the
Employment Agreement between the Purchaser and the Stockholder referred to in
Section 7(b) hereof, the Note shall become immediately due and payable in full
on the date of such termination. The Note shall also become immediately due and
payable in full on the death of the Stockholder.
(e) Tangible Book Value; Proration of Certain Expenses.
The phrase "Tangible Book Value of the Assets" for purposes of this Section 2
shall mean the net book value of the tangible Assets being purchased hereunder
as shown on the Seller's October 31, 1997 balance sheet: $126,484.98. All
expenses and charges related to the Business, including all expenses and charges
falling under the categories specified in the Seller's Profit and Loss Statement
for the period ended October 31, 1997 and attached hereto as Exhibit H, shall be
prorated as of the Closing Date. Purchaser shall bear all such expenses from and
after the Closing Date. The parties shall use their best efforts to have all
contracts and accounts related to the Business assigned to the Purchaser and to
have the Seller and Stockholder released from obligations thereunder at the
Closing Date or promptly thereafter.
(f) Assumption of Liabilities. At the Closing, as
additional consideration for the sale, conveyance, transfer and delivery of the
Assets, the Purchaser shall assume and become obligated for, commencing and
effective from the Closing Date, the Assumed Liabilities, but shall not and does
not assume any Excluded Liabilities. The assumption of the Assumed Liabilities
will occur only to the extent that the Assumed Liabilities are current according
to their terms as of the Closing Date and monthly payments thereunder do not
materially exceed in amount those amounts estimated on EXHIBIT B hereto, and
that, after such assumption, such liabilities are on terms and subject to
conditions no less favorable to the Purchaser than the terms and conditions
thereof as of the date of this Agreement. The Excluded Liabilities shall remain
the sole obligation of the Seller. For purposes of this Agreement, the Term
"Assumed Liabilities" shall mean the liabilities set forth on EXHIBIT B to this
Agreement, and the "Excluded Liabilities" shall mean all liabilities and
obligations of the Seller other than the Assumed Liabilities.
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(g) Allocation of Purchase Price. The Purchaser and the
Seller agree that the Purchase Price shall be allocated among the Assets in such
manner as the parties shall agree, as set forth on EXHIBIT C hereto. Neither
party will take a position contrary to such Exhibit for state or federal income
tax purposes except to the extent required by Section 1060 of the Internal
Revenue Code of 1986, as amended.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
STOCKHOLDER.
The Seller and the Stockholder hereby jointly and severally
represent and warrant to the Purchaser the following:
(a) Organization and Standing. The Seller is a
corporation duly organized, validly existing and in active status under the laws
of the State of California, and has the corporate power and authority to carry
on its business as it is now being conducted. The Seller is subject to no
material liability, and will not become subject to any material liability, by
reason of its failure to qualify to do business as a foreign corporation in any
state. The Seller has no subsidiaries.
(b) Stock Ownership. The Stockholder owns 100% of the
outstanding capital stock of the Seller.
(c) Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement by the Seller have been duly
authorized by the Board of Directors of the Seller and by the Stockholder. No
further corporate or other action is necessary on their part to make this
Agreement valid and binding upon the Seller or upon the Stockholder and
enforceable against each of them in accordance with the terms hereof or to carry
out the transactions contemplated hereby, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws and equitable
principles relating to or limiting creditors' right generally and by general
principles of equity.
(d) No Violations. The execution, delivery and
performance of this Agreement by the Seller and the Stockholder do not and will
not: (i) constitute a breach or a violation of the Seller's Articles of
Incorporation or by-laws, or of any material law, rule or regulation, agreement,
indenture, deed of trust, mortgage, loan agreement or other material instrument
to which the Seller or the Stockholder is a party or by which either of them is
bound; (ii) constitute a violation of any material order, judgment or decree to
which the Seller or the Stockholder is bound or by which any of the Seller's
assets or properties are bound or affected; or (iii) result in the creation of
any material lien, charge or encumbrance upon any of the Seller's assets or
properties.
(e) Compliance with Agreements. The Seller is not a party
to any agreement, indenture, deed of trust, instrument, judgment, order,
obligation or decree which materially and adversely affects the Business or the
Assets. The Seller is not in default under any agreement, indenture, deed of
trust or other instrument to which it is a party or by which it may be bound,
nor is it in violation of any applicable law or regulation, ordinance, order,
injunction, decree or
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requirement of any governmental body or court which might materially and
adversely affect the Business or the Assets.
(f) Tax Matters. The Seller has prepared and filed all
federal, state and local tax returns and reports as are or have been required to
be filed, all taxes owed (whether or not shown on any tax return) have been
timely paid in full, and all such tax returns and reports filed are true,
correct, complete and accurate in all material respects. The Seller has not
executed or filed with the Internal Revenue Service or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes, and the Seller is not a party to any pending audit
examination, deficiency, or other action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against the Seller. No accrued and unpaid
taxes of any kind exist, and no formal claims have been made or asserted by the
United States Government or by any state or foreign country or local government
for income or any other taxes, except such as have been paid or (whether or not
disputed) are disclosed pursuant to this Agreement. True and complete copies of
all federal, state and local tax returns filed by the Seller during the past
five years have previously been delivered to the Purchaser. Adequate provision
for any taxes (including any deferred taxes) due or to become due for the Seller
through October 31, 1997 has been made and is reflected on the financial
statements included on EXHIBIT H hereto. All taxes which the Seller is required
by law to withhold or collect for payment have been duly withheld and collected,
and have been paid to the proper governmental authority or are being withheld by
the Seller. The Seller is in compliance with, and its records contain all
information and documents necessary to comply with, all applicable information
reporting and tax withholding requirements under federal, state and local law.
There are no liens with respect to taxes upon any of the Assets.
(g) Litigation. The Seller is not a party to any
litigation, proceeding or administrative investigation and none is pending or,
to the knowledge of the Seller or the Stockholder, threatened against the
Seller, its properties, or any property used in its business or any of the
Assets, and, to the knowledge of the Seller or the Stockholder, other than the
letter dated December 15, 1997 from Craig J. Zinda of First American Real Estate
Information Services, Inc. to Glen S. Corso, there is no basis for any such
litigation, proceeding or investigation which might have a material adverse
effect, financial or otherwise, on the Seller, its business, property,
operations or prospects, or any of the Assets. There is no outstanding material
order, writ, injunction or decree of any court, government, governmental
authority or arbitration against or affecting the Seller, its properties or
business, or any of the Assets.
(h) Title to and Condition of Assets. The Seller has good
and marketable title to all of the Assets, except the Assigned Contracts. The
Assets are subject to no guaranty, judgment, execution, pledge, lien,
conditional sales agreement, security agreement, encumbrance or charge, or other
liability (whether accrued, absolute, contingent or otherwise) which would have
a material adverse effect, financial or otherwise, on the Seller, its business,
property, operations or prospects, or any of the Assets, other than as disclosed
in this Agreement and in the Exhibits hereto, whether or not such liabilities
are customarily reflected in a corporate balance sheet prepared in accordance
with generally accepted accounting principles. In addition, to the knowledge of
the Seller or the Stockholder, there are no facts in existence on the date
hereof that might reasonably serve as the
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basis now in or in the future for the Assets becoming subject to any such
liability or obligation. The Assets that constitute tangible property are in
good condition and repair, ordinary wear and tear excepted, are in the
possession of the Seller, and are operated in conformity with all applicable
laws, ordinances and regulations.
(i) Client List; Engagement Letters. A list of all of the
existing clients of the Seller as of the date of this Agreement, certified by
the Seller and the Stockholder as true, complete and correct, has been delivered
to the Purchaser prior to the execution of this Agreement (the "Client List").
An updated certified Client List shall be delivered to the Purchaser on the
Closing Date. True and correct copies of all engagement letters of the Seller
for searches which are or will be in progress on the Effective Date and prior to
the Closing Date have been delivered to the Purchaser prior to the execution of
this Agreement, (or, if entered into between the date of this Agreement and the
Closing Date, will be delivered to the Purchaser on the Closing Date). The
Seller and the Stockholder will take all reasonable and necessary steps to
ensure that a good relationship is maintained with each of its clients or
prospective clients after the Effective Date, whether or not listed on the
Client List, and will also take all reasonable and necessary steps to encourage
its clients and prospective clients to do business with Purchaser after the
Closing Date. Neither the Seller nor the Stockholder make any representation or
warranty as to the assignability of the engagement letters or their
enforceability following the consummation of the transactions contemplated
hereby, or as to whether the client will make payments thereunder.
(j) Real Property Leases. Attached hereto as EXHIBIT D is
a true and correct list of all Leased Real Property. True and correct copies of
all Real Property Leases have been delivered to the Purchaser prior to the
execution of this Agreement. Each Real Property Lease is in full force and
effect and there is no existing default or event of default, real or claimed, or
event which with notice or lapse of time or both would constitute default
thereunder the enforcement of which would materially adversely affect the Assets
or the Business. Except as described on EXHIBIT D, the assignment of any Real
Property Lease does not require the consent of the lessor thereunder, and such
assignment will not cause a breach, default, or event of default thereunder.
(k) Customers/Clients. Except as disclosed to the
Purchaser in writing on or before the Closing Date, to the knowledge of the
Seller or the Stockholder, there has been no termination, cancellation or
material limitation, modification or change since October 31, 1997 in the
business relationship of the Seller with any client.
(l) Employees. To the knowledge of the Seller or the
Stockholder, no executive, key employee, or group of employees has any plans to
terminate employment with the Seller prior to the Closing Date, or to decline to
accept any offer of employment made by the Purchaser on or after the Closing
Date. Notwithstanding the foregoing, the Seller and the Stockholder believe that
some executives believe that they have insufficient information to make a
decision with respect to any offer of employment by the Purchaser, and may make
plans not to accept any such offer.
(m) Employee Benefits. EXHIBIT E hereto contains a true
and complete list of all the following agreements, plans or other arrangements,
covering any employee of the Seller, which are presently in effect or were in
effect at any time prior to the Closing Date: (i) employee benefit
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plans within the meaning of ERISA Section 3(3); and (ii) any other employee
benefit plan, program, policy or arrangement, whether written or unwritten,
formal or informal, which Seller has maintained, currently maintains, or to
which it has any outstanding present or future obligations to contribute or
other liability, whether voluntary, contingent or otherwise (collectively, the
"Employee Benefit Plans"). The Assets are not, and Seller does not reasonably
expect them to become, subject to a lien imposed under ERISA Section 4068.
Seller never has had and currently has no obligation to contribute to any
multi-employer plan, as defined in ERISA Section 3(37), with respect to the
Business. Seller has not completely or partially withdrawn from any
multi-employer plan, within the meaning of ERISA Section 3(37). The Business has
not suffered a seventy percent decline in "contribution base units," within the
meaning of ERISA Section 4205(b)(1)(A), in any plan year beginning after 1979.
There are no actions, audits or claims pending or, to the knowledge of the
Seller or the Stockholder, threatened against the Assets or the Business with
respect to the Business's maintenance of the Employee Benefit Plans, other than
routine claims for benefits. Seller has complied with any applicable
continuation coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608 ("COBRA"). The Purchaser has no COBRA obligation, or obligation under any
state statute of similar import, with respect to current or former employees,
and the Seller and the Stockholder promise to indemnify the Purchaser and hold
it harmless for any costs or expenses relating to any allegations or findings of
liability with respect to such current or former employees for "qualifying
events" (as defined in Section 4980 B(f)(3) of the Internal Revenue Code)
occurring on or before the date such individual becomes a participant in the
Purchaser's group health plans.
(n) Owned Personal Property. EXHIBIT F contains a true
and correct list and a brief description of all Equipment owned by Seller and
included in the Assets (excluding items of equipment having a fair market or net
book value of less than $5,000). The Equipment is and at Closing will be in good
operating condition (normal wear and tear excepted). EXHIBIT F contains a true
and correct list and a brief description of all Furniture, Fixtures and other
items of tangible personal property (excluding items of Furniture, Fixtures and
other personal property owned by Seller and having a fair market or net book
value of less than $5,000) owned by Seller and included in the Assets. The
Furniture, Fixtures and other items of tangible personal property included in
the Assets are and at Closing will be in good operating condition (normal wear
and tear excepted).
(o) Leased Personal Property. EXHIBIT G contains a true
and correct list and brief description of all items of tangible personal
property leased by Seller. True, correct and complete copies of all documents
evidencing the leases described on EXHIBIT G are attached hereto. Each of the
leases described on EXHIBIT G is now, and will be on the Closing Date, in full
force and effect and there are not now, and will not be on the Closing Date, any
existing defaults or events of default, real or claimed, or events which with
notice or lapse of time or both would constitute defaults, the consequence of
which would have a material adverse effect on the Assets or the Business. Except
as shown on EXHIBIT G, all such leases are fully assignable without the consent
of any third party, and such assignment will not cause a breach, default, or
event of default thereunder.
(p) Financial Statements. Attached to this Agreement as
EXHIBIT H are financial statements of the Seller for the years ended December
31, 1994, 1995 and 1996, and for the ten
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month period ended October 31, 1997, which statements: (i) include the Seller's
balance sheet as of December 31, 1994, 1995 and 1996, and as of October 31,
1997, and income statement for the years ended December 31, 1994, 1995 and 1996
and the ten month period ended October 31, 1997; (ii) are in accordance with the
books and records of the Seller; (iii) are true and accurate statements and
fairly set forth the financial condition and results of operations of the Seller
as of the dates thereof; (iv) have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis except as set
forth on EXHIBIT H; and (v) contain and reflect all necessary adjustments for a
fair presentation of the financial condition and results of operations for the
periods covered by the statements.
(q) Insurance. EXHIBIT I contains a true, complete and
correct list of all insurance policies maintained by Seller and Stockholder in
connection with the Business, including, but not limited to, professional
malpractice, life, casualty, fire, general liability, employers' liability,
title, business interruption, errors and omissions, and all other forms of
insurance, in each case indicating the insurer and the amount, scope and
coverage of such policies (effective dates, deductibles, and any aggregate
limits). All such policies are in full force and effect, and all premiums
payable pursuant thereto for all periods up to and including the Closing Date
have been or will be fully paid by the Seller. The Seller has not received any
notice from any insurance carrier or otherwise that (i) such insurance will be
cancelled or terminated or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs will be substantially increased. Except as
disclosed on EXHIBIT I, there are no claims pending under such policies of
insurance and no notices have been given by the Seller under such policies.
(r) Absence of Certain Changes or Events. Other than as
disclosed in exhibits to this Agreement and in the ordinary course of its
business or in connection with effecting the transactions contemplated by this
Agreement, and other than bonus payments or dividends made to certain employees
of the Seller, a schedule of which bonus payments has been provided to the
Purchaser prior to the execution of this Agreement, since October 31, 1997,
there has not been (i) any material adverse change in the financial condition,
Assets or results of operations of the Business; or (ii) any damage, destruction
or loss, whether or not covered by insurance, materially adversely affecting the
Assets or the Business.
(s) Compliance With Applicable Laws. The conduct of its
business by the Seller and the Closing of the transactions contemplated by this
Agreement do not violate or infringe any federal, state, local or foreign law,
statute, ordinance, license or regulation that is presently in effect or that to
the knowledge of the Seller or the Stockholder is proposed to be adopted
(including, without limitation, laws relating to environmental liability) that
would materially and adversely affect the Business or the Assets. Such conduct
and Closing do not violate or infringe any right or concession, copyright,
trademark, trade name, patent, know-how or other proprietary right of others,
the enforcement of which would materially and adversely affect the Business or
the value of the Assets. The Seller has and has maintained all material licenses
and permits required by all local, state and federal authorities and regulating
bodies.
(t) Approvals and Consents. Except as set forth on
EXHIBIT J, no consent, approval or authorization is required in connection with
the execution or delivery of this Agreement
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by the Seller and the Stockholder or the consummation by either of them of the
transactions contemplated hereby.
(u) Disclosure. No representation or warranty made by the
Seller or the Stockholder in this Agreement, the exhibits hereto or any of the
documents and papers required to be delivered pursuant to this Agreement or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
(v) No Undisclosed Changes. The representations and
warranties made by the Seller and the Stockholder pursuant to this Section 3 of
this Agreement are and will be true and complete as of not only the date of this
Agreement, but also as though again made on the Closing Date, except to the
extent that such representations and warranties are incorrect as of such later
date by reason of events occurring after the date of this Agreement in
compliance with the terms hereof.
(w) Investment Representations. Seller (i) understands
that the Note and the LAI Stock acquired by it as part of the Purchase Price
pursuant to this Agreement have not been, and will not be, registered under the
Securities Act of 1933 or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (ii) is acquiring the Note and the LAI Stock
solely for its own account for investment purposes, and not with a view to the
distribution thereof (except to the Stockholder), (iii) is a sophisticated
investor with knowledge and experience in business and financial matters, (iv)
has received certain information concerning the Purchaser and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in investing in the Note and the LAI Stock, (v) is
able to bear the economic risk and lack of liquidity inherent in holding the
Note and the LAI Stock, (vi) is an Accredited Investor as defined in the
Securities Act of 1933 and the rules and regulations promulgated thereunder, and
(vii) is aware that all shares of the LAI Stock acquired as part of the Purchase
Price will be subject to the Lock-Up Agreement (as hereinafter defined).
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants the following:
(a) Organization and Standing. The Purchaser is a
corporation duly organized, validly existing, and in active status under the
laws of the State of Florida, and has the corporate power and authority to carry
on its business as it is now being conducted. The Purchaser is subject to no
material liability, and will not become subject to any material liability, by
reason of its failure to qualify to do business as a foreign corporation in any
state.
(b) Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby by the Purchaser have been duly authorized by the Board of Directors of
the Purchaser. No further corporate or other action is necessary on the part of
the Purchaser to make this Agreement valid and binding upon the Purchaser
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and enforceable against it in accordance with the terms hereof or to carry out
the transactions contemplated hereby, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other laws and equitable principles
relating to or limiting creditors' right generally and by general principles of
equity.
(c) No Violations. Except with respect to the Purchaser's
existing credit arrangements with Barnett Bank, N.A., the execution, delivery
and performance of this Agreement by the Purchaser do not and will not: (i)
constitute a breach or a violation of the Purchaser's Articles of Incorporation
or by-laws, or of any material law, rule or regulation, agreement, indenture,
deed of trust, mortgage, loan agreement or other material instrument to which
the Purchaser is a party or by which it is bound; (ii) constitute a violation of
any material order, judgment or decree to which the Purchaser is bound or by
which any of the Purchaser's assets or properties are bound or affected; or
(iii) result in the creation of any lien, charge or encumbrance upon any of the
Purchaser's assets or properties.
(d) LAI Stock. Upon the delivery of the LAI Stock and any
of the Purchaser's stock issued pursuant to the Note to the Seller, the Seller
will acquire good and marketable title to such Stock, free and clear of any
liens, encumbrances, or restrictions, except as imposed by law or contemplated
by this Agreement, and the shares of such Stock, when issued in accordance with
the provisions of this Agreement, will be fully paid and nonassessable. Upon the
delivery of the Note to the Seller, the Seller will acquire good and marketable
title to the Note, free and clear of any liens, encumbrances, or restrictions,
except as imposed by law or contemplated by this Agreement.
(e) Financial Statements. The financial statements that
are included as part of the Purchaser's Form 10-Q filed for the quarter ended
August 31, 1997, (the Financial Statements") were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, were prepared in accordance with the books and records of the
Purchaser and present fairly the financial position of the Purchaser as of the
respective dates thereof and the results of operations of Purchaser for the
respective periods then ended.
(f) Compliance with Agreements. The Purchaser is not a
party to any agreement, indenture, deed of trust, instrument, judgment, order,
obligation or decree which materially and adversely affects its business or its
assets. The Purchaser is not in default under any agreement, indenture, deed of
trust or other instrument to which it is a party or by which it may be bound,
nor is it in violation of any applicable law or regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court which might
materially and adversely affect its business or its assets.
(g) Compliance With Applicable Laws. The conduct of its
business by the Purchaser and the Closing of the transactions contemplated by
this Agreement do not violate or infringe any federal, state, local or foreign
law, statute, ordinance, license or regulation that is presently in effect or
that to the knowledge of the Purchaser is proposed to be adopted (including,
without limitation, laws relating to environmental liability) and that would
materially and adversely affect its business or its assets. Such conduct and
Closing do not violate or infringe any right or concession, copyright,
trademark, trade name, patent, know-how or other proprietary right of others,
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the enforcement of which would materially and adversely affect the business or
the assets of the Purchaser. The Purchaser has and has maintained all material
licenses and permits required by all local, state and federal authorities and
regulating bodies.
(h) Nasdaq. The LAI Stock shall be listed for quotation
on Nasdaq effective upon the Closing.
(i) Disclosure. No representation or warranty made by the
Purchaser in this Agreement, the exhibits hereto or any of the documents and
papers required to be delivered pursuant to this Agreement or in connection with
the consummation of the transactions contemplated hereby contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading.
5. DUE DILIGENCE INVESTIGATION.
Between the Effective Date and the Closing Date, the Seller and the
Stockholder shall (i) give to the Purchaser's designated representatives full
and complete access, from time to time, during normal business hours, and upon
reasonable advance notice, to the Seller's business offices, premises, books,
records and business information, (ii) permit the Purchaser's designated
representatives to make such examinations of the foregoing, and conduct such
other investigations, as they consider appropriate to determine and verify the
condition (financial or otherwise) of the Business and the Assets and to
consummate the transactions contemplated by this Agreement, and (iii) furnish to
the Purchaser's designated representatives such additional information with
respect to the Business and the Assets as they may reasonably request from time
to time.
6. TRANSACTIONS PENDING CLOSING.
(a) Business in the Ordinary Course. Except as otherwise
expressly required or permitted by this Agreement and except as otherwise
authorized or approved by the Purchaser between the Effective Date and the
Closing Date, the Stockholder and the Seller agree that the Seller shall conduct
the Business in the ordinary course and shall (i) use reasonable efforts to
maintain and preserve the Business and the Assets intact, to keep available the
services of its present employees and to preserve the goodwill of clients,
customers and others having business relations with it; (ii) meet all
obligations of the Seller under each agreement assigned hereunder; (iii) keep in
force at no less than their present limits all existing policies of insurance;
and (iv) bill all of the clients of the Seller in accordance with the terms of
any engagement letters applicable to them and consistent with the past practices
of the Seller.
(b) Notification of Change. The Seller and the
Stockholder will each immediately notify the Purchaser, in writing, of any event
or condition known to either Seller or the Stockholder which occurs prior to
Closing hereunder and causes a change in the facts relating to, or the truth of
any of the representations set forth in Section 3 of this Agreement or that
otherwise adversely affects or that is reasonably likely to affect the Assets or
the operation of the Business. Between the date of this Agreement and the
Closing, the Seller and the Stockholder will promptly advise the Purchaser
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in writing of any fact which, if existing or known at the date of this
Agreement, would have been required to be set forth in or disclosed pursuant to
this Agreement.
(c) Corporate Action; Approvals and Consents. The Seller
and the Stockholder will each take all corporate and other action and use their
best efforts to obtain in writing as promptly as possible all approvals and
consents required to be obtained by any of them in order to effectuate the
consummation of the transactions contemplated hereby.
(d) Other Transactions Prohibited. Between the date of
this Agreement and the Closing, neither the Stockholder, the Seller nor any of
its officers, directors, employees or stockholders will enter into any
negotiations or agreements with any person or entity other than the Purchaser
with respect to the sale of all or any part of the Assets or the sale of all or
any portion of the capital stock of the Seller.
(e) Disclosure of Transactions. From and after the date
of this Agreement and regardless of whether or not the transactions contemplated
by this Agreement are ever consummated, all of the parties to this Agreement,
and their respective agents, employees, contractors and representatives, shall
treat as confidential all information with respect to the Purchase Price and all
other material terms and conditions of the transactions contemplated by this
Agreement (collectively the "Price and Terms"), and shall not make, or permit to
be made, any public announcement or other disclosure whatsoever of the Price and
Terms (except as such disclosure may be compelled by law) without the prior
consent of all other parties.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser under this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (the fulfillment of any of which may be waived in writing
by the Purchaser):
(a) Accuracy of Representations and Warranties. Each of
the representations, warranties and statements of the Seller and the Stockholder
contained in this Agreement, all exhibits hereto and any documents delivered in
connection herewith shall not only have been true and complete as of the date of
this Agreement but shall also be true and complete in all material respects as
though again made on the Closing Date, except (i) to the extent that such
representations and warranties and statements are incorrect as of such later
date by reason of events occurring after the date of this Agreement in
compliance with the terms hereof or (ii) to the extent that such inaccuracies do
not, in the aggregate, constitute a material adverse change in the Assets or the
Business or the results of operations of the Seller.
(b) Employment Agreement. The Stockholder shall have
entered into an Employment Agreement with the Purchaser, substantially in the
form of that Employment Agreement attached hereto as EXHIBIT K (the "Employment
Agreement").
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(c) Lock-Up Agreement. The Seller and the Stockholder
shall have entered into a Lock-Up Agreement with respect to the LAI Stock
received as part of the Purchase Price, substantially in the form of that
Lock-Up Agreement attached hereto as EXHIBIT L, containing certain restrictions
on the ability of the Seller and the Stockholder to sell, convey, assign or
otherwise transfer the LAI Stock (the "Lock-Up Agreement"). The Lock-Up
Agreement shall provide, in pertinent part, that the Stockholder shall not, for
a period of two (2) years after the Closing Date, directly or indirectly, offer,
sell, transfer, pledge, contract to sell or otherwise dispose of, or cause or in
any way permit to be offered, sold, transferred, pledged or otherwise disposed
of, or grant any options, warrants or other rights to acquire, any shares of the
LAI Stock owned by the Stockholder as of the Closing Date. The Lock-Up Agreement
shall terminate in the event of the death, permanent disability or termination
without good cause of the Stockholder as defined in the Employment Agreement.
(d) Barnett Consent. The Purchaser shall have received
the consent of Barnett Bank, N.A. to the transactions contemplated pursuant to
this Agreement; provided, however, that the Purchaser shall use its reasonable
best efforts to obtain that consent.
(e) Compliance. The Seller and the Stockholder shall each
have performed and complied with all agreements, covenants and conditions
required by this Agreement and all exhibits hereto to be performed and complied
with by each of them at or prior to the Closing.
(f) No Material Adverse Change Prior to Closing. Seller
shall not have suffered any material adverse change in the Assets or the
Business or the results of operation thereof, nor shall there have occurred any
event that has had or is reasonably expected to have a materially adverse effect
on the Assets or the Business or the results of operation thereof.
(g) Consents and Waivers. Purchaser shall have received
any required consents or waivers for the consummation of the transactions
described herein.
(h) Active Status Certificate; Certified Copy of
Articles. The Purchaser shall have received a certificate executed by the
Secretary of State of the State of California dated within 14 days prior to the
Closing Date certifying that the Seller is a corporation in active status under
the laws of the State of California and a certificate executed by the Secretary
of State of the State of California dated within 14 days prior to the Closing
Date certifying to a true and complete copy of the Seller's Articles of
Incorporation.
(i) Certificate. The Purchaser shall have received a
certificate executed by the President of the Seller, attested to by the
Secretary of such corporation under its corporate seal, and executed by the
Stockholder, dated the Closing Date, satisfactory in form and substance to the
Purchaser and its counsel, certifying as to:
(i) the fulfillment of the matters set forth in
Sections 7(a) through (g) of this Agreement,
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(ii) the resolutions adopted by the Board of
Directors of the Seller and the Stockholder approving the execution of
this Agreement and the consummation of the transactions contemplated
hereby; and
(iii) the incumbent officers of the Seller and the
authenticity of the signatures of each.
(j) Instruments of Transfer. The Seller shall have
delivered to the Purchaser such bills of sale, endorsements, assignments,
licenses and other good and sufficient instruments of conveyance and transfer
and any other instruments reasonably necessary or appropriate to vest in the
Purchaser all of the Seller's right, title and interest in and to the Assets,
free and clear of all liens, charges, encumbrances, pledges or claims of any
nature which would have a material adverse effect on the Business all in form
and substance satisfactory to counsel to the Purchaser.
(k) Opinion of Seller's Counsel. The Purchaser shall have
received an opinion of Greene Radovsky Maloney & Share LLP, counsel to the
Seller, dated the Closing Date, satisfactory in form and substance to the
Purchaser and its counsel, to the effect of that set forth in EXHIBIT M.
(l) Litigation. There shall not be any litigation or
proceeding to restrain or invalidate the consummation of the transactions
contemplated hereby, the defense of which would, in the sole discretion of the
Purchaser, involve expense to the Purchaser or a lapse of time that would be
materially adverse to its interests with respect hereto.
(m) Casualty. Since the date of this Agreement, and prior
to the completion of the Closing on the Closing Date, no material portion of the
Assets shall have been destroyed or damaged (whether or not there exists
insurance against such loss).
(n) Termination of Financing Statements. No financing
statements shall be of record with any state or any subdivision thereof, or in
the public records of any county thereof, with respect to any of the Assets
which shall have a material adverse effect on the value of the Assets. The
Seller shall have furnished evidence satisfactory to counsel to the Purchaser of
the termination of any financing statements previously on record with respect to
any of the Assets, but if any such financing statements shall be of record with
any state or any subdivision thereof or of any other state or in the public
records of any county thereof, with respect to the Assets (whether or not such
financing statements have a material adverse effect on the value of the Assets),
the Seller shall deliver termination statements, releases or other documents
satisfactory to counsel to the Purchaser which will be effective upon recording
or filing to terminate or release all such filings of record with respect to the
Assets.
(o) Actions, Proceedings, Etc. All actions, proceedings,
instruments, agreements and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all other related legal
matters shall have been reasonably satisfactory to and approved by Trenam,
Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, Professional Association,
counsel to the
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Purchaser; and, such counsel shall have been furnished with such copies
(certified if requested) of all such actions, proceedings, instruments,
agreements and documents as they shall have reasonably requested.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER AND THE
STOCKHOLDER.
The obligations of the Seller and the Stockholder under this
Agreement are subject to the satisfaction at or prior to the Closing of each of
the following conditions (the fulfillment of any one of which may be waived in
writing by such parties):
(a) Accuracy of Representations and Warranties. The
representations and warranties and statements of the Purchaser contained in this
Agreement shall not only have been true and complete on the date of this
Agreement and when made but shall also be true and complete as though again made
on the Closing Date, except to the extent that they are incorrect as of the
Closing Date by reason of events occurring after the date of this Agreement in
compliance with the terms hereof.
(b) Compliance. The Purchaser shall have performed and
complied with all agreements, covenants and conditions required by this
Agreement and all exhibits hereto to be performed and complied with by it at or
prior to the Closing.
(c) Certificate of the Purchaser. The Seller shall have
received a certificate exe cuted by the President of the Purchaser and attested
to by its Secretary under its corporate seal, dated the Closing Date, certifying
as to:
(i) the fulfillment of the matters mentioned in
Sections 8(a) and (b) of this Agreement;
(ii) the resolutions adopted by the Board of
Directors of the Purchaser approving the execution of this Agreement
and the consummation of the transactions con templated hereby; and
(iii) the incumbent officers of the Purchaser and
the authenticity of the signatures of each.
(d) Employment Agreement. The Purchaser shall have
entered into an Employment Agreement with the Stockholder, substantially in the
form of the Employment Agreement attached hereto as EXHIBIT K (the "Employment
Agreement).
(e) Opinion of Purchaser's Counsel. The Seller shall have
received an opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
P.A., counsel to the Purchaser, dated the Closing Date, satisfactory in form and
substance to the Seller and its counsel.
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9. SURVIVAL OF REPRESENTATIONS, WARRANTIES, OBLIGATIONS,
COVENANTS AND AGREEMENTS.
Each of the representations, warranties, obligations, covenants and
agreements of the Seller, the Stockholder and the Purchaser included or provided
for in this Agreement or in any Exhibit to this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement for a period of eighteen (18) months after the Closing Date, except
for (i) the representation and warranty of the Seller and the Stockholder set
forth in Sections 3(f) and (m) hereof, which shall survive the Closing Date and
continue in full force and effect up to and including the applicable statute of
limitations, and (ii) the Restrictive Covenants set forth in Section 12 hereof,
which shall survive the Closing Date for the periods set forth therein.
10. INDEMNIFICATION.
(a) Indemnifications by the Seller and the Stockholder.
The Seller and the Stockholder jointly and severally agree to indemnify and hold
harmless the Purchaser in respect of any and all claims, losses and expenses
which may be incurred by the Purchaser arising out of:
(i) any material breach by either the Seller or
the Stockholder of any of the representations, warranties, covenants or
agreements made by either of them in this Agreement, the exhibits
hereto or any document or paper delivered in connection with the
transactions contemplated hereby;
(ii) any attempt (whether or not successful) by
any person to cause or require the Purchaser to pay or discharge any
debt, obligation, liability or commitment of the Seller other than an
Assumed Liability; or any action, suit, proceeding, assessment or
judgment arising out of or incident to any of the matters indemnified
against in this Section 10, including reasonable fees and disbursements
of counsel;
provided, however, that the Seller and the Stockholder shall not have any
obligation to indemnify the Purchaser hereunder: (A) until the Purchaser has
suffered claims, losses and expenses arising out of the events set forth in (i)
through (iii) above in excess of a $50,000 aggregate deductible, or (B)
thereafter to the extent the claims, losses and expenses the Purchaser has
suffered arising out of the events set forth in (i) through (iii) above exceeds
an aggregate dollar amount equal to Three Million Dollars ($3,000,000).
(b) Indemnification by the Purchaser. The Purchaser
agrees to indemnify and hold harmless the Seller and the Stockholder in respect
of any and all claims, losses and expenses which may be incurred by the Seller
or the Stockholder arising out of:
(i) any material breach by the Purchaser of any
of the representations, warranties, covenants or agreements made by it
in this Agreement, the exhibits hereto or any document or paper
delivered in connection with the transactions contemplated hereby;
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(ii) any action, suit, proceeding, assessment or
judgment arising out of or incident to any of the matters indemnified
against in this Section 10, including reasonable fees and disbursements
of counsel;
provided, however, that the Purchaser shall not have any obligation to indemnify
the Seller or the Stockholder hereunder, except as to any of the Assumed
Liabilities: (A) until the Seller or the Stockholder have suffered claims,
losses and expenses arising out of the events set forth in (i) and (ii) above in
excess of a $50,000 aggregate deductible, or (B) thereafter to the extent the
claims, losses and expenses the Seller and the Stockholder have suffered arising
out of the events set forth in (i) and (ii) above exceeds an aggregate dollar
amount equal to Three Million Dollars ($3,000,000).
(c) Claims for Indemnification. Whenever any claim shall
arise for indemnification under this Section 10, the indemnified party shall
notify the party or parties (as the case may be) against whom indemnification is
sought (whether one party or more, the "Indemnifying Party") in writing of the
facts constituting the basis for such claim. Such notice shall specify all facts
known to the indemnified party giving rise to such indemnification right and the
amount or an estimate of the amount of the liability arising therefrom. The
right to indemnification hereunder and the amount or the estimated amount
thereof, as set forth in such notice, shall be deemed agreed to by the
Indemnifying Party unless, within 45 days after the receipt of such notice, the
Indemnified Party is notified in writing that the Indemnifying Party disputes
the right to indemnification as set forth or estimated in such notice.
(d) Right to Defend; Third-Party Claims, Etc.
(i) If the facts giving rise to any such
indemnification right shall involve any actual or threatened claim or demand by
any third party against the indemnified party or any possible claim by the
indemnified party against any third party, such claim by or against a third
party shall be referred to as a "Third-Party Claim." If the Indemnifying Party
gives the indemnified party an agreement in writing, in form and substance
reasonably satisfactory to counsel to the indemnified party confirming the
agreement to indemnify and save the indemnified party harmless from all costs
and liability arising from any Third-Party Claim, the Indemnifying Party may at
its own expense undertake full responsibility for the defense or prosecution of
such Third-Party Claim and may contest or settle it on such terms as it may
choose. If the Indemnifying Party fails to deliver such an agreement of
indemnity to the indemnified party:
(1) the Indemnifying Party at its own
expense may nevertheless participate with the indemnified party in the defense
or prosecution of the Third-Party Claim and in any and all settlement
negotiations relating thereto, and
(2) the indemnified party may contest
or settle the Third-Party Claim on such terms at it may choose, although the
indemnified party shall not reach a settlement until it has consulted in good
faith with the Indemnifying Party.
Any such participation shall not relieve the Indemnifying Party of its
obligations to indemnify the indemnified party under this Section 10.
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(ii) If by reason of any Third-Party Claim a
lien, attachment, garnishment or execution is placed upon any of the property or
assets of the indemnified party, the Indemnifying Party, if it desires to
exercise its right to defend or prosecute such suit, shall furnish a
satisfactory indemnity bond to obtain the prompt release of such lien,
attachment, garnishment or execution.
(e) Cooperation. The parties to this Agreement shall
execute such powers of attorney as may be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably be
related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business hours
to all properties, personnel, books, tax records, contracts, commitments and all
other business records of such other party and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested).
(f) Offset. With respect to any claims by the Purchaser
against the Seller or the Stockholder for indemnification under this Section 10,
in furtherance and not in limitation of its rights under this Agreement, the
Purchaser, at its option, shall be entitled to an immediate right of offset
against any amounts owed by the Purchaser to either the Seller or the
Stockholder, specifically excluding any payments to be paid to Stockholder as
compensation under the Employment Agreement.
11. OBLIGATIONS AFTER THE CLOSING.
(a) Distribution of Consideration. The Seller and the
Stockholder hereby covenant that on and after the Closing, they shall pay and
distribute any and all consideration paid by the Purchaser to the Seller
pursuant hereto in accordance with all applicable laws and shall indemnify and
hold the Purchaser harmless from any liability arising by virtue of any failure
on the part of the Seller or the Stockholder to comply in all respects with this
covenant.
(b) Transition of Business. The Seller and the
Stockholder agree to assist as requested to effect an orderly transition of the
Business to the Purchaser.
(c) Post Closing Access to Financial Records. There may
be circumstances from time to time hereafter, whether in connection with the
preparation of historical audited financial statements or otherwise, where the
Purchaser may need to have access to the financial records retained by the
Seller and/or the Stockholder, or their respective agents, with respect to the
Assets or the Business. The Seller and the Stockholder agree to provide to the
Purchaser and its counsel, accountants and other representatives full access
during normal business hours for inspection of such financial records of the
Seller and/or the Stockholder relating to the Assets or the Business as the
Purchaser or its counsel or accountants may from time to time reasonably
request.
(d) Employment of Employees; Benefit Plans. On the
Closing Date, Purchaser shall offer employment to such employees of Seller as
Purchaser, in its sole discretion, shall deem to be in its best interest.
Purchaser will assume no responsibility with regard to any Employee Benefit
Plans of Seller. Purchaser agrees to give each employee of Seller hired by
Purchaser credit
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for prior years of service with Seller for purposes of participation and vesting
in Purchaser's employee benefit plans. Effective at the Closing Date, all
employees of Seller hired by Purchaser shall be entitled to participate in
Purchaser's employee benefit plans. The Seller will adopt appropriate
resolutions of its Board of Directors terminating its Employee Benefit Plans
(except for the cafeteria plan) as of the Closing Date (or in the case of its
health insurance plan, as of the close of business on the date immediately prior
to the Closing Date). If and to the extent that the Seller obtains an
appropriate determination letter from the Internal Revenue Service with respect
to its money purchase pension plan and 401(k) profit sharing plan, the Seller's
former employees who become participants in the Purchaser's profit sharing plan
will be entitled to rollover their balances from the Seller's plans to the
Purchaser's plan.
12. RESTRICTIVE COVENANTS.
(a) Noncompetition. For the period commencing on the
Closing Date and continuing through and including the three (3) years following
the Closing Date, neither the Seller, the Stockholder, nor any officer or
director of the Seller, will, without the prior written consent of the
Purchaser, directly or indirectly, enter into, engage in, be employed by or
consult with any business in any county in any state in which either the Seller
or the Purchaser does or has done business, in competition with the Business,
whether as an individual, independent contractor, partner or joint venturer, or
as an officer, director, stockholder, agent, employee or salesman for any
person, firm, partnership, corporation or other entity.
(b) Nonsolicitation of Clients and Employees. For the
period commencing on the Closing Date and continuing through and including three
(3) years following the Closing Date, the Stockholder shall not, directly or
indirectly, either as an individual, partner, officer, director, stockholder,
advisor, independent contractor, joint venturer, consultant, agent, employee,
representative or salesman for any person, firm, partnership, corporation or
other entity, or otherwise, (i) solicit or counsel any third person,
partnership, joint venture, company, corporation, association or other
organization that is or was a client or prospective client (including any
individual who is or was an employee, principal, partner, officer or director of
a client or prospective client) of Purchaser or Seller with whom Stockholder had
a substantial relationship within the preceding three (3) year period,
regardless of such person's or entity's location, to terminate any business
relationship with Purchaser and/or to commence a similar business relationship
with any other individual or entity; (ii) accept, with or without solicitation,
any business from any third person, partnership, joint venture, company,
corporation, association or other organization that is or was a client or
prospective client (including any individual who is or was an employee,
principal, partner, officer or director of a client or prospective client), of
Purchaser or Seller with whom Stockholder had a substantial relationship within
the preceding three (3) year period, regardless of such person's or entity's
location; or (iii) solicit any of the employees, consultants, agents, or
independent contractors of Purchaser to terminate any business relationship with
Purchaser. The restrictions of this Section 12(b) shall not be violated by the
ownership of no more than 2% of the outstanding securities of any company whose
stock is traded on a national securities exchange or is quoted in the Automated
Quotation System of the National Association of Securities Dealers (NASDAQ).
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(c) Extension of Time. The period of time during which
the Seller or the Stockholder is prohibited from engaging in certain business
practices pursuant to Sections 12(a) and (b) shall be extended by any length of
time during which the Seller or the Stockholder (or either one of them) is in
breach of such covenant.
(d) Essential Elements. It is understood by and between
the parties hereto that the foregoing restrictive covenants set forth in
Sections 12(a) and (b) are essential elements of this Agreement, and that, but
for the agreement of the Seller and the Stockholder to comply with such
covenants, the Purchaser would not have agreed to enter into this Agreement.
Such covenants by the Seller and the Stockholder shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action of the Seller or the Stockholder against the
Purchaser, whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by the Purchaser of such covenant.
(e) Severability. It is agreed by the parties to this
Agreement that if any portion of the restrictive covenants set forth in Sections
12(a) and (b) is held to be unreasonable, arbitrary or against public policy,
then each such portion of such covenants shall be considered divisible both as
to time and geographical area. The parties agree that, if the specified time
period or the specified geographical area applicable to Sections 12(a) and/or
(b) is determined to be invalid, unreasonable, arbitrary or against public
policy, a lesser period of time or geographical area shall be enforced so long
as the same is not unreasonable, arbitrary or against public policy. The parties
to this Agreement agree that, if a specified time period or a specified
geographical area is determined to be unreasonable, arbitrary or against public
policy, a lesser time period or geographical area which is determined to be
reasonable, nonarbitrary and not against public policy may be enforced against
the Seller and/or the Stockholder.
(f) Termination Without Good Cause. In the event of the
termination without good cause of the Stockholder by the Purchaser as defined in
the Employment Agreement referred to in Section 7(b), the Restrictive Covenants
set forth in Sections 12(a) and (b) above shall extend only for a period of one
year from the date of such termination.
13. GENERAL.
(a) No Brokers. Each of the parties to this Agreement
represents and warrants, each to the others, that it has not utilized the
services of any finder, broker or agent. Each of the parties agrees to indemnify
the other parties against and hold them harmless from any and all liabilities to
any person, firm or corporation claiming any broker's or finder's fee or
commission of any kind on account of services rendered on behalf of such
corporation in connection with the transactions contemplated by this Agreement.
(b) Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein, therein or in
any document delivered in connection herewith or therewith. The waiver by any
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party to this Agreement of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
(c) Remedies.
(i) General. The parties to this Agreement
acknowledge that the performance of their respective obligations hereunder is
essential to the consummation of the transactions contemplated by this
Agreement. Each of them further acknowledges that the Assets are unique and that
no party will have an adequate remedy at law if any other party fails to perform
its or his obligations hereunder. The parties further agree that damages at law
will be an insufficient remedy to the Purchaser in the event that the
restrictive covenants of Sections 12(a) and (b) are violated. In any such event,
each party shall have the right, in addition to any other remedies or rights it
may have, upon application to a court of competent jurisdiction, to obtain
injunctive relief to compel specific performance of this Agreement. The other
party agrees to pay to the prevailing party all costs and expenses incurred by
the prevailing party relating to the enforcement of this Agreement, including
reasonable fees and disbursements of counsel (before, during or after
arbitration or trial and in appellate proceedings). The right to seek specific
performance by way of injunctive relief provided in this Section 13(c)(i) and
the right to indemnification provided in Section 10 shall be the exclusive
remedies of the parties pursuant to this Agreement.
(ii) Mandatory Arbitration. Should any dispute
arise among or between one or more of the parties to this Agreement relating to
this Agreement, the interpretation of any provision hereof, or any of the rights
or obligations hereunder of any of the parties to this Agreement, then at the
election of any party involved in such dispute, such dispute shall be resolved
finally by a single arbitrator in an arbitration proceeding conforming to the
rules of the American Arbitration Association applicable to commercial
arbitrations. The arbitrator shall be appointed as follows: the party not
electing to submit the matter to arbitration (the "Non-Electing Party") shall
provide to the other (the "Electing Party") a list of three proposed
arbitrators, each of whom shall be knowledgeable as to matters that are the
subject of the dispute and each of whom shall be completely independent of and
with no prior affiliation or direct or indirect relationship with any party or
any of their affiliates. The Electing Party shall then select the arbitrator
from such list or, if all such proposed arbitrators are reasonably unacceptable
to such party, so advise the Non-Electing Party, whereupon such party shall
prepare a new list of three proposed arbitrators and the selection process shall
begin anew. The arbitration shall take place in a state which shall be agreed to
by the parties, other than the state where the Stockholder resides or where the
Purchaser is incorporated; provided, however, that if the parties cannot agree
upon a state, the arbitration shall take place in Denver, Colorado. The decision
of such arbitrator shall be final and binding upon the parties, and such
decision shall be enforceable as a judgment in a court of competent
jurisdiction. Other than the right to seek specific performance by way of
injunctive relief to enforce the provisions of Sections 12(a) and (b) set forth
in Section 13(c)(i) above, each party to this Agreement covenants not to
institute any suit or other proceeding in any court with respect to any matter
arising under or pursuant to or directly or indirectly relating to this
Agreement, the subject matter hereof or the other agreements, documents and
instruments delivered or required to be delivered hereunder or in connection
herewith unless the intended subject matter thereof has first been submitted for
arbitration in accordance with the foregoing procedure and such arbitration
proceeding has been
23
<PAGE> 28
completed. In order to maintain the confidentiality of the dispute intended to
be resolved by arbitration as provided in this Agreement as well as the
information adduced and contentions asserted in any such arbitration, the
parties agree to maintain in strict confidence and agree to neither make nor
suffer any public disclosure of the fact of, contentions or evidence,
discovered, developed or introduced in and the result of any such arbitration;
provided, however, the foregoing to the contrary notwithstanding, that the
Purchaser may make public disclosures regarding the existence of the
arbitration, the nature of the dispute and the results thereof as may be
necessary or appropriate to satisfy the Purchaser's disclosure obligations under
applicable securities or other laws.
(d) Expenses. Each of the parties to this Agreement shall
pay its own expenses in connection with this Agreement and the transactions
contemplated hereby, including the fees and expenses of its counsel and its
certified public accountants and other experts.
(e) Press Releases. The Purchaser and the Seller shall
consult with each other and shall mutually agree as to the form and substance of
any press release or other public disclosure of matters related to this
Agreement prior to the distribution or documentation of any such release;
provided however, that nothing herein shall be deemed to prohibit any party from
making any disclosure which its counsel deems necessary in order to fulfill such
party's disclosure obligations imposed by law.
(f) Confidentiality. If the transactions contemplated by
this Agreement are not consummated, then each of the parties to this Agreement
agrees to keep confidential and to not use for its own benefit any of the
information (unless in the public domain) obtained from any other party and to
promptly return to such other parties all schedules, documents or other written
information (without retaining copies thereof) previously obtained from such
other parties. If the transactions contemplated in this Agreement are
consummated, each of the parties agrees to keep confidential and not to disclose
to any person or entity, whether orally or in writing, any of the terms of the
transactions or any of the specific provisions of this Agreement or any of the
Exhibits hereto.
(g) Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy or similar
electronic transmission method; the day after it is sent, if sent by recognized
expedited delivery service; and five days after it is sent, if mailed, first
class mail, postage prepaid. In each case notice shall be sent to the parties at
the addresses set forth on EXHIBIT N.
(h) Entire Agreement; Amendment. This Agreement
(including the exhibits hereto and all documents and papers delivered pursuant
hereto and any written amendments hereof executed by the parties to this
Agreement) constitutes the entire agreement, and supersedes all prior agreements
and understandings, oral and written, among the parties to this Agreement with
respect to the subject matter hereof, other than the agreements and
understandings set forth in the Confidentiality Agreement dated August 26, 1997
between the parties hereto, which shall remain in full force and effect in
accordance with the terms thereof. This Agreement may not be modified or
otherwise amended except by an instrument in writing executed by the parties to
this Agreement.
24
<PAGE> 29
(i) Assignability. This Agreement shall not be assignable
by any of the parties to this Agreement without the prior written consent of all
other parties to this Agreement.
(j) Venue; Process. The parties to this Agreement agree
that jurisdiction and venue of any action brought pursuant to this Agreement, to
enforce the terms hereof or otherwise with respect to the relationships between
the parties created or extended pursuant hereto, shall properly lie in Denver,
Colorado, unless another state is agreed to by the parties. The parties further
agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such Court shall constitute valid and
lawful service of process against them, without the necessity for service by any
other means otherwise provided by statute or rule of Court.
(k) Further Assurances. The parties to this Agreement
will execute and deliver, or cause to be executed and delivered, such additional
or further transfers, assignments, endorsements or other instruments as any
party or its counsel may reasonably request for the purpose of carrying out the
transactions contemplated by this Agreement.
(l) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(m) Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(n) Governing Law. The validity, construction and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the State of Florida (except any choice of law
provision of Florida law shall not apply if the law of a state or jurisdiction
other than Florida would apply thereby).
IN WITNESS WHEREOF, this Agreement has been signed by the individual
parties hereto and signed by an officer thereunto duly authorized and attested
under the corporate seal by the Secretary of each of the corporate parties
hereto, all on the date first above written.
ATTEST: CHARTWELL PARTNERS
INTERNATIONAL, INC.
(CORPORATE SEAL)
By:
- --------------------------------- ------------------------------
Secretary President
"SELLER"
25
<PAGE> 30
WITNESSES:
- --------------------------------- ------------------------------
DAVID M. DEWILDE
- --------------------------------- ------------------------------
As to Stockholder "STOCKHOLDER"
ATTEST: LAMALIE ASSOCIATES, INC.
(CORPORATE SEAL)
By:
- --------------------------------- ---------------------------
Secretary Jack P. Wissman, Executive
Vice President
"PURCHASER"
26
<PAGE> 31
EXHIBITS
<TABLE>
<CAPTION>
Exhibit Section Description
============================================================================
<S> <C> <C>
A 1.5(b), 1.(c) Excluded Assets
A(1) 2(c) Form of Note
B 2.(f) Assumed Liabilities
C 2.(g) Allocation of Purchase Price
D 3.(j) Leased Real Property
E 3.(m) Employee Benefits Plan of Seller
F 3.(n) Owned Personal Property
G 3.(o) Leased Personal Property
H 3.(e), 3.(f) Seller's Financial Statements
3,(p)
I 3.(q) Insurance Policy List
J 3.(t) Consents and Approvals to be Obtained
by Seller
K 7.(b), 8.(d) Form of Employment Agreement
L 7.(c) Form of Lock-Up Agreement
M 7.(j) Opinion of Seller's Counsel
N 13.(g) List of Party Addresses for Notices
</TABLE>
27
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of this 27th day of
February, 1998, by and among LAMALIE ASSOCIATES, INC., a Florida corporation
("LAI"), WARD HOWELL INTERNATIONAL, INC., a Connecticut corporation and the
wholly-owned subsidiary of LAI (the "Company"), and NAME, residing at Address,
City, State Zip (the "Partner").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Partner, and the Partner hereby accepts
such employment, upon the terms and subject to the conditions set forth in this
Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall be effective as of the date first
above written and shall continue for a period of three years from the date of
this Agreement.
3. COMPENSATION
(a) Partner Compensation Plan. (i) All compensation to be paid by the
Company to the Partner shall be determined in accordance with the LAI Partner
Compensation Plan dated March 1, 1997 (the "Partner Compensation Plan") as
adopted by the Compensation Committee (the "Committee") of the Board of
Directors of LAI (the "LAI Board"). For a period of three (3) years following
the date of this Agreement, the Partner Compensation Plan applicable to the
Partner under this Agreement may be amended with respect to the Partner only
upon the affirmative vote of holders of two thirds (2/3) or more of the shares
of LAI Common Stock then held by former shareholders of Ward Howell
International, Inc., a Connecticut corporation ("Ward Howell") who are then
employees of the Company, if such shares were acquired by them in connection
with the Merger Agreement dated February 20, 1998 by and among LAI, the Company
and Ward Howell (the "Merger Agreement"), but excluding for this purpose all
such shares held by Michael Corey, Patrick Corey, Paul Hanson and Thomas Moran.
(ii) The foregoing to the contrary notwithstanding, for the period
January 1, 1998 through February 29, 1999, the Partner will be entitled to
receive compensation under the Partner Compensation Plan at the rate of 35% of
billings on the first $400,000 of billings and 50% of all billings in excess of
$400,000. Solely for purposes of determining the amount of billings for which
the Partner shall be credited in making the foregoing determination, the
Partner's billings at Ward Howell during January and February 1998 shall be
taken into account.
<PAGE> 2
(b) Base Salary. Subject to the terms of the Partner Compensation Plan,
the Company shall pay to the Partner as basic compensation for all services
rendered by the Partner during the term of this Agreement an initial basic
annualized salary of $Salary per year, payable monthly or in other more frequent
installments, as determined by the Company (the "Base Salary"). The Base Salary
shall be treated as an advance against billings generated by the Partner, as
more fully set forth in the Partner Compensation Plan.
(c) Bonuses. In addition to the Base Salary to be paid pursuant to
Section 3(b) of this Agreement, during the term of this Agreement or any renewal
or extension, the Company shall pay to the Partner as incentive compensation
monthly bonuses based on billings in accordance with the terms of the Partner
Compensation Plan. In addition, the Board, in its discretion, may award a bonus
or bonuses to the Partner at the Company's fiscal year end, also in accordance
with the terms of the Partner Compensation Plan.
(d) Stock Option Award. The Partner shall participate in LAI's 1998
Omnibus Stock and Incentive Plan as currently in effect ("the Omnibus Plan"), in
accordance with the terms thereof, through the grant on the date hereof of
options to purchase _____ shares of LAI's common stock at the closing price on
the Nasdaq Stock Market (NMS) on the date of grant (the "Options"). The Options
shall vest over a period of five (5) years at the rate of 20% per year, and
shall have a term of ten (10) years. Attached hereto as Exhibit A is a Stock
Option Certificate in the form to be issued to evidence the Options. The parties
acknowledge that the Options will be issued subject to obtaining approval of the
Omnibus Plan by LAI's stockholders at their 1998 annual meeting. If such
approval is not obtained, LAI will cause the Options to be reissued promptly
thereafter on substantially the same terms and conditions as those specified in
the first two sentences of this Section 3(d), including the use of the initial
date of grant as the starting date for vesting purposes and the same exercise
price as under the original Options; provided, however, in the event of such a
re-issuance, the parties recognize the options so re-issued will not be able to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
(e) Reimbursement. The Company shall reimburse the Partner, in accordance
with the Company's policies and practices for Partners, for all reasonable
expenses incurred by the Partner in the performance of the Partner's duties
under this Agreement, provided, however, that the Partner has furnished to the
Company an itemized account, reasonably satisfactory to the Company, in
substantiation of such expenditures.
(f) Other Benefits. The Partner shall be entitled to such fringe benefits
including, but not limited to, medical and other insurance benefits as may be
provided from time to time by the Company to other Partners of the Company which
shall be the same as the benefits provided by LAI to its Partners.
(g) Other Incentive and Benefit Plans. The Partner shall be eligible to
participate, in accordance with the terms of such plans as they may be adopted,
amended and administered from time to time, in incentive, bonus, benefit or
similar plans, including without limitation, any stock option, bonus or other
equity ownership plan, any short, mid or long term incentive plan and any
<PAGE> 3
other bonus, pension or profit sharing plans now existing or hereafter
established by the Company or LAI from time to time for its Partners.
4. DUTIES
(a) General. The Partner is engaged as a Partner of the Company. The
Partner's duties and responsibilities shall be commensurate with the Partner
Role Definition as in effect from time to time (the "Partner Role Definition").
The Partner acknowledges having previously received a copy of the Partner Role
Definition as currently in effect in the form attached as Exhibit B to this
Agreement. Specific duties and responsibilities consistent with the Partner Role
Definition may be assigned to the Partner by the Board of Directors of the
Company (the "Board") or the LAI Board from time to time.
(b) Home Office. The parties acknowledge that the Partner will render
services hereunder principally from the Company's office located in ______ (the
"Partner's Home Office"). The parties recognize that effectively carrying out
the duties and responsibilities of the Partner Role Definition and, accordingly,
the effective performance of the Partner's duties under this Agreement, will
involve significant amounts of travel away from the locale of the Partner's Home
Office. However, the Partner shall not be obligated to relocate to an office
from which the Partner is to principally render services located outside of the
general locale of the Partner's Home Office.
5. EXTENT OF SERVICES
During the term of the Partner's employment under this Agreement, the
Partner shall devote full-time energy and attention during regular business
hours to the benefit and business of the Company as may be reasonably necessary
in performing the Partner's duties pursuant to this Agreement.
6. FACILITIES
The Company shall provide the Partner with a fully furnished office in
the Partner's Home Office. The facilities of the Company and LAI shall be
generally available to the Partner in the performance of the Partner's duties
pursuant to this Agreement, it being understood and contemplated by the parties
that all equipment, supplies and office personnel reasonably required for the
performance of the Partner's duties under this Agreement shall be provided by
and at the sole expense of the Company.
<PAGE> 4
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Partner dies during the term of the Partner's
employment, the Company shall pay to the estate of the Partner within 30 days
after the date of death such Base Salary and any bonus compensation earned as
would otherwise have been payable to the Partner up to the end of the month in
which the Partner's death occurs and other compensation which would be earned
upon collection of accounts receivable resulting from work performed prior to
the date of termination pursuant to the Partner Compensation Plan but not yet
paid. After receiving the payments provided in this Section 7(a), the Partner
and the Partner's estate shall have no further rights under this Agreement
(other than those rights already accrued, which shall specifically include the
vesting of options as set forth in Section 8(d) hereof).
(b) Disability. (i) During any period of disability, illness or
incapacity during the term of this Agreement which renders the Partner at least
temporarily unable to substantially perform the services required under this
Agreement, the Partner shall receive the Base Salary payable under Section 3(b)
of this Agreement plus any bonus compensation earned and other compensation
which would be earned upon collection of accounts receivable resulting from work
performed prior to the date of termination for Permanent Disability pursuant to
the Partner Compensation Plan but not yet paid, less any cash benefits received
by him under any disability insurance paid for by the Company. Upon the
Partner's "Permanent Disability" (as defined below), which Permanent Disability
continues during the payment periods specified herein, the Company shall pay to
the Partner the Base Salary payable under Section 3(b) of this Agreement plus
any bonus compensation earned and other compensation which would be earned upon
collection of accounts receivable resulting from work performed prior to the
date of termination for Permanent Disability pursuant to the Partner
Compensation Plan to the end of the month in which the Partner is terminated for
Permanent Disability as set forth below, less any cash benefits received by him
under any disability insurance paid for by the Company. The Partner may be
entitled to receive payments under any disability income insurance which may be
carried by, provided by or paid for by the Company from time to time. Upon
"Permanent Disability" (as that term is defined in Section 7(b)(ii) below) of
the Partner, except as provided in this Section 7(b) and in Section 8(d) below,
all rights of the Partner under this Agreement shall terminate (other than
rights already accrued).
(ii) The term "Permanent Disability" as used in this Agreement
shall mean, in the event a disability insurance policy is provided or paid for
by the Company covering the Partner at such time and is in full force and
effect, the definition of permanent disability set forth in such policy. If no
such disability policy is so maintained at such time and is then in full force
and effect, the term "Permanent Disability" shall mean the inability of the
Partner, as reasonably determined by the Board by reason of physical or mental
disability to perform the duties required of him under this Agreement for a
period of one hundred and twenty (120) days in any one-year period. Successive
periods of disability, illness or incapacity will be considered separate periods
unless the later period of disability, illness or incapacity is due to the same
or related cause and commences less than three months from the ending of the
previous period of disability. Upon such determination, the Board may terminate
the Partner's employment under this Agreement upon ten (10) days' prior written
notice. If any determination of the Board with respect to permanent disability
is disputed by the Partner, the parties hereto agree to abide by the decision of
a panel of three physicians. The Partner
<PAGE> 5
and Company shall each appoint one member, and the third member of the panel
shall be appointed by the other two members. The Partner agrees to make himself
available for and submit to reasonable examinations by such physicians as may be
directed by the Company. Failure to submit to any such examination may be
treated by the Company as an admission by the Partner of Permanent Disability.
8. OTHER TERMINATIONS
(a) By the Partner. (i) The Partner may terminate the Partner's
employment hereunder upon giving at least two weeks' prior written notice.
(ii) If the Partner gives notice pursuant to Section 8(a) above,
the Company shall have the right (but not the obligation) to relieve the
Partner, in whole or in part, of the Partner's duties under this Agreement, or
direct the Partner to no longer perform such duties, or direct that the Partner
should no longer report to work, or any combination of the foregoing (an "Early
Termination"). In any such event, the Partner shall be entitled to receive only
the Base Salary and any bonus compensation earned and other compensation which
would be earned upon collection of accounts receivable resulting from work
performed prior to the date of termination pursuant to the Partner Compensation
Plan but not yet paid, as would otherwise have been payable to the Partner up to
the date on which the Company provides for Early Termination or, if there is no
Early Termination, the expiration of the two week minimum notice period. If the
Partner gives notice pursuant to Section 8(a), upon receiving the payments
provided for under this Section 8(a), all rights of the Partner to receive
compensation or other payments or benefits under this Agreement (other than
rights already accrued) shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided in
this Agreement, the Company may terminate the employment of the Partner
hereunder only for "Good Cause," which shall mean (a) the continued refusal or
failure of the Partner to make reasonable efforts to carry out his duties as a
Partner with the Company as set forth in the Partner Role Definition as in
effect on the date of this Agreement and attached as Exhibit B to this Agreement
(other than any failure due to physical or mental incapacity), as determined in
the reasonable discretion of the LAI Board or the Committee, which has not
ceased within a reasonable period (not to exceed 30 days) after a written demand
for substantial performance is delivered to the Partner by or on behalf of the
Company, which demand shall identify in reasonable detail the manner in which
the Company believes that the Partner has not performed such duties and
indicates the steps required to be taken to cure such refusal or failure, (b)
willful misconduct materially and demonstrably injurious to the Company,
financially or otherwise, as determined in the reasonable discretion of the LAI
Board or the Committee or (c) the Partner's conviction of or the entering of a
plea of nolo contendere to either a felony (excepting any felony traffic
offenses, including driving under the influence of alcohol or drugs) or any
crime directly related to the Partner's employment by the Company which causes a
substantial detriment to the Company. With respect to any proposed termination
pursuant to clauses (a) or (b) of the preceding sentence, the Partner may
request in writing an opportunity to meet with the LAI Board or the Committee,
at or prior to the meeting at which the LAI Board or the Committee will consider
whether to terminate this Agreement for Good Cause, to review the matters set
forth
<PAGE> 6
in the written notice. No termination for Good Cause shall be effected until
after any such requested meeting has taken place.
(ii) If the employment of the Partner is terminated for Good
Cause under Section 8(b)(i) of this Agreement, the Company shall pay to the
Partner any Base Salary earned prior to the effective date of termination
specified by the LAI Board or the Committee but not yet paid and any bonus
compensation earned and other compensation which would be earned upon collection
of accounts receivable resulting from work performed prior to the date of
termination pursuant to the Partner Compensation Plan but not paid to the
Partner prior to the effective date of such termination. Under such
circumstances, such payments shall be in full and complete discharge of any and
all liabilities or obligations of the Company to the Partner hereunder, and the
Partner shall be entitled to no further benefits under this Agreement (other
than rights already accrued).
(iii) Termination by the Company of the employment of the Partner
other than as expressly specified above in Section 8(b)(i) for Good Cause shall
be deemed to be a termination of employment by the Company "Without Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right with or without
notice to terminate the Partner's employment Without Good Cause pursuant to the
provisions of this Section 8(c). If the Company terminates the Partner's
employment with notice, such notice may not provide a termination date more than
two weeks after the date on which the notice is delivered to the Partner. If the
Company shall terminate the employment of the Partner Without Good Cause
effective on a date earlier than the termination date provided for in Section 2
(with the effective date of termination as so identified by the Company being
referred to herein as the "Accelerated Termination Date"), the Partner shall
continue to receive the Base Salary until the end of the term of this Agreement
as provided for in Section 2 or for a period of six months, whichever is longer,
plus any bonus compensation earned and other compensation which would be earned
upon collection of accounts receivable resulting from work performed prior to
the date of such termination pursuant to the terms of the Partner Compensation
Plan but not yet paid; provided that, the Company shall have the right to
relieve the Partner, in whole or in part, of the Partner's duties under this
Agreement, or direct the Partner to no longer perform such duties, or direct
that the Partner no longer be required to report to work, or any combination of
the foregoing, in each case prior to the Accelerated Termination Date. If the
Partner is terminated Without Good Cause pursuant to this provision, the Partner
may no longer be required by the Company to perform his duties or report to work
after the Accelerated Termination Date.
(ii) The parties agree that, because there can be no exact
measure of the damage that would occur to the Partner as a result of a
termination by the Company of the Partner's employment Without Good Cause, the
unearned payments and benefits paid and provided pursuant to this Section 8(c),
in addition to being consideration for the release required to be delivered
pursuant to Section 8(e) of this Agreement, also shall be deemed to constitute
full consideration for any such damages and shall be considered as liquidated
damages and not a penalty for the Company's termination of the Partner's
employment Without Good Cause.
<PAGE> 7
(d) Vesting of Options. Upon any termination of the Partner's employment
for any reason (including without limitation death or Permanent Disability)
other than a voluntary termination by the Partner pursuant to Section 8(a)
hereof or by the Company for Good Cause pursuant to Section 8(b) hereof, any and
all vesting requirements or conditions affecting the Options shall be deemed to
be fully satisfied or to have fully accrued and any risk of forfeiture with
respect thereto shall be deemed to have lapsed.
(e) Release. Payment of any compensation to the Partner under this
Section 8 following termination of employment other than any Base Salary or
bonus compensation earned and other compensation which would be earned upon
collection of accounts receivable resulting from work performed prior to the
date of termination pursuant to the Partner Compensation Plan but not yet paid
shall be conditioned upon the prior receipt by the Company of a release executed
by the Partner in substantially the form attached to this Agreement as Exhibit
C.
(f) Effect on Certain Covenants. Notwithstanding any termination of the
Partner's employment, the Partner's covenants set forth in Sections 10, 11 and
12 are intended to and shall remain in full force and effect.
9. DISCLOSURE
The Partner agrees that during the term of the Partner's employment by
the Company, the Partner will disclose only to the Company all ideas, methods,
plans, developments or improvements known by him which relate to the business of
the Company acquired by the Partner during the Partner's employment by the
Company. Nothing in this Section 9 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure as a trade secret of a third party or by any other lawful
prohibition against such communication. The covenants of this Section 9 shall
not be violated by ordinary and customary communications with reporters, bankers
and securities analysts and other members of the investment community.
10. CONFIDENTIALITY
The Partner agrees to keep in strict secrecy and confidence any and all
information the Partner assimilates or to which the Partner has access during
the Partner's employment by the Company and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Company, including but not limited to information regarding the Company's focus
account strategy both generally and as it may be directed at particular existing
and prospective clients, the Company's past, current and future strategic plans
and underlying data and confidential and proprietary information regarding
search candidates and companies, including but not limited to that available on
the Company's CMS system (collectively, the "Confidential Information"). The
Partner agrees that both during and after the term of the Partner's employment
by the Company, the Partner will not, without the prior written consent of the
Company, disclose any Confidential Information to any third person, partnership,
joint venture, company, corporation
<PAGE> 8
or other organization. The foregoing covenants shall not be breached to the
extent that any such Confidential Information was known to the Partner prior to
his employment with the Company or becomes a matter of general knowledge other
than through a breach by the Partner. Further, the provisions of this Section 10
shall not apply to the Partner to the extent that they would prevent the Partner
from utilizing any information known to him personally and contained in the
Partner's personal business plan or contained in the Partner's personal Rolodex
or similar personal property about pending or prior executive searches for which
the Partner was the originating or engagement partner and which will result in
an obligation to pay to the Company the liquidated damages amounts set forth in
Section 12(b) hereof (the "Personally Developed Information"). The foregoing
exceptions with respect to the use of Personally Developed Information and the
Partner's personal property shall not relieve the Partner of the Partner's
obligation upon termination of employment with the Company to promptly return to
the Company any and all Company property, including personal property, software,
files and materials used or developed by the Partner during the Partner's
employment with the Company or Ward Howell (other than Personally Developed
Information), regardless of whether such materials are in analog, digital, paper
or electronic documents, files or other media forms.
11. NONSOLICITATION OF EMPLOYEES
(a) General. The Partner hereby acknowledges that, during and as a result
of the Partner's employment by the Company, the Partner has received and shall
continue to receive: (1) special training and education with respect to
executive search research and methods and other related matters, and (2) access
to confidential information and business and professional contacts, including
contacts with clients and prospective clients of the Company. In consideration
of the special and unique opportunities afforded to the Partner by the Company
as a result of the Partner's employment, as outlined in the previous sentence,
the Partner agrees to the restrictive covenants in this Section 11. The parties
hereto also acknowledge that the restrictive covenants in this Section 11 are
being entered into between the parties in connection with and as a result of the
transactions contemplated by the Merger Agreement.
(b) Nonsolicitation of Employees. During the term of the Partner's
employment, whether pursuant to this Agreement, any automatic or other renewal
or extension hereof or otherwise, and, except as may be otherwise herein
provided, for a period of two years after the termination of the Partner's
employment with the Company for any reason other than termination by the Company
Without Good Cause as defined in Section 8(c) of this Agreement, the Partner
shall not, directly or indirectly, either as an individual, partner, officer,
director, stockholder, executive, advisor, independent contractor, joint
venturer, consultant, agent, employee, representative or salesman for any
person, firm, partnership, corporation or other entity, or otherwise (1) solicit
any of the current or former employees, consultants, directors or officers of
the Company, LAI or any of their affiliates to terminate any business
relationship with the Company, LAI or any of their affiliates or (2) employ or
retain as an independent contractor, consultant or agent any of the current or
former employees, consultants, directors or officers of the Company, LAI or any
of their affiliates, unless such persons have been separated from any
relationship with the Company, LAI or any of their affiliates for at least six
(6) months; unless any such employees, consultants, directors or officers of the
Company,
<PAGE> 9
LAI or any of their affiliates are or have been terminated by the Company, LAI
or any of their affiliates.
(c) Extension of Time. The period of time during which the Partner is
prohibited from engaging in certain business practices pursuant to Section 11
shall be extended by any length of time during which the Partner is in breach of
such covenant.
(d) Essential Element. It is understood by and between the parties hereto
that the foregoing restrictive covenants set forth in this Section 11 are
essential elements of this Agreement, and that, but for the agreement of the
Partner to comply with such covenants, the Company would not have agreed to
enter into this Agreement. Such covenants by the Partner shall be construed as
agreements independent of any other provision in this Agreement.
12. REMEDIES
(a) Specific Performance. The Partner agrees that damages at law will
be an insufficient remedy to the Company if the Partner violates the terms of
Sections 9, 10 or 11 of this Agreement and that the Company would suffer
irreparable damage as a result of any such violation. Accordingly, it is agreed
that the Company shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief to enforce the provisions of such
Sections, which injunctive relief shall be in addition to any other rights or
remedies available to the Company hereunder. The parties consent to the
modification or termination of any injunctive relief obtained pursuant to this
Section 12(a) in accordance with and upon the entry of a final decision obtained
in arbitration pursuant to Section 12(c) of this Agreement with respect to the
subject matter of any such injunction.
(b) Liquidated Damages. The Partner agrees that no exact measure of the
damage caused to the Company if this Agreement is terminated by the Partner
pursuant to Section 8(a) hereof or by the Company for Good Cause as defined in
Section 8(b) hereof can be determined, and, therefore, for the purpose of
liquidating the amount of damages and not as a penalty, it is agreed that in the
case of a termination of this Agreement by the Partner pursuant to Section 8(a)
hereof or by the Company for Good Cause as defined in Section 8(b) hereof, and
in addition to the injunctive relief provided for by Section 12(a) above, the
damages caused shall be and are fixed, liquidated and determined at an amount,
payable in cash, which shall be equal to the sum of (i), (ii) and (iii) below;
provided, however, that this Section 12(b) shall not apply in the case of
termination of this Agreement by the Company for Good Cause as defined in
Section 8(b) hereof if such termination for Good Cause is based on the Partner's
failure to comply with the second or fourth bullet points under
"Professionalism", the sixth bullet point under "Quality," or any of the bullet
points under "Partnership" set forth in the Partner Role Definition attached to
this Agreement as Exhibit B.
(i) If the date of termination occurs on or before one year after
the date of execution of this Agreement, a lump sum cash payment in the amount
of $Liquidated Damages (the "Lump Sum Liquidated Damage Payment"); if the
termination date occurs more than one year after the date of execution of this
Agreement, but no later than the end of the second year after such execution, a
<PAGE> 10
lump sum cash payment equal to two-thirds (2/3) of the Lump Sum Liquidated
Damage Payment; if the termination date occurs more than two years after the
date of execution of this Agreement but before the expiration of the three-year
term of this Agreement, a lump sum cash payment equal to one-third (1/3) of the
Lump Sum Liquidated Damage Payment; and if the termination date occurs more than
three years after the date of execution of this Agreement, no Lump Sum
Liquidated Damage Payment shall be made.
(ii) Fifty percent (50%) of the gross fee revenues derived by
the Partner personally or by any entity with which Partner becomes employed or
otherwise associated (whichever is greater) from any executive search work
performed or assignment obtained as a result of or in connection with
Competition by the Partner with the Company as defined below during the
remainder of the unexpired term of this Agreement (the "Competition Period"),
including revenues paid later than the Competition Period as a result of work
performed during the Competition Period, to the extent that such revenues are
generated from existing clients of LAI or any of its affiliates as of the date
of this Agreement or from new clients of the Company, LAI or any of their
affiliates acquired after the date of this Agreement which are not set forth on
Exhibit D hereto. If the date of termination occurs within 90 days after the
occurrence of any "Pivotal Change in Control of LAI," as that term is defined in
Section 12(b)(v), the Partner's obligation to make payment to the Company of the
amounts set forth in this Section 12(b)(ii) shall terminate.
(iii) Thirty-five percent (35%) of the gross fee revenues derived
by the Partner personally or by any entity with which Partner becomes employed
or otherwise associated (whichever is greater) from any executive search work
performed or assignment obtained as a result of or in connection with
Competition by the Partner with the Company as defined below during the
remainder of the unexpired term of this Agreement, including revenues paid later
than the Competition Period as a result of work performed during the Competition
Period, to the extent that such revenues are generated from the clients of Ward
Howell as listed on Exhibit D. If the date of termination occurs within 90 days
after the occurrence of any "Pivotal Change in Control of LAI," as that term is
defined in Section 12(b)(v), the Partner's obligation to make payment to the
Company of the amounts set forth in this Section 12(b)(iii) shall terminate.
(iv) "Competition" by the Partner with the Company for purposes
of this Section 12 shall be defined as any of the following actions taken by the
Partner, directly or indirectly, either as an individual, partner, officer,
director, stockholder, executive, advisor, independent contractor, joint
venturer, consultant, agent, employee, representative or salesman for any
person, firm, partnership, corporation or other entity, or otherwise, during the
Competition Period: (1) soliciting or counseling any third person, partnership,
joint venture, company, corporation, association or other organization that is
or was a client (including for purposes of this clause (1) and not for purposes
of clause (2) below, any individual who is or was an employee, principal,
partner, officer or director of a client) of the Company, LAI, Ward Howell, or
any of their affiliates, regardless of such person's or entity's location, to
terminate any business relationship with the Company, LAI, Ward Howell or any of
their affiliates and/or to commence a similar business relationship with any
other individual or entity; (2) accepting, with or without solicitation, any
business from any third person, partnership, joint venture, company,
corporation, association or other organization that is or was a client of the
Company, LAI, Ward Howell or any of their affiliates, regardless of such
person's or entity's location.
<PAGE> 11
(v) "Pivotal Change in Control of LAI" shall mean any of the
following: (1) the acquisition of "beneficial ownership" as that term is defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "1934 Act") of LAI's
securities comprising 51% or more of the combined voting power of LAI's
outstanding securities by any "person" (as that term is used in Sections 13(d)
and 14(d)(2) of the 1934 Act), but shall not include any acquisition or
ownership by (X) LAI, (Y) any trustee or fiduciary acting in that capacity for
an employee benefit plan sponsored by LAI or (Z) persons who prior to any such
acquisition were employees of the Company, LAI and any subsidiary of the Company
or LAI and, in each of the foregoing, each such person's "affiliates" and
"associates" (as those terms are defined under the 1934 Act), (2) the failure of
the "Incumbent Directors" (as defined below) to constitute at least a majority
of all directors of LAI (for these purposes, "Incumbent Directors" means
individuals who were the directors of LAI on January 1, 1998, and, after his or
her election, any individual becoming a director subsequent to January 1, 1998,
whose election, or nomination for election by LAI's stockholders, is approved by
a vote of at least a majority of the directors then comprising the Incumbent
Directors, except that no individual shall be considered an Incumbent Director
who is not recommended by management and whose initial assumption of office as a
director is in connection with an actual or threatened "election contest"
relating to the "election of directors" of LAI, as such terms are used in Rule
14a-11 of Regulation 14A under the 1934 Act; (3) the closing of a sale of all or
substantially all of the assets of LAI; or (4) the closing of a merger or
consolidation involving LAI in which LAI is not the surviving corporation and
then only if immediately following such merger or consolidation, less than a
majority of the surviving corporation's outstanding voting stock is held by
persons who were stockholders of LAI immediately prior to such merger or
consolidation.
(c) Mandatory Arbitration.
(i) General. Should any dispute arise among or between one or
more of the parties to this Agreement relating to this Agreement, the
interpretation of any provision hereof, or any of the rights or obligations
hereunder of any of the parties to this Agreement, then at the election of any
party involved in such dispute, such dispute shall be resolved finally by a
single arbitrator (who, to the extent reasonably practical in accordance with
the rules and procedures of the American Arbitration Association, will be a
retired judge) in an arbitration proceeding conforming to the rules of the
American Arbitration Association applicable to commercial arbitrations. If the
arbitration proceeding would qualify as an expedited arbitration proceeding
pursuant to the rules of the American Arbitration Association based on the
amount in controversy, the rules applicable to expedited arbitrations shall
apply.
(ii) Appointment of Arbitrator. The arbitrator shall be appointed
as follows: the party not electing to submit the matter to arbitration (the
"Non-Electing Party") shall provide to the other (the "Electing Party") a list
of three proposed arbitrators, each of whom shall be knowledgeable as to matters
that are the subject of the dispute and each of whom shall be completely
independent of and with no prior affiliation or direct or indirect relationship
with any party or any of their affiliates. The Electing Party shall then select
the arbitrator from such list or, if all such proposed arbitrators are
reasonably unacceptable to such party, so advise the Non-Electing Party,
whereupon such party shall prepare a new list of three proposed arbitrators and
the selection process shall begin anew.
<PAGE> 12
(iii) Location of Arbitration. The arbitration shall take place
in the closest of Atlanta, Georgia, Chicago, Illinois, Houston, Texas, Los
Angeles, California, New York, New York, Phoenix, Arizona or Tampa, Florida, to
the city in which the Partner's Home Office is located.
(iv) Effect of Arbitration. The decision of such arbitrator
shall be final and binding upon the parties, and such decision shall be
enforceable as a judgment in a court of competent jurisdiction. Other than the
Company's right to seek specific performance by way of injunctive relief to
enforce the provisions of Sections 9, 10 and 11 set forth in Section 12(a)
above, each party to this Agreement covenants not to institute any suit or other
proceeding in any court with respect to any matter arising under or pursuant to
or directly or indirectly relating to this Agreement, the subject matter hereof
or the other agreements, documents and instruments delivered or required to be
delivered hereunder or in connection herewith unless the intended subject matter
thereof has first been submitted for arbitration in accordance with the
foregoing procedure and such arbitration proceeding has been completed.
(v) Confidentiality of Arbitration. In order to maintain the
confidentiality of the dispute intended to be resolved by arbitration as
provided in this Agreement as well as the information adduced and contentions
asserted in any such arbitration, the parties agree to maintain in strict
confidence and agree to neither make nor suffer any public disclosure of the
fact of, contentions or evidence, discovered, developed or introduced in and the
result of any such arbitration; provided, however, the foregoing to the contrary
notwithstanding, that the Company may make public disclosures regarding the
existence of the arbitration, the nature of the dispute and the results thereof
as may be necessary or appropriate to satisfy the Company's disclosure
obligations under applicable securities or other laws.
13. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement of a
breach of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any subsequent breach by such other party.
(b) Compliance With Other Agreements. The Partner represents and warrants
that the execution of this Agreement by him and the Partner's performance of the
Partner's obligations hereunder will not conflict with, result in the breach of
any provision of or the termination of or constitute a default under any
agreement to which the Partner is a party or by which the Partner is or may be
bound.
(c) Binding Effect; Assignment. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. This Agreement is a personal employment
contract and the rights, obligations and interests of the Partner hereunder may
not be sold, assigned, transferred, pledged or hypothecated.
(d) Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This
<PAGE> 13
Agreement may be changed only by an agreement in writing signed by the party
against whom any waiver, change, amendment, modification or discharge is sought.
(e) Headings, Etc. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Use of the term "Partner" is for the convenience of the parties
and is not intended to alter the employee-employer relationship between the
Company as a corporation and the Partner as an employee of a corporation
described in this Agreement.
(f) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the application of such provision
would result in the application of the law of a state or jurisdiction other than
Florida).
(g) Venue; Process. To the extent it is necessary to resolve any disputes
arising under this Agreement, and the agreements and instruments and documents
contemplated hereby in a court and resolution by a court is consistent with the
provisions of Section 12, the parties to this Agreement agree that jurisdiction
and venue in any action brought pursuant to this Agreement to enforce its terms
or otherwise with respect to the relationships between the parties shall
properly lie in the Circuit Court of the Thirteenth Judicial Circuit of the
State of Florida in and for Hillsborough County (the "Circuit Court") or in the
United States District Court for the Middle District of Florida, Tampa Division
or in any state or federal court located in Chicago, Illinois, Los Angeles,
California and New York, New York. Such jurisdiction and venue are merely
permissive; jurisdiction and venue shall also continue to lie in any court where
jurisdiction and venue would otherwise be proper. The parties further agree that
the mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court. The parties agree that they will not
object that any action commenced in the foregoing jurisdictions is commenced in
a forum non conveniens.
(h) Severability. Any provision of this Agreement which is determined
pursuant to arbitration under Section 12 of this Agreement (or to the extent it
is necessary to resolve any disputes arising under this Agreement, and the
agreements and instruments and documents contemplated hereby in a court and
resolution by a court is consistent with the provisions of Section 12, by a
court of competent jurisdiction) to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect. If any provision or term of this Agreement is susceptible to
two or more constructions or interpretations, one or more of which would render
the provision or term void or unenforceable, the parties agree that a
construction or interpretation which renders the term or provision valid shall
be favored.
<PAGE> 14
(i) Enforcement. If after written demand to comply with the obligations
of one of the parties to this Agreement served in writing on the other,
compliance or reasonable assurance of compliance is not forthcoming, and the
party demanding compliance engages the services of an attorney to enforce rights
under this Agreement, the prevailing party in any action shall be entitled to
recover all reasonable costs and expenses of enforcement (including reasonable
attorneys' fees and reasonable expenses during investigation, before litigation
or arbitration, and at trial and in appellate proceedings). In addition, each of
the parties agrees to indemnify the other in respect of any and all claims,
losses, costs, liabilities and expenses, including reasonable fees and
reasonable disbursements of counsel (during investigation prior to initiation of
litigation or arbitration and at trial and in appellate proceedings if
litigation ensues), directly or indirectly resulting from or arising out of a
breach by the other party of their respective obligations hereunder. The
parties' costs of enforcing this Agreement shall include prejudgment interest.
Additionally, if any party incurs any out-of-pocket expenses in connection with
the enforcement of this Agreement, all such amounts shall accrue interest at 10%
per annum (or such lower rate as may be required to avoid any limit imposed by
applicable law) commencing 30 days after any such expenses are incurred.
(j) Notices. All notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and three days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Company: LAMALIE ASSOCIATES, INC.
Suite 220E
3903 Northdale Boulevard
Tampa, FL 33624
Attn: Chief Financial Officer
Fax: (813) 962-2138
To the Partner at the Partner's address as set forth on the first page of
this Agreement, or to such other address as either party may specify by written
notice to the other.
(k) LAI Guaranty. LAI unconditionally guarantees the full and prompt
performance by the Company of all of the Company's duties and obligations under
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ATTEST: LAMALIE ASSOCIATES, INC.
(Corporate Seal)
________________________________ By:____________________________________
Secretary Robert L. Pearson, President
<PAGE> 15
"LAI"
ATTEST: WARD HOWELL INTERNATIONAL, INC.
(Corporate Seal)
By:
- -------------------------------- -------------------------------
Secretary
"Company"
Witnesses:
- -------------------------------- --------------------------------------
Shareholder
- --------------------------------
As to Partner
"Partner"
<PAGE> 1
Exhibit 23.9
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 8-K, into the Company's
previously filed Registration Statement File No. 333-30903.
/s/ ARTHUR ANDERSEN LLP
Tampa, Florida
March 13, 1998
<PAGE> 1
EXHIBIT 23.10
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated August 1, 1997, with respect to the
balance sheets of Ward Howell International, Inc. as of December 31, 1996 and
1995 and the related statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996
which report appears in the Form 8-K of Lamalie Associates, Inc. to be filed on
March 13, 1998.
/s/ KPMG PEAT MARWICK LLP
New York, New York
March 10, 1998
