<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: March 19, 1999
(Date of earliest event reported): March 11, 1999
--------------------------------
LAI WORLDWIDE, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Florida 0-22645 59-3547281
---------------------------- ------------ --------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
200 Park Avenue New York, New York 33694-0468
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip code)
(212) 953-7900
-------------------------------
(Registrant's Telephone Number, Including
Area Code)
LAMALIE ASSOCIATES, INC.
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Company has entered into an Agreement and Plan of Merger with TMP
Worldwide Inc., pursuant to which TMP will acquire LAI in a pooling of
interests transaction.
LAI Worldwide's operations will be combined with TMP Worldwide-owned
TASA Worldwide and the combined entity will rank as one of the world's largest
executive search firms. Michael Squires, currently president of TASA Worldwide,
and Robert L. Pearson, LAI Worldwide's chairman and CEO, will jointly run the
combined operations.
On a pro-forma basis for calendar 1998, executive search commissions
and fees for the combined entity would have been approximately $155.0 million,
of which 25% would have related to searches conducted outside the U.S.
The acquisition, which is anticipated to close in the third quarter,
is expected to be accretive immediately. It is estimated that costs associated
with the merger, including a non-cash charge of $2.7 million to reflect the
accelerated vesting of equity incentives due LAI employees, will be
approximately $6.0 million.
Under the terms of the agreement, each share of LAI stock will be
exchanged for 0.1321 shares of TMP common stock, assuming that the TMP average
share price for the 20 days ending on the 2nd day prior to closing is between
$42.00 and $64.00 per share. Should the 20-day average share price of TMP stock
fall below $42.00 per share, unless TMP elects to terminate the acquisition,
the exchange ratio will be adjusted to that obtained by dividing $5.55 by TMP's
20-day average stock price measured prior to closing. Should TMP's 20-day
average share price exceed $64.00 per share, the exchange ratio will be
adjusted to that obtained by dividing $8.45 by TMP's 20-day average stock price
measured prior to closing, but not below that which would provide LAI
shareholders with a fraction of a TMP share equal to $5.55. Based on the
exchange ratio of 0.1321, TMP Worldwide expects to issue approximately 1.2
million shares, including the effect of options. The agreement is subject to
customary closing conditions, including approval by the shareholders of LAI
Worldwide.
"By joining TASA and LAI's operations, we greatly strengthen our
global executive search infrastructure, further solidifying our position as one
of the world's leading executive search firms," said Andrew J. McKelvey,
chairman and CEO of TMP Worldwide. "The addition of LAI complements TASA's
already strong presence overseas. With so many foreign-based open positions
controlled by U.S. companies, a large presence in the U.S. will add substantial
new business opportunities to our overseas offices."
Mr. McKelvey continued, "We are aware of LAI's past difficulties and
the fact that they expect to report a loss for the fourth quarter of fiscal
1998, which will include operating and
2
<PAGE> 3
restructuring charges. However, the synergies with TASA Worldwide are great,
and we expect LAI's acquisition to be immediately accretive."
Jeff Taylor, CEO of TMP Interactive, stated: "LAI's web-based
assessment tools and competency-based job profiling capabilities, will
significantly boost mid-level executive search product offerings on
Monster.com."
"LAI Worldwide is an industry leader, with a reputation for providing
its clients the very best in high-end executive search services," said Michael
Squires, president of TASA Worldwide. Mr. Squires continued, "I am looking
forward to working with Bob Pearson and the LAI team. Our TASA consultants have
the highest regard for LAI and we are very excited by the opportunity of
building a premium worldwide executive search practice."
With the addition of LAI, TASA Worldwide expands and strengthens its
leadership position in executive search for the financial services and
technology industries. Moreover, with LAI, TASA expands its search capabilities
into other important and growing industries such as health care, industrial,
and consumer products.
"We are very pleased to be associated with a company as innovative
and exciting as TMP Worldwide," said Robert L. Pearson, chairman and CEO of LAI
Worldwide. Mr. Pearson continued, "Recently, LAI experienced a challenging
market environment. We have made the necessary decisions to turn our operations
around. We believe that combining with TMP Worldwide provides the necessary
catalyst to expand LAI's executive search business to the next level while
maximizing shareholder value."
The above statements include forward-looking statements based on
current management expectations. Factors that could cause future results to
differ from these expectations include the following: risks associated with
acquisitions, competition and seasonality. Additional factors are described in
the company's reports filed with the Securities and Exchange Commission.
Founded in 1967, TMP Worldwide, has more than 4,750 employees in 19
countries. The company's clients include more than 70 of the Fortune 100 and
more than 400 of the Fortune 500 companies.
TASA has over 130 consultants operating through 12 offices in Europe,
six offices in the Asia-Pacific region, six associated offices in Latin America
and nine offices in the United States, which will integrate with LAI
Worldwide's operations.
LAI is one of the largest providers of executive recruiting services,
offering its services exclusively on a retained basis. To help its clients meet
the demands of a changing workforce in the markets it serves, LAI identifies,
evaluates and recommends qualified candidates for senior executive positions
primarily at Fortune 500 and large, private companies. LAI has 121 executive
search consultants located in 19 offices in the United States as well as
offices in London and Hong Kong.
3
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Exhibits to this report are listed in the Index to Exhibits set
forth elsewhere herein.
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 hereunto duly authorized.
LAI WORLDWIDE, INC.
Date: March 19, 1999 By: /s/ Philip R. Albright
------------------------ -------------------------------------------
Philip R. Albright, Chief Financial Officer
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2.4 Agreement and Plan of Merger dated as of March 11, 1999 by and among the
Registrant, TMP Worldwide Inc. and TMP Florida Acquisition Corp.
4.3 Amendment to Stockholder Rights Agreement
99.1 Press Release
</TABLE>
4
<PAGE> 1
EXHIBIT 2.4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
THE MERGER............................................................................................1
SECTION 1.01 Effective Time of the Merger.....................................................1
SECTION 1.02 Closing..........................................................................1
SECTION 1.03 Effects of the Merger............................................................2
SECTION 1.04 Directors and Officers...........................................................2
ARTICLE II
CONVERSION OF SECURITIES..............................................................................2
SECTION 2.01 Conversion of Capital Stock......................................................2
SECTION 2.02 Exchange of Certificates.........................................................4
SECTION 2.03 Conversion of Options............................................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................7
SECTION 3.01 Organization of Seller...........................................................8
SECTION 3.02 Seller Capital Structure.........................................................8
SECTION 3.03 Authority; No Conflict; Required Filings and Consents...........................10
SECTION 3.04 SEC Filings; Financial Statements...............................................11
SECTION 3.05 No Undisclosed Liabilities......................................................11
SECTION 3.06 Absence of Certain Changes or Events............................................11
SECTION 3.07 Taxes...........................................................................12
SECTION 3.08 Properties......................................................................13
SECTION 3.09 Agreements, Contracts and Commitments...........................................14
SECTION 3.10 Litigation......................................................................14
SECTION 3.11 Employee Benefit Plans..........................................................14
SECTION 3.12 Compliance With Laws............................................................15
SECTION 3.13 Accounting and Tax Matters......................................................16
SECTION 3.14 Registration Statement; Proxy Statement/Prospectus..............................16
SECTION 3.15 Labor Matters...................................................................16
SECTION 3.16 Year 2000 Compliance............................................................17
SECTION 3.17 No Existing Discussions.........................................................17
SECTION 3.18 Opinion of Financial Advisor....................................................17
SECTION 3.19 Anti-Takeover Laws; Stockholder Rights Agreement................................17
</TABLE>
(i)
<PAGE> 2
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB......................................................18
SECTION 4.01 Organization of Buyer and Sub...................................................18
SECTION 4.02 Buyer Capital Structure.........................................................19
SECTION 4.03 Authority; No Conflict; Required Filings and Consents...........................20
SECTION 4.04 SEC Filings; Financial Statements...............................................21
SECTION 4.05 No Undisclosed Liabilities......................................................21
SECTION 4.06 Absence of Certain Changes or Events............................................21
SECTION 4.07 Taxes...........................................................................22
SECTION 4.08 Agreements, Contracts and Commitments...........................................22
SECTION 4.09 Litigation......................................................................23
SECTION 4.10 Compliance With Laws............................................................23
SECTION 4.11 Accounting and Tax Matters......................................................23
SECTION 4.12 Registration Statement; Proxy Statement/Prospectus..............................23
SECTION 4.13 Year 2000 Compliance............................................................24
SECTION 4.14 Interim Operations of Sub.......................................................24
ARTICLE V
CONDUCT OF BUSINESS..................................................................................25
SECTION 5.01 Covenants of Seller.............................................................25
SECTION 5.02 Covenants of Buyer..............................................................27
SECTION 5.03 Cooperation.....................................................................28
SECTION 5.04 Confidentiality.................................................................28
SECTION 5.05 Notices of Certain Events.......................................................28
ARTICLE VI
ADDITIONAL AGREEMENTS................................................................................28
SECTION 6.01 No Solicitation.................................................................28
SECTION 6.02 Proxy Statement/Prospectus; Registration Statement..............................30
SECTION 6.03 Nasdaq Quotation................................................................30
SECTION 6.04 Access to Information...........................................................30
SECTION 6.05 Stockholder Meeting.............................................................30
SECTION 6.06 Legal Conditions to Merger......................................................31
SECTION 6.07 Public Disclosure...............................................................32
SECTION 6.08 Reorganization..................................................................32
SECTION 6.09 Pooling Accounting..............................................................32
SECTION 6.10 Affiliate Agreements............................................................32
</TABLE>
(ii)
<PAGE> 3
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 6.11 Nasdaq National Market Listing..................................................33
SECTION 6.12 Stock Plans.....................................................................33
SECTION 6.13 Certain Employee Benefit Plan Obligations.......................................33
SECTION 6.14 Indemnification, Exculpation and Insurance......................................33
SECTION 6.15 Brokers or Finders..............................................................34
SECTION 6.16 Comfort Letters from Seller's Accountants.......................................34
SECTION 6.17 Comfort Letter from Buyer's Accountants.........................................35
SECTION 6.18 Control of Operations...........................................................35
SECTION 6.19 No Rights Triggered.............................................................35
SECTION 6.20 Release of Lockups.............................................................35
SECTION 6.21 ...............................................................................35
ARTICLE VII
CONDITIONS TO MERGER.................................................................................35
SECTION 7.01 Conditions to Each Party's Obligation To Effect the Merger......................35
SECTION 7.02 Additional Conditions to Obligations of Buyer and Sub...........................36
SECTION 7.03 Additional Conditions to Obligations of Seller..................................38
ARTICLE VIII
TERMINATION AND AMENDMENT............................................................................39
SECTION 8.01 Termination.....................................................................39
SECTION 8.02 Effect of Termination...........................................................40
SECTION 8.03 Fees and Expenses...............................................................40
SECTION 8.04 Amendment.......................................................................41
SECTION 8.05 Extension; Waiver...............................................................42
ARTICLE IX
MISCELLANEOUS........................................................................................42
SECTION 9.01 Nonsurvival of Representations, Warranties and Agreements.......................42
SECTION 9.02 Notices.........................................................................42
SECTION 9.03 Interpretation..................................................................43
SECTION 9.04 Counterparts....................................................................43
SECTION 9.05 Entire Agreement; No Third Party Beneficiaries..................................43
SECTION 9.06 GOVERNING LAW...................................................................44
SECTION 9.07 Jurisdiction....................................................................44
SECTION 9.08 Assignment......................................................................44
SECTION 9.09 Severability....................................................................44
</TABLE>
(iii)
<PAGE> 4
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 9.10 Enforcement.....................................................................44
SECTION 9.11 No Rule of Construction.........................................................45
</TABLE>
(iv)
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
March 11, 1999, by and among TMP Worldwide Inc., a Delaware corporation
("Buyer"), TMP Florida Acquisition Corp., a Florida corporation and a direct,
wholly-owned subsidiary of Buyer ("Sub"), and LAI Worldwide, Inc., a Florida
corporation ("Seller").
WHEREAS, the Boards of Directors of Buyer, Sub and Seller
deem it advisable and in the best interests of each corporation and its
respective stockholders that Buyer, Sub and Seller combine in order to advance
the long-term business interests of Buyer, Sub and Seller;
WHEREAS, the combination of Buyer, Sub and Seller shall be
effected by the terms of this Agreement and in accordance with the Florida
Business Corporation Act (the "FBCA") through a merger of Sub into Seller, as a
result of which the stockholders of Seller will become stockholders of Buyer
(the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. Subject to
the provisions of this Agreement, articles of merger in such form as is
required by the relevant provisions of the FBCA (the "Articles of Merger")
shall be duly executed and acknowledged by the appropriate parties hereto and
thereafter delivered to the Department of State of the State of Florida for
filing, as soon as practicable on the Closing Date (as defined in Section
1.02). The Merger shall become effective at the time of filing on the date
filed, as evidenced by the Department of State's date and time endorsement on
the original Articles of Merger, as delivered to the Department of State for
filing (the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties (the "Closing Date"), which shall be no later than the
second business day after satisfaction or waiver of the
<PAGE> 6
conditions set forth in Article VII hereof (other than the conditions with
respect to the documents to be delivered at the Closing), at the offices of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, NY 10103, unless
another date, place or time is agreed to in writing by the parties.
SECTION 1.03 Effects of the Merger. At the Effective
Time (i) the separate corporate existence of Sub shall cease and Sub shall be
merged with and into Seller (Sub and Seller are sometimes referred to below as
the "Constituent Corporations" and Seller following the Merger is sometimes
referred to below as the "Surviving Corporation"), (ii) the Articles of
Incorporation of Sub as in effect immediately prior to the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation (except that the
name of the Surviving Corporation shall be "LAI Worldwide, Inc."), and (iii)
the Bylaws of Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation. The Merger shall have the effects set
forth in the FBCA.
SECTION 1.04 Directors and Officers. The directors and
officers of Sub immediately prior to the Effective Time shall become the
directors and officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any shares of the common stock, $.01 par value per share, of
Seller ("Seller Common Stock"), or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of the capital stock of Sub shall be converted
into and become one fully paid and nonassessable
share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock. All shares of Seller
Common Stock that are owned directly or indirectly
by Seller as treasury stock shall be cancelled and
retired and shall cease to exist and no stock of
Buyer or other consideration shall be delivered in
exchange therefor.
(c) Exchange Ratio for Seller Common Stock. Subject to
Section 2.02, each issued and outstanding share of
Seller Common Stock (other than shares to be
cancelled in accordance with Section 2.01(b) and any
shares of Seller Common Stock which are held by
shareholders who are dissenting shareholders
pursuant to Sections 607.1301 through 607.1320 of
the FBCA) shall be converted into the right to
receive a fraction of a fully paid and
non-assessable share of Buyer's Common Stock, $.001
par value per share
2
<PAGE> 7
("Buyer Common Stock"), such fraction to be in the
ratio (the "Exchange Ratio") as set forth herein. If
the Average Stock Price (as hereinafter defined) is:
(i) Greater than $64.00, the Exchange Ratio
shall be equal to the quotient obtained by
dividing (A) $8.45 by (B) the Average Stock
Price (provided however, that if the
Average Stock Price is greater than $64.00
but the Average Closing Stock Price is such
that the product of the Exchange Ratio
multiplied by the Average Closing Stock
Price is less than $5.55, then the Exchange
Ratio shall be adjusted to that quotient
determined by dividing $5.55 by the Average
Closing Stock Price);
(ii) Equal to or greater than $42.00 but less
than or equal to $64.00, the Exchange Ratio
shall be 0.1321; or
(iii) Less than $42.00, the Exchange Ratio shall
be equal to the quotient obtained by
dividing (A) $5.55 by (B) the Average Stock
Price (provided that Buyer shall have the
right to terminate this Agreement pursuant
to Section 8.01(g) of this Agreement if the
Average Stock Price is less than $42.00).
"Average Stock Price" means the average of the daily
closing prices of Buyer Common Stock for the twenty
consecutive trading days ending on the second
trading day immediately prior to the Closing Date.
"Average Closing Stock Price" means the average of
the daily closing prices of Buyer Common Stock for
the two consecutive trading days ending on the
trading day immediately prior to the Closing Date.
All such shares of Seller Common Stock when so
converted shall no longer be outstanding and shall
automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate
representing any such shares shall cease to have any
rights with respect thereto, except the right to
receive the shares of Buyer Common Stock and any
cash in lieu of fractional shares of Buyer Common
Stock to be issued or paid in consideration therefor
upon the surrender of such certificate in accordance
with Section 2.02, without interest.
(d) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend
(including any dividend or distribution of
securities convertible into Buyer Common Stock or
Seller Common Stock), reorganization,
recapitalization or other like change with respect
to Buyer Common Stock or Seller Common Stock
occurring after the date hereof and prior to the
Effective Time.
3
<PAGE> 8
SECTION 2.02 Exchange of Certificates. The procedures
for exchanging outstanding shares of Seller Common Stock for Buyer Common Stock
pursuant to the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Buyer
shall deposit with a bank or trust company
designated by Buyer and Seller (the "Exchange
Agent"), for the benefit of the holders of shares of
Seller Common Stock for exchange in accordance with
this Section 2.02, through the Exchange Agent, (i)
certificates representing the shares of Buyer Common
Stock (such shares of Buyer Common Stock, together
with cash in lieu of fractional shares and any
dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 2.01 in exchange
for outstanding shares of Seller Common Stock and
(ii) cash, as required, in an amount sufficient to
make payments of cash in lieu of fractional shares,
if any, required pursuant to Section 2.02(e).
(b) Exchange Procedures. Promptly after the Effective
Time, Buyer shall instruct the Exchange Agent and
the Exchange Agent shall mail to each holder of
record of a certificate or certificates which
immediately prior to the Effective Time represented
outstanding shares of Seller Common Stock (the
"Certificates") whose shares of Seller Common Stock
were converted pursuant to Section 2.01 into the
right to receive shares of Buyer Common Stock (i) a
letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent,
and shall be in such form and have such other
provisions as Buyer and Seller may reasonably
specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for
certificates representing shares of Buyer Common
Stock (plus cash in lieu of fractional shares, if
any, of Buyer Common Stock as provided below). Upon
surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as
may be appointed by Buyer, together with such letter
of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of
whole shares of Buyer Common Stock which such holder
has the right to receive pursuant to the provisions
of this Article II after taking into account all the
shares of Seller Common Stock then held by such
holder under all such Certificates so surrendered,
and the Certificate so surrendered shall immediately
be cancelled. In the event of a transfer of
ownership of Seller Common Stock which is not
registered in the transfer records of Seller, a
certificate representing the proper number of shares
of Buyer Common Stock may be issued to a transferee
if the Certificate representing such Seller Common
Stock is presented to the Exchange Agent,
accompanied by all
4
<PAGE> 9
documents required to evidence and effect such
transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time
to represent only the right to receive upon such
surrender the certificate representing shares of
Buyer Common Stock and cash in lieu of any
fractional shares of Buyer Common Stock as
contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made
after the Effective Time with respect to Buyer
Common Stock with a record date after the Effective
Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares
of Buyer Common Stock to which such holder is
entitled until the holder of record of such
Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be
paid to the record holder of the certificates
representing whole shares of Buyer Common Stock
issued in exchange therefor, without interest, (i)
at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Buyer
Common Stock to which such holder is entitled
pursuant to subsection (e) below and the amount of
dividends or other distributions with a record date
after the Effective Time previously paid with
respect to such whole shares of Buyer Common Stock
date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable
with respect to such whole shares of Buyer Common
Stock.
(d) No Further Ownership Rights in Seller Common Stock.
All shares of Buyer Common Stock issued upon the
surrender for exchange of Certificates in accordance
with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section
2.02) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares
of Seller Common Stock, subject, however, to the
Surviving Corporation's obligation to pay any
dividends or make any other distributions with a
record date prior to the Effective Time which may
have been declared or made by Seller on such shares
of Seller Common Stock in accordance with the terms
of this Agreement (to the extent permitted under
Section 5.01) prior to the date hereof and which
remain unpaid at the Effective Time, and from and
after the Effective Time there shall be no further
registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of
Seller Common Stock which were outstanding
immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall
be cancelled and exchanged as provided in this
Section 2.02.
5
<PAGE> 10
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Buyer Common Stock
shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any
other rights of a stockholder of Buyer.
Notwithstanding any other provision of this
Agreement, each holder of shares of Seller Common
Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction
of a share of Buyer Common Stock (after taking into
account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part
of a share of Buyer Common Stock multiplied by the
Average Stock Price.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the
stockholders of Seller for 180 days after the
Effective Time shall be delivered to Buyer, upon
demand, and any stockholders of Seller who have not
previously complied with this Section 2.02 shall
thereafter look only to Buyer for payment of their
claim for Buyer Common Stock, any cash in lieu of
fractional shares of Buyer Common Stock and any
dividends or distributions with respect to Buyer
Common Stock.
(g) No Liability. To the extent permitted by applicable
law, neither Buyer nor Seller shall be liable to any
holder of shares of Seller Common Stock or Buyer
Common Stock, as the case may be, for such shares
(or dividends or distributions with respect thereto)
delivered to a public official pursuant to any
applicable abandoned property, escheat or similar
law.
(h) Withholding Rights. Each of Buyer and the Surviving
Corporation shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to
this Agreement to any holder of shares of Seller
Common Stock such amounts as it is required to
deduct and withhold with respect to the making of
such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that
amounts are so withheld by Surviving Corporation or
Buyer, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of
Seller Common Stock in respect of which such
deduction and withholding was made by Surviving
Corporation or Buyer, as the case may be.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the
posting by such person of a bond in such reasonable
amount
6
<PAGE> 11
as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Common Stock and any
cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Buyer
Common Stock deliverable in respect thereof pursuant
to this Agreement.
SECTION 2.03 Conversion of Options. At the Effective
Time, each option granted by Seller to purchase shares of Seller Common Stock
("Seller Stock Option") which is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of Seller Common
Stock and shall be converted automatically into an option to purchase the
number of shares of Buyer Common Stock equal to the number of whole shares of
Seller Common Stock subject to such option multiplied by the Exchange Ratio, at
a price per share of Buyer Common Stock equal to (i) the exercise price for the
shares of Seller Common Stock purchasable pursuant to such Seller Stock Option
immediately prior to the Effective Time divided by (ii) the Exchange Ratio, and
shall otherwise be subject to the terms of the Seller Employee Plans (as
defined in Section 3.11) pursuant to which such options were issued and the
agreements evidencing grants thereunder and shall thereupon be assumed by
Buyer. Subject to the foregoing, the adjustment provided herein with respect to
any options which are "incentive stock options" (as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code")) shall be and is
intended to be effected in a manner which is consistent with Section 424(a) of
the Code. Subject to the adjustments noted herein, the duration and other terms
of the option shall be the same as the original option except that all
references to (i) Seller Common Stock shall be deemed to be references to Buyer
Common Stock and (ii) the Company shall be deemed to be references to Buyer.
Further, any and all vesting or performance requirements or conditions
affecting any outstanding restricted stock, performance stock, stock option,
stock appreciation right, phantom stock, bonus, award, right, grant or any
other arrangement with any director or employee of Seller or any of its
Subsidiaries shall be based on the terms of the respective Seller Employee Plan
and the agreements evidencing grants thereunder. This Section 2.03 is intended
to be for the benefit of holders of options to purchase the Common Stock of
Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and Sub that the
statements contained in this Article III are true and correct, except as set
forth herein and in the disclosure schedule delivered by Seller to Buyer on or
before the date of this Agreement (the "Seller Disclosure Schedule"). The
Seller Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other paragraphs in this Article III
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other paragraphs. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be
7
<PAGE> 12
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty concerns the existence of the
document or the other item itself).
SECTION 3.01 Organization of Seller. Seller and each of its
Subsidiaries (as defined below) which is a corporation is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of Seller and its Subsidiaries, taken as a whole (a "Seller Material
Adverse Effect"); provided, however, that for purposes of this Agreement, the
following events, shall not be taken into account in determining whether there
has been or would be a "Seller Material Adverse Effect" on or with respect to
Seller and its Subsidiaries, taken as a whole: (A) changes, events or
occurrences in the United States securities markets which are not specific to
Seller and its Subsidiaries, (B) changes, events or occurrences in the world
economy which are not specific to the Seller and its Subsidiaries, (C) the
existence of this Agreement or the transactions contemplated hereby or the
announcement thereof, (D) any changes in generally accepted accounting
principles ("GAAP") and (E) changes, events or occurrences relating to the
executive search industry in general, and not specifically to Seller and its
Subsidiaries. Seller has no Subsidiaries other than Subsidiaries which are
corporations. Except as set forth in the Seller SEC Reports (as defined in
Section 3.04(a)) filed on or prior to the date hereof and except for inactive
Subsidiaries, neither Seller nor any of its Subsidiaries directly or indirectly
owns any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business association or entity, excluding securities in any publicly
traded company held for investment by Seller and comprising less than five
percent (5%) of the outstanding stock of such company. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
or member (excluding partnerships and limited liability companies, the general
partnership or membership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting interest in such
partnership or limited liability company or veto rights with respect to
decisions made by or on behalf of such partnership or limited liability
company), or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries.
SECTION 3.02 Seller Capital Structure. (a) The
authorized capital stock of Seller consists of 35,000,000 shares of Common
Stock ("Seller Common Stock") and 3,000,000 shares of Preferred Stock ("Seller
Preferred Stock"). As of February 28, 1999, (i) 8,082,953 shares of Seller
Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no shares of Seller Common Stock were held
in the treasury of Seller or by Subsidiaries of Seller, and (iii) no shares of
Seller Preferred Stock were issued and outstanding. The Seller Disclosure
Schedule shows the number of shares of Seller Common Stock reserved for future
8
<PAGE> 13
issuance pursuant to stock options and warrants granted and outstanding as of
February 28, 1999 and the plans under which such options were granted, if
applicable (collectively, the "Seller Stock Plans"). No material change in such
capitalization has occurred between February 28, 1999 and the date of this
Agreement. All shares of Seller Common Stock subject to issuance as specified
above are duly authorized and, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be
validly issued, fully paid and nonassessable. There are no bonds, debentures,
notes or other indebtedness of Seller having the right to vote (or convertible
into securities having the right to vote) on any matters on which shareholders
of Seller may vote. There are no obligations, contingent or otherwise, of
Seller or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of Seller Common Stock, Seller Preferred Stock, or the capital stock
of any Subsidiary or to provide funds to or make any material investment (in
the form of a loan, capital contribution or otherwise) in any such Subsidiary
or any other entity other than guarantees of bank obligations of Subsidiaries
entered into in the ordinary course of business. All of the outstanding shares
of capital stock or other equity interests of or in each of Seller's
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable
and all such shares (other than directors' qualifying shares in the case of
foreign Subsidiaries) and other equity interests are owned by Seller or another
Subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Seller's voting rights, charges or other
encumbrances of any nature.
(b) Except as set forth in this Section 3.02 or as reserved for
future grants of options and warrants under the Seller Stock Plans, there are
no equity securities of any class of Seller or any of its Subsidiaries, or any
security exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding, and there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Seller or any of its Subsidiaries is a party or by
which such entity is bound (including under letters of intent, whether binding
or nonbinding) obligating Seller or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests of Seller or any of its Subsidiaries or
obligating Seller or any of its Subsidiaries to grant, extend, accelerate the
vesting of, otherwise modify or amend or enter into any such option, warrant,
equity security, call, right, commitment or agreement. To the best knowledge of
Seller, there are no voting trusts, proxies or other voting agreements or
understandings with respect to the shares of capital stock or other equity
interests of Seller or any Subsidiary other than the Seller Voting Agreements.
(c) No consent of the holders of the Seller Stock Options is
required in connection with the conversion of the Seller Stock Options into
options to acquire Buyer Common Stock in accordance with Section 2.03.
SECTION 3.03 Authority; No Conflict; Required Filings
and Consents. (a) Seller has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby by Seller have
been duly authorized by all necessary corporate action on the part of Seller,
subject only to the approval of the Merger by Seller's stockholders under the
FBCA; the vote of Seller's stockholders required to
9
<PAGE> 14
approve this Agreement and the Merger is a majority of the outstanding shares
of Seller Common Stock on the record date for the Seller Meeting (as defined in
Section 3.15), at which a quorum is present. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and thereby will not,
(i) conflict with, or result in any violation or breach of, any provision of
the Articles of Incorporation or Bylaws of Seller, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both)
a default (or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any material benefit) under, or require a consent
or waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Seller or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, or (iii)
conflict with, violate, or cause the termination of any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Seller or any of its Subsidiaries or any of its or
their properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which are not, individually or in the aggregate, reasonably likely to have a
Seller Material Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Seller or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby or thereby, except for (i)
the filing of the pre-merger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"), (ii) the filing of
the Articles of Merger with the Department of State of the State of Florida,
(iii) the filing of the Proxy Statement (as defined in Section 3.15 below) with
the Securities and Exchange Commission (the "SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not
materially interfere with the operations of any material facility of Seller or
otherwise be reasonably likely to have a Seller Material Adverse Effect.
SECTION 3.04 SEC Filings; Financial Statements. (a)
Since the date of its initial public offering, and to the extent that their
failure to do so would not be reasonably likely to have a Seller Material
Adverse Effect, Seller and/or its Subsidiaries have filed all forms, reports
and documents, including the exhibits thereto, required to be filed by Seller
and/or its Subsidiaries with the SEC under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act
10
<PAGE> 15
(these forms, reports and documents, including the exhibits thereto, are
referred to collectively as "Seller SEC Reports". The Seller SEC Reports (i)
at the time filed complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in such Seller SEC Reports or necessary in order to
make the statements in such Seller SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Seller's
Subsidiaries is required to file any forms, reports or other documents with
the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the Seller SEC Reports complied
as to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
presented the consolidated financial position of Seller and its Subsidiaries as
of the dates and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount. The unaudited balance sheet of
Seller as of November 30, 1998 is referred to herein as the "Seller Balance
Sheet."
SECTION 3.05 No Undisclosed Liabilities. Except as set
forth on the Seller Disclosure Schedule or as disclosed in the Seller SEC
Reports or in press releases that have been made public by Seller and available
at Nasdaq's website at HTTP://WWW.NASDAQ.COM ("Seller Releases") filed prior to
the date hereof, and except for normal or recurring liabilities incurred since
November 30, 1998 in the ordinary course of business consistent with past
practices, Seller and its Subsidiaries do not have any liabilities, either
accrued, contingent or otherwise (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become
due, which individually or in the aggregate are reasonably likely to have a
Seller Material Adverse Effect.
SECTION 3.06 Absence of Certain Changes or Events.
Except as disclosed in the Seller SEC Reports filed prior to the date hereof or
Seller Releases, since the date of the Seller Balance Sheet, Seller and its
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date, there has not been
(i) any change in the financial condition, results of operations, business or
properties of Seller and its Subsidiaries, taken as a whole that has had, or is
reasonably likely to have, a Seller Material Adverse Effect; (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to
Seller or any of its Subsidiaries that has had, or is reasonably likely to
have, a Seller Material Adverse Effect; (iii) any material change by Seller in
its accounting methods, principles or practices to which Buyer has not
previously consented in writing; (iv) any revaluation by Seller of any of its
assets that has had, or is reasonably likely to have, a Seller Material Adverse
Effect; or (v) any other action or event that
11
<PAGE> 16
would have required the consent of Buyer pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement.
SECTION 3.07 Taxes. (a) For the purposes of this
Agreement, a "Tax" or, collectively, "Taxes," means any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
fees, levies, impositions and liabilities, including without limitation,
income, gross receipts, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment insurance, social security, business license,
occupation, business organization, stamp, environmental, personal property,
real property, worker's compensation, license, lease, service, service use,
severance, windfall profits, customs and other taxes, together with all
interest, fines, penalties and additions imposed with respect to such amounts
and any obligations under any agreements or arrangements with any other person
with respect to such amounts and including any liability for taxes of a
predecessor entity. For purposes of this Agreement, "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
(b) Except as set forth on the Seller Disclosure Schedule, Seller
and each of its Subsidiaries have (i) timely filed all federal, state, local
and foreign Tax Returns required to be filed by them prior to the date of this
Agreement (taking into account extensions) and will timely file all such Tax
Returns required to be filed on or before the Closing Date, (ii) paid or
accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for
which a notice of assessment or collection has been received (other than
amounts being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the books of the Seller), except in
the case of clause (i), (ii) or (iii) for any such filings, payments or
accruals which are not reasonably likely, individually or in the aggregate, to
have a Seller Material Adverse Effect. The unpaid Taxes of the Seller and each
of its Subsidiaries for tax periods through the Seller Balance Sheet date do
not exceed the accruals and reserves for Taxes (excluding reserves for deferred
Taxes) set forth on the Seller Balance Sheet by an amount that is reasonably
likely to have a Seller Material Adverse Effect nor will unpaid Taxes of Seller
and each of its Subsidiaries through the Closing Date exceed the accruals or
reserves for Taxes (excluding reserves for deferred Taxes on the financial
statements and the books and records of Seller) on the Closing Date. Neither
the Internal Revenue Service (the "IRS") nor any other taxing authority has
asserted any claim for Taxes, or to the actual knowledge of the executive
officers of Seller, is threatening to assert any claims for Taxes, which
claims, individually or in the aggregate, are reasonably likely to have a
Seller Material Adverse Effect ; no waivers of time to assess any Tax are in
effect and no requests for waiving of the time to assess any Tax are pending.
Seller and each of its Subsidiaries have withheld or collected and paid over to
the appropriate governmental authorities (or are properly holding for such
payment) all Taxes required by law to be withheld or collected, except for
amounts which are not reasonably likely, individually or in the aggregate, to
have a Seller Material Adverse Effect. There are no liens for Taxes upon the
assets of Seller or any of its Subsidiaries (other than liens for taxes that
are not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which are not reasonably likely, individually or
in the aggregate, to have a Seller Material Adverse Effect.
12
<PAGE> 17
(c) Seller is not and never has been a party to or bound by any
Tax indemnity, Tax sharing or Tax allocation agreement (whether written or
unwritten or arising under operation of federal law as a result of being a
member of a group filing consolidated or combined Tax Returns, under operation
of any state or local laws as a result of being a member of a combined,
consolidated or unitary group, or under comparable laws of any other foreign
jurisdiction) which includes a party other than Seller and its Subsidiaries nor
does Seller owe any amount under any such agreement.
(d) Neither Seller nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Seller or the Subsidiaries are subject to an election under Section
341(f) of the Code.
(e) Neither Seller nor any of its Subsidiaries has been a United
States real property holding corporation with the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(f) Neither Seller nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement
that could obligate it to make any payments that will be an "excess parachute
payment" under Section 280G of the Code as a result of the transactions
contemplated by this Agreement.
SECTION 3.08 Properties. (a) Seller has provided to
Buyer a true and complete list of all real property leased by Seller or its
Subsidiaries pursuant to leases providing for the occupancy of facilities with
an annual rent in excess of $50,000 (collectively "Seller Material Lease(s)")
and the location of the premises. With respect to each such Seller Material
Lease and except as set forth on the Seller Disclosure Schedule: (i) the lease
is legal, valid, binding, enforceable against Seller subject to the Bankruptcy
and Equity Exception, and in full force and effect; (ii) the lease will
continue to be legal, valid, binding, enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing; (iii) neither Seller nor, to the Seller's
knowledge, any other party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification or acceleration
thereunder; and (iv) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or sublease hold;
except, in the case of clauses (i) through (iv) that the same is not reasonably
likely to have a Seller Material Adverse Effect. Neither Seller nor any of its
Subsidiaries owns any real property.
SECTION 3.09 Agreements, Contracts and Commitments.
Except as disclosed in the Seller SEC Reports or delivered to Buyer or as set
forth on the Seller Disclosure Schedule, there are no contracts, agreements or
commitments that are required to be filed as an exhibit under the Exchange Act
and the rules and regulations thereunder. Neither Seller nor any Subsidiary has
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any material agreement, contract or commitment
filed as an exhibit to the Seller SEC Reports or any other agreement, contract
or commitment, the termination of which would have a
13
<PAGE> 18
Seller Material Adverse Effect ("Seller Material Contracts") in such a manner
as, individually or in the aggregate, are reasonably likely to have a Seller
Material Adverse Effect. Each Seller Material Contract that has not expired by
its terms is in full force and effect, and no party to any of the Seller
Material Contracts will have the right to terminate such contract as a result
of the transactions contemplated by this Agreement. None of the Seller Material
Contracts is currently being renegotiated, and Seller has no knowledge that any
Seller Material Contract will be the subject of a voluntary or regulatory
ordered renegotiation within 12 months after the date of this Agreement.
SECTION 3.10 Litigation. Except as described in the
Seller SEC Reports filed prior to the date hereof or as set forth on the Seller
Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration
or investigation against Seller or any of its Subsidiaries pending or as to
which Seller or any of its Subsidiaries has received any written notice of
assertion, which, individually or in the aggregate, is reasonably likely to
have a Seller Material Adverse Effect or a material adverse effect on the
ability of Seller to consummate the transactions contemplated by this
Agreement. There is no judgment, decree, injunction, rule or order of any
Governmental Entity or arbitration outstanding against Seller or any of its
Subsidiaries having, or insofar as reasonably can be foreseen in the future,
would have a Seller Material Adverse Effect.
SECTION 3.11 Employee Benefit Plans. (a) Seller has
listed in Section 3.11 of the Seller Disclosure Schedule all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement or severance plans or
agreements, for the benefit of, or relating to, any current or former employee,
director or independent contractor providing services to Seller, any
Subsidiary, or any entity which is a member (an "ERISA Affiliate") of (i) a
controlled group of corporations, (ii) a group of trades or businesses (whether
or not incorporated) under common control with Seller, or (iii) an affiliated
service group, all within the meaning of Section 414 of the Code, of which
includes the Seller, or any Subsidiary of Seller (together, the "Seller
Employee Plans").
(b) With respect to each Seller Employee Plan, Seller has made
available to Buyer, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS (and the related financial statement),
(ii) such Seller Employee Plan, (iii) each trust agreement and group annuity
contract, if any, relating to such Seller Employee Plan and (iv) the most
recent actuarial report or valuation relating to a Seller Employee Plan subject
to Title IV of ERISA.
(c) With respect to the Seller Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of Seller, there
exists no condition or set of circumstances in connection with which Seller
could be subject to any liability that is reasonably likely to have a Seller
Material Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Seller Employee Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or
14
<PAGE> 19
otherwise properly footnoted, in either case, in accordance with GAAP, on the
financial statements of Seller, which obligations are reasonably likely to have
a Seller Material Adverse Effect.
(e) Except as disclosed in Seller SEC Reports filed prior to the
date of this Agreement, except as set forth on the Seller Disclosure Schedule
and except as provided for in this Agreement, neither Seller nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any current
or former officer or other key employee of Seller or any of its Subsidiaries,
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving Seller of the nature
contemplated by this Agreement, (ii) agreement with any current or former
officer of Seller providing any term of employment or compensation guarantee
extending for a period longer than eighteen months from the date hereof and for
the payment of compensation in excess of $200,000 per annum, or (iii) agreement
or plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting or funding of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement.
(f) There are no pending or, to Seller's knowledge, threatened
claims, actions, suits, termination proceedings, or investigations by any
Governmental Entity against or involving any Seller Benefit Plan; any Seller
Benefit Plan intended to be qualified under Section 401(a) of the Code has
received a determination letter from the Internal Revenue Service to that
effect, which has not been revoked, and nothing has occurred since the date of
the most recent determination letter that would adversely affect such
qualification.
SECTION 3.12 Compliance With Laws. Seller and its
Subsidiaries have complied with, are not in violation of, and have not received
any notices of violation with respect to, any federal, state or local statute,
law or regulation or any judgment, decree or order of any Governmental Entity
with respect to the conduct of their respective business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Seller Material Adverse Effect. Seller and its Subsidiaries have in
effect all federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, notices, permits and rights
("Approvals") necessary for them to own lease or operate their properties and
assets and to carry on their respective businesses as now conducted and there
has occurred no default under any such Approval, or failure to obtain such
Approval, which would in the aggregate have a Seller Material Adverse Effect.
SECTION 3.13 Accounting and Tax Matters. To its
knowledge, after consulting with its independent auditors, neither Seller nor
any of its Affiliates (as defined in Section 6.10) has taken or agreed to take
any action which would (i) prevent Buyer from accounting for the business
combination to be effected by the Merger as a pooling of interests or (ii)
prevent the Merger from constituting a transaction qualifying as a
reorganization under 368(a) of the Code.
15
<PAGE> 20
SECTION 3.14 Registration Statement; Proxy Statement/
Prospectus. The information to be supplied by Seller for inclusion in the
registration statement on Form S-4 pursuant to which shares of Buyer Common
Stock issued in the Merger will be registered under the Securities Act (the
"Registration Statement"), shall not at the time the Registration Statement is
filed with the SEC and at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by Seller for inclusion in the proxy statement/prospectus
to be sent to the stockholders of Seller in connection with the meeting of
Seller's stockholders to consider this Agreement and the Merger (the "Seller
Meeting") (the " Proxy Statement") shall not, on the date the Proxy Statement
is first mailed to stockholders of Seller, at the time of the Seller Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Proxy Statement not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Seller Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Seller or any of its
Affiliates, officers or directors should be discovered by Seller which should
be set forth in an amendment the Registration Statement or a supplement to the
Joint Proxy Statement, Seller shall promptly inform Buyer. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation is made by Seller with respect to statements made or
incorporated by reference therein based on information supplied by Buyer or Sub
specifically for inclusion or incorporation by reference in the Proxy
Statement.
SECTION 3.15 Labor Matters. Neither Seller nor any of
its Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Seller or any of its
Subsidiaries the subject of any material proceeding asserting that Seller or
any of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, as of the
date of this Agreement, is there pending or, to the knowledge of Seller,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving Seller or any of its Subsidiaries.
SECTION 3.16 Year 2000 Compliance. The computer systems
of Seller and its Subsidiaries (including, without limitation, all software,
hardware, workstations and related components, automated devices, embedded
chips and other date sensitive equipment such as security systems, alarms,
elevators and HVAC systems) are Year 2000 Compliant or will be Year 2000
Compliant by September 30, 1999, except to the extent that any failure to be
Year 2000 Compliant, either individually or in the aggregate, would not have a
Seller Material Adverse Effect. The term "Year 2000 Compliant" as used herein
means that the computer systems are (1) capable of recognizing, processing,
managing, representing, interpreting, and manipulating correctly date related
data for dates earlier and later than January 1, 2000, including, but not
limited to, calculating,
16
<PAGE> 21
comparing, sorting, storing, tagging and sequencing, without resulting in or
causing logical or mathematical errors or inconsistencies in any user-interface
functionalities or otherwise, including data input and retrieval, data storage,
data fields, calculations, reports, processing, or any other input or output,
(2) have the ability to provide data recognition for any data element without
limitation (including, but not limited to, date-related data represented
without a century designation, date- related data whose year is represented by
only two digits and date fields assigned special values), (3) have the ability
to automatically function into and beyond the year 2000 without human
intervention and without any change in operations associated with the advent of
the year 2000, (4) have the ability to correctly interpret data, dates and time
into and beyond the year 2000, (5) have the ability not to produce
noncompliance in existing information, nor otherwise corrupt such data into and
beyond the year 2000, (6) have the ability to correctly process after January
1, 2000 data containing dates before that date, and (7) have the ability to
recognize all "leap years", including February 29, 2000.
Seller and its Subsidiaries do not believe that the lack of ability of
their computer systems to properly interface with internal and external
applications and systems of third parties with whom the Seller and its
Subsidiaries exchange data electronically (including without limitation
customers, clients, suppliers, service providers, subcontractors, processors,
converters, shippers, warehousemen, outsources, data processors, regulatory
agencies and banks) will have a Seller Material Adverse Effect.
SECTION 3.17 No Existing Discussions. As of the date
hereof, Seller has terminated all discussions or negotiations with any third
party with respect to an Acquisition Proposal (as defined in Section 6.01(a)).
SECTION 3.18 Opinion of Financial Advisor. The financial
advisor of Seller has delivered to the Board of Directors of Seller an opinion
dated the date of approval by such Board of Directors of the terms hereof to
the effect that the Exchange Ratio in the Merger is fair to the holders of
Seller Common Stock from a financial point of view.
SECTION 3.19 Anti-Takeover Laws; Stockholder Rights
Agreement. Seller has taken or at or prior to the Closing will have taken, all
actions necessary such that no "fair price", "business combination", "control
share acquisition", or similar statute will be applicable to the transactions
contemplated by this Agreement. With respect to that certain Stockholder Rights
Agreement between Seller and Chasemellon Shareholder Services, LLC dated as of
December 30, 1998 (the "Stockholder Rights Agreement") and the preferred stock
purchase rights issued under or pursuant thereto (the "Rights"), Seller has
taken, or at or prior to the Closing will have taken, all actions necessary
such that the entering into of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in any Right
becoming exercisable.
17
<PAGE> 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB
Buyer and Sub jointly and severally represent and warrant to Seller
that the statements contained in this Article IV are true and correct, except
as set forth herein in the disclosure schedule delivered by Buyer and Sub to
Seller on or before the date of this Agreement (the "Buyer Disclosure
Schedule"). The Buyer Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV and the disclosure in any paragraph shall qualify other paragraphs in this
Article IV only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraphs.
Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty concerns the existence of the document or the
other item itself).
SECTION 4.01 Organization of Buyer and Sub. Buyer and
Sub and each of Buyer's other Subsidiaries which is a corporation is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would have a material adverse effect on the business, properties,
financial condition or results of operations of Buyer and its Subsidiaries,
taken as a whole (a "Buyer Material Adverse Effect"); provided, however, that
for purposes of this Agreement, the following events shall not be taken into
account in determining whether there has been or would be a "Buyer Material
Adverse Effect" on or with respect to Buyer and its Subsidiaries, taken as a
whole: (A) changes, events or occurrences in the United States securities
markets which are not specific to Buyer and its Subsidiaries, (B) changes,
events or occurrences in the world economy which are not specific to the Buyer
and it Subsidiaries, (C) the existence of this Agreement or the transactions
contemplated hereby or the announcement thereof, (D) any changes in GAAP, and
(E) changes, events or occurrences relating to the yellow page advertising,
recruitment advertising or the executive search industries in general, and not
specifically to Buyer and its Subsidiaries. Each of Buyer's Subsidiaries which
is a limited partnership or a limited liability company is validly existing and
in good standing under the laws of the jurisdiction of its formation, has all
requisite statutory power to own, lease and operate its property and to carry
on its business as now being conducted and as proposed to be conducted, and is
duly qualified to do business and is in good standing as a foreign limited
partnership or foreign limited liability company, as the case may be, in each
jurisdiction in which the failure to be so qualified would have a Buyer's
Material Adverse Effect. Except as set forth in the Buyer SEC Reports (as
defined in Section 4.04(a)) filed prior to the date hereof and with respect to
acquisitions of third parties of which Buyer advises Seller after the closing
thereof, neither Buyer nor any of its Subsidiaries directly or indirectly owns
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business
18
<PAGE> 23
association, or entity, excluding securities in any publicly traded company
held for investment by Buyer and comprising less than five percent (5%) of the
outstanding stock of such company.
SECTION 4.02 Buyer Capital Structure. (a) The authorized
capital stock of Buyer consists of (i) 200,000 shares of 10.5% Cumulative
Preferred Stock, par value $10.00 per share ("10.5% Cumulative Preferred
Stock") (ii) 800,000 shares of Preferred Stock, par value $.001 per share
("Buyer Preferred Stock") (iii) 200,000,000 shares of Buyer Common Stock, and
(iv) 39,000,000 shares of Class B Common Stock, par value $.001 per share
("Buyer Class B Common Stock"). As of February 28, 1999, there were outstanding
no shares of 10.5% Cumulative Preferred Stock, no shares of Buyer Preferred
Stock, 33,283,203 shares of Buyer Common Stock and 2,381,000 shares of Buyer
Class B Common Stock. 3,590,988 shares of Buyer Common Stock are reserved for
future issuance pursuant to stock options granted and outstanding as of
February 28, 1999 under Buyer's stock option plans (collectively, the "Buyer
Stock Plans"). There are no shares of Buyer Class B Common Stock reserved for
future issuance. Except for the issuance of additional shares of Buyer Common
Stock in acquisitions, no material change in such capitalization has occurred
between February 28, 1999 and the date of this Agreement. All shares of Buyer
Common Stock subject to issuance as specified above are duly authorized and,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be validly issued, fully paid and
nonassessable. The shares of Buyer Common Stock to be issued in the Merger
will, when issued in accordance with the terms of this Agreement, be validly
issued, fully paid and nonassessable. Except with respect to approximately
50,000 shares of Buyer Common Stock, there are no obligations, contingent or
otherwise, of Buyer or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Buyer Common Stock, Buyer Class B Common Stock,
10.5% Cumulative Preferred Stock or Buyer Preferred Stock or the capital stock
of any Subsidiary. All of the outstanding shares of capital stock of each of
Buyer's Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and such shares owned by Buyer (other than directors' qualifying
shares in the case of foreign Subsidiaries) are owned by Buyer or another
Subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Buyer's voting rights, charges or other encumbrances
of any nature.
(b) Except as set forth in this Section 4.02 or as reserved for
future grants of options under the Buyer Stock Plans or as may be reserved for
issuance from time to time in connection with acquisitions, there are no equity
securities of any class of Buyer or any of its Subsidiaries, or any security
exchangeable into or exercisable or convertible for such equity securities,
issued, reserved for issuance or outstanding. There are no options, warrants,
equity securities, calls, rights, commitments or agreements of any character to
which Buyer or any of its Subsidiaries is a party or by which such entity is
bound (including under letters of intent, whether binding or nonbinding)
obligating Buyer or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of Buyer or
any of its Subsidiaries or obligating Buyer or any of its Subsidiaries to
grant, extend, accelerate the vesting of, otherwise modify or amend or enter
into any such option, warrant, equity security, call, right, commitment or
agreement except under Buyer Stock Plans or in connection with acquisitions. To
the knowledge of Buyer, there are no voting
19
<PAGE> 24
trusts, proxies or other voting agreements or understandings with respect to
the shares of capital stock of Buyer.
SECTION 4.03 Authority; No Conflict; Required Filings
and Consents.
(a) Each of Buyer and the Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of each of
Buyer and Sub (including the approval of the Merger by Buyer as the sole
stockholder of Sub). This Agreement has been duly executed and delivered by
each of Buyer and Sub and constitutes the valid and binding obligation of each
of Buyer and Sub, enforceable in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by each of
Buyer and Sub does not, and the consummation of the transactions contemplated
by this Agreement will not, (i) conflict with, or result in any violation or
breach of, any provision of the Certificate of Incorporation or Bylaws of Buyer
or Sub, (ii) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Buyer or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound, or (iii) conflict with, violate, or cause the
termination of any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or any
of its Subsidiaries or any of its or their properties or assets, except in the
case of (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which are not, individually or in
the aggregate, reasonably likely to have a Buyer Material Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Buyer or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the pre-merger
notification report under the HSR Act, (ii) the filing of the Registration
Statement with the SEC in accordance with the Securities Act, (iii) the filing
of the Articles of Merger with the Department of State of the State of Florida,
(iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any foreign country, (v) the approval by the Nasdaq
National Market of the listing of the shares of Buyer Common Stock to be issued
in the transactions contemplated by this Agreement, and (vi) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not interfere with the operation of any facility of
Buyer or otherwise be reasonably likely to have a Buyer Material Adverse
Effect.
20
<PAGE> 25
SECTION 4.04 SEC Filings; Financial Statements.
(a) Since the date of its initial public offering, Buyer has
filed all forms, reports and documents, including the exhibits thereto,
required to be filed by Buyer with the SEC under the Securities Act or the
Exchange Act (these forms, reports and documents are referred to collectively
as "Buyer SEC Reports"). The Buyer SEC Reports (i) at the time filed complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Buyer SEC Reports or necessary in order to make the statements in such Buyer
SEC Reports, in the light of the circumstances under which they were made, not
misleading. None of Buyer's Subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Buyer SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
presented the consolidated financial position of Buyer and its Subsidiaries as
of the dates and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount. The unaudited balance sheet of
Buyer as of September 30, 1998 is referred to herein as the "Buyer Balance
Sheet."
SECTION 4.05 No Undisclosed Liabilities. Except as
disclosed in the Buyer SEC Reports or in press releases that have been made
public by Buyer and are available at Nasdaq's website at HTTP://WWW.NASDAQ.COM
("Buyer Releases") filed prior to the date hereof, and except for normal or
recurring liabilities incurred since September 30, 1998 in the ordinary course
of business consistent with past practices, Buyer and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with GAAP), and
whether due or to become due, which individually or in the aggregate, are
reasonably likely to have a Buyer Material Adverse Effect.
SECTION 4.06 Absence of Certain Changes or Events.
Except as disclosed in the Buyer SEC Reports filed prior to the date hereof or
Buyer Releases, since the date of the Buyer Balance Sheet, Buyer and its
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date, there has not been
(i) any change in the financial condition, results of operations, business or
properties of Buyer and its Subsidiaries, taken as a whole, that has had, or is
reasonably likely to have, a Buyer Material Adverse Effect; (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to Buyer
or any of its Subsidiaries that has had, or is reasonably likely to have, a
Buyer Material Adverse Effect; (iii) any material change by Buyer in its
accounting methods, principles or practices to which Seller has not previously
consented in writing; (iv) any revaluation by Buyer of any of its assets that
has had,
21
<PAGE> 26
or is reasonably likely to have, a Buyer Material Adverse Effect; or (v) any
other action or event that would have required the consent of Seller pursuant
to Section 5.02 of this Agreement had such action or event occurred after the
date of this Agreement.
SECTION 4.07 Taxes. Buyer and each of its Subsidiaries
have (i) filed all federal, state, local and foreign Tax Returns required to be
filed by them prior to the date of this Agreement (taking into account
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which are not reasonably likely, individually or
in the aggregate, to have a Buyer Material Adverse Effect. The unpaid Taxes of
the Buyer and each of its Subsidiaries for tax periods through the Buyer
Balance Sheet date do not exceed the accruals and reserves for Taxes (excluding
reserves for deferred Taxes) set forth on the Buyer Balance Sheet by an amount
that is reasonably likely to have a Buyer Material Adverse Effect. Neither the
IRS nor any other taxing authority has asserted any claim for Taxes, or to the
actual knowledge of the executive officers of Buyer, is threatening to assert
any claims for Taxes, which claims, individually or in the aggregate, are
reasonably likely to have a Buyer Material Adverse Effect. Buyer and each of
its Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts which are not
reasonably likely, individually or in the aggregate, to have a Buyer Material
Adverse Effect. There are no liens for Taxes upon the assets of Buyer or any of
its Subsidiaries (other than liens for taxes that are not yet due or that are
being contested in good faith by appropriate proceedings), except for liens
which are not reasonably likely, individually or in the aggregate, to have a
Buyer Material Adverse Effect.
SECTION 4.08 Agreements, Contracts and Commitments.
Except as delivered to Seller or as set forth on the Buyer Disclosure Schedule,
there are no contracts, agreements or commitments that are required to be filed
as an exhibit under the Exchange Act and the rules and regulations thereunder.
Neither Buyer nor any Subsidiary has breached, or received in writing any claim
or notice that it has breached, any of the terms or conditions of any material
agreement, contract or commitment filed as an exhibit to the Buyer SEC Reports
or any other agreement, contract or commitment the termination of which would
have a Buyer Material Adverse Effect ("Buyer Material Contracts") in such a
manner as, individually or in the aggregate, are reasonably likely to have a
Buyer Material Adverse Effect. Each Buyer Material Contract that has not
expired by its terms is in full force and effect, and no party to any of the
Buyer Material Contracts will have the right to terminate such contract as a
result of the transactions contemplated by this Agreement. Except for
employment agreements, none of the Buyer Material Contracts is currently being
renegotiated in any material respect, and Buyer has no knowledge that any Buyer
Material Contract will be subject of a voluntary or regulatory ordered
renegotiation within 12 months after the date of this Agreement.
SECTION 4.09 Litigation. Except as described in the
Buyer SEC Reports filed prior to the date hereof, there is no action, suit or
proceeding, claim, arbitration or investigation
22
<PAGE> 27
against Buyer or any of its Subsidiaries pending or as to which Buyer or any
Subsidiary has received any written notice of assertion, which, individually or
in the aggregate, is reasonably likely to have a Buyer Material Adverse Effect
or a material adverse effect on the ability of Buyer to consummate the
transactions contemplated by this Agreement. There is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitration outstanding
against Buyer or any of its Subsidiaries having, or insofar as reasonably can
be foreseen in the future, would have a Buyer Material Adverse Effect.
SECTION 4.10 Compliance With Laws. Buyer and its
Subsidiaries have complied with, are not in violation of, and have not received
any notices of violation with respect to, any federal, state or local statute,
law or regulation or any judgment, decree or order of any Governmental Entity
with respect to the conduct of their respective business, or the ownership or
operation of their business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Buyer Material Adverse Effect. Buyer and its Subsidiaries have all
Approvals necessary for them to own, lease or operate their properties and to
carry on their respective businesses as now conducted and there has occurred no
default under any such Approval, or failure to obtain such Approval, which
would not in the aggregate have a Buyer Material Adverse Effect.
SECTION 4.11 Accounting and Tax Matters. To its
knowledge, after consulting with its independent auditors, neither Buyer nor
any of its Affiliates has taken or agreed to take any action which would (i)
prevent Buyer from accounting for the business combination to be effected by
the Merger as a pooling of interests, or (ii) prevent the Merger from
constituting a transaction qualifying as a reorganization under Section 368(a)
of the Code.
SECTION 4.12 Registration Statement; Proxy Statement/
Prospectus. The information in the Registration Statement (except for
information supplied by Seller for inclusion in the Registration Statement, as
to which Buyer makes no representation) shall not at the time the Registration
Statement is filed with the SEC and at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information supplied by Buyer for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to
stockholders of Seller, at the time of the Seller Meeting and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Proxy Statement not false or misleading; or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Seller Meeting which has become false or misleading. If at any time prior to
the Effective Time any event relating to Buyer or any of its Affiliates,
officers or directors should be discovered by Buyer which should be set forth
in an amendment to the Registration Statement or a supplement to the Proxy
Statement, Buyer shall promptly inform Seller. The Registration Statement will
comply as to form in all material respects
23
<PAGE> 28
with the requirements of the Securities Act and the rules and regulations
promulgated thereunder, except that no representation is made by Buyer with
respect to statements made or incorporated by reference therein based on
information supplied by Seller specifically for inclusion or incorporation by
reference in the Registration Statement.
SECTION 4.13 Year 2000 Compliance. The computer systems
of Buyer and its Subsidiaries (including, without limitation, all software,
hardware, workstations and related components, automated devices, embedded
chips and other date sensitive equipment such as security systems, alarms,
elevators and HVAC systems) are Year 2000 Compliant or will be Year 2000
Compliant by September 30, 1999, except to the extent that any failure to be
Year 2000 Compliant, either individually or in the aggregate, would not have a
Buyer Material Adverse Effect. The term "Year 2000 Compliant" as used herein
means that the computer systems are (1) capable of recognizing, processing,
managing, representing, interpreting, and manipulating correctly date related
data for dates earlier and later than January 1, 2000, including, but not
limited to, calculating, comparing, sorting, storing, tagging and sequencing,
without resulting in or causing logical or mathematical errors or
inconsistencies in any user-interface functionalities or otherwise, including
data input and retrieval, data storage, data fields, calculations, reports,
processing, or any other input or output, (2) have the ability to provide data
recognition for any data element without limitation (including, but not limited
to, date-related data represented without a century designation, date- related
data whose year is represented by only two digits and date fields assigned
special values), (3) have the ability to automatically function into and beyond
the year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000, (4) have the ability to correctly
interpret data, dates and time into and beyond the year 2000, (5) have the
ability not to produce noncompliance in existing information, nor otherwise
corrupt such data into and beyond the year 2000, (6) have the ability to
correctly process after January 1, 2000 data containing dates before that date,
and (7) have the ability to recognize all "leap years", including February 29,
2000.
The computer systems of Buyer and its Subsidiaries have the
ability to properly interface and will continue to properly interface with
internal and external applications and systems of third parties with whom Buyer
and its Subsidiaries exchange data electronically (including without limitation
customers, clients, suppliers, service providers, subcontractors, processors,
converters, shippers, warehousemen, outsources, data processors, regulatory
agencies and banks) whether or not they have achieved Year 2000 Compliance.
SECTION 4.14 Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
24
<PAGE> 29
ARTICLE V
CONDUCT OF BUSINESS
SECTION 5.01 Covenants of Seller. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Seller agrees as to itself
and its respective Subsidiaries (except to the extent that Buyer shall
otherwise consent in writing), to carry on its business in the usual, regular
and ordinary course in substantially the same manner as previously conducted,
to pay its debts and taxes when due subject to good faith disputes over such
debts or taxes, to pay or perform its other obligations when due, and, to the
extent consistent with such business, use all reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Except as expressly
contemplated by this Agreement, Seller shall not (and shall not permit any of
its respective Subsidiaries to), without the written consent of Buyer:
(a) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property)
in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock;
(b) Accelerate, amend or change the period of
exercisability of options or restricted stock or
authorize cash payments in exchange for any such
options except as required by the terms of any
employee stock plans or any related agreements in
effect as of the date of this Agreement or purchase
any shares of Seller Common Stock;
(c) Issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its
capital stock or securities convertible into shares
of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements
or commitments of any character obligating it to
issue any such shares or other convertible
securities, other than (i) the grant of options
consistent with past practices to existing or new
employees, which options represent in the aggregate
the right to acquire no more than 200,000 shares
(net of cancellations) of Seller Common Stock, or
(ii) the issuance of shares of Seller Common Stock
pursuant to the exercise of options and warrants
outstanding on the date of this Agreement;
(d) Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
equity interest in or substantial portion of the
assets of, or by any other manner, any business or
any corporation, partnership or other business
organization or division, or otherwise acquire or
agree to acquire any assets (other than inventory
and other items in the ordinary course of business);
(e) Sell, lease, license, mortgage or otherwise encumber
or otherwise dispose of any of its material
properties or assets in an amount in excess of
$100,000
25
<PAGE> 30
except as required to carry on Seller's business in
the usual, regular and ordinary course;
(f) Except to the extent required under applicable law,
and except for amendments as may be requested by the
Internal Revenue Service in connection with a
determination letter request, (i) increase or agree
to increase the compensation payable or to become
payable to its officers or employees, except for
increases in salary or wages of employees (other
than officers) in accordance with past practices,
(ii) grant any additional severance or termination
pay to, or enter into any employment or severance
agreements with, any employees or officers,
provided, however, that Seller may enter into
employment or severance arrangements with those
employees or officers who earn or have earned less
than $100,000 annually, (iii) enter into any
collective bargaining agreement, or (iv) establish,
adopt, enter into or amend any bonus, profit
sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or
other plan, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees
or pay any bonuses except for bonuses based on the
performance of Seller and its employees during the
Seller's fiscal year ended February 28, 1999 which
are consistent in nature and amount with Seller's
bonus payments for its prior year or in accordance
with contracts in effect on the date hereof;
(g) Amend or propose to amend its charter or bylaws,
except as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than
pursuant to credit agreements in effect as of the
date hereof or indebtedness in the form of deferred
purchase price;
(i) Initiate, compromise, or settle any material
litigation or arbitration proceeding;
(j) Except in the ordinary course of business, modify,
amend or terminate any Seller Material Contract or
waive, release or assign any material rights or
claims;
(k) Make any Tax election, settle or compromise any Tax
liability or amend any Tax return;
(l) Change its methods of accounting as in effect at
February 28, 1999;
(m) Make or commit to make any capital expenditures that
exceed the capital budget furnished by Seller to
Buyer;
26
<PAGE> 31
(n) Make any cash disbursement exceeding $250,000 for
any single item or related series of items except as
expressly set forth in the Seller Disclosure
Schedule or except as consistent with the capital
budget furnished by Seller to Buyer;
(o) Invest funds in debt securities or other instruments
in each case maturing more than 90 days after the
date of investment;
(p) Adopt, implement or amend any stockholder rights
plan that could have the effect of impeding or
restricting the consummation of the transactions
contemplated hereby;
(q) Permit the purchase of Seller Common Stock pursuant
to Seller's Employee Stock Purchase Plan; or
(r) Take, or agree in writing or otherwise to take, any
of the actions described in Sections (a) through (q)
above.
SECTION 5.02 Covenants of Buyer. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, Buyer agrees as to itself and its
respective Subsidiaries (except to the extent that Seller shall otherwise
consent in writing), to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and taxes when due subject to good faith disputes over such debts
or taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Except as expressly contemplated by this
Agreement, Buyer shall not (and shall not permit any of its respective
Subsidiaries to), without the written consent of Seller:
(a) Accelerate, amend or change the period of
exercisability of options or restricted stock or
authorize cash payments in exchange for any options
granted under any of such plans except as required
by the terms of any employee stock plans or any
related agreements in effect as of the date of this
Agreement or purchase any shares of Buyer Common
Stock;
(b) Amend or propose to amend its charter or bylaws;
(c) Change its methods of accounting as in effect at
December 31, 1998; or
27
<PAGE> 32
(d) Take, or agree in writing or otherwise to take, any
of the actions described in Sections (a) through (c)
above.
SECTION 5.03 Cooperation. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Buyer
and Seller shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations and shall promptly provide the other party or its counsel with
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby and thereby.
SECTION 5.04 Confidentiality. The parties acknowledge
that Buyer and Seller have previously executed a Confidentiality Agreement
dated as of February 2, 1999 (the "Confidentiality Agreement"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms, except as expressly modified herein.
SECTION 5.05 Notices of Certain Events. Each of Buyer
and Seller shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or
may be required in connection with the Merger; (ii) any notice of other
communication from any Governmental Entity in connection with the Merger; and
(iii) any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or otherwise
affecting the Buyer or Seller or their respective Subsidiaries that relate to
the consummation of the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 No Solicitation. (a) Seller shall not,
directly or indirectly, through any officer, director, employee, financial
advisor, representative or agent of such party solicit, initiate, or encourage
(including by the way of furnishing non-public information) any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer to acquire all or any Substantial part of the business or
properties of the Seller or any of its Subsidiaries or any Substantial part of
the capital stock of the Seller or any of its Subsidiaries, whether by merger,
consolidation, business combination, purchase of Substantial assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof, other than the transactions contemplated by this Agreement
(any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"); provided, however, that if the Board
of Directors of Seller determines in good faith, based on the advice of outside
counsel and of an investment banker, that failure to do so would be reasonably
likely to constitute a breach of its fiduciary duties to Seller's stockholders
under applicable law, Seller, in response to a written Acquisition Proposal
that (i) was unsolicited or that did not otherwise result from a breach of this
section, and (ii) is more favorable, as determined by the Board of Directors in
good faith, than the
28
<PAGE> 33
transaction contemplated by this Agreement (a "Superior Proposal"), may (x)
furnish non-public information with respect to Seller to the person who made
such Acquisition Proposal pursuant to a customary confidentiality agreement and
(y) participate in negotiations regarding such Acquisition Proposal. The term
"Substantial" as used herein means (i) 10% or more of the capital stock of
Seller or any Subsidiary or (ii) the assets of Seller and/or its Subsidiaries
representing 10% or more of the consolidated assets of Seller as set forth on
the Seller Balance Sheet or generating 10% or more of Seller's consolidated
revenue, operating profit or net income for the nine months ended November 30,
1998.
The Board of Directors of Seller shall not (1) withdraw or modify, in
a manner adverse to Buyer, its approval or recommendation of this Agreement or
the Merger unless there is a Superior Proposal outstanding, (2) approve or
recommend, or propose to approve or recommend, an Acquisition Proposal that is
not a Superior Proposal or (3) cause Seller to enter into any letter of intent,
agreement in principle or other agreement with respect to an Acquisition
Proposal unless, in the case of (3), the Board of Directors of Seller (x) shall
have determined in good faith, based on the advice of outside counsel, that
failure to do so would be reasonably likely to constitute a breach of its
fiduciary duties to Seller's stockholders under applicable law, (y) shall then
terminate this Agreement pursuant to the termination provisions of Section 8.01
and (z) shall then pay to Buyer the fees and expenses set forth in Section
8.03. Notwithstanding anything to the contrary contained herein, Seller may
only take any of the actions permitted in clauses (1), (2) and (3) above after
the second business day following Buyer's receipt of written notice advising
Buyer that Seller has received a Superior Proposal, specifying the terms of the
Superior Proposal and identifying the person making such Superior Proposal (it
being understood that any amendment to a Superior Proposal shall necessitate an
additional two business day period).
Nothing contained in this Section shall prohibit Seller from at any
time taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) of the Exchange Act with regard to an Acquisition Proposal.
(b) Seller shall notify Buyer immediately after receipt by
Seller (or its advisors) of any Acquisition Proposal or any request for
nonpublic information in connection with an Acquisition Proposal or for access
to the properties, books or records of Seller by any person or entity that
informs Seller that it is considering making, or has made, an Acquisition
Proposal. Such notice shall be made orally and in writing and shall indicate
in reasonable detail the identity of the offeror and the terms and conditions
of such proposal, inquiry or contact. Seller shall continue to keep Buyer
informed, on a current basis, of the status of any such discussions or
negotiations and the terms being discussed or negotiated.
SECTION 6.02 Proxy Statement/Prospectus; Registration
Statement. As promptly as practical after the execution of this Agreement,
Buyer and Seller shall prepare and file with the SEC the Proxy Statement, and
Buyer shall prepare and file with the SEC the Registration Statement, in which
the Proxy Statement will be included as a prospectus, provided that Buyer may
delay the filing of the Registration Statement until the Proxy Statement is
cleared by the SEC. Buyer
29
<PAGE> 34
and Seller shall use all reasonable efforts to cause the Registration Statement
to become effective as soon after such filing as practicable. Buyer and Seller
shall make all necessary filings with respect to the Merger under the
Securities Act, the Exchange Act, applicable state blue sky laws and the rules
and regulations thereunder. Seller shall mail the Proxy Statement to its
shareholders as soon as possible after the Registration Statement is declared
effective.
SECTION 6.03 Nasdaq Quotation. Seller agrees to use
reasonable efforts to continue the quotation of Seller Common Stock on the
Nasdaq National Market during the term of this Agreement.
SECTION 6.04 Access to Information. Upon reasonable
notice, Seller and Buyer shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Seller and
Buyer shall (and shall cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as such other
party may reasonably request. Unless otherwise required by law, the parties
will hold any such information which is nonpublic in confidence in accordance
with the Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.04 or otherwise shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the Merger.
SECTION 6.05 Stockholder Meeting. The Seller, acting
through its Board of Directors, shall, subject to and according to applicable
law and its Articles of Incorporation and Bylaws, promptly and duly call, give
notice of, convene and hold as soon as practicable following the date on which
the Registration Statement becomes effective the Seller Meeting for the purpose
of voting to approve and adopt this Agreement and the Merger (the "Seller
Voting Proposal"). The Board of Directors of the Seller shall (i) recommend
approval and adoption of the Seller Voting Proposal by the stockholders of the
Seller and include in the Proxy Statement such recommendation and (ii) take all
reasonable and lawful action to solicit and obtain such approval; provided,
however, that the Board of Directors of Seller may withdraw such recommendation
as permitted by Section 6.01.
SECTION 6.06 Legal Conditions to Merger. (a) Seller
and Buyer shall use their respective reasonable best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (ii)
obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by Seller or Buyer or any of their Subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
30
<PAGE> 35
consummation of the transactions contemplated hereby including, without
limitation, the Merger, and (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under (A) the Securities Act
and the Exchange Act, and any other applicable federal or state securities
laws, (B) the HSR Act and any related governmental request thereunder, and (C)
any other applicable law. Seller and Buyer shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing
and, if requested, to accept all reasonable additions, deletions or changes
suggested in connection therewith. Seller and Buyer shall use their respective
best efforts to furnish to each other all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable law (including all information required to be included in the
Proxy Statement and the Registration Statement) in connection with the
transactions contemplated by this Agreement.
(b) Buyer and Seller agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best efforts
to obtain any government clearances or approvals required for Closing under the
HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal
Trade Commission Act, as amended, and any other Federal, state or foreign law
or, regulation or decree designed to prohibit, restrict or regulate actions for
the purpose or effect of monopolization or restraint of trade (collectively
"Antitrust Laws"), to respond to any government requests for information under
any Antitrust Law, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") that restricts, prevents or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement under any Antitrust Law. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one
another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
any Antitrust Law. Buyer and Seller shall mutually direct any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing, and
shall afford each other a reasonable opportunity to participate therein.
Notwithstanding anything to the contrary in this Section 6.06, neither Seller,
Buyer nor any of their respective Subsidiaries shall be required to (i) divest
any of their respective businesses, product lines or assets, or to take or
agree to take any other action or agree to any limitation, or (ii) take any
action under this Section 6.06 if the United States Department of Justice or
the United States Federal Trade Commission authorizes its staff to seek a
preliminary injunction or restraining order to enjoin consummation of the
Merger.
(c) Each of Seller and Buyer shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their reasonable efforts to obtain
any third party consents related to or required in connection with the Merger
that are (A) necessary to consummate the transactions contemplated hereby, (B)
disclosed or required to be disclosed in the Seller Disclosure Schedule or the
Buyer Disclosure Schedule, as the case may be, or (C) required to prevent a
Seller Material Adverse Effect or a Buyer Material Adverse Effect from
occurring prior to or after the Effective Time.
31
<PAGE> 36
SECTION 6.07 Public Disclosure. Buyer and Seller shall
consult with each other before issuing any press release or otherwise making
any public statement with respect to the Merger or this Agreement and shall not
issue any such press release or make any such public statement prior to such
consultation, except as, in the reasonable judgment of the Board of Directors
of either Buyer or Seller, may be required by law or the rules and regulations
of Nasdaq.
SECTION 6.08 Reorganization. Buyer and Seller shall
each use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code. SECTION 6.09 Pooling
Accounting. From and after the date hereof and until the Effective Time,
neither Seller nor Buyer, nor any of their respective Subsidiaries, shall
knowingly take any action, or knowingly fail to take any action, that is
reasonably likely to jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes.
SECTION 6.10 Affiliate Agreements. Upon the execution
of this Agreement, Seller will provide Buyer with a list of those persons who
are, in Seller's reasonable judgment, "affiliates" of Seller, respectively,
within the meaning of Rule 145 promulgated under the Securities Act ("Rule
145") (each such person who is an "affiliate" of Seller within the meaning of
Rule 145 is referred to as an "Affiliate"). Seller shall provide Buyer such
information and documents as Buyer shall reasonably request for purposes of
reviewing such list and shall notify Seller in writing regarding any change in
the identity of its Affiliates prior to the Closing Date. Seller shall have
delivered or caused to be delivered to Buyer, prior to the execution of this
Agreement, from each of its Affiliates, an executed Affiliate Agreement, in
substantially the form appended hereto as Exhibit A (collectively, the
"Affiliate Agreements"). Buyer shall be entitled to place appropriate legends
on the certificates evidencing any Buyer Common Stock to be received by such
Affiliates of Seller pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Buyer
Common Stock, consistent with the terms of the Affiliate Agreements (provided
that such legends or stop transfer instructions shall be removed, two years
after the Effective Date, upon the request of any stockholder that is not then
an Affiliate of Buyer). Buyer shall publish through the filing of a Quarterly
Report on Form 10-Q or Annual Report on Form 10-K, as applicable, no later than
45 days and 90 days respectively, after the end of the first quarter after the
Effective Time in which there are at least 30 days of post-Merger combined
operations, combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135. This
Section 6.10 is intended to be for the benefit of affiliates of the Seller.
SECTION 6.11 Nasdaq National Market Listing. Buyer
shall use its best efforts to cause the shares of Buyer Common Stock to be
issued in the Merger to be listed on the Nasdaq National Market, subject to
official notice of issuance, on or prior to the Closing Date.
SECTION 6.12 Stock Plans. (a) As soon as practicable
after the Effective Time, Buyer shall deliver to the participants in the Seller
Stock Plans appropriate notice setting forth such participants' rights pursuant
thereto and the grants pursuant to the Seller Stock Plans shall
32
<PAGE> 37
continue in effect on the same terms and conditions (subject to the adjustments
required by Section 2.03 after giving effect to the Merger).
(b) Buyer shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Buyer Common Stock for delivery
under Seller Stock Plans assumed in accordance with Section 2.03. As soon as
practicable after the Effective Time, Buyer shall file a registration statement
on Form S-8 (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of Buyer Common Stock subject to
such options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. This Section 6.12(b) is intended to be for
the benefit of holders of options to purchase the Common Stock of Seller.
SECTION 6.13 Certain Employee Benefit Plan Obligations.
Buyer shall make its standard health (including medical insurance, life
insurance and disability plans) available to the Seller's employees, and shall
waive any preexisting condition, waiting period or insurability limitation
whether or not required under the Health Insurance Portability and
Accountability Act of 1996.
SECTION 6.14 Indemnification, Exculpation and Insurance.
(a) Buyer and Sub agree that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors,
officer, employees or agents of Seller and its Subsidiaries as provided in
their respective Articles or Certificates of Incorporation or by-laws (or
comparable organizational documents) and any indemnification agreements or
arrangements of Seller shall be assumed by Buyer, shall survive the Merger and
shall continue in full force and effect, without amendment, for six years after
the Effective Time; provided, however, that all rights to indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim. Buyer shall pay any expenses of any
indemnified person under this Section 6.14 in advance of the final disposition
of any action, proceeding or claim relating to any such act or omission to the
fullest extent permitted under applicable law upon receipt from the applicable
indemnified person to whom advances are to be advanced of any undertaking to
repay such advances required under applicable law. Buyer shall cooperate in the
defense of any such matter. In addition, from and after the Effective Time,
directors or officers of Seller and its Subsidiaries who become directors or
officers of Buyer or its Subsidiaries will be entitled to the same indemnity
rights and protections as are afforded to other directors and officers of
Buyer.
(b) In the event that either of the Surviving Corporation or
Buyer or any of its successors or assigns (i) consolidates with or merges with
or into any other person and is not the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision will be made so that the successors and assigns of
Buyer or the Surviving Corporation, as applicable, will assume the obligations
thereof set forth in this Section 6.14.
33
<PAGE> 38
(c) The provisions of this Section 6.14 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to , and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.
(d) For six years after the Effective Time, Buyer or the
Surviving Corporation shall maintain in effect the Seller's current directors'
and officers' liability insurance covering acts or omissions occurring prior to
the Effective Time with respect to those persons who are currently covered by
the Sellers' directors' and officers' liability insurance policy on terms with
respect to such coverage and amount no less favorable in the aggregate to
Seller's directors and officers currently covered by such insurance than those
of such policy in effect on the date hereof; provided that Buyer may substitute
therefor policies of Buyer or its Subsidiaries containing terms with respect to
coverage and amount no less favorable to such directors or officers.
(e) Buyer shall cause the Surviving Corporation or any successor
thereto to comply with its obligations under this Section 6.14.
SECTION 6.15 Brokers or Finders. Each of Buyer and
Seller represents, as to itself, its Subsidiaries and its Affiliates, that no
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement except for Robert W. Baird & Co. Incorporated, whose fees and
expenses will be paid by Seller in accordance with Seller's agreements with
such firms (a copy of which have been delivered by Seller to Buyer prior to the
date of this Agreement).
SECTION 6.16 Comfort Letters from Seller's Accountants.
Seller shall use reasonable efforts to cause to be delivered to Buyer and
Seller a letter of Arthur Andersen LLP, Seller's independent auditors, dated a
date within two business days before the date on which the Registration
Statement shall become effective and addressed to Buyer, in form reasonably
satisfactory to Buyer and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
SECTION 6.17 Comfort Letter from Buyer's Accountants.
Buyer shall use reasonable efforts to cause to be delivered to Seller and Buyer
a letter of BDO Seidman, LLP, Buyer's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Seller, in form reasonably satisfactory to
Seller and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
SECTION 6.18 Control of Operations. Nothing contained
in this Agreement shall give Buyer, directly or indirectly, the right to
control or direct the operations of the Seller or its Subsidiaries prior to the
Effective Time. Nothing contained in this Agreement shall give Seller, directly
or indirectly, the right to control or direct the operations of Buyer or its
Subsidiaries prior
34
<PAGE> 39
to the Effective Time. Prior to the Effective Time, each of Buyer and Seller
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
SECTION 6.19 No Rights Triggered. Seller shall take all
actions necessary, and Buyer shall cooperate in the taking of such actions,
such that the entering into of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in any Right
becoming exercisable.
SECTION 6.20 Release of Lockups. Seller shall use its
best efforts to obtain from Robert W. Baird & Co. Incorporated ("Baird") the
release of all lockup agreements, effective as of the Effective Time, in effect
as of the date of this Agreement between Baird and certain current or former
holders of Seller Common Stock with respect to the Seller Common Stock.
SECTION 6.21 Guaranty of Certain Obligations. Buyer
hereby unconditionally and irrevocably guarantees, and shall cause the
Surviving Corporation to guarantee, the obligations of the Seller and its
Subsidiaries under the agreements specified on Exhibit B hereto. The provisions
of this Section 6.21 are intended to be for the benefit of the officers,
directors and employees of Seller and its Subsidiaries parties to the
agreements set forth in Exhibit B hereto.
ARTICLE VII
CONDITIONS TO MERGER
SECTION 7.01 Conditions to Each Party's Obligation To
Effect the Merger. The respective obligations of each party to this Agreement
to effect the Merger shall be subject to the satisfaction prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. The Seller Voting Proposal
shall have been approved and adopted by the
affirmative vote of the holders of a majority of the
shares of Seller Common Stock outstanding on the
record date for the Seller Meeting, at which a
quorum is present.
(b) HSR Act. The waiting period applicable to the
consummation of the Merger under the HSR Act shall
have expired or been terminated.
(c) Approvals. Other than the filing provided for by
Section 1.01, all authorizations, consents, orders
or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any
Governmental Entity, the failure of which to file,
obtain or occur is reasonably likely to have a Buyer
Material Adverse Effect or Seller Material Adverse
Effect shall have been filed, been obtained or
occurred.
35
<PAGE> 40
(d) Registration Statement. The Registration Statement
shall have become effective under the Securities Act
and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity or federal,
state or foreign court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or
entered any order, executive order, stay, decree,
judgment or injunction (each an "Order") or statute,
rule, regulation which is in effect and which has
the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(f) Pooling Letters. Buyer and Seller shall have
received letters from Arthur Andersen LLP, and BDO
Seidman, LLP, regarding the concurrence of such
accountants with Buyer's and Seller's management's
conclusions, as to the appropriateness of the
pooling of interests accounting, under Accounting
Principles Board Opinion No. 16 for the Merger, as
contemplated to be effected as of the date of the
letters, it being agreed that Buyer and Seller shall
each provide reasonable cooperation to Arthur
Andersen LLP and BDO Seidman, LLP to enable them to
issue such letters.
(g) Nasdaq National Market Listing. The shares of Buyer
Common Stock to be issued in the Merger shall have
been approved for listing on the Nasdaq National
Market, subject only to official notice of issuance.
SECTION 7.02 Additional Conditions to Obligations of
Buyer and Sub. The obligations of Buyer and Sub to effect the Merger are
subject to the satisfaction of each of the following conditions, any of which
may be waived in writing exclusively by Buyer and Sub:
(a) Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement
shall be true and correct as of the date of this
Agreement and (except to the extent such
representations and warranties speak as of an
earlier date) as of the Closing Date as though made
on and as of the Closing Date, except for, (i)
changes contemplated by this Agreement and (ii)
where the failures to be true and correct (without
giving effect as to any limitation as to
"materiality" or "Seller Material Adverse Effect"),
individually or in the aggregate, have not had and
are not reasonably likely to have a Seller Material
Adverse Effect or a material adverse effect upon the
ability of Seller to consummate the transactions
contemplated hereby; and Buyer shall have received a
certificate signed on behalf of Seller by the
President and the Chief Financial Officer of Seller
to such effect.
(b) Performance of Obligations of Seller. Seller shall
have performed in all material respects all
obligations required to be performed by it under
this
36
<PAGE> 41
Agreement at or prior to the Closing Date; and Buyer
shall have received a certificate signed on behalf
of Seller by the President and the Chief Financial
Officer of Seller to such effect.
(c) Permits and Licenses. All permits, licenses and
other governmental authorizations required for Buyer
to conduct Seller's business in the same manner as
conducted prior to the Effective Time and as
contemplated to be conducted subsequent to the
Merger shall be in full force and effect, and any
necessary approvals for the continued effectiveness
of such permits, licenses and authorizations
subsequent to the Effective Time shall have been
obtained; except where the lack of such permits,
licenses and other governmental authorizations or
approvals for same shall not have, individually or
in the aggregate, a Seller Material Adverse Effect.
(d) Dissenting Shareholders. The shares of Seller Common
Stock held by dissenting shareholders shall not
exceed 10% of the shares of Seller Common Stock
issued and outstanding on the Closing Date.
(e) Stockholder Rights Agreement. Seller shall have
taken all actions necessary such that the entering
into of this Agreement and the consummation of the
transactions contemplated hereby do not and will not
result in any Right becoming exercisable.
(f) Opinion. Buyer and Sub shall have received the
written opinion of Trenam, Kemker, Scharf, Barkin,
Frye, O'Neill & Mullis, Professional Association,
counsel to Seller, as to the due organization of
Seller and the corporate authority of Seller to
enter into this Agreement and that the shares of
Seller Common Stock to be acquired in the Merger
have been duly authorized, validly issued and are
fully paid and non-assessable shares of the capital
stock of Seller.
SECTION 7.03 Additional Conditions to Obligations of
Seller. The obligation of Seller to effect the Merger is subject to the
satisfaction of each of the following conditions, any of which may be waived,
in writing, exclusively by Seller:
(a) Representations and Warranties. The representations
and warranties of Buyer and Sub set forth in this
Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such
representations speak as of an earlier date) as of
the Closing Date as though made on and as of the
Closing Date, except for, (i) changes contemplated
by this Agreement and (ii) where the failures to be
true and correct (without giving effect as to any
limitation as to "materiality" or "Buyer Material
Adverse Effect"), individually or in the aggregate,
have not had and are not reasonably likely to have a
Buyer
37
<PAGE> 42
Material Adverse Effect or a material adverse effect
upon the ability of Buyer and Sub to consummate the
transactions contemplated hereby; and Seller shall
have received a certificate signed on behalf of
Buyer by the chief executive officer and the chief
financial officer of Buyer to such effect.
(b) Performance of Obligations of Buyer and Sub. Buyer
and Sub shall have performed in all material
respects all obligations required to be performed by
them under this Agreement at or prior to the Closing
Date, and Seller shall have received a certificate
signed on behalf of Buyer by the chief executive
officer and the chief financial officer of Buyer to
such effect.
(c) Tax Opinion. Seller shall have received the opinion
of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, Professional Association, counsel to Seller,
to the effect that the Merger will be treated for
Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code;
(it being agreed that Buyer and Seller shall each
provide reasonable cooperation to such firm to
enable them to render such opinion).
(d) Opinion. Seller shall have received the written
opinion of Fulbright & Jaworski L.L.P., counsel to
Buyer and Sub, as to the due organization of Buyer
and the corporate authority of Buyer to enter into
this Agreement and that the shares of Buyer Common
Stock to be issued in the Merger have been duly
authorized, validly issued and are fully paid and
non-assessable shares of the capital stock of Buyer.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01 Termination. This Agreement may be
terminated at any time prior to the Effective Time (with respect to Sections
8.01(b) through 8.01(g), by written notice by the terminating party to the
other party), whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Seller or Buyer:
(a) by mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller if the Merger shall not
have been consummated by September 30, 1999 (the
"Outside Date") (provided that the right to
terminate this Agreement under this Section 8.01(b)
shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the
Merger to occur on or before such date); or
38
<PAGE> 43
(c) by either Buyer or Seller if a court of competent
jurisdiction or other Governmental Entity shall have
issued a nonappealable final order, decree or ruling
or taken any other nonappealable final action, in
each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the
Merger; or
(d) by either Buyer or Seller, if at the Seller Meeting
(including any adjournment or postponement), the
requisite vote of the stockholders of Seller in
favor of the Seller Voting Proposal shall not have
been obtained (provided that the right to terminate
this Agreement under this Section 8.01(d) shall not
be available to any party seeking termination who at
the time is in breach of or has failed to fulfill
its obligations under this Agreement); or
(e) by Buyer, if (i) the Board of Directors of Seller
shall have withdrawn or modified its recommendation
of this Agreement or the Merger; (ii) after the
receipt by Seller of an Acquisition Proposal, Buyer
requests in writing that the Board of Directors of
Seller reconfirm its recommendation of this
Agreement or the Merger and the Board of Directors
of Seller fails to do so within 10 business days
after its receipt of Buyer's request; (iii) the
Board of Directors of Seller shall have recommended
to the stockholders of Seller an Acquisition
Proposal; (iv) a tender offer or exchange offer for
10% or more of the outstanding shares of Seller
Common Stock is commenced (other than by Buyer or an
Affiliate of Buyer) and the Board of Directors of
Seller recommends that the stockholders of Seller
tender their shares in such tender or exchange
offer; or (v) for any reason Seller fails to call
and hold the Seller Meeting by the Outside Date; or
(f) by Buyer or Seller, if there has been a breach of
any representation, warranty, covenant or agreement
on the part of the other party set forth in this
Agreement, which breach (i) causes the conditions
set forth in Section 7.02(a) or (b) (in the case of
termination by Buyer) or 7.03(a) or (b) (in the case
of termination by Seller) not to be satisfied, and
(ii) shall not have been cured within 30 days
following receipt by the breaching party of written
notice of such breach from the other party; or
(g) by Buyer in the event that the Average Stock Price
is less than $42.00;or
(h) by Seller if the Board of Directors of Seller shall
have withdrawn or modified its recommendation of
this Agreement or the Merger because it has accepted
a Superior Proposal and Seller has paid Buyer's
expenses pursuant to Section 8.03(b).
39
<PAGE> 44
SECTION 8.02 Effect of Termination. In the event of
termination of this Agreement as provided in Section 8.01, this Agreement shall
immediately become void and there shall be no liability or obligation on the
part of Buyer, Seller, Sub or their respective officers, directors,
stockholders or Affiliates, except as set forth in Sections 5.04 and 8.03;
provided that any such termination shall not limit liability for any wilful
breach of this Agreement and the provisions of Sections 5.04 and 8.03 of this
Agreement and the Confidentiality Agreements shall remain in full force and
effect and survive any termination of this Agreement.
SECTION 8.03 Fees and Expenses. (a) Except as set forth
in this Section 8.03, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated; provided,
however, that Seller and Buyer shall share equally all fees and expenses, other
than attorneys' fees, incurred with respect to the printing and filing of the
Proxy Statement (including any related preliminary materials) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements.
(b) Seller shall pay Buyer up to $2,000,000 as
reimbursement for expenses of Buyer actually
incurred relating to the transactions contemplated
by this Agreement prior to termination (including,
but not limited to, fees and expenses of Buyer's
counsel, accountants and financial advisors, but
excluding any discretionary fees paid to such
financial advisors), upon the termination of this
Agreement by Buyer pursuant to (i) Section 8.01(e),
(ii) Section 8.01(b) as a result of the failure to
satisfy the condition set forth in Section 7.02(a),
(iii) Section 8.01(f) or (iv) Section 8.01(h).
(c) In addition to the expenses specified above, Seller
shall pay Buyer a termination fee of $2,000,000 upon
the earliest to occur of the following events:
(i) the termination of this Agreement by Buyer
pursuant to Section 8.01(e) or by Seller pursuant to Section 8.01(h);
or
(ii) the termination of this Agreement by Buyer
pursuant to Section 8.01(f) after a willful breach by Seller of this
Agreement, provided at the time of such breach, Seller shall have
received an Acquisition Proposal; or
(iii) the termination of the Agreement by Buyer
pursuant to Section 8.01(d) as a result of the failure to receive the
requisite vote for approval of the Seller Voting Proposal by the
stockholders of Seller at the Seller Meeting if, at the time of such
failure, there shall have been announced an Acquisition Proposal
relating to Seller which shall not have been absolutely and
unconditionally withdrawn and abandoned.
40
<PAGE> 45
(d) Buyer shall pay Seller up to $2,000,000 as
reimbursement for expenses of Seller actually
incurred relating to the transactions contemplated
by this Agreement prior to termination (including,
but not limited to fees and expenses of Seller's
counsel, accountants and financial advisors, but
excluding any discretionary fees paid to such
financial advisors), upon (A) the termination of
this Agreement by Seller pursuant to (i) Section
8.01(b) as a result of the failure to satisfy the
condition set forth in Section 7.03(a), or (ii)
Section 8.01(f) or (B) the termination of this
Agreement by Buyer pursuant to Section 8.01(g).
(e) The expenses and fees, if applicable, payable
pursuant to Section 8.03(b), 8.03(c), or 8.03(d)
shall be paid within one business day after the
first to occur of the events described in Section
8.03(b), 8.03(c), or 8.03(d); provided that in no
event shall Buyer or Seller, as the case may be, be
required to pay the expenses and fees, if
applicable, to the other, if, immediately prior to
the termination of this Agreement, the party to
receive the expenses and fees, if applicable, was in
material breach of its obligations under this
Agreement.
SECTION 8.04 Amendment. This Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Seller or of Buyer, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 8.05 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Nonsurvival of Representations, Warranties
and Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
2.01, 2.02, 2.03, 6.10, 6.11, 6.12, 6.13, 6.14, 6.21 and Article IX. The
Confidentiality Agreements shall survive the execution and delivery of this
Agreement.
41
<PAGE> 46
SECTION 9.02 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or mailed by registered
or certified mail (return receipt requested) or by Federal Express to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Buyer or Sub, to
TMP Worldwide Inc.
1633 Broadway
New York, NY 10019
Attn: Andrew J. McKelvey
Myron Olensnyckyj
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
Attn: Gregg J. Berman
` Roy Goldman
(b) if to Seller, to
LAI Worldwide, Inc.
Thanksgiving Tower, Suite 4150
1601 Elm Street
Dallas, TX 75201
Attn: Robert L. Pearson
Patrick J. McDonnell
with a copy to:
Trenam, Kemker, Scharf, Barkin, Frye,
O'Neill, Mullis, Professional Association
2700 Barnett Plaza
101 E. Kennedy Boulevard
Tampa, FL 33601
Attn: Richard Leisner
SECTION 9.03 Interpretation. When a reference is made
in this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table
42
<PAGE> 47
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 9.04 Counterparts. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
SECTION 9.05 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as specifically
provided in Section 9.01 (with respect to Sections 2.01, 2.02, 2.03, 6.10,
6.11, 6.13, 6.14, 6.21 and this Article IX) are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder; provided
that the Confidentiality Agreements shall remain in full force and effect until
the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Seller nor
Buyer makes any other representations or warranties, and each hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to the other or the other's representatives of any documentation or
other information with respect to any one or more of the foregoing.
SECTION 9.06 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
FLORIDA WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
SECTION 9.07 Jurisdiction. Each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) agrees that it will not bring any action relating to this Agreement
or any of the transactions contemplated by this agreement in any court other
than a Federal court sitting in the State of New York or a New York state
court.
SECTION 9.08 Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties provided that Sub may assign its rights
hereunder to Buyer or a Subsidiary of Buyer. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
43
<PAGE> 48
SECTION 9.09 Severability. In the event that any
provision of this Agreement or the application thereof, becomes or is declared
by a court of competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
SECTION 9.10 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
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 of this Agreement in any court of
the United States located in the State of New York or in any New York state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any court of the United States
located in the State of New York or of any New York state court in the event
any dispute arises out of this Agreement or the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement in
any court other than a court of the United States located in the State of New
York or a New York state court.
SECTION 9.11 No Rule of Construction. The parties agree
that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Agreement.
44
<PAGE> 49
IN WITNESS WHEREOF, Buyer, Sub and Seller have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
TMP WORLDWIDE INC.
By: /s/ Myron F. Olensnyckyj
----------------------------
TMP FLORIDA ACQUISITION CORP.
By: /s/ Myron F. Olensnyckyj
----------------------------
LAI WORLDWIDE, INC.
By: /s/ Robert L. Pearson
----------------------------
45
<PAGE> 1
EXHIBIT 4.3
AMENDMENT TO STOCKHOLDER RIGHTS AGREEMENT
THIS AMENDMENT (this "Amendment") is made and entered into on and
effective as of the 11th day of March, 1999 by and between LAI WORLDWIDE, INC.,
a Florida corporation (the "Company" or "LAI"), and CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., a New Jersey limited liability company (the "Rights Agent")
with respect to that certain STOCKHOLDER RIGHTS AGREEMENT dated the 30th day of
December, 1998 by and between LAI and the Rights Agent (the "Rights
Agreement").
WHEREAS, LAI, TMP Worldwide Inc., a Delaware corporation ("Buyer") and
TMP Florida Acquisition Corp., a Florida corporation and a direct, wholly-owned
subsidiary of Buyer ("Sub") intend to enter into an Agreement and Plan of
Merger pursuant to which Sub will merge with and into LAI; and
WHEREAS, pursuant to and in compliance with the Rights Agreement, LAI
and the Rights Agent desire to amend the Rights Agreement as set forth in this
Amendment to reflect the foregoing;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and in the Rights Agreement, the parties hereto
hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended to add
the following at the end of the existing definition of
"Acquiring Person" thereunder:
Anything in this Agreement to the contrary notwithstanding,
"Acquiring Person" shall not include either TMP Worldwide
Inc., a Delaware corporation ("TMP") or TMP Florida
Acquisition Corp., a Florida corporation and a direct,
wholly-owned subsidiary of TMP ("TMP-Sub"), or any Affiliate
or Associate of TMP or TMP-Sub, by virtue of (x) the
announcement, approval, execution or delivery of the
Agreement and Plan of Merger among the Company, TMP and
TMP-Sub dated as of March 8, 1999 (including any amendments
thereto) (the "TMP Merger Agreement") pursuant to which,
among other things, Sub shall merge with and into the Company
(the "TMP Merger") or (y) the consummation of the TMP Merger
and the transactions contemplated by the TMP Merger
Agreement.
2. Section 3(c) of the Rights Agreement is hereby amended by
substituting in place and stead of the first sentence thereof
the following:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Stockholder Rights
Agreement between LAI Worldwide, Inc. (the "Company") and
ChaseMellon Shareholder Services, L.L.C. dated as of December
30, 1998, as amended as of March 8, 1999 and as the same may
be further amended from time to
<PAGE> 2
Amendment to Stockholder Rights Agreement Page 2
time (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of the
Company.
3. Section 13 of the Rights Agreement is hereby amended to add
the following paragraph at the end thereof:
Notwithstanding any other provision of this Agreement,
neither of the following events shall constitute an
occurrence of the events referred to in Section 13(a)(i),
(ii), (iii) or (iv) hereof: (A) the announcement, approval,
execution or delivery of the TMP Merger Agreement or (B) the
consummation of the TMP Merger.
4. The Rights Agreement is hereby amended to add a new Section
35 which shall read in its entirety as follows:
Anything in this Agreement to the contrary notwithstanding,
the announcement, approval, execution or delivery of the TMP
Merger Agreement, the acquisition of beneficial ownership of
the Common Stock of the Company pursuant to the TMP Merger
and the consummation of the transactions contemplated by the
TMP Merger Agreement shall not (i) cause TMP or TMP-Sub, or
any Affiliate or Associate of either of them, to be deemed an
Acquiring Person. (ii) give rise to a Distribution Date, any
event referred to in Section 12 hereof, any of the events
referred to in Section 13(a)(i), (ii), (iii) or (iv) hereof
or a Stock Acquisition Date, or (iii) result in any Right
becoming exercisable.
5. The Form of Right Certificate attached to the Rights
Agreement as Exhibit A is hereby amended by changing the
phrase "December 30, 1998 as the same may be amended from
time to time" appearing in the first paragraph in the body
thereof to read "December 30, 1998, as amended as of March 8,
1999 and as the same may be further amended from time to
time."
6. This Amendment shall be deemed to be a contract made under
the laws of the State of Florida and for all purposes shall
be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of
the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable
to contracts made and to be preformed entirely within such
state.
<PAGE> 3
Amendment to Stockholder Rights Agreement Page 3
7. This Amendment may be executed in any number of counterparts
and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
8. Except as expressly set forth herein, this Amendment shall
not by implication or otherwise alter, modify, amend, or in
any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Rights Agreement,
all of which are ratified and affirmed in all respects and
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the day and year first above written.
LAI WORLDWIDE, INC.
By: /s/ Philip R. Albright
------------------------------------
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Kathryn M. Gallagher
-----------------------------------
<PAGE> 1
EXHIBIT 99.1
Page 1 of 4
FOR IMMEDIATE RELEASE
CONTACT: FOR TMP WORLDWIDE
Jim Treacy (212) 527-8604
[email protected]
Lavine Surtani (212) 445-8262
[email protected]
FOR LAI WORLDWIDE
Philip Albright (813) 961-7494
Janey Loyd (203) 324-4445
TMP WORLDWIDE TO ACQUIRE LAI WORLDWIDE
ACQUISITION OF FIFTH LARGEST U.S.-BASED EXECUTIVE SEARCH FIRM
STRENGTHENS TMP'S GLOBAL "INTERN-TO-CEO" RECRUITMENT STRATEGY
NEW YORK, NY, MARCH 11, 1999 - TMP Worldwide Inc. (NASDAQ: TMPW; ASX: TMP), the
leading provider of global recruitment solutions including the dominant
Internet career portal, Monster.com, and the world's largest Yellow Pages
advertising agency, and LAI Worldwide, Inc. (NASDAQ: LAIX) today announced they
have entered into an agreement by which TMP will acquire LAI in a pooling of
interests transaction.
LAI Worldwide is a New York-based retained executive search firm, with
19 offices in the United States, and two international offices. For the nine
months ended November 30, 1998, LAI reported net fee revenues of $71.0 million
and EBITDA of $6.8 million. LAI also reported net cash of approximately $28.5
million as of that date.
LAI Worldwide's operations will be combined with TMP Worldwide-owned
TASA Worldwide and the combined entity will rank as one of the world's largest
executive search firms. Michael Squires, currently president of TASA Worldwide,
and Robert L. Pearson, LAI Worldwide's chairman and CEO, will jointly run the
combined operations.
<PAGE> 2
On a pro-forma basis for calendar 1998, executive search commissions
and fees for the combined entity would have been approximately $155.0 million,
of which 25% would have related to searches conducted outside the U.S.
The acquisition, which is anticipated to close in the third quarter,
is expected to be accretive immediately. It is estimated that costs associated
with the merger, including a non-cash charge of $2.7 million to reflect the
accelerated vesting of equity incentives due LAI employees, will be
approximately $6.0 million.
Under the terms of the agreement, each share of LAI stock will be
exchanged for 0.1321 shares of TMP common stock, assuming that the TMP average
share price for the 20 days ending on the 2nd day prior to closing is between
$42.00 and $64.00 per share. Should the 20-day average share price of TMP stock
fall below $42.00 per share, unless TMP elects to terminate the acquisition,
the exchange ratio will be adjusted to that obtained by dividing $5.55 by TMP's
20-day average stock price measured prior to closing. Should TMP's 20-day
average share price exceed $64.00 per share, the exchange ratio will be
adjusted to that obtained by dividing $8.45 by TMP's 20-day average stock price
measured prior to closing, but not below that which would provide LAI
shareholders with a fraction of a TMP share equal to $5.55. Based on the
exchange ratio of 0.1321, TMP Worldwide expects to issue approximately 1.2
million shares, including the effect of options. The agreement is subject to
customary closing conditions, including approval by the shareholders of LAI
Worldwide.
"By joining TASA and LAI's operations, we greatly strengthen our
global executive search infrastructure, further solidifying our position as one
of the world's leading executive search firms," said Andrew J. McKelvey,
chairman and CEO of TMP Worldwide. "The addition of LAI complements TASA's
already strong presence overseas. With so many foreign-based open positions
controlled by U.S. companies, a large presence in the U.S. will add substantial
new business opportunities to our overseas offices."
Mr. McKelvey continued, "We are aware of LAI's past difficulties and
the fact that they expect to report a loss for the fourth quarter of fiscal
1998, which will include operating and
<PAGE> 3
restructuring charges. However, the synergies with TASA Worldwide are great,
and we expect LAI's acquisition to be immediately accretive."
Jeff Taylor, CEO of TMP Interactive, stated: "LAI's web-based
assessment tools and competency-based job profiling capabilities, will
significantly boost mid-level executive search product offerings on
Monster.com."
"LAI Worldwide is an industry leader, with a reputation for providing
its clients the very best in high-end executive search services," said Michael
Squires, president of TASA Worldwide. Mr. Squires continued, "I am looking
forward to working with Bob Pearson and the LAI team. Our TASA consultants have
the highest regard for LAI and we are very excited by the opportunity of
building a premium worldwide executive search practice."
With the addition of LAI, TASA Worldwide expands and strengthens its
leadership position in executive search for the financial services and
technology industries. Moreover, with LAI, TASA expands its search capabilities
into other important and growing industries such as health care, industrial,
and consumer products.
"We are very pleased to be associated with a company as innovative
and exciting as TMP Worldwide," said Robert L. Pearson, chairman and CEO of LAI
Worldwide. Mr. Pearson continued, "Recently, LAI experienced a challenging
market environment. We have made the necessary decisions to turn our operations
around. We believe that combining with TMP Worldwide provides the necessary
catalyst to expand LAI's executive search business to the next level while
maximizing shareholder value."
SPECIAL NOTE
The above statements include forward-looking statements based on
current management expectations. Factors that could cause future results to
differ from these expectations include the following: risks associated with
acquisitions, competition and seasonality. Additional factors are described in
the company's reports filed with the Securities and Exchange Commission.
<PAGE> 4
Founded in 1967, TMP Worldwide, has more than 4,750 employees in 19
countries. The company's clients include more than 70 of the Fortune 100 and
more than 400 of the Fortune 500 companies.
TASA has over 130 consultants operating through 12 offices in Europe,
six offices in the Asia-Pacific region, six associated offices in Latin America
and nine offices in the United States, which will integrate with LAI
Worldwide's operations.
LAI is one of the largest providers of executive recruiting services,
offering its services exclusively on a retained basis. To help its clients meet
the demands of a changing workforce in the markets it serves, LAI identifies,
evaluates and recommends qualified candidates for senior executive positions
primarily at Fortune 500 and large, private companies. LAI has 121 executive
search consultants located in 19 offices in the United States as well as
offices in London and Hong Kong.
# # #
