AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1998
REGISTRATION STATEMENT NO. 333-50803
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TECHNISOURCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
FLORIDA 7363 59-2786227
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
JOSEPH W. COLLARD
1901 WEST CYPRESS CREEK ROAD 1901 WEST CYPRESS CREEK ROAD
SUITE 202 SUITE 202
FT. LAUDERDALE, FLORIDA 33309 FT. LAUDERDALE, FLORIDA 33309
(954) 493-8601 (954) 493-8601
(ADDRESS, INCLUDING ZIP CODE, (NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) OF AGENT FOR SERVICE)
</TABLE>
---------------
COPIES TO:
STEVEN SONBERG, ESQ. JEFFREY A. SCHUMACHER, ESQ.
HOLLAND & KNIGHT LLP SACHNOFF & WEAVER, LTD.
701 BRICKELL AVENUE 30 S. WACKER DRIVE
SUITE 3000 SUITE 2900
MIAMI, FLORIDA 33131 CHICAGO, ILLINOIS 60606
(305) 374-8500 (312) 207-1000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED TO BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share ..................... 3,565,000 $ 14.00 $49,910,000 $14,750
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 465,000 shares that the Underwriters have an option to purchase to
cover over-allotments, if any.
(2) Estimated pursuant to Rule 457(a) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee.
(3) Of which $11,800 was paid with the initial filing of this Registration
Statement.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 29, 1998
PROSPECTUS
, 1998
3,100,000 SHARES
[TECHNISOURCE LOGO]
COMMON STOCK
All of the 3,100,000 shares of Common Stock offered hereby are being sold
by Technisource, Inc. ("Technisource" or the "Company").
Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently anticipated that the initial public
offering price will be between $12.00 and $14.00 per share. See "Underwriting"
for information relating to the factors to be considered in determining the
initial public offering price.
Application has been made for the Common Stock to be approved for
quotation on the Nasdaq National Market under the symbol "TSRC."
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Share ......... $ $ $
Total(3) .......... $ $ $
(1) SEE "UNDERWRITING" FOR INDEMNIFICATION ARRANGEMENTS WITH THE UNDERWRITERS.
(2) BEFORE DEDUCTING EXPENSES, ESTIMATED AT $700,000, WHICH WILL BE PAID BY THE
COMPANY.
(3) CERTAIN SHAREHOLDERS (THE "SELLING SHAREHOLDERS") HAVE GRANTED TO THE
UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP TO 465,000 ADDITIONAL SHARES
OF COMMON STOCK AT THE PRICE TO THE PUBLIC, LESS UNDERWRITING DISCOUNTS
AND COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF SUCH OPTION
IS EXERCISED IN FULL, THE TOTAL PRICE TO THE PUBLIC, UNDERWRITING
DISCOUNTS AND COMMISSIONS AND PROCEEDS TO THE SELLING SHAREHOLDERS WILL BE
$ , $ AND $ , RESPECTIVELY. THE COMPANY WILL NOT RECEIVE ANY
OF THE PROCEEDS FROM THE SALE OF SHARES OF COMMON STOCK BY THE SELLING
SHAREHOLDERS PURSUANT TO THE UNDERWRITERS' OVER-ALLOTMENT OPTION, IF
EXERCISED. SEE "PRINCIPAL AND SELLING SHAREHOLDERS" AND "UNDERWRITING."
The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions, including their right to reject orders in whole or in
part. It is expected that delivery of the share certificates will be made in
New York, New York on or about , 1998.
DONALDSON, LUFKIN & JENRETTE WILLIAM BLAIR & COMPANY
SECURITIES CORPORATION
<PAGE>
[MAP OF TECHNISOURCE OFFICE LOCATIONS]
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE
FINANCIAL STATEMENTS AND RELATED NOTES THERETO APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION CONTAINED IN THIS
PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT
EXERCISED. ALL SHARE AND PER SHARE DATA IN THIS PROSPECTUS HAVE BEEN ADJUSTED
TO GIVE RETROACTIVE EFFECT TO A 72,000 FOR 1 STOCK SPLIT EFFECTED MAY 26, 1998.
UNLESS OTHERWISE INDICATED, THE TERMS "COMPANY" AND "TECHNISOURCE" REFER
COLLECTIVELY TO TECHNISOURCE, INC., TECHNISOURCE OF FLORIDA, INC. AND
TECHNISOURCE MIDWEST, INC., AND THE COMPANY'S FINANCIAL STATEMENTS REFER TO THE
COMBINED FINANCIAL STATEMENTS OF SUCH ENTITIES.
THE COMPANY
Technisource is a national provider of information technology ("IT")
services through 22 offices in the United States and Canada, utilizing over 900
highly trained consultants. The Company's consultants provide services which
are used to design, develop and implement IT solutions, including database
development, documentation and training, enterprise resource planning ("ERP")
package implementation, help desk/desktop support, Internet/intranet
development, mainframe development, network engineering, real-time development,
systems administration and testing & quality assurance. The Company's services
are provided to various departments within its client's organization, including
research and product development departments.
Over the last ten years, the Company has developed and refined an internal
growth methodology (the "Technisource Growth Model"), which is focused on
facilitating rapid internal growth through the replication of Technisource
Development Triangles. Each Development Triangle is typically comprised of one
account manager, two trained recruiting professionals and a group of IT
consultants. As the revenues generated by a Development Triangle reach critical
mass, a high-performing recruiting professional from the Development Triangle
is promoted to account manager and forms a new Development Triangle, which is
seeded with a portion of the revenue-generating projects and consultants from
the original Development Triangle. This scalable model fuels growth by
developing and retaining employees within the Technisource culture and by
reducing the time required to achieve profitability and the risks associated
with expansion.
The Company has demonstrated the scalability of the Technisource Growth
Model, having replicated over 40 Development Triangles. This has resulted in
rapid internal growth, as revenues have increased at a five-year compound
annual growth rate of 60.0%, from $10.3 million in 1993 to $67.3 million in
1997. The Company has grown from four branch offices in 1993 to 16 branch
offices in 1997, and has added six branch offices in 1998.
Business organizations are increasingly relying on IT solutions to resolve
business issues and improve productivity. The migration of technology
throughout the business enterprise has created a wide range of opportunities,
including improved service and product capabilities. Organizations are also
outsourcing technology services functions throughout the business enterprise in
order to keep pace with rapidly changing technologies, efficiently match
employee skills and utilization levels with current needs and address the
growing shortage of IT professionals. According to industry sources, the
worldwide market for IT services was estimated at $280 billion in 1997, with a
projected market of $400 billion for 2001.
3
<PAGE>
The Company's goal is to maximize growth and maintain profitability by
capitalizing on key industry dynamics. The key elements of the Company's
business strategy designed to achieve this goal are the following: (i) rapidly
deploy highly trained IT consultants; (ii) apply the Technisource Growth Model
by replicating Development Triangles; (iii) establish long-term client
relationships; (iv) provide a wide range of IT capabilities; (v) capitalize on
local presence; and (vi) leverage established infrastructure. Technisource's
substantial investment in a centralized infrastructure leaves the Company well
positioned to continue its expansion. For example, the Company has expanded its
proprietary TSRC Database to include over 100,000 potential consultants and
their qualifications, which allows the Company to identify and quickly deploy
IT consultants with the appropriate skill sets.
Technisource believes that the breadth of its service offerings fosters
long-term client relationships, affords cross-selling opportunities, reduces
its dependence on any single technology and enables the Company to attract
consultants with a variety of skill sets to service the needs of the Company's
clients. For each of the years 1995, 1996 and 1997, existing clients from the
previous year generated at least 80% of the Company's revenues. In 1997, the
Company provided IT services to over 200 clients in the United States,
including more than 390 divisions or business units, in a diverse range of
industries. Clients include AlliedSignal, AT&T, Caterpillar, Eli Lilly, General
Electric, General Motors, Honeywell, Lockheed Martin, Lucent Technologies,
Motorola, Rockwell and UPS.
The Company's strategy is to leverage the Technisource Growth Model to
generate same-office growth and expansion of branch-office locations, and to
selectively take advantage of acquisition opportunities. The Company's growth
strategy includes the following elements: (i) expand geographic presence
through opening new branch offices; (ii) broaden service lines and IT
capabilities; (iii) leverage existing client base; and (iv) pursue strategic
acquisitions or partnerships.
The Company's executive offices are located at 1901 West Cypress Creek
Road, Suite 202, Ft. Lauderdale, Florida 33309, and its telephone number is
(954) 493-8601.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company ....................... 3,100,000 shares
Common Stock to be outstanding after the offering ......... 10,300,000 shares(1)
Use of proceeds ........................................... Payment of undistributed S corporation
earnings; repayment of existing debt;
expansion of existing operations, including
opening additional branch offices,
development of new service lines and
possible acquisitions of related businesses;
and general corporate purposes, including
working capital.
Proposed Nasdaq National Market Symbol .................... TSRC
</TABLE>
- ---------------------
(1) Excludes: (i) options that will be outstanding upon the consummation of
this offering to purchase 358,462 shares of Common Stock at a weighted
average exercise price of $1.31 per share, assuming an initial public
offering price of $13.00 per share; and (ii) 1,531,538 additional shares
of Common Stock reserved for issuance upon exercise of options that may be
granted in the future under the Company's Incentive Stock Option Plan. See
"Management--Employee Benefit Plans" and Notes 7 and 10 of Notes to
Financial Statements.
4
<PAGE>
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- -----------------------
1993 1994 1995 1996 1997 1997 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................... $10,285 $15,572 $29,130 $40,360 $ 67,327 $13,400 $ 22,780
Cost of revenues ........................... 8,758 12,050 21,879 30,624 50,775 10,122 17,210
------- ------- ------- ------- -------- ------- --------
Gross profit ............................... 1,527 3,522 7,251 9,736 16,552 3,278 5,570
Selling, general and administrative
expenses ................................. 1,685 2,536 4,778 6,659 12,222 2,360 4,302
------- ------- ------- ------- -------- ------- --------
Operating income (loss) .................... (158) 986 2,473 3,077 4,330 918 1,268
Interest and other income .................. 16 9 23 8 27 -- --
Interest expense ........................... 2 20 60 105 160 44 38
------- ------- ------- ------- -------- ------- --------
Income (loss) before income taxes .......... (144) 975 2,436 2,980 4,197 874 1,230
Income taxes (benefit) ..................... (388) -- 22 231 183 38 59
------- ------- ------- ------- -------- ------- --------
Net income ................................. $ 244 $ 975 $ 2,414 $ 2,749 $ 4,014 $ 836 $ 1,171
Pro forma provision for incremental
income taxes(1) .......................... 335 375 930 851 1,500 312 412
------- ------- ------- ------- -------- ------- --------
Pro forma net income (loss) ................ $ (91) $ 600 $ 1,484 $ 1,898 $ 2,514 $ 524 $ 759
======= ======= ======= ======= ======== ======= ========
Pro forma net income per share--basic ...... $ 0.35 $ 0.11
======== ========
Pro forma net income per share--diluted..... $ 0.31 $ 0.09
======== ========
Weighted average shares outstanding--
basic .................................... 7,200 7,200
Weighted average shares outstanding--
diluted(2) ............................... 8,217 8,217
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
---------------------------
ACTUAL AS ADJUSTED(3)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......... $ 163 $26,137
Working capital .................... 6,322 34,991
Total assets ....................... 13,864 40,238
Total debt ......................... 2,305 --
Total shareholders' equity ......... 8,004 36,683
</TABLE>
- ---------------------
(1) The pro forma statement of operations information has been computed for the
pro forma period by adjusting the Company's net income, as reported for
such period, to record incremental income taxes which would have been
recorded had the Company been a C corporation during such period. See "S
Corporation Distribution," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of Notes to
Financial Statements.
(2) The weighted average shares outstanding-diluted includes: (i) the pro forma
effect of the sale (at an assumed initial public offering price of $13.00
per share) of 716,441 shares of Common Stock offered hereby needed to
generate net proceeds sufficient to pay the estimated $8.5 million S
corporation distribution; and (ii) the dilutive effect of common stock
equivalents using the treasury stock method.
(3) As adjusted to give effect to: (i) an estimated $8.5 million S corporation
distribution and the recognition of a net deferred tax asset of
approximately $400,000 upon the termination of the Company's S corporation
election; and (ii) the sale of 3,100,000 shares of Common Stock offered by
the Company hereby, assuming an initial public offering price of $13.00
per share and the application of the estimated net proceeds therefrom. See
"Use of Proceeds," "S Corporation Distribution" and Notes 4 and 10 of
Notes to Financial Statements.
5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS IN CONNECTION
WITH AN INVESTMENT IN THE SHARES OF THE COMMON STOCK OFFERED HEREBY. THIS
PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS CAN
GENERALLY BE IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT INCLUDES
WORDS SUCH AS THE COMPANY "BELIEVES," "ANTICIPATES," "EXPECTS," "INTENDS," OR
OTHER WORDS OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE THE
COMPANY'S FUTURE PLANS, OBJECTIVES AND GOALS ARE ALSO FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD
DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS.
RISKS RELATING TO RECRUITMENT AND RETENTION OF IT PROFESSIONALS
The Company's business involves delivering IT services capabilities and is
labor-intensive. The Company's success depends upon its ability to attract,
develop, motivate and retain highly skilled IT consultants possessing the
technical skills and experience necessary to meet client needs. Qualified IT
consultants are in high demand worldwide and are likely to remain a limited
resource for the foreseeable future. The shortage of IT professionals has in
the past and is likely in the future to result in wage inflation. To the extent
the Company is unable to make corresponding increases in its billing rates, the
Company's results of operations could be materially adversely affected.
Further, IT consultants typically provide services on an
assignment-by-assignment basis and can terminate an assignment with the Company
at any time. The Company's success will depend in part on its ability to
attract consultants with skill sets that keep pace with continuing changes in
industry standards and client preferences. The Company competes for such
individuals with general IT services firms, temporary staffing and personnel
placement companies, general management consulting firms, major accounting
firms, divisions of large hardware and software companies, systems consulting
and implementation firms, programming companies and niche providers of IT
services. Many of the IT consultants who work with the Company also work with
the Company's competitors, and there can be no assurance that IT consultants
currently working on projects for the Company will not choose to work for
competitors on future assignments. There also can be no assurance that
qualified IT consultants will continue to be available to the Company in
sufficient numbers, or that the Company will be successful in retaining current
or future consultants. Failure to attract or retain qualified IT consultants in
sufficient numbers could have a material adverse effect on the Company's
business, operating results and financial condition. See "Business--Human
Resources and Recruiting."
CONCENTRATION OF REVENUES
The Company derives a significant portion of its revenues from a limited
number of clients. During 1997, the Company's two most significant clients,
Motorola and Rockwell, accounted for approximately 21% and 15% of the Company's
revenues, respectively, and the Company's top ten clients accounted for
approximately 53% of its revenues. In 1996, Motorola and Rockwell together
accounted for 32% of the Company's revenues, and for the quarter ended March
31, 1998, these companies together accounted for 38% of the Company's revenues.
There can be no assurance that these clients will continue to engage the
Company for additional projects or do so at the same revenue levels. Clients
engage the Company on an assignment-by-assignment basis, and a client can
generally terminate an assignment at any time without penalty. Conditions
affecting any of the Company's significant clients could cause such clients to
reduce their usage of the Company's services for reasons unrelated to the
Company's performance. The loss of any significant client or a decrease in the
revenues generated from such a client could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Clients and Representative Solutions."
RISKS RELATING TO DEVELOPMENT OF NEW BRANCH OFFICE LOCATIONS
The Company's growth is partially dependent on the internal development of
new branch offices. This expansion is dependent on a number of factors,
including the Company's ability to: attract, hire,
6
<PAGE>
integrate and retain qualified revenue-generating employees; accurately assess
the demand for the Company's IT services in a new market; initiate, develop and
sustain corporate client relationships in each new regional market; and
continue to replicate its Development Triangles to help provide an initial base
of revenues for each new office. The addition of new branch offices typically
results in increases in operating expenses, primarily due to the hiring of
additional employees. Expenses are incurred in advance of forecasted revenue,
and there is typically a delay before the Company's newly opened offices reach
full productivity, resulting in initial losses. Newly opened offices generally
operate at a loss for their first 10 to 12 months of operation; however there
can be no assurance that newly opened offices will become profitable within
expected time frames, or at all. Also, there can be no assurance that the
Company can profitably expand with new branch office locations or that new
offices will meet the growth and profitability objectives of the Company. The
Company's business, operating results and financial condition could be
materially adversely affected if the Company fails to successfully implement
its new branch office strategy. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview" and "Business--Growth
Strategy."
ABILITY TO MANAGE GROWTH
The Company has experienced rapid growth that has placed significant
demands on the Company's managerial, administrative and operational resources.
Revenues have grown from $10.3 million in 1993 to $67.3 million in 1997. The
Company's continued growth depends on its ability to hire recruiting
professionals and to hire and deploy additional IT consultants. Effective
management of the Company's growth will require the Company to continue to
improve its operational, financial and other management processes and systems.
The Company's failure to manage growth effectively could have a material
adverse effect on its business, operating results and financial condition. See
"Business--Growth Strategy."
VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company's revenues and operating results are subject to significant
variation depending on the timing and number of client projects commenced and
completed during the quarter, acceleration in the hiring of recruiting
professionals and IT consultants, attrition and utilization rates, changes in
the pricing of the Company's services and timing of branch and service line
expansion activities, among other factors. The Company generally experiences
lower operating results in the first quarter due in part to the timing of
unemployment taxes, FICA tax accruals and delays in client contract renewals
due to clients' budget approval processes. Further, the Company generally
experiences a certain amount of seasonality in the fourth quarter due to the
number of holidays and the closing of client facilities during that quarter.
Because a high percentage of the Company's expenses, in particular personnel
and facilities costs, are relatively fixed, small variations in revenues may
cause significant variations in operating results. Additionally, the Company
periodically incurs cost increases due to the hiring of new employees and
strategic investments in its infrastructure in anticipation of future
opportunities for revenue growth. No assurances can be given that quarterly
results will not fluctuate, which may have a material adverse effect on the
Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Unaudited Quarterly Results."
COMPETITION
The IT services industry is highly competitive and served by numerous
national, regional and local firms, all of which are either existing or
potential competitors of the Company. The Company competes for both clients and
qualified technical consultants with a variety of competitors, including
general IT services firms, temporary staffing and personnel placement
companies, general management consulting firms, major accounting firms,
divisions of large hardware and software companies, systems consulting and
implementation firms, programming companies and niche providers of IT services.
Many of these competitors have substantially greater financial, technical and
marketing resources and greater name recognition than the Company. The IT
services industry is undergoing consolidation which may result in increasing
pressure on profit margins. In addition, there are relatively few barriers to
entry into the Company's markets and the Company has faced, and expects to
continue to face, additional competition
7
<PAGE>
from new entrants into its markets. Moreover, certain clients enter into
"preferred vendor" contracts to reduce the number of vendors with whom they do
business and obtain better pricing in return for a potential increase in the
volume of business to the preferred vendor. While these contracts may generate
higher volumes, they may also result in lower margins. Also, the failure to be
designated a preferred vendor may preclude the Company from providing services
to existing or potential clients. Further, there is a risk that clients may
elect to increase their internal IT resources to satisfy their needs. These
factors may limit the Company's ability to increase prices commensurate with
increases in employee compensation, which could adversely affect the Company's
profit margins. There can be no assurance that the Company will compete
successfully with existing or new competitors. See "Business--Competition."
RISKS ASSOCIATED WITH YEAR 2000 PROJECTS
The Company anticipates that the competition for technical consultants
will increase substantially as companies continue to hire technical consultants
to perform services to implement Year 2000 solutions. Such increased
competition could materially and adversely affect the Company's ability to
attract and retain qualified technical consultants in the future. The Company
also believes that many of its clients and potential clients will continue to
devote substantial resources to Year 2000 projects. As a result, the Company's
clients or potential clients may postpone other information systems projects
pending completion of their Year 2000 projects. This could adversely affect the
demand for the Company's services. In addition, the Company's competitors
offering Year 2000 services may be able to obtain other assignments from
clients previously served by the Company or may provide solutions which give
them an advantage in competing for new clients. Moreover, the Company expects
that Year 2000 projects will peak prior to calendar year 2000 as companies
address their Year 2000 needs. Thereafter, the availability of a substantial
number of IT consultants formerly engaged in Year 2000 projects could have a
material adverse effect on the Company, including reducing the demand for the
Company's IT consultants, increasing competition for available client
engagements, and creating downward pressure on pricing for the Company's
services.
DEPENDENCE ON KEY EMPLOYEES
The success of the Company is highly dependent on the efforts and
abilities of its key employees, including Joseph W. Collard, President and
Chief Executive Officer, James F. Robertson, Executive Vice President and Chief
Operating Officer, Paul Cozza, Vice President and Director of National Sales,
and John A. Morton, Vice President and Chief Financial Officer. Messrs. Collard
and Robertson each have entered into five-year employment agreements with the
Company that contain noncompetition covenants that extend for a period of one
year following termination of employment. Messrs. Cozza and Morton have each
entered into three-year employment agreements with the Company that contain
noncompetition covenants that extend for a period of two years following
termination of employment. Such agreements contain nondisclosure covenants that
terminate five years following termination of employment. Such agreements do
not guarantee that Messrs. Collard, Robertson, Cozza or Morton will continue
their employment with the Company or that such covenants will be enforceable.
The loss of the services of these or other key employees for any reason could
have a material adverse effect on the Company's business, operating results and
financial condition. See "Management."
LIABILITY RISKS
The Company is exposed to liability with respect to actions taken by its
IT consultants while on assignment, such as damages caused by errors of IT
consultants and misuse of client proprietary information. Although the Company
maintains insurance coverage, due to the nature of the Company's engagements,
and in particular the access by IT consultants to client information systems
and confidential information, and the potential liability with respect thereto,
there can be no assurance that such insurance coverage will continue to be
available on reasonable terms or that it will be adequate to cover any such
liability. Further, many of the Company's engagements involve projects that are
critical to its clients' business or products, and the benefits provided by the
Company may be difficult to quantify. The Company's failure or inability to
meet a client's expectations in the execution of its services could result in a
material adverse effect on the client's business or products and, therefore,
8
<PAGE>
could give rise to claims against the Company or damage the Company's
reputation, which might adversely affect its business, operating results and
financial condition. Moreover, the Company may be exposed to claims of
discrimination and harassment and other similar claims as a result of
inappropriate actions allegedly taken by or against its IT consultants.
RISKS RELATED TO POSSIBLE ACQUISITIONS
The Company may expand its operations through the acquisition of
additional businesses. There can be no assurance that the Company will be able
to identify, acquire or profitably manage additional businesses or successfully
integrate any acquired businesses into the Company without substantial
expenses, delays or other operational or financial problems. Further,
acquisitions may involve a number of special risks, including diversion of
management's attention, failure to retain key acquired personnel, unanticipated
events or circumstances, legal liabilities and amortization of acquired
intangible assets, some or all of which could have a material adverse effect on
the Company's business, operating results and financial condition. To date,
neither the Company nor any member of its senior management has significant
experience completing or integrating acquisitions. Client dissatisfaction or
performance problems within an acquired firm could have a material adverse
impact on the reputation of the Company as a whole. There can be no assurance
that acquired businesses, if any, will achieve anticipated revenues and
earnings. The failure of the Company to manage any possible acquisitions
successfully could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, the Company may issue
additional shares of its capital stock to acquire such additional businesses,
which would have a dilutive effect on the Company's shareholders. See
"Business--Growth Strategy."
CONTROL BY PRINCIPAL SHAREHOLDERS
Upon completion of this offering, Mr. Collard and Mr. Robertson will
beneficially own approximately 35.3% and 33.9% (approximately 33.3% and 31.9%
if the Underwriters exercise their over-allotment option in full),
respectively, of the outstanding shares of Common Stock. As a result, Mr.
Collard and Mr. Robertson will retain the voting power to exercise control over
the election of directors and other matters requiring a vote of the
shareholders of the Company. Such a concentration of ownership may have the
effect of delaying or preventing a change in control of the Company and may
also impede or preclude transactions in which shareholders might otherwise
receive a premium for their shares over then current market prices. See
"Principal and Selling Shareholders."
RELIANCE ON INTELLECTUAL PROPERTY RIGHTS
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom the Company may license intellectual property. The Company enters into
confidentiality agreements with its key employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of
proprietary information or that the Company will be able to detect unauthorized
use of and take appropriate steps to enforce its intellectual property rights.
Although the Company does not believe that its activities infringe on the
rights of third parties, there can be no assurance that third parties will not
assert infringement claims against the Company in the future, that such
assertions will not result in costly litigation or require the Company to
obtain a license for the intellectual property rights of third parties, or that
such licenses will be available on reasonable terms or at all.
NO PRIOR MARKET FOR COMMON STOCK; STOCK PRICE VOLATILITY
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price per share of the Common Stock will be
determined by negotiations among management of the Company and representatives
of the Underwriters. The factors to be considered in determining the initial
public offering price include the history of and the prospects for the industry
in which the Company competes, the past and present operations of the Company,
the historical results of operations of the Company, the prospects for future
earnings of the Company, the recent market prices of securities of generally
comparable companies and the general condition of the securities markets at the
9
<PAGE>
time of this offering. The Nasdaq National Market initial listing requirements
include a requirement that there be at least three market makers for the
Company's Common Stock. The Company believes that there will be at least three
market makers for the Company's Common Stock upon the consummation of this
offering. However, there can be no assurance that an active public market in
the Common Stock will develop or be sustained. The Nasdaq National Market has
from time to time experienced extreme price and volume fluctuations that have
often been unrelated to the operating performance of particular companies. In
addition, factors such as announcements of technological innovations, new
products or services or new client engagements by the Company or its
competitors or third parties, conditions and trends in the IT services industry
and general market conditions may have a significant impact on the market price
of the Common Stock. The market price for the Common Stock may also be affected
by the Company's ability to meet analysts' or other market expectations, and
any failure or anticipated failure to meet such expectations, even if minor,
could have a material adverse effect on the market price of the Common Stock.
See "Underwriting."
RELIANCE ON FIXED-PRICE PROJECTS
The Company may bill certain projects on a fixed-price basis and other
projects on a fee-capped basis. These billing methods entail greater risk to
the Company than its standard billing on a time-and-materials basis. The
failure of the Company to complete projects billed other than on a time-and-
materials basis within budget or below the fee-cap would expose the Company to
the risks associated with cost overruns, which could have a material adverse
effect on the Company's business, operating results and financial condition.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Articles of Incorporation and Bylaws,
as well as the Florida Business Corporation Act, could make it more difficult
or discourage a third party from attempting to acquire control of the Company
without approval of the Company's Board of Directors. Such provisions could
also limit the price that certain investors might be willing to pay in the
future for shares of Common Stock. Certain of such provisions allow the Board
of Directors to authorize the issuance of preferred stock with rights superior
to those of the Common Stock. Moreover, certain provisions of the Company's
Articles of Incorporation or Bylaws generally permit directors to be removed by
the Board of Directors only for cause or, with or without cause, by a vote of
the holders of at least 50% of the outstanding shares of Common Stock, require
a vote of the holders of at least 60% of the outstanding Common Stock to amend
the Company's Articles of Incorporation or Bylaws, require a demand of the
holders of at least 50% of the outstanding Common Stock to call a special
meeting of shareholders, and prohibit shareholder actions by written consent.
See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Immediately after completion of this offering, the Company will have
10,300,000 shares of Common Stock outstanding, of which the 3,100,000 shares
sold pursuant to this offering will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), except for shares acquired by affiliates of the Company.
Holders of the remaining shares will be eligible to sell such shares pursuant
to Rule 144 ("Rule 144") under the Securities Act at prescribed times and
subject to the manner of sale, volume, notice and information restrictions of
Rule 144. The Company has granted certain registration rights covering an
aggregate of 7,128,000 shares of currently issued and outstanding Common Stock
(6,709,154 shares if the Underwriters' over-allotment option is exercised in
full). In addition, 358,462 shares of Common Stock are issuable upon the
exercise of stock options that will be outstanding upon the consummation of
this offering (274,648 of which will be exercisable at such time), which shares
will be registered by the Company under the Securities Act and after issuance
upon exercise may be freely tradeable without restriction. The Company and its
directors, executive officers and current shareholders (holding in the
aggregate 7,200,000 shares of Common Stock upon consummation of this offering),
have agreed not to offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock or exercise registration rights,
until 180 days after the date of this Prospectus, without the prior consent of
Donaldson, Lufkin & Jenrette
10
<PAGE>
Securities Corporation, which it may provide in whole or in part, with or
without a public announcement. Sales of substantial amounts of such shares in
the public market or the availability of such shares for future sale could
adversely affect the market price of the shares of Common Stock and the
Company's ability to raise additional capital at a price favorable to the
Company. See "Shares Eligible for Future Sale" and "Underwriting."
SIGNIFICANT UNALLOCATED NET PROCEEDS
The Company expects to use approximately $10.8 million of the estimated
$36.8 million net proceeds it receives from this offering (assuming an initial
public offering price of $13.00 per share) for specific identified purposes,
including payment of undistributed S corporation earnings and repayment of
existing debt, with the remainder of approximately $26.0 million to be used for
expansion of existing operations and general corporate purposes. As a result,
the Board of Directors will have broad discretion with respect to the use of a
large percentage of the net proceeds of this offering. There can be no
assurance that the Company will deploy these proceeds in a manner that enhances
shareholder value. See "Use of Proceeds."
IMMEDIATE AND SUBSTANTIAL DILUTION
The initial public offering price per share of Common Stock is
substantially higher than the net tangible book value per share of the Common
Stock. At an assumed initial public offering price of $13.00 per share,
purchasers of shares of Common Stock in this offering will experience immediate
and substantial dilution of $9.44 in the pro forma net tangible book value per
share of Common Stock. See "Dilution."
11
<PAGE>
THE COMPANY
The Company was incorporated on March 25, 1987 as a Florida corporation.
The Company maintains its principal executive offices at 1901 West Cypress
Creek Road, Suite 202, Ft. Lauderdale, Florida 33309, and its telephone number
is (954) 493-8601. The Company's web site address is www.tsi.net. The Company's
web site is not a part of this Prospectus. References to the Company currently
include two affiliated companies that have common ownership with the Company.
Upon the consummation of this offering, one of these affiliated companies will
become a wholly-owned subsidiary of the Company and the other, which is
currently inactive, will be dissolved.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company (after deduction of estimated underwriting
discounts and commissions and offering expenses payable by the Company) are
estimated to be approximately $36.8 million, assuming an initial public
offering price of $13.00 per share. The Company expects to use the net proceeds
from this offering for the following purposes: (i) an estimated $8.5 million
for payment of undistributed S corporation earnings; (ii) approximately $2.3
million for repayment in full of existing debt, which bears interest at 0.5%
over the prime rate (9.0% as of March 31, 1998) and matures on August 31, 1998;
(iii) expansion of existing operations, including opening additional branch
offices, development of new service lines and possible acquisitions of related
businesses; and (iv) general corporate purposes, including working capital. The
Company has no present commitments or agreements and is not currently
conducting negotiations with respect to any acquisitions.
The principal purposes of this offering are to obtain additional capital,
facilitate future access for the Company to the public equity markets and
enhance the Company's ability to use its Common Stock as consideration for
potential acquisitions and as a means of attracting and retaining key
employees. The Company's management will retain complete discretion in the
application of a majority of the net proceeds. Pending use of the net proceeds
for the above purposes, the Company intends to invest such funds in short term,
interest-bearing, investment grade obligations. The Company will not receive
any proceeds from the sale of Common Stock by the Selling Shareholders, which
may be sold pursuant to the exercise of the Underwriters' over-allotment
option.
S CORPORATION DISTRIBUTION
Since January 1, 1993, the Company has been a corporation subject to
income taxation under Subchapter S of the Internal Revenue Code of 1986, as
amended (the "Code"). As a result, substantially all of the Company's net
income has been attributed, for income tax purposes, directly to the Company's
shareholders rather than to the Company. The Company's S corporation status
will terminate in connection with this offering and thereupon the Company will
make a final distribution (the "Distribution") to its existing shareholders in
an aggregate amount representing substantially all of the Company's
undistributed earnings taxed or taxable to its shareholders through the closing
of this offering. The Distribution is estimated to be approximately $8.5
million. Purchasers of Common Stock in this offering will not receive any
portion of the Distribution.
Following termination of its S corporation status, the Company will be
subject to corporate income taxation on an accrual basis under Subchapter C of
the Code. In connection with the termination of its S corporation status, the
Company estimates that it will record, in the quarter in which this offering
occurs, a net deferred tax asset and a corresponding net income tax benefit of
approximately $400,000. The majority of this net deferred tax asset will be
recorded in accordance with Statement of Financial Accounting Standards No.
109. See Notes 4 and 10 of Notes to Financial Statements.
12
<PAGE>
DIVIDEND POLICY
The Company made distributions to its shareholders while it was an S
corporation. The Company currently anticipates that it will retain all of its
future earnings for use in the operation and expansion of its business and does
not anticipate paying any cash dividends in the foreseeable future. Any
determination to pay dividends in the future will be at the discretion of the
Company's Board of Directors and will depend upon the Company's results of
operations, financial condition and other factors as the Board of Directors may
deem relevant.
CAPITALIZATION
The following table sets forth the short-term debt and total
capitalization of the Company as of March 31, 1998, and as adjusted to give
effect to: (i) the recording of a net deferred tax asset of approximately
$400,000 upon termination of the Company's S corporation status; (ii) an
estimated $8.5 million payment of undistributed S corporation earnings; and
(iii) the issuance of 3,100,000 shares of Common Stock by the Company (at an
assumed initial public offering price of $13.00 per share) and the application
of the estimated net proceeds therefrom. See "Use of Proceeds" and "S
Corporation Distribution." The following table should be read in conjunction
with the Financial Statements and related Notes thereto included elsewhere in
this Prospectus:
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
------------------------------
ACTUAL AS ADJUSTED
<S> <C> <C>
Total short-term debt ................................................... $2,295,256 $ --
========== ===========
Notes payable ........................................................... $ 10,000 $ --
Shareholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares
issued and outstanding ............................................... -- --
Common stock, $.01 par value; 50,000,000 shares authorized;
7,200,000 issued and outstanding; 10,300,000 issued and outstanding
as adjusted(1) ....................................................... 72,000 103,000
Additional paid-in capital ............................................. -- 36,580,103
Retained earnings ...................................................... 7,932,103 --
---------- -----------
Total shareholders' equity ............................................ 8,004,103 36,683,103
---------- -----------
Total capitalization ................................................. $8,014,103 $36,683,103
========== ===========
</TABLE>
- ---------------------
(1) Excludes: (i) options that will be outstanding upon the consummation of
this offering to purchase 358,462 shares of Common Stock at a weighted
average exercise price of $1.31 per share, assuming an initial public
offering price of $13.00 per share; and (ii) 1,531,538 additional shares
of Common Stock reserved for issuance upon exercise of options that may be
granted in the future under the Technisource Long-Term Incentive Plan. See
"Management--Employee Benefit Plans" and Notes 7 and 10 of Notes to
Financial Statements.
13
<PAGE>
DILUTION
The net tangible book value of the Company as of March 31, 1998 was
$8,004,103 or $1.11 per share. Net tangible book value per share is determined
by dividing the Company's tangible net worth (total tangible assets less total
liabilities) by the number of shares of Common Stock outstanding. After giving
effect to: (i) the recording of a net deferred tax asset of approximately
$400,000 upon termination of the Company's S corporation status; (ii) an
estimated $8.5 million payment of undistributed S corporation earnings; and
(iii) the issuance of 3,100,000 shares of Common Stock by the Company (at an
assumed initial public offering price of $13.00 per share) and the application
of the estimated net proceeds therefrom, the pro forma net tangible adjusted
book value of the Company as of March 31, 1998 would have been $36.7 million,
or $3.56 per share. See "Use of Proceeds" and "S Corporation Distribution."
This amount represents an immediate increase in net tangible book value of
$2.45 per share to existing shareholders of the Company and an immediate
dilution in net tangible book value of $9.44 per share to the purchasers of
Common Stock in this offering. The following table illustrates this dilution on
a per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock ......... $ 13.00
Net tangible book value per share as of March 31, 1998 ................. $ 1.11
Increase in net tangible book value per share attributable to
new investors ........................................................ 2.45
Pro forma net tangible book value per share after this offering ......... 3.56
--------
Dilution in net tangible book value per share to new investors .......... $ 9.44
========
</TABLE>
The following table summarizes the total number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid for such shares by the existing shareholders and by new
investors purchasing Common Stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------ ------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
Existing shareholders(1) ......... 7,200,000 70.0% $ 72,000 --% $ 0.01
New investors(1) ................. 3,100,000 30.0 40,300,000 100.0 13.00
--------- ----- ----------- -----
Total .......................... 10,300,000 100.0% $40,372,000 100.0%
========== ===== =========== =====
</TABLE>
- ---------------------
(1) If the Underwriters' over-allotment option is exercised in full, sales by
the Selling Shareholders in this offering will reduce the number of shares
held by existing shareholders of the Company to 6,735,000 shares or 65.4%
of the total number of shares outstanding after this offering and will
increase the number of shares held by new investors to 3,565,000 shares or
34.6% of the total number of shares outstanding after this offering, and
the total consideration paid by new investors will increase to $46,345,000
or 100%. See "Principal and Selling Shareholders."
14
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data of the Company in the table as of and for the
years ended December 31, 1995, 1996 and 1997 are derived from the financial
statements of the Company, which have been audited by KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere in this
Prospectus. The selected financial data of the Company in the table as of and
for the years ended December 31, 1993 and 1994 and the three months ended March
31, 1997 and 1998 are derived from the financial statements of the Company
which, in the opinion of management, include all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation of the
information set forth therein. Results for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. The data presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Financial Statements and related Notes thereto
and the other financial information appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................................ $10,285 $15,572 $29,130 $40,360 $67,327
Cost of revenues ........................................ 8,758 12,050 21,879 30,624 50,775
------- ------- ------- ------- -------
Gross profit ............................................ 1,527 3,522 7,251 9,736 16,552
Selling, general and administrative expenses ............ 1,685 2,536 4,778 6,659 12,222
------- ------- ------- ------- -------
Operating income (loss) ................................. (158) 986 2,473 3,077 4,330
Interest and other income ............................... 16 9 23 8 27
Interest expense ........................................ 2 20 60 105 160
------- ------- ------- ------- -------
Income (loss) before income taxes ....................... (144) 975 2,436 2,980 4,197
Income taxes (benefit) .................................. (388) -- 22 231 183
------- ------- ------- ------- -------
Net income .............................................. $ 244 $ 975 $ 2,414 $ 2,749 $ 4,014
Pro forma provision for incremental income
taxes(1) (unaudited) ................................... 335 375 930 851 1,500
------- ------- ------- ------- -------
Pro forma net income (loss) (unaudited) ................. $ (91 $ 600 $ 1,484 $ 1,898 $ 2,514
======= ======= ======= ======= =======
Pro forma net income per share--basic
(unaudited) ............................................ $ 0.35
=======
Pro forma net income per share--diluted
(unaudited) ............................................ $ 0.31
=======
Weighted average shares outstanding--basic .............. 7,200
Weighted average shares outstanding--diluted(2) ......... 8,217
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1997 1998
(IN THOUSANDS, EXCEPT
PER SHARE
DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ................................................ $13,400 $22,780
Cost of revenues ........................................ 10,122 17,210
------- -------
Gross profit ............................................ 3,278 5,570
Selling, general and administrative expenses ............ 2,360 4,302
------- -------
Operating income (loss) ................................. 918 1,268
Interest and other income ............................... -- --
Interest expense ........................................ 44 38
------- -------
Income (loss) before income taxes ....................... 874 1,230
Income taxes (benefit) .................................. 38 59
------- -------
Net income .............................................. $ 836 $ 1,171
Pro forma provision for incremental income
taxes(1) (unaudited) ................................... 312 412
------- -------
Pro forma net income (loss) (unaudited) ................. $ 524 $ 759
======= =======
Pro forma net income per share--basic
(unaudited) ............................................ $ 0.11
=======
Pro forma net income per share--diluted
(unaudited) ............................................ $ 0.09
=======
Weighted average shares outstanding--basic .............. 7,200
Weighted average shares outstanding--diluted(2) ......... 8,217
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
--------------------------------------------- ------------------
1993 1994 1995 1996 1997 1997 1998
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......... $ 260 $ 58 $ 6 $ 174 $ 470 $ 618 $ 163
Working capital .................... 894 1,836 3,390 3,191 5,964 3,700 6,322
Total assets ....................... 1,028 3,278 4,455 7,949 10,638 9,256 13,864
Total debt ......................... 11 1,021 371 2,693 822 1,964 2,305
Total shareholders' equity ......... 942 1,917 3,681 3,914 7,230 4,639 8,004
</TABLE>
- -------------------
(1) The pro forma statement of operations information has been computed for the
pro forma period by adjusting the Company's net income, as reported for
such period, to record incremental income taxes which would have been
recorded had the Company been a C corporation during such period. See "S
Corporation Distribution," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of Notes to
Financial Statements.
(2) The weighted average shares outstanding-diluted includes: (i) the pro forma
effect of the sale (at an assumed initial public offering price of $13.00
per share) of 716,441 shares of Common Stock offered hereby needed to
generate net proceeds sufficient to pay the estimated $8.5 million S
corporation distribution; and (ii) the dilutive effect of common stock
equivalents using the treasury stock method.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS CAN
GENERALLY BE IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT INCLUDES
WORDS SUCH AS THE COMPANY "BELIEVES," "ANTICIPATES," "EXPECTS," "INTENDS," OR
OTHER WORDS OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE THE
COMPANY'S FUTURE PLANS, OBJECTIVES AND GOALS ARE ALSO FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD
DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
Technisource is a national provider of IT services through 22 offices in
the United States and Canada, utilizing over 900 highly trained consultants.
The Company has achieved a compound annual revenue growth rate of 60.0% over
the past five years. This growth rate has been generated internally, without
the benefit of acquisitions.
The Company's revenues grew from $10.3 million in 1993 to $67.3 million in
1997. The Company's revenue growth is driven primarily by increases in the
number of consultants placed with existing and new clients. The number of
consultants utilized by the Company grew from 126 as of December 31, 1993 to
812 as of December 31, 1997, and to 925 as of May 27, 1998. For each of 1995,
1996 and 1997, clients from the previous year generated at least 80% of the
Company's revenues. The Company generates substantially all of its revenues
from fees for the provision of IT consulting services, most of which are billed
at contracted hourly rates. Clients are typically billed and consultants are
paid on a weekly basis. The Company recognizes revenues as services are
performed.
The Company's most significant cost is its personnel expense, which
consists primarily of salaries, fees and benefits of the Company's consultants.
To date, the Company has generally been able to maintain its gross profit
margin by offsetting increases in consultant salaries and fees with increases
in the hourly billing rates charged to clients. However, there can be no
assurance that the Company will continue to be able to offset increases in the
Company's cost of revenues by increasing the amounts the Company bills to its
clients. The Company attempts to control overhead and indirect expenses, which
are not passed through to its clients, by controlling the rate of its branch
office expansion and by maintaining centralized operations and back-office
infrastructure.
In anticipation of the Company's growth, the Company has made substantial
investments in its infrastructure, including: (i) the Company's proprietary
project and consultant TSRC Database; (ii) a national recruiting and training
center; (iii) the development and continued refinement of the Technisource
Growth Model and the process of replicating Development Triangles; and (iv) a
network of 22 branch offices in the United States and Canada. The Company's
substantial investment in a centralized infrastructure leaves the Company well
positioned to continue its expansion.
To support anticipated growth, the Company has invested in the expansion
of its proprietary TSRC Database of over 100,000 potential consultants and
their qualifications to ensure that IT professionals with the appropriate skill
sets are quickly deployed to respond to client needs and are placed on
assignments that utilize their technical skills and optimize their billing
rates. The Company has also established a formal two-week recruiting and
training program designed to train recruiting professionals in the Company's
culture and operating procedures and teach them the Company's proprietary
techniques and technical skills. The Company increased its administrative,
sales, recruiting and training professionals from 99 employees on December 31,
1996 to 190 employees on December 31, 1997.
Over the last ten years, the Company has developed and refined the
Technisource Growth Model, which is focused on facilitating rapid internal
growth through the replication of Development Triangles. The Company has grown
from four Development Triangles as of December 31, 1993 to 33 Development
Triangles as of December 31, 1997, and to more than 40 Development Triangles as
of
16
<PAGE>
May 27, 1998. The Company invested in the creation of over 15 Development
Triangles in 1997 which more than doubled the Company's sales and recruiting
capacities. Although the Company's operating margins may be adversely affected
during periods following relatively large increases in the number of the
Company's Development Triangles, the Company leverages its initial investment
in infrastructure as Development Triangles mature and the Company's sales and
recruiting personnel achieve greater levels of productivity.
The Company has opened six new branch offices in 1998. The Company
anticipates that each new branch office will require an investment of
approximately $100,000 to $150,000 in order to begin operations and fund
operating losses for an initial ten- to twelve-month period of operations,
which is the amount of time management believes should generally be required
for a new office to achieve profitability. The Company expenses the costs of
opening a new office as such expenses are incurred. The Company anticipates
continuing to leverage its current network of 22 branch offices, as the
start-up costs have already been expensed and additional start-up branch office
costs will constitute a smaller percentage of revenues as the Company continues
to increase its revenue base. There can be no assurance that new Development
Triangles or branch offices will be profitable within projected time-frames, or
at all. See "Risk Factors--Development of New Branch Office Locations."
Following termination of its S corporation status, the Company will be
subject to corporate income taxation on an accrual basis under Subchapter C of
the Code. In connection with the termination of its S corporation status, the
Company estimates that it will record, in the quarter in which this offering
occurs, a net deferred tax asset and a corresponding net income tax benefit of
approximately $400,000. The majority of this net deferred tax asset will be
recorded in accordance with Statement of Financial Accounting Standards No.
109. See Notes 4 and 10 of Notes to Financial Statements.
RESULTS OF OPERATIONS
The following tables set forth for the periods indicated the percentage of
revenues and the percentage change from the prior period of certain items
reflected in the Company's statements of income:
<TABLE>
<CAPTION>
PERCENTAGE
THREE MONTHS ENDED CHANGE FROM
YEARS ENDED DECEMBER 31, MARCH 31, PRIOR YEAR
----------------------------------- ----------------------- ---------------------
1995 1996 1997 1997 1998 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues ........................... 100.0% 100.0% 100.0% 100.0% 100.0% 38.6% 66.8%
Cost of revenues ................... 75.1 75.9 75.4 75.5 75.5 40.0 65.8
----- ----- ----- ----- -----
Gross profit ....................... 24.9 24.1 24.6 24.5 24.5 34.3 70.0
Selling, general and administrative
expenses ......................... 16.4 16.5 18.2 17.6 18.9 39.4 83.5
----- ----- ----- ----- -----
Operating income ................... 8.5 7.6 6.4 6.9 5.6 24.4 40.7
Interest and other income .......... 0.1 -- -- -- -- * *
Interest expense ................... 0.2 0.2 0.2 0.3 0.2 75.0 52.4
----- ----- ----- ----- -----
Income before income taxes ......... 8.4 7.4 6.2 6.5 5.4 22.3 40.8
Income taxes ....................... 0.1 0.6 0.3 -- -- * *
----- ----- ----- ----- -----
Net income ......................... 8.3% 6.8% 5.9% 6.2% 5.1% 13.9% 46.0%
Pro forma provision for incremental
income taxes ..................... 3.2 2.1 2.2 2.3 1.8 * *
----- ----- ----- ----- -----
Pro forma net income ............... 5.1% 4.7% 3.7% 3.9% 3.3% 27.9% 32.5%
===== ===== ===== ===== =====
</TABLE>
- ---------------------
* Not meaningful.
17
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
REVENUES. The Company's revenues increased 70.0% from $13.4 million in the
first quarter of 1997 to $22.7 million in the first quarter of 1998. This
growth is primarily attributable to increased sales in existing offices and, to
a lesser extent, the addition of new branch offices. The total number of client
divisions and business units billed increased from 192 during the quarter ended
March 31, 1997 to 323 during the quarter ended March 31, 1998, and the number
of IT consultants working for the Company increased from 547 as of March 31,
1997 to 910 as of March 31, 1998.
GROSS PROFIT. Gross profit consists of revenues less cost of revenues. The
Company's cost of revenues consists primarily of compensation, benefits and
expenses for the Company's consultants and other direct costs associated with
providing services to clients. Gross profit increased 69.9% from $3.3 million
in the first quarter of 1997 to $5.6 million in the first quarter of 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist primarily of costs associated with the
Company's direct selling and marketing efforts, human resources and recruiting
departments, administration, training and facilities. Selling, general and
administrative expenses increased 82.3% from $2.4 million in the quarter ended
March 31, 1997 to $4.3 million in the quarter ended March 31, 1998. As a
percentage of revenues, selling, general and administrative expenses increased
from 17.6% in the first quarter of 1997 to 18.9% in the first quarter of 1998.
This increase resulted from expenses incurred to build and enhance the
infrastructure necessary to support the Company's anticipated revenue growth,
including opening four branch offices during the first quarter of 1998.
1997 COMPARED TO 1996
REVENUES. The Company's revenues increased 66.8% from $40.4 million in 1996
to $67.3 million in 1997. This growth is primarily attributable to increased
sales in existing offices and, to a lesser extent, the addition of seven new
branch offices. Six of the seven additional offices were opened after June 1
1997. The total number of client divisions and business units billed increased
from 292 during the year ended December 31, 1996 to more than 390 during the
year ended December 31, 1997, and the number of IT consultants working for the
Company increased from 476 as of December 31, 1996 to 812 as of December 31,
1997.
GROSS PROFIT. The Company's cost of revenues consists primarily of
compensation, benefits and expenses for the Company's consultants and other
direct costs associated with providing services to clients. Gross profit
increased 70.0% from $9.7 million in 1996 to $16.6 million in 1997. As a
percentage of revenues, gross profit increased from 24.1% in 1996 to 24.6% in
1997. This increase was attributable to the Company's shift of its business
toward higher value-added service offerings.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 83.5% from $6.7 million in 1996 to $12.2
million in 1997. As a percentage of revenues, selling, general and
administrative expenses increased from 16.5% in 1996 to 18.2% in 1997. This
increase resulted from expenses incurred to build and enhance the
infrastructure necessary to support the Company's anticipated revenue growth,
including opening six branch offices after June 1, 1997, and more than doubling
the number of Development Triangles and sales, administration, recruiting and
training professionals during 1997.
1996 COMPARED TO 1995
REVENUES. The Company's revenues increased 38.6% from $29.1 million in
1995 to $40.4 million in 1996. This growth is primarily attributable to
increased sales in existing offices and, to a lesser extent, the addition of
five new branch offices. The total number of client divisions and business
units billed increased from 150 during the year ended December 31, 1995 to 292
during the year ended December 31, 1996, and the number of IT consultants
working for the Company increased from 320 as of December 31, 1995 to 476 as of
December 31, 1996.
18
<PAGE>
GROSS PROFIT. Gross profit increased 34.3% from $7.3 million in 1995 to
$9.7 million in 1996. As a percentage of revenues, gross profit decreased from
24.9% in 1995 to 24.1% in 1996. This decrease is primarily attributable to
salary increases for IT consultants in 1996 that were only partially offset by
billing increases.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 39.4% from $4.8 million in 1995 to $6.7
million in 1996. As a percentage of revenues, selling, general and
administrative expenses increased from 16.4% in 1995 to 16.5% in 1996.
UNAUDITED QUARTERLY RESULTS
The following table sets forth certain unaudited quarterly operating
information for each of the nine quarters ending March 31, 1998. This data
includes, in the opinion of management, all normal recurring adjustments
necessary for the fair presentation of the information for the periods
presented when read in conjunction with the Company's Financial Statements and
related Notes thereto. Results for any previous fiscal quarter are not
necessarily indicative of results for the full year or for any future quarter.
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1996 1996 1996 1996
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues ....................... $ 8,259 $ 9,401 $ 10,484 $ 12,216
Cost of revenues ............... 6,335 7,030 8,112 9,147
------- ------- -------- --------
Gross profit ................... 1,924 2,371 2,372 3,069
Selling, general and
administrative expenses ....... 1,246 1,590 1,713 2,110
------- ------- -------- --------
Operating income ............... 678 781 659 959
Interest and other income
(expense) ..................... 4 2 -- 2
Interest expense ............... 3 19 26 57
------- ------- -------- --------
Income before income taxes ..... 679 764 633 904
Income taxes ................... 53 59 49 70
------- ------- -------- --------
Net income ..................... $ 626 $ 705 $ 584 $ 834
Pro forma provision for
incremental income taxes ...... 194 218 181 258
------- ------- -------- --------
Pro forma net income ........... $ 432 $ 487 $ 403 $ 576
======= ======= ======== ========
<CAPTION>
QUARTERS ENDED
-----------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1997 1998
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues ....................... $ 13,400 $ 16,249 $ 17,333 $20,345 $22,780
Cost of revenues ............... 10,122 12,209 13,199 15,245 17,210
-------- -------- -------- ------- -------
Gross profit ................... 3,278 4,040 4,134 5,100 5,570
Selling, general and
administrative expenses ....... 2,360 2,695 3,112 4,055 4,302
-------- -------- -------- ------- -------
Operating income ............... 918 1,345 1,022 1,045 1,268
Interest and other income
(expense) ..................... -- -- 35 (8) (38)
Interest expense ............... 44 71 31 14 --
-------- -------- -------- -------- -------
Income before income taxes ..... 874 1,274 1,026 1,023 1,230
Income taxes ................... 38 53 46 46 59
-------- -------- -------- -------- -------
Net income ..................... $ 836 $ 1,221 $ 980 $ 977 $ 1,171
Pro forma provision for
incremental income taxes ...... 312 456 366 366 412
-------- -------- -------- -------- -------
Pro forma net income ........... $ 524 $ 765 $ 614 $ 611 $ 759
======== ======== ======== ======== =======
</TABLE>
The Company generally experiences lower operating results in the first
quarter due in part to the timing of unemployment taxes, FICA tax accruals and
delays in client contract renewals due to clients' budget approval processes.
Further, the Company generally experiences a certain amount of seasonality in
the fourth quarter due to the number of holidays and the closing of client
facilities during that quarter. No assurance can be given that future quarterly
results will not fluctuate, which may have a material adverse effect on the
Company's business and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have been cash flow from
operations and available borrowings under its line of credit. The Company's
cash flow from operating activities was $1.6 million, $1.0 million, $3.8
million and $(0.9) million for the years ended December 31, 1995, 1996 and 1997
and the quarter ended March 31, 1998, respectively. Because the Company has
elected to be treated as an S corporation for tax purposes, which will
terminate on the consummation of this offering, the Company's net cash provided
by operations does not recognize federal income taxes and reflects only certain
state income taxes.
The Company maintains a revolving line of credit with Barnett Bank, N.A.,
which provides for maximum borrowings of up to $8.0 million. The line of credit
is secured by the Company's accounts
19
<PAGE>
receivable and equipment and is guaranteed by the Company's controlling
shareholders. Interest is payable monthly at a variable rate of 0.5% over the
prime rate, which was 9.0% as of March 31, 1998. All interest and principal
outstanding under the line of credit is due on August 31, 1998. As of March 31,
1998, approximately $2.3 million was outstanding under the line of credit,
including bank overdrafts. The Company anticipates using a portion of the
proceeds of this offering to pay off the balance of the line of credit.
The Company anticipates that the net proceeds from the sale of Common
Stock offered hereby, together with existing sources of liquidity and funds
generated from operations, will provide adequate cash to fund its currently
anticipated cash needs at least through the next twelve months.
YEAR 2000 CONTINGENCY
The Company has performed an initial assessment of the impact of the "Year
2000 Issue" on its reporting systems and operations. The "Year 2000 Issue"
exists because many computer systems and applications currently use two-digit
fields to designate a year. As the century date occurs, date sensitive systems
will recognize the year 2000 as 1900, or not at all. Based on the Company's
initial assessment, it believes that its accounting systems and operations
substantially avoid the "Year 2000 Issue", thereby enabling it to properly
process critical financial and operational information. There can be no
assurance, however, that the Company's systems are Year 2000 compliant or that
the systems of other companies on which the Company's systems and operations
rely will be timely converted to address the "Year 2000 Issue", or that a
failure to convert by another company, or a conversion that is incompatible
with the Company's systems, would not have a material adverse effect on the
Company's financial position and results of operations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for
the reporting and presentation of comprehensive income and its components. In
June 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
reporting information about a company's operating segments and related
disclosures about its products, services, geographic areas of operations and
major clients. Both statements will be adopted by the Company in 1998. The
adoption of these statements will not impact the Company's results of
operations, cash flows or financial position.
20
<PAGE>
BUSINESS
OVERVIEW
Technisource is a national provider of information technology services
through 22 offices in the United States and Canada, utilizing over 900 highly
trained consultants. The Company's consultants provide services which are used
to design, develop and implement IT solutions, including database development,
documentation and training, ERP package implementation, help desk/desktop
support, Internet/intranet development, mainframe development, network
engineering, real-time development, systems administration and testing &
quality assurance. The Company's services are provided to various departments
within its client's organization, including research and product development
departments.
Since the Company's inception on March 25, 1987, the Company has developed
and refined an internal growth methodology which is focused on facilitating
rapid internal growth through the replication of Technisource Development
Triangles. Each Development Triangle is typically comprised of one account
manager, two trained recruiting professionals and a group of IT consultants. As
the revenues generated by a Development Triangle reach critical mass, a
high-performing recruiting professional from the Development Triangle is
promoted to account manager and forms a new Development Triangle, which is
seeded with a portion of the revenue-generating projects and consultants from
the original Development Triangle. This scalable model fuels growth by
developing and retaining employees within the Technisource culture and by
reducing the time required to achieve profitability and the risks associated
with expansion.
The Company has demonstrated the scalability of the Technisource Growth
Model, having replicated over 40 Development Triangles. This has resulted in
rapid internal growth, as revenues have increased at a five-year compound
annual growth rate of 60.0%, from $10.3 million in 1993 to $67.3 million in
1997. The Company has grown from four branch offices in 1993 to 16 branch
offices in 1997, and has added six branch offices in 1998.
The Company's goal is to maximize growth and maintain profitability by
capitalizing on key industry dynamics. The key elements of the Company's
business strategy designed to achieve this goal are the following: (i) rapidly
deploy highly trained IT consultants; (ii) apply the Technisource Growth Model
by replicating Development Triangles; (iii) establish long-term client
relationships; (iv) provide a wide range of IT capabilities; (v) capitalize on
local presence; and (vi) leverage established infrastructure. Technisource's
substantial investment in a centralized infrastructure leaves the Company well
positioned to continue its expansion. For example, the Company has expanded its
proprietary TSRC Database to include over 100,000 potential consultants and
their qualifications, which allows the Company to identify and quickly deploy
IT consultants with the appropriate skill sets.
Technisource believes that the breadth of its service offerings fosters
long-term client relationships, affords cross-selling opportunities, reduces
its dependence on any single technology and enables the Company to attract
consultants with a variety of skill sets to service the needs of the Company's
clients. For each of the years 1995, 1996 and 1997, existing clients from the
previous year generated at least 80% of the Company's revenues. In 1997, the
Company provided IT services to over 200 clients in the United States,
including more than 390 divisions or business units, in a diverse range of
industries. Clients include AlliedSignal, AT&T, Caterpillar, Eli Lilly, General
Electric, General Motors, Honeywell, Lockheed Martin, Lucent Technologies,
Motorola, Rockwell and UPS.
The Company's strategy is to leverage the Technisource Growth Model to
generate same-office growth and expansion of branch-office locations, and to
selectively take advantage of acquisition opportunities. The Company's growth
strategy includes the following elements: (i) expand geographic presence
through opening new branch offices; (ii) broaden service lines and IT
capabilities; (iii) leverage existing client base; and (iv) pursue strategic
acquisitions or partnerships.
21
<PAGE>
INDUSTRY OVERVIEW
Increased competition, deregulation, globalization and technological
advances are forcing business organizations to increasingly rely on IT
solutions to resolve business issues and increase productivity. The ability of
an organization to integrate, deploy and manage new information technologies
has become critical to its long-term viability and competitiveness. The
migration of technology throughout the business enterprise has created a wide
range of opportunities, including improved service and product capabilities.
These capabilities are being deployed throughout a variety of complicated
networking protocols, operating systems, databases, devices and architectures.
Organizations are increasingly outsourcing technology services functions
throughout the business enterprise in order to: (i) keep pace with rapidly
changing technologies; (ii) efficiently match employee skills and utilization
levels with current needs; and (iii) address the growing shortage of IT
professionals.
KEEP PACE WITH RAPIDLY CHANGING TECHNOLOGIES. Growth in the IT services
industry has been fueled by the clients' need to remain competitive through the
use of emerging technology capabilities, including open and distributed
computing, client/server architectures, Internet/intranet, relational databases
and object-oriented programming. The pace of change in technology capabilities
quickly renders existing IT infrastructure obsolete and makes it more difficult
for organizations to maintain the requisite internal expertise needed to
evaluate, develop and integrate new technologies.
MATCH EMPLOYEE SKILLS AND UTILIZATION LEVELS WITH CURRENT NEEDS.
Increasingly, organizations are outsourcing technical functions to keep pace
with changes in technology and better match available skills with project
requirements. In today's rapidly changing environment, technical professionals
are often needed on a project by project basis. Organizations typically lack
the quantity or variety of IT skills necessary to efficiently match project
requirements with the availability of qualified internal employees. The
outsourcing of technical skills in a controlled environment creates higher
utilization rates and a more efficient deployment of technical skills.
Outsourcing IT services functions has also reduced management's exposure to
uncertain expenses, including the costs of recruiting, hiring, terminating and
under-utilizing permanent employees.
ADDRESS THE GROWING SHORTAGE OF IT PROFESSIONALS. Demand for consultants
is increasing due to the growing shortage of IT professionals. As business
organizations continue to move from centralized mainframe architectures to
distributed client/server technologies, the Company believes that the demand
for IT professionals will continue to rise. In addition, the shortage of
skilled IT professionals and the complexity of IT solutions have forced senior
executives to increasingly rely on outside specialists to help them execute IT
strategies. Business organizations often lack recruiting and employee
management networks capable of attracting and deploying, on short notice, large
numbers of qualified IT professionals. Further, these organizations often lack
the infrastructure necessary to provide training to IT professionals in
emerging technology skills. Third-party IT services providers have been able to
attract, develop, motivate and retain qualified IT professionals by offering a
variety of benefits, including the opportunity to train and work with emerging
technologies in multiple industries, flexible work and travel schedules, and
accelerating cash and stock compensation.
According to industry sources, the worldwide market for IT services was
estimated at $280 billion in 1997 with a projected market of $400 billion for
2001. The Company believes the IT services industry is highly fragmented and
will experience consolidation as smaller IT services firms are unable to meet
the wide-ranging service needs of, or provide nationwide services to, large
national or international clients, and are unable to achieve economies of scale
in recruiting, training and managing IT consultants. The Company believes that
these trends will provide opportunities for certain industry participants to
expand their operations by acquiring smaller IT consulting firms.
22
<PAGE>
BUSINESS STRATEGY
The Company's goal is to maximize growth and maintain profitability by
capitalizing on key industry dynamics. The key elements of the Company's
business strategy designed to achieve this goal are the following:
RAPIDLY DEPLOY HIGHLY TRAINED IT CONSULTANTS. Technisource's growth has
been fueled by its ability to recruit and deploy, on short notice, experienced
IT professionals to meet client needs on a national basis. The Company's
proprietary TSRC Database of over 100,000 potential consultants and their
qualifications allows the Company to identify and quickly deploy IT consultants
with the appropriate skill sets to meet client needs. In order to maximize its
ability to capitalize on anticipated industry growth, the Company has developed
and maintained an aggressive consultant recruiting strategy, with a full
complement of recruiting professionals to support each of the Company's
offices. Also, the Company has made substantial investments in computer-based
training systems that enable its consultants to learn new skills in response to
changing industry requirements. This helps ensure the high quality of the
Company's consultants and helps them to achieve their career objectives.
APPLY THE TECHNISOURCE GROWTH MODEL BY REPLICATING DEVELOPMENT TRIANGLES.
Over the last ten years, the Company has developed and refined the Technisource
Growth Model. This model is focused on facilitating rapid internal growth
through the replication of Development Triangles. Each Development Triangle is
typically comprised of one account manager, two trained recruiting
professionals and a group of IT consultants, who are assigned to projects
managed by the account managers. As each Development Triangle reaches a
budgeted profitablity level, a high-performing recruiting professional from the
Development Triangle is promoted to account manager and a new Development
Triangle is created. Each new Development Triangle is seeded with a portion of
the revenue-generating projects and consultants from the original Development
Triangle. Account managers involved in the creation of several Development
Triangles may be further promoted to regional manager. The Company's TSRC
Database maximizes employee utilization and the expansion of skill sets by
managing the migration of consultants between projects and Development
Triangles. The Company has replicated over 40 Development Triangles, which
currently include over 900 consultants. The Company has demonstrated the
scalability of the Technisource Growth Model as revenues have increased at a
five-year compound annual growth rate of 60.0%, from $10.3 million in 1993 to
$67.3 million in 1997.
ESTABLISH LONG-TERM CLIENT RELATIONSHIPS. The Company's goal is to
continue to establish long-term client relationships that enable the Company to
cross-sell its capabilities within and expand the Company's business throughout
a client organization. The Company's account managers are trained to understand
the full breadth of the Company's capabilities and their clients' business
needs. By developing long-term client relationships, account managers are
better able to identify client needs and cross-sell the Company's services,
generating recurring revenue streams. For each of the years 1995, 1996, and
1997, existing clients from the previous year generated at least 80% of the
Company's revenues. An example of the Company's success in building long-term
client relationships is its relationship with Motorola, which was serviced by
one account manager and generated revenues of approximately $340,000 from three
client locations in 1993, and grew, through the Technisource Growth Model, to
six account managers, revenues of approximately $14.0 million and eight client
locations in 1997.
PROVIDE A WIDE RANGE OF IT CAPABILITIES. The Company's services are
provided to various departments within its client's organization, including
research and product development departments. The Company provides its clients
with a wide range of IT applications, solutions and services, including
database development, documentation and training, ERP package implementation,
help desk/desktop support, Internet/intranet development, mainframe
development, network engineering, realtime development, systems administration
and testing and quality assurance. These services are provided in a wide
variety of computing environments, and use leading technologies, including
client/server architectures, object-oriented programming languages and tools,
distributed database management systems and the latest networking and
communications technologies. In addition, the Company has
23
<PAGE>
developed proprietary methodologies and tools to improve productivity and
enhance the value of the Company's services. The wide range of the Company's IT
capabilities enhances the Company's ability to establish long-term client
relationships and provides the Company with the opportunity to cross-sell
multiple services.
CAPITALIZE ON LOCAL PRESENCE. Technisource has a geographically diverse
network of 22 branch offices in the United States and Canada, established and
grown by replicating Development Triangles. The Company's branch office network
demonstrates the Company's commitment to each local market, enables the Company
to generate additional client projects, and enhances the Company's ability to
attract experienced, locally based consultants. This branch network increases
efficiencies to clients by enhancing the Company's responsiveness and
minimizing travel expense.
LEVERAGE ESTABLISHED INFRASTRUCTURE. In order to facilitate the
Technisource Growth Model, the Company has made significant capital investments
in its infrastructure, including a centralized client server accounting system,
and centralized, state-of-the-art billing, collections, and payroll systems.
The Company also has a centralized training program in Ft. Lauderdale, Florida
for newly hired recruiting professionals, centralized CBT Systems training
capabilities through the Company's intranet site, and the proprietary TSRC
Database that matches the Company's client requirements with the skill sets of
the Company's IT consultants. This infrastructure has the capacity to support
significant growth with only modest additional capital expenditures and
additions to administrative personnel.
GROWTH STRATEGY
The Company's strategy is to grow its business by using the Technisource
Growth Model to generate same-office growth and expansion of branch office
locations, and to selectively take advantage of acquisition opportunities. The
Company has demonstrated the scalability of the Technisource Growth Model as
revenues have increased at a five-year internal compound annual growth rate of
60.0%, from $10.3 million in 1993 to $67.3 million in 1997. The Company's
growth strategy includes the following elements:
EXPAND GEOGRAPHIC PRESENCE BY REPLICATING DEVELOPMENT TRIANGLES.
Technisource has successfully expanded geographically by servicing new and
existing clients in strategic locations. The Company intends to continue to
expand its geographic presence by opening additional branch offices in selected
locations. The Company utilizes the Technisource Growth Model to establish new
branch offices by replicating Development Triangles in new locations. The
Company believes the Technisource Growth Model reduces the time required to
achieve profitability, as well as the risks associated with opening new
offices, by replicating Development Triangles. The Company has grown from four
branch offices in 1993 to 16 branch offices in 1997, and the Company has added
six branch offices in 1998. The Company's substantial investment in a
centralized infrastructure leaves the Company well positioned to continue the
expansion of its branch office locations. In connection with each new branch
office, the Company's Office Development Team acquires office space, outfits
the new office with appropriate hardware, integrates back-office operations
with the Company's centralized systems, and enables the new office to access
the Company's TSRC Database.
BROADEN SERVICE LINES AND IT CAPABILITIES. Technisource believes that it
can increase its revenues from existing clients and attract new clients by
expanding its base of IT professionals to include additional professionals with
an increasingly broad range of skill sets. The Company has expanded its service
lines and capabilities over the last ten years to utilize consultants with
skill sets, including database development, documentation and training, ERP
package implementation, help desk/desktop support, Internet/intranet
development, mainframe development, network engineering, realtime development,
systems administration and testing and quality assurance. The Company provides
its IT consultants with substantial computer-based training resources in order
to allow them to respond to market needs by retooling their skills. The Company
plans to continue to selectively expand the services it offers its clients in
order to meet its client's evolving technological needs.
LEVERAGE EXISTING CLIENT BASE. The Company intends to continue its
internal growth by expanding the amount of work it performs for existing
clients. By replicating the Development Triangles servicing
24
<PAGE>
existing clients, the Company can service additional divisions and business
units of existing clients and the Company's account managers can better
cross-sell the Company's wide range of capabilities. During 1997, the Company
provided services to over 200 clients in the United States, including more than
390 divisions or business units. The Company believes that its long-term client
relationships and its ability to address its client's needs throughout the life
cycle of their IT systems provides the Company with substantial growth
opportunities. For each of the years 1995, 1996, and 1997, existing clients
from the previous year generated at least 80% of the Company's revenues.
PURSUE STRATEGIC ACQUISITIONS OR PARTNERSHIPS. The Company intends to
selectively pursue strategic acquisitions that will provide well-trained,
high-quality professionals, new service offerings, additional industry
expertise, a broader client base and an expanded geographic presence, both
domestically and internationally. The Company believes that acquisition
opportunities exist due to the highly fragmented nature of the IT services
industry. The Company currently has no agreements, understandings or
commitments with respect to any potential acquisitions.
REPRESENTATIVE SERVICES AND SKILLS
Technisource offers its clients a comprehensive range of IT services
required to successfully design, develop and implement IT solutions. The
following is a summary of representative technology skill sets provided by the
Company:
<TABLE>
<CAPTION>
CATEGORY DESCRIPTION OF SERVICES AND SKILLS
- -------------------------------- -------------------------------------------------------------------
<S> <C>
DATABASE DEVELOPMENT Database developers use products and toolsets including SQL,
Oracle, Sybase, Informix and Access. These professionals provide
data modeling, define relational database structures, resolve
scalability issues, perform physical/logical database design, and
design graphical user interfaces.
DOCUMENTATION AND TRAINING Professionals in this area document technical systems, develop
user manuals and train users on how to operate their technical
systems. Assignments in this area include employee productivity
improvement, knowledge transfer support and document
management.
ENTERPRISE RESOURCE PLANNING These professionals work with ERP packages from SAP,
Peoplesoft, BAAN, Oracle and J.D. Edwards. Assignments in this
area include redesigning the chart of accounts; identifying,
documenting and assessing current business processes; and
converting from a mainframe environment to an ERP
environment.
HELP DESK/DESKTOP SUPPORT These professionals typically support users of a device, software
package or operating system. The typical assignment is to provide
support for a large business with a multi-platform environment.
Specific tasks include providing phone support, on-site support
and troubleshooting.
INTERNET/INTRANET DEVELOPMENT These professionals are proficient in CGI, Perl, IIS, Cold Fusion,
JavaScript ++ and HTML. Typical services involve designing and
developing a web interface, as well as connectivity to a database
server that will allow a user to add to or query existing data.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
CATEGORY DESCRIPTION OF SERVICES AND SKILLS
- ------------------------------ -----------------------------------------------------------------------
<S> <C>
MAINFRAME DEVELOPMENT These professionals typically perform work utilizing MVS,
COBOL, JCL, DB2 and IMS. Services include analyzing change
requests, identifying requirements for fixes and enhancements,
developing project plans for known maintenance activities,
installing upgrades and enhancements and making program code
changes to existing on-line and batch programs.
NETWORK ENGINEERING Professionals providing these services are proficient with
gateways, routers, hubs, bridges, Ethernet, Token Ring, SNA,
FDDI, SONET, T1, DS3, Frame Relay, multi-point and TCP/IP.
The services provided involve network analysis, daily network
management, network utilization trend analysis, integration of
software to perform network/systems management, utilization of
core processes and process design techniques, capacity and
performance management and network tuning.
REALTIME DEVELOPMENT Professionals in this area are proficient in ADA, assembly
language, microprocessor experience and debuggers. Assignments
typically involve working with a large team of engineers
developing a subsystem for an aircraft or a communications
device. These assignments generally involve significant
documentation, testing and quality assurance requirements.
SYSTEMS ADMINISTRATION Professionals performing services in this capacity generally
specialize in a particular operating platform, including Sun/UNIX,
Windows NT, Lotus Notes or HP-UX. The tasks performed range
from establishing user accounts, installing software and hardware
upgrades, monitoring system performance and performing systems
programming and resource utilization studies.
TESTING & QUALITY ASSURANCE These professionals participate in clients' quality assurance efforts.
Services performed include interfacing with clients to develop
systems' test requirements; interpreting, determining and refining
test specifications; writing test plans; overseeing systems tests;
troubleshooting; establishing test tools; and writing test reports.
</TABLE>
26
<PAGE>
CLIENTS AND REPRESENTATIVE SOLUTIONS
During 1997, the Company provided services to over 200 clients in the
United States, including more than 390 divisions or business units. More than
50% of the Company's revenues during 1997 were generated from Fortune 500
companies. The Company seeks to maximize its client retention rate and secure
follow-on engagements by being responsive to clients and providing high quality
services. For each of the years 1995, 1996, and 1997, existing clients from the
previous year generated at least 80% of the Company's revenues. During 1997,
the Company's two most significant clients, Motorola and Rockwell, accounted
for approximately 21% and 15% of the Company's revenues, respectively. The IT
services provided to Motorola were divided among a number of divisions and
subsidiaries in eight client locations. The Company has provided services to,
among others, the following clients in 1997:
<TABLE>
<S> <C> <C>
Aegon USA, Inc. General Motors Corporation Publix Super Markets, Inc.
AlliedSignal, Inc. Harris Corporation Raytheon Company
AT&T Corporation Hitachi Ltd. Rockwell International Corp.
Boehringer Mannheim Corp. Honeywell Inc. Scientific-Atlanta, Inc.
Caterpillar Inc Lockheed Martin Corporation Siemens Corporation
Digital Equipment Corporation Lucent Technologies Inc. Sunstrand Corporation
Eaton Corporation Motorola, Inc. Teradyne, Inc.
Eli Lilly & Company NCR Corporation Thomson Consumer Electronics
Florida Power Corporation Norand Corporation 3 Com Corporation
General Electric Company Northrop Grumman Corporation UPS of America, Inc.
</TABLE>
Examples of the Company's engagements are set forth below:
FORTUNE 100 TELECOMMUNICATIONS COMPANY. This technology-driven
telecommunications company, through a joint venture with two other Fortune 500
companies, established a nationwide commercial support service for a new
digital cellular network. The client was administering and supporting a UNIX-
based (Sun/Solaris) switching system that required a background in the area of
UNIX system administration. Over a twelve-month period, Technisource provided
over 30 IT consultants to serve as UNIX system administrators at multiple
locations throughout the United States. These consultants had extensive
backgrounds with Sun/Solaris in a networking and client/server environment and
also possessed expertise working with network cell sites (BTS & HD2) for
switches. The Company's IT consultants also monitored and administered cell
site control centers for large CDMA cellular networks and provided system level
support, including switching platforms, RF products and various processors and
applications, using analog and CDMA technologies. The Company's account manager
coordinated supervision of the project and the technical personnel with the
clients' engineering section project managers. The Company's involvement in
this project has led to an ongoing relationship with the client and a new
engagement with another Fortune 500 company to provide similar services.
FORTUNE 100 AVIONICS COMPANY. A client located in Ft. Lauderdale, Florida
needed to certify a flight critical system in accordance with Federal Aviation
Administration ("FAA") standards within an accelerated time-frame. The Company
supplied a team of more than 50 IT consultants, including a project manager,
team leaders, software engineers and support personnel over a six-month period
in order to complete the certification project on a timely basis. The Company's
highly experienced team of professionals developed the plans, standards and
work product to complete system testing, hardware/software integration
testing, software integration testing and low-level requirements-based testing.
Certain of the Company's team members also assisted with the development of the
requirements, design and code for the system. All of the work products were
ISO-9001 compliant and the client's product was successfully certified by the
FAA.
The initial certification and development efforts by the Company resulted
in the Company being engaged by the client for four follow-on certification and
development programs. To date, three of these efforts have been successfully
certified by the FAA, and one is in progress.
DIVISION OF A FORTUNE 100 MANUFACTURING COMPANY. The Company was engaged
to assist this client with the upgrade of their development/communications
environment from Windows 3.1 to Windows 95 or Windows NT. Thirty of the
Company's software engineers and IT professionals worked with client
27
<PAGE>
project managers to provide programming, administration, technical expertise,
training, hardware deployment support in multiple locations and a help desk.
During this eight-month project, the Company provided research and tools that
facilitated a smooth transition between operating systems.
This project led to the Company being awarded a contract to provide
similar services in connection with the same client's transition from cc:mail
to Lotus Notes, and in connection with the client's combination of multiple
business units into one division. During a six-month period, the Company
assisted in the installation of a network operating system for the client's
entire multi-office organization.
SALES
New business engagements are generated by account managers, who manage the
Development Triangles. Upon being promoted from a recruiting professional to an
account manager in connection with the replication of a Development Triangle,
the account manager is seeded with a portion of the current revenue-generating
projects and a group of IT consultants from the original Development Triangle.
The Technisource Growth Model is designed to provide incentives to account
managers to generate new client engagements and further replicate Development
Triangles. The Company's execution of the Technisource Growth Model enabled the
Company to generate 76 new clients in 1996 and 89 new clients in 1997. In 1997,
the Company serviced over 200 clients, including more than 390 divisions or
business units.
Each account manager is responsible for managing client relationships,
ensuring that the Development Triangle is performing as expected, and
identifying new business opportunities. The Company has a national sales
director and three regional managers, who are responsible for the performance
of four-to-ten Development Triangles within one or more of the Company's
geographic locations. The Company's regional managers and account managers are
compensated through a highly incentive-based compensation system that includes
a combination of base salary, commissions and bonuses.
The Company intends to compensate all of its regional managers and account
managers with stock options in order to further align their interests with the
Company's shareholders and to increase the performance-based portion of their
compensation packages. The Company believes that its performance-based
compensation structure provides incentives to its employees and allows the
Company to retain high-performing employees by compensating them at competitive
levels.
HUMAN RESOURCES AND RECRUITING
The Technisource Growth Model is designed to expand the skills and develop
the careers of the Company's employees and consultants, while providing
substantial incentives to further the Company's growth. The Company provides
its IT consultants with substantial computer-based training resources in order
to allow its consultants to respond to market needs by retooling their skills.
This has resulted in the Company maintaining a highly skilled pool of
career-oriented IT consultants. The Company also develops the careers of its
recruiting professionals and account managers by promoting high-performing
recruiting professionals to account managers with responsibility for a
Development Triangle, and by promoting high-performing account managers to
regional managers, with responsibility for several Development Triangles in
multiple geographic locations.
The Company's future growth depends in large part on its ability to
attract, develop, motivate and retain highly skilled IT professionals. The
Company's strategy for attracting career-oriented IT professionals includes
providing computer-based training; allocation of assignments in accordance with
employee skills and career objectives; and an optional comprehensive benefits
package including a Company-matched 401(k) plan, health and dental insurance, a
flexible spending account and tuition reimbursement. The Company expects to use
employee stock options as an important part of its recruitment and retention
strategy. See "Management--Employee Benefit Plans."
On May 27, 1998, the Company had 113 full-time recruiting professionals
dedicated to hiring IT consultants and new recruiting professionals. The
Company actively recruits IT consultants and recruiting professionals by
advertising in leading national and local newspapers and trade magazines,
through employee recruitment and skill-matching capabilities on the Company's
web site, and by
28
<PAGE>
participating in career fairs. In addition, the Company provides incentives for
its employees and consultants to refer candidates for new positions.
Each new recruiting professional hired by the Company is trained during a
two-week training course held at the Company's training center located in Ft.
Lauderdale, Florida. The training course teaches the recruiting professionals
the Company's culture and operating procedures, proprietary tools and
techniques, and technical skills.
As part of its retention efforts, the Company has formulated a strategy
for minimizing turnover that emphasizes human resource management, competitive
salaries, comprehensive benefits and employee stock options. The Company's IT
professionals typically have bachelors or masters degrees in Computer Science
or other technical disciplines. As of May 27, 1998, the Company had 1,091
employees, including 840 IT professionals, 46 sales and marketing personnel,
113 recruiting professionals and 92 general and administrative personnel. As of
May 27, 1998, the Company also had 85 independent contractors working on client
engagements. The Company's employees are not represented by a union or covered
by a collective bargaining agreement and the Company believes that the
relationship between the Company and its employees is good.
COMPETITION
The IT services industry is highly competitive. The Company competes for
clients, qualified IT consultants, account managers and recruiting
professionals with a variety of companies, including general IT services firms,
temporary staffing and personnel placement companies, general management
consulting firms, major accounting firms, divisions of large hardware and
software companies, systems consulting and implementation firms, programming
companies and niche providers of IT services. Several traditional staffing
companies, which have historically emphasized the placement of clerical and
other less highly skilled personnel on short-term assignments, have begun to
provide IT services competitive with those provided by the Company. The Company
also competes for technical consultants within the internal IT departments of
its clients and potential clients. In addition, as part of the Company's growth
strategy, the Company may also compete with other IT staffing and services
companies for suitable acquisition candidates.
Several of the Company's competitors are substantially larger than the
Company and have greater financial and other resources. Many of these
competitors have also been in business much longer than the Company and have
significantly greater name recognition. Because the Company's competitors may
be able to meet a broader range of a client's IT staffing and services needs
and serve a broader geographic range than the Company, they may be better able
to compete for national client accounts.
The Company believes that the primary competitive factors in obtaining and
retaining clients are its ability to provide comprehensive IT solutions for all
aspects of a client's IT needs, its understanding of the specific requirements
of a project and its ability to rapidly deploy carefully screened, highly
trained IT consultants at competitive prices. The primary competitive factors
in attracting and retaining qualified candidates for IT consultant positions
are the Company's ability to offer competitive wages and provide a consistent
flow of high-quality and varied assignments.
FACILITIES
The Company's executive offices are located in Ft. Lauderdale, Florida,
where the Company leases approximately 16,000 square feet of office space. The
Company's other current offices are located in Huntsville, Alabama; Phoenix,
Arizona; Los Angeles and San Diego, California; Toronto, Canada; Jacksonville,
Tampa and Orlando, Florida; Atlanta, Georgia; Chicago, Palatine, Peoria and
Willowbrook, Illinois; Carmel, Indiana; Cedar Rapids and Des Moines, Iowa;
Overland Park, Kansas; Hazlet, New Jersey; Raleigh, North Carolina;
Wilkes-Barre, Pennsylvania and San Antonio, Texas. The Company believes that
its facilities are adequate for its current needs and that additional
facilities can be leased to meet future needs.
LITIGATION
There are no material legal proceedings pending against the Company or its
properties or to which the Company is a party.
29
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Joseph W. Collard ........... 41 President, Chief Executive Officer and Director
James F. Robertson .......... 37 Executive Vice President, Chief Operating Officer and Director
Paul Cozza .................. 35 Vice President of Sales and Director of National Sales
John A. Morton .............. 50 Vice President of Finance, Chief Financial Officer and Director
</TABLE>
JOSEPH W. COLLARD. Mr. Collard, a founder of the Company, has served as
its President and Chief Executive Officer and as a director since the formation
of the Company in March 1987. From 1981 to 1987, he served as a computer
consultant on a number of projects for, among others, Allied Signal, Lear
Siegler, Mannesmann Demag A.G., General Electric, IBM and Martin Marrieta. Mr.
Collard has over 15 years of experience in the IT services industry. Mr.
Collard holds a Bachelor of Business Administration degree from the University
of Michigan, Flint.
JAMES F. ROBERTSON. Mr. Robertson, a founder of the Company, serves as its
Executive Vice President and Chief Operating Officer and has served as a
director since the formation of the Company in March 1987. Prior to 1987, he
worked as a software engineer and consultant on a number of projects for, among
others, AlliedSignal, General Dynamics, Honeywell, Lear Siegler and United
Technologies. Mr. Robertson has over 15 years of experience in the IT services
industry. Mr. Robertson received a Bachelor of Science degree in Computer
Science from the University of Central Florida.
PAUL COZZA. Mr. Cozza joined the Company in 1990 and currently serves as
its Vice President of Sales and Director of National Sales. He has served the
Company as a recruiting professional, an account manager and a regional manager
of the Company's Midwest region. Mr. Cozza has over 13 years of sales
experience.
JOHN A. MORTON. Mr. Morton joined the Company as its Vice President of
Finance and Chief Financial Officer in November 1997 and was elected as a
director in April 1998. Prior to joining the Company, Mr. Morton was employed
as the chief financial officer of Tire Group International, Inc. since 1995, as
the chief financial officer of Advanced Promotions Technologies, Inc. between
1991 and 1995, and as the controller at Office Depot, Inc. from 1987 to 1991.
Mr. Morton is a certified public accountant and has an MBA from Southern
Illinois University.
ELECTION, COMMITTEES AND COMPENSATION OF DIRECTORS
The Board of Directors currently consists of three members. The Company
expects to fill two vacancies on the Board with independent directors within 90
days following the consummation of this offering. Each director holds office
until his successor is duly elected and qualified, or until his earlier death,
resignation or removal. An election of directors is held annually at the annual
meeting of the Company's shareholders.
Following the consummation of this offering, the Company intends to
establish a Compensation and Stock Option Committee (the "Compensation
Committee") and an Audit Committee.
The Compensation Committee will be responsible for recommending to the
Board of Directors the salaries, bonuses and other compensation for the
Company's executive officers and will establish such compensation levels for
the other officers and employees of the Company. The Compensation Committee
also will administer the Technisource Long-Term Incentive Plan (the "Incentive
Plan"), including, among other things, determining the amount, exercise price
and vesting schedule of stock options awarded under the Incentive Plan.
30
<PAGE>
The Audit Committee will review the scope and results of the annual audit
of the Company's consolidated financial statements conducted by the Company's
independent accountants, the scope of the other services provided by the
Company's independent accountants, proposed changes in the Company's financial
and accounting standards and principles, and the Company's policies and
procedures with respect to its internal accounting, auditing and financial
controls. The Audit Committee will also examine and consider other matters
relating to the financial affairs and accounting methods of the Company,
including selection and retention of the Company's independent accountants. The
Audit Committee is currently expected to be comprised of one employee director
and two independent directors.
Each non-employee director of the Company is entitled to receive a fee of
$1,500 for attendance at each meeting of the Board of Directors. In addition,
each non-employee director is entitled to receive $500 for attendance at each
separate meeting of a committee of the Board of Directors. All directors are
reimbursed for travel expenses incurred in connection with the performance of
their duties as directors.
Each non-employee director is entitled to receive an option to purchase
5,000 shares of Common Stock upon their appointment to the Board of Directors
and is entitled to receive an option to purchase 2,500 shares of Common Stock
annually thereafter, so long as they continue to serve on the Board of
Directors. See "Management--Employee Benefit Plans."
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee prior to this offering.
Accordingly, Messrs. Collard and Robertson, the Company's President and Chief
Executive Officer and the Company's Executive Vice President and Chief
Operating Officer, respectively, had responsibility for all decisions with
respect to executive officer compensation.
31
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth certain information concerning the annual and
long-term compensation paid by the Company for services rendered during the
fiscal year ended December 31, 1997, with respect to those persons who were:
(i) the Company's Chief Executive Officer; and (ii) the other most highly
compensated executive officers of the Company who received compensation in
excess of $100,000 in that year (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- -----------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS(#) COMPENSATION(1)
<S> <C> <C> <C> <C>
Joseph W. Collard ........... $ 104,000 $ -- -- $13,665
President and
Chief Executive Officer
James F. Robertson .......... 104,000 -- -- 10,694
Executive Vice President and
Chief Operating Officer
Paul Cozza .................. 175,349 143,000 -- 16,290
Vice President and
Director of National Sales
John A. Morton .............. 14,061(2) -- 15,385(3) --
Vice President and
Chief Financial Officer
</TABLE>
- ---------------------
(1) Consists of life insurance premiums paid by the Company, the Company's
reimbursement of certain personal expenses and matching contributions to
the Company's 401(k) Plan.
(2) Reflects the portion of Mr. Morton's annual salary received between
November 11, 1997, the date on which Mr. Morton commenced employment with
the Company, and December 31, 1997. Mr. Morton's annual salary is
$110,000. See "Management--Employment Agreements."
(3) Assuming an initial public offering price of $13.00 per share.
32
<PAGE>
EXECUTIVE OPTION GRANTS. The following table sets forth information
concerning options to purchase shares of Common Stock granted during 1997 to
the Named Executive Officers at no cost to such officers. The amounts shown as
potential realizable values on the options identified in the table are based on
assumed annualized rates of appreciation in the price of the Common Stock of 5%
and 10% over the term of the options. Actual gains, if any, on stock option
exercises are dependent on any future increases in the market price of the
Common Stock. There can be no assurance that the potential realizable values
reflected in this table will be achieved.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
John A. Morton ......... 15,385(1) 100% $ 9.75(1) 11/11/07 $94,337 $239,067
</TABLE>
- ---------------------
(1) Assuming an initial public offering price of $13.00 per share.
OPTION EXERCISES AND FISCAL YEAR-END VALUES. The following table sets
forth information concerning the value of unexercised options held by the Named
Executive Officers as of December 31, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Paul Cozza ............. -- 300,000 $ -- $3,862,320
John A. Morton ......... -- 15,385(1) -- 50,001
</TABLE>
- ---------------------
(1) Assuming an initial public offering price of $13.00 per share.
(2) Calculated based on an initial public offering price of $13.00, less the
exercise price payable for such shares.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Joseph W. Collard
effective as of January 1, 1998. Under the agreement, Mr. Collard serves as
President and Chief Executive Officer of the Company for a term expiring on
January 1, 2003, unless earlier terminated for cause, upon the death or
disability of Mr. Collard, or, at the election of Mr. Collard, upon a change in
control of the Company. In the event that Mr. Collard is terminated without
cause or upon a change in control of the Company, in both cases as defined in
the agreement, Mr. Collard is entitled to receive as severance compensation his
base salary, bonus compensation, and annual stock options until the later to
occur of the date 36 months after such termination and January 1, 2003. The
agreement provides that Mr. Collard receives base annual compensation of
$170,000 for each year during the term of the agreement, subject to an annual
increase in an amount to be determined by the Board of Directors. Under the
agreement, Mr. Collard also receives an annual bonus in an amount to be
determined by the Board of Directors, based upon Mr. Collard's and the
Company's performance. The agreement also provides that the Company will
provide Mr. Collard with the use of an automobile. Mr. Collard is prohibited
from competing with the Company during the term of the agreement and for one
year after termination thereof and is subject to certain non-disclosure
obligations for five years following termination of the agreement.
The Company entered into an employment agreement with James F. Robertson
effective as of January 1, 1998. Under the agreement, Mr. Robertson serves as
Executive Vice President and Chief
33
<PAGE>
Operating Officer of the Company for a term expiring on January 1, 2003, unless
earlier terminated for cause, upon the death or disability of Mr. Robertson,
or, at the election of Mr. Robertson, upon a change in control of the Company.
In the event that Mr. Robertson is terminated without cause or upon a change in
control of the Company, in both cases as defined in the agreement, Mr.
Robertson is entitled to receive as severance compensation his base salary,
bonus compensation, and annual stock options until the later to occur of the
date 36 months after such termination and January 1, 2003. The agreement
provides that Mr. Robertson receives base annual compensation of $160,000 for
each year during the term of the agreement, subject to an annual increase in an
amount to be determined by the Board of Directors. Under the agreement, Mr.
Robertson also receives an annual bonus in an amount to be determined by the
Board of Directors based upon Mr. Robertson's and the Company's performance.
The agreement also provides that the Company will provide Mr. Robertson with
the use of an automobile. Mr. Robertson is prohibited from competing with the
Company during the term of the agreement and for one year after termination
thereof and is subject to certain non-disclosure obligations for five years
following termination of the agreement.
The Company entered into an employment agreement with Paul Cozza effective
as of January 1, 1998. Under the agreement, Mr. Cozza serves as Vice President
of Sales and Director of National Sales of the Company for a three-year term,
unless earlier terminated for cause or upon the death or disability of Mr.
Cozza. The term of Mr. Cozza's employment will be automatically renewed for an
additional one-year term unless either Mr. Cozza or the Company provides notice
of their intention not to renew the agreement. In the event that Mr. Cozza is
terminated without cause, as defined in the agreement, Mr. Cozza is entitled to
receive as severance compensation his base salary, bonus compensation, and
annual stock options until the later to occur of the date twelve months after
such termination and the end of the term of the agreement. The agreement
provides that Mr. Cozza will receive base annual compensation of $175,000 for
each year during the term of the agreement, subject to an annual increase in an
amount to be determined by the Board of Directors. Under the agreement, Mr.
Cozza is eligible to receive an annual stock option grant in an amount to be
determined by the Board of Directors based upon Mr. Cozza's and the Company's
performance. Mr. Cozza may also receive a bonus in an amount of up to $200,000
for 1998, based upon the profitability of the Company, and after 1998 in an
amount to be determined by the Board of Directors based upon Mr. Cozza's and
the Company's performance. Mr. Cozza is prohibited from competing with the
Company during the term of the agreement and for two years after termination
thereof.
The Company entered into an employment agreement with John A. Morton
effective as of November 11, 1997. Under the agreement, Mr. Morton serves as
Vice President of Finance and Chief Financial Officer of the Company for a
three-year term, unless earlier terminated for cause or upon the death or
disability of Mr. Morton. The term of Mr. Morton's employment will be
automatically renewed for an additional one-year term unless either Mr. Morton
or the Company provides notice of their intention not to renew the agreement.
In the event that Mr. Morton is terminated without cause, as defined in the
agreement, Mr. Morton is entitled to receive as severance compensation his base
salary, bonus compensation, and annual stock options until the later to occur
of the date twelve months after such termination and the end of the term of the
agreement. The agreement provides that Mr. Morton will receive base annual
compensation of $110,000 for each year during the term of the agreement,
subject to an annual increase in an amount to be determined by the Board of
Directors. Under the agreement, Mr. Morton is eligible to receive an annual
bonus and an annual stock option grant in amounts to be determined by the Board
of Directors based upon Mr. Morton's and the Company's performance. Mr. Morton
is prohibited from competing with the Company during the term of the agreement
and for two years after termination thereof. Mr. Morton has received an option
to purchase 15,385 shares of Common Stock at an exercise price equal to $9.75
per share, based on an assumed initial public offering price of $13.00 per
share. These options vest over a three-year period beginning November 11, 1997
and expire on November 11, 2007.
EMPLOYEE BENEFIT PLANS
PROFIT SHARING 401(K) PLAN. The Company maintains a 401(k) defined
contribution plan (the "401(k) Plan"). All employees of the Company who have
completed three months of employment are
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<PAGE>
eligible to participate in the 401(k) Plan, pursuant to which each participant
may contribute up to 15.0% of eligible compensation (up to a statutorily
prescribed annual limit of $10,000 in 1998). The Company may at its discretion
match contributions made by employees to the 401(k) Plan. All amounts
contributed by the employee participants and earnings on these contributions
are fully vested at all times. Employee participants may elect to invest their
contributions in various established funds.
LONG-TERM INCENTIVE PLAN. The Incentive Plan became effective January 1,
1998. The Incentive Plan provides for awards ("Awards") consisting of grants,
at no cost to the recipient, of discretionary stock options, formula stock
options, IT Professional stock options, stock appreciation rights, restricted
stock and performance awards to employees, non-employee directors, and other
persons who perform services for the Company.
The Incentive Plan is administered by the Company's Compensation
Committee, consisting of at least two directors of the Company who are
"non-employee directors" within the meaning of Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act and who are "outside directors" within the
meaning of Section 162(m) of the Code and the regulations promulgated under
Section 162(m) of the Code. The Compensation Committee is authorized in its
discretion to select the individuals to whom Awards will be granted, determine
the type, size and terms and conditions of Awards, construe and interpret the
Incentive Plan, and provide for the acceleration of the date or dates on which
an option becomes exercisable. The Compensation Committee is authorized to
delegate the Incentive Plan administration responsibilities to one or more
employees of the Company. No determination has been made regarding the specific
criteria the Compensation Committee will consider in awarding benefits under
the Incentive Plan.
The maximum number of shares of Common Stock that may be made the subject
of Awards granted under the Incentive Plan is 1,590,000. In the event of any
certain changes in capitalization of the Company, however, the Compensation
Committee may adjust the maximum number and class of shares with respect to
which Awards may be granted, the number and class of shares which are subject
to outstanding Awards and the purchase price therefor. In addition, if any
Award expires or terminates without having been exercised, the shares of Common
Stock subject to the Award again become available for grant under the Incentive
Plan.
The Compensation Committee may grant Awards to any employee, non-employee
director, consultant, advisor, or independent contractor of the Company
("Optionee"). The Compensation Committee is authorized to grant to eligible
persons options ("Options") to purchase a specified number of shares of Common
Stock at a stated price per share. An Option may be intended to qualify as an
incentive stock option ("ISO") pursuant to the Code, or may be intended to be a
nonqualified option ("NQO"). The term of an ISO cannot exceed 10 years, and the
exercise price of any ISO must be equal to or greater than the fair market
value of the shares of Common Stock on the date of the grant. Any ISO granted
to a holder of 10% or more of the combined voting power of the capital stock of
the Company must have an exercise price equal to or greater than 110% of the
fair market value of the Common Stock on the date of grant and may not have a
term exceeding five years from the grant date. The exercise price and the term
of an NQO shall be determined by the Compensation Committee on the date that
the NQO is granted.
Options shall become exercisable in whole or in part by the Optionee on
the date or dates specified by the Compensation Committee. The Compensation
Committee may provide that an Option becomes exercisable in installments over a
period of years or upon the attainment of stated goals. The Compensation
Committee, in its sole discretion, may accelerate the date or dates on which an
Option becomes exercisable.
Each Option shall expire on such date or dates as the Compensation
Committee shall determine at the time the Option is granted. Upon termination
of an Optionee's employment with the Company (including by reason of the
Optionee's death), each unexercised Option (whether or not then exercisable)
shall terminate and be forfeited, except that any such Options which are then
exercisable
35
<PAGE>
shall remain exercisable for such period after termination of the Optionee's
employment as the Compensation Committee may have determined at the time the
Option was granted. If an Optionee's employment with the Company is terminated
for cause (as defined in the Incentive Plan), all of such person's Options
shall immediately terminate.
Payment for shares of Common Stock purchased upon exercise of an Option
must be made in full at the time of purchase. Payment may be made in cash or in
any other manner as may be authorized by the Compensation Committee. Each
Option shall be evidenced by a written agreement containing such terms and
conditions consistent with the Incentive Plan as shall be established by the
Compensation Committee.
The Incentive Plan provides for automatic grants of NQOs to non-employee
directors ("Formula Options"). Each non-employee director will receive: (i) a
Formula Option to purchase 5,000 shares of Common Stock upon his or her initial
election and qualification as a member of the Board of Directors; and (ii) a
Formula Option to purchase 2,500 shares of Common Stock upon each re-election
and qualification as a member of the Board of Directors. The per share exercise
price of the Formula Option is equal to 100% of the fair market value of the
shares of Common Stock on the date of grant. Each Formula Option becomes
exercisable with respect to 100% of the underlying shares on the first
anniversary of the date of grant. If a non-employee director ceases to serve as
a director of the Company, each Formula Option shall expire on such date or
dates as the Compensation Committee shall determine at the time the Option is
granted. Payment for shares of Common Stock purchased upon exercise of a
Formula Option must be made in full at the time of purchase. Payment may be
made in cash or in any other manner as may be authorized by the Compensation
Committee. Each Formula Option shall be evidenced by a written agreement
containing such terms and conditions consistent with the Incentive Plan as
shall be established by the Compensation Committee.
The Compensation Committee is authorized in its discretion to grant to IT
professionals options to purchase a specified number of shares of Common Stock
at a stated purchase price per share (an "IT Professional Option"). The
purchase price of the shares of Common Stock subject to each IT Professional
Option shall be equal to 100% of the fair market value as of the date of grant.
No determination has been made regarding the specific criteria the Compensation
Committee will consider in awarding benefits under the Incentive Plan.
IT Professional Options will become exercisable in whole or in part by the
IT Professional on the date or dates specified by the Compensation Committee.
The Compensation Committee may provide that an IT Professional Option becomes
exercisable in installments over a period of years or upon the attainment of
stated goals. The Compensation Committee, in its sole discretion, may
accelerate the date or dates on which an IT Professional Option becomes
exercisable. Each IT Professional Option will terminate not more than ten years
from the date of the grant. If an IT professional's employment with the Company
is terminated for cause (as defined in the Incentive Plan), all of such
person's IT Professional Options will immediately terminate. Payment for shares
of Common Stock purchased upon exercise of an IT Professional Option must be
made in full at the time of purchase. Payment may be made in cash or in any
other manner as may be authorized by the Compensation Committee. Each IT
Professional Option will be evidenced by a written agreement containing such
terms and conditions consistent with the Incentive Plan as shall be established
by the Compensation Committee.
On October 27, 1993, the Company awarded, at no cost, stock options to
Paul Cozza, a Vice President and the Company's Director of National Sales.
Under the terms of the stock option award, Mr. Cozza is entitled to purchase up
to 300,000 shares of Common Stock at an exercise price of approximately $0.13
per share. Options to purchase up to 274,648 shares of Common Stock will become
exercisable upon the consummation of this offering, and the remaining options
become exercisable on December 31, 1998. The stock options expire on January 2,
2004. Concurrently with the closing of this offering, the Company also intends
to issue, at no cost to the recipient, options to purchase an aggregate of
43,077 shares of Common Stock, based on an initial public offering price of
$13.00 per share, to certain of its employees at an exercise price equal to
$6.50 per share.
36
<PAGE>
CERTAIN TRANSACTIONS
Joseph W. Collard and James F. Robertson, the controlling shareholders of
the Company, and the President and Chief Executive Officer, and Executive Vice
President and Chief Operating Officer of the Company, respectively, have
personally guaranteed the repayment of a loan to the Company by Barnett Bank,
N.A. It is anticipated that the loan will be repaid with a portion of the
proceeds from this offering and that Messrs. Collard and Robertson will be
released from their personal guarantees.
37
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of May 27, 1998, and as adjusted to
reflect the sale of the Common Stock offered hereby for: (i) each person known
by the Company to own beneficially more than 5.0% of the outstanding Common
Stock; (ii) each of the Company's directors; (iii) each of the Named Executive
Officers; and (iv) all directors and executive officers of the Company as a
group. All information with respect to beneficial ownership by the Company's
directors, Named Executive Officers or beneficial owners has been furnished by
the respective director, Named Executive Officer or beneficial owner, as the
case may be. Unless otherwise indicated below, each person or entity named
below has sole voting and investment power with respect to all Common Stock
shown as beneficially owned by such holder. Unless otherwise indicated in the
footnotes to the table set forth below, each person or entity named below has
an address in care of the Company's principal executive officers at 1901 West
Cypress Creek Road, Suite 202, Ft. Lauderdale, Florida 33309.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING(1)
----------------------- ----------------------
NUMBER OF NUMBER OF
NAME SHARES PERCENT SHARES PERCENT
<S> <C> <C> <C> <C>
Joseph W. Collard ................... 3,635,280 50.5% 3,635,280 35.3
James F. Robertson .................. 3,492,720 48.5 3,492,720 33.9
Paul Cozza(2) ....................... 346,648 4.6 346,648 3.3
John A. Morton ...................... -- -- -- --
All executive officers and directors
as a group (4 persons)(2) ......... 7,474,648 100.0 7,474,648 70.7
</TABLE>
- ---------------------
* Less than 1%
(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an aggregate of 465,000 shares of Common Stock from the Selling
Shareholders, including 209,423 shares from Mr. Collard, 209,423 shares
from Mr. Robertson and 46,154 shares from Mr. Cozza. If the Underwriters'
over-allotment option is exercised in full, upon completion of this
offering Messrs. Collard, Robertson and Cozza would beneficially own
3,425,857 (33.3%), 3,283,297 (31.9%) and 300,494 (2.8%) shares of Common
Stock, respectively.
(2) Includes 274,648 shares subject to options that will become exercisable
upon the consummation of this Offering.
38
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.01 per share, and 10,000,000 shares of preferred stock, par value $.01
per share ("Preferred Stock"). As of March 31, 1998, the Company had 7,200,000
shares of Common Stock outstanding and no shares of Preferred Stock
outstanding. As of March 31, 1998, the outstanding shares of Common Stock were
held by three shareholders.
COMMON STOCK
Each holder of shares of Common Stock is entitled to one vote for each
share owned of record on all matters presented to shareholders. In the event of
a liquidation, dissolution or winding-up of the Company, the holders of Common
Stock are entitled to share equally and ratably in the assets of the Company,
if any, remaining after the payment of all debts and liabilities of the Company
and any liquidation preference of any outstanding Preferred Stock. The shares
of Common Stock have no preemptive rights, no cumulative voting rights and no
redemption, sinking fund or conversion provisions.
Holders of shares of Common Stock are entitled to receive dividends if,
as, and when declared by the Board of Directors out of funds legally available
therefor, subject to the dividend and liquidation rights of any Preferred Stock
that may be issued and outstanding and subject to any dividend restrictions in
the Company's credit facilities. No dividend or other distribution (including
redemptions or repurchases of shares of capital stock) may be made if after
giving effect to such distribution, the Company would not be able to pay its
debts as they become due in the usual course of business, or the Company's
total assets would be less than the sum of its total liabilities plus the
amount that would be needed at the time of a liquidation to satisfy the
preferential rights of any holders of Preferred Stock. See "Dividend Policy."
All of the Common Stock offered hereby will be, when issued and sold, duly
authorized, validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
shareholder action, to divide any or all shares of the authorized Preferred
Stock into series and to fix and determine the designations, preferences and
relative rights, and qualifications, limitations or restrictions thereon, of
any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. As of the
date of this Prospectus, the Board of Directors has not authorized any series
of Preferred Stock and there are no plans, agreements or understandings for the
authorization or issuance of any shares of Preferred Stock. However, because
the rights and preferences for any series of Preferred Stock may be set by the
Board of Directors in its sole discretion, those rights and preferences may be
superior to those of the Common Stock and thus may adversely affect the holders
of Common Stock.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation provide that special meetings of
shareholders may be called only by: (i) holders of not less than 50% of the
outstanding shares of Common Stock; or (ii) the President or a majority of the
Board of Directors. The Articles of Incorporation establish an advance notice
procedure for the nomination, other than by or at the direction of the Board of
Directors or a committee thereof, of candidates for election as directors, as
well as for other shareholder proposals to be considered at shareholders'
meetings. Moreover, certain provisions of the Company's Articles of
Incorporation and Bylaws generally permit directors to be removed by the Board
of Directors only for cause or, with or without cause, by the affirmative vote
of holders of at least 50% of the outstanding shares of Common Stock. The
preceding provisions of the Articles of Incorporation may be changed only upon
the affirmative vote of holders of 60% of the outstanding shares of Common
Stock.
The provisions of the Articles of Incorporation and Bylaws summarized in
the preceding paragraph and the provisions of Florida's Business Corporation
Act described under "Certain Provisions of Florida
39
<PAGE>
Law," contain provisions that may have the effect of delaying, deferring or
preventing a non-negotiated merger or other business combination. These
provisions are intended to encourage any person interested in acquiring the
Company to negotiate with and obtain the approval of the Board of Directors in
connection with the transaction. Certain of these provisions may, however,
discourage a future acquisition of the Company not approved by the Board of
Directors in which shareholders might receive a premium for their shares or
that a substantial number or even a majority of the Company's shareholders
might believe to be in their best interest. As a result, shareholders who
desire to participate in such a transaction may not have the opportunity to do
so. Such provisions could also discourage bids for the Common Stock at a
premium, as well as create a depressive effect on the market price of the
Common Stock.
CERTAIN PROVISIONS OF FLORIDA LAW
The Company is subject to several anti-takeover provisions under Florida
law that apply to a public corporation organized under Florida law, unless the
corporation has elected to opt out of those provisions in its articles of
incorporation or bylaws. The Company has not elected to opt out of those
provisions. The Florida Business Corporation Act (the "FBCA") prohibits the
voting of shares in a publicly-held Florida corporation that are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
"control share acquisition" is defined as an acquisition that immediately
thereafter entitles the acquiring party to vote in the election of directors
within each of the following ranges of voting power: (i) one-fifth or more but
less than one-third of such voting power; (ii) one-third or more but less than
a majority of such voting power; and (iii) more than a majority of such voting
power.
The FBCA also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder," unless: (i) the transaction is approved by a majority
of disinterested directors before the person becomes an interested shareholder;
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years; or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An interested shareholder is
defined as a person who together with affiliates and associates beneficially
owns more than 10% of the corporation's outstanding voting shares.
DIRECTOR AND OFFICER INDEMNIFICATION
The Company's Bylaws contain certain provisions indemnifying directors and
officers of the Company to the fullest extent permitted by law and providing
for the advancement of expenses incurred in connection with an action upon the
receipt of an appropriate undertaking to repay such amount if it is determined
that the individual in question is not entitled to indemnification.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the shares of Common Stock will be
American Stock Transfer and Trust Company.
40
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the Common Stock.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could adversely affect market prices
prevailing from time to time. Furthermore, since certain contractual and legal
restrictions on resale described below restrict the ability of the Company and
current shareholders of the Company from selling Common Stock, sales of
substantial amounts of Common Stock in the public market after the restrictions
lapse could adversely affect the prevailing market price and the ability of the
Company to raise equity capital in the future.
Upon completion of this offering, the Company will have outstanding an
aggregate of 10,300,000 shares of Common Stock. Of these shares of Common Stock
outstanding, the 3,100,000 shares of Common Stock sold in this offering will be
freely tradable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act. The remaining 7,200,000 shares of
Common Stock held by existing shareholders are "restricted securities" as that
term is defined in Rule 144 under the Securities Act ("Restricted Shares") and
have been held by officers of the Company for at least two years. Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rules 144 or 701 promulgated under the
Securities Act, which are summarized below. Sales of the Restricted Shares in
the public market, or the availability of such shares for sale, could adversely
affect the market price of the Common Stock. The Company has granted certain
registration rights to two of its shareholders. These shareholders have
"piggyback" registration rights to request that the Company register any of
their shares in the event that the Company proposes to register any of its
securities under the Securities Act. Additionally, these shareholders have
"demand" registration rights to have the Company prepare and file, on three
occasions each, a registration statement so as to permit a public offering and
sale of their shares of Common Stock.
The Company and the executive officers and directors of the Company have
each agreed that during the 180-day period after the date of this Prospectus,
they will not, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation, sell, offer to sell, contract to sell, grant
any option to purchase or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
other than the Common Stock offered hereby, except that the Company may issue
shares upon the exercise of stock options granted prior to the execution of the
Underwriting Agreement, and may grant additional options under stock option and
other employee compensation plans, provided that, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation, such options
shall not be exercisable during such period.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner other than an affiliate of the Company)
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of: (i) one percent of the number of shares of
Common Stock then outstanding (which will equal approximately 103,000 shares
immediately after this offering); or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sales provisions and notice requirements and to the availability of
current public information about the Company. Under Rule 144(k), a person who
is not deemed to have been an affiliate of the Company at any time during the
90 days preceding a sale, and who has beneficially owned the shares proposed to
be sold for at least two years (including the holding period of any prior owner
other than an affiliate), is entitled to sell such shares without complying
with the manner of sale, public information, volume limitation or notice
provisions of Rule 144.
Any employee, officer or director of or consultant to the Company who
purchased his or her shares pursuant to a written compensatory plan or contract
may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits
affiliates to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell such shares in reliance on Rule 144 without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. In both cases, a holder of Rule 701 shares is required to wait until
90 days after the date of this Prospectus before selling such shares.
41
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement, dated
, 1998 (the "Underwriting Agreement"), the Underwriters named below, who
are represented by Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
and William Blair & Company, L.L.C. (the "Representatives"), have severally
agreed to purchase from the Company the respective number of shares of Common
Stock set forth opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation .........
William Blair & Company, L.L.C. .............................
Total ..................................................... 3,100,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval by their counsel of certain legal
matters and to certain other conditions. The Underwriters are obligated to
purchase and accept delivery of all the shares of Common Stock offered hereby
(other than those shares covered by the over-allotment option described below)
if any are purchased.
The Underwriters initially propose to offer the shares of Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain dealers (including the
Underwriters) at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, to certain
other dealers a concession not in excess of $ per share. After the initial
offering of the Common Stock, the public offering price and other selling terms
may be changed by the Representatives at any time without notice. The
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
The Selling Shareholders have granted to the Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase, from
time to time, in whole or in part, up to an aggregate of 465,000 additional
shares of Common Stock at the initial public offering price less underwriting
discounts and commissions. The Underwriters may exercise such option solely to
cover over-allotments, if any, made in connection with this offering. To the
extent that the Underwriters exercise such option, each Underwriter will become
obligated, subject to certain conditions, to purchase its pro rata portion of
such additional shares based on such Underwriter's percentage underwriting
commitment as indicated in the preceding table.
42
<PAGE>
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
Each of the Company, its executive officers, directors and current
shareholders have agreed, subject to certain exceptions, not to: (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with
the ownership of any Common Stock (regardless of whether any of the
transactions described in clause (i) or (ii) is to be settled by the delivery
of Common Stock, or such other securities, in cash or otherwise) for a period
of 180 days after the date of this Prospectus without the prior written consent
of DLJ. In addition, during such period, the Company has also agreed not to
file any registration statement with respect to, and each of its executive
officers, directors and the Selling Shareholders have agreed not to make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock without DLJ's prior written consent.
Prior to this offering, there has been no established trading market for
the Common Stock. The initial public offering price for the shares of Common
Stock offered hereby will be determined by negotiation among the Company and
the Representatives. The factors to be considered in determining the initial
public offering price include the history of and the prospects for the industry
in which the Company competes, the past and present operations of the Company,
the historical results of operations of the Company, the prospects for future
earnings of the Company, the recent market prices of securities of generally
comparable companies and the general condition of the securities markets at the
time of this offering.
Other than in the United States, no action has been taken by the Company,
the Selling Shareholders or the Underwriters that would permit a public
offering of the shares of Common Stock offered hereby in any jurisdiction where
action for that purpose is required. The shares of Common Stock offered hereby
may not be offered or sold, directly or indirectly, nor may this Prospectus or
any other offering material or advertisements in connection with the offer and
sale of any such shares of Common Stock be distributed or published in any
jurisdiction, except under circumstances that will result in compliance with
the applicable rules and regulations of such jurisdiction. Persons into whose
possession this Prospectus comes are advised to inform themselves about and to
observe any restrictions relating to this offering of the Common Stock and the
distribution of this Prospectus. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any shares of Common Stock offered
hereby in any jurisdiction in which such an offer or a solicitation is
unlawful.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot this offering,
creating a syndicate short position. The Underwriters may bid for and purchase
shares of Common Stock in the open market to cover such syndicate short
position or to stabilize the price of the Common Stock. In addition, the
underwriting syndicate may reclaim selling concessions from syndicate members
if DLJ repurchases previously distributed Common Stock in syndicate covering
transactions, in stabilizing transactions or otherwise or if DLJ receives a
report that indicates that the clients of such syndicate members have "flipped"
the Common Stock. These activities may stabilize or maintain the market price
of the Common Stock above independent market levels. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.
The Company and the Underwriters have agreed to reserve up to 155,000
shares of the Common Stock offered hereby for sale by the Underwriters to
certain eligible employees and other designees of the Company at the initial
public offering price set forth on the cover page of the Prospectus. Any
43
<PAGE>
reserved Common Stock not purchased by such persons will be offered by the
Underwriters to the public on the same basis as the other shares of Common
Stock offered hereby.
LEGAL MATTERS
Certain legal matters in connection with the sale of the shares of Common
Stock offered hereby will be passed upon for the Company by Holland & Knight
LLP, Miami, Florida, and for the Underwriters by Sachnoff & Weaver, Ltd.,
Chicago, Illinois.
EXPERTS
The Combined Financial Statements of the Company as of December 31, 1996
and 1997, and for each of the years in the three-year period ended December 31,
1997, have been included in this Prospectus and in the Registration Statement,
of which this Prospectus is a part, in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere
herein or the Registration Statement, and upon their authority as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the Securities Act of
1933 with respect to the shares of Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement and to the exhibits and
schedules filed as part of the Registration Statement. Statements contained in
this Prospectus concerning the contents of any contract or any other document
referred to are not necessarily complete; reference is made in each instance to
the copy of such contract or document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference
to such exhibit. Copies of the Registration Statement and the exhibits and
schedules thereto may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any part of such materials may be obtained from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees. Such reports and other information
concerning the Company are also available for inspection at the offices of The
Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006. In
addition, the Registration Statement, including the exhibits and schedules
thereto, is available on the Commission's Web site at http://www.sec.gov.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements examined by its independent auditors
and quarterly reports for the first three quarters of each year containing
interim unaudited financial information.
44
<PAGE>
TECHNISOURCE, INC.
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants ....................................... F-2
Combined Balance Sheets as of December 31, 1996 and 1997 and as of the three months ended
March 31, 1998 (unaudited) .............................................................. F-3
Combined Statements of Income for the years ended December 31, 1995, 1996 and 1997 and
the three months ended March 31, 1997 and 1998 (unaudited) .............................. F-4
Combined Statements of Shareholders' Equity for the years ended December 31, 1995, 1996
and 1997 and the three months ended March 31, 1998 (unaudited) .......................... F-5
Combined Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997
and the three months ended March 31, 1997 and 1998 (unaudited) .......................... F-6
Notes to Combined Financial Statements ................................................... F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders
Technisource, Inc.:
We have audited the accompanying combined balance sheets of Technisource,
Inc., Technisource of Florida, Inc. and Technisource Midwest, Inc.
(collectively, "the Company") as of December 31, 1996 and 1997 and the related
combined statements of income, shareholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1997. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1996 and 1997, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31,
1997 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Fort Lauderdale, Florida
February 20, 1998
F-2
<PAGE>
TECHNISOURCE, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
------------------------------- MARCH 31,
1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 174,204 $ 469,973 $ 163,121
Trade accounts receivable, less allowance for doubtful
accounts of $336,000, $425,000 and $495,000 in 1996,
1997 and 1998, respectively .......................... 6,975,801 8,743,630 11,707,393
Due from shareholders and employees .................... 41,923 39,986 24,740
Prepaid expenses and other current assets .............. 24,339 108,335 276,696
----------- ----------- -----------
Total current assets ................................ 7,216,267 9,361,924 12,171,950
Property and equipment, net ............................. 709,671 1,229,658 1,632,563
Other assets ............................................ 22,903 46,002 59,779
----------- ----------- -----------
$ 7,948,841 $10,637,584 $13,864,292
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts ........................................ $ 959,741 $ 588,106 $ 779,258
Accounts payable ....................................... 310,681 529,961 1,032,388
Income taxes payable ................................... 108,771 183,001 10,000
Accrued expenses ....................................... 922,500 1,873,004 2,512,545
Line of credit ......................................... 1,723,402 223,460 1,515,998
----------- ----------- -----------
Total current liabilities ........................... 4,025,095 3,397,532 5,850,189
Notes payable ........................................... 10,000 10,000 10,000
----------- ----------- -----------
Total liabilities ................................... 4,035,095 3,407,532 5,860,189
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value, 50,000,000 shares
authorized, 7,200,000 issued and outstanding ......... 72,000 72,000 72,000
Retained earnings ...................................... 3,841,746 7,158,052 7,932,103
----------- ----------- -----------
Total shareholders' equity .......................... 3,913,746 7,230,052 8,004,103
----------- ----------- -----------
$ 7,948,841 $10,637,584 $13,864,292
=========== =========== ===========
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-3
<PAGE>
TECHNISOURCE, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------- -----------------------------
1995 1996 1997 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues .......................... $ 29,129,819 $40,359,792 $67,326,805 $13,400,441 $22,780,380
Cost of revenues .................. 21,878,869 30,624,300 50,774,870 10,122,084 17,210,443
------------ ----------- ----------- ----------- -----------
Gross profit .................. 7,250,950 9,735,492 16,551,935 3,278,357 5,569,937
Selling, general and
administrative expenses .......... 4,778,120 6,658,589 12,221,748 2,360,072 4,301,760
------------ ----------- ----------- ----------- -----------
Operating income .............. 2,472,830 3,076,903 4,330,187 918,285 1,268,177
Other income (expense):
Interest and other income ........ 22,886 8,419 26,492 -- --
Interest expense ................. (59,906) (105,202) (159,651) (44,100) (37,785)
------------ ----------- ----------- ----------- -----------
Income before
income taxes ............... 2,435,810 2,980,120 4,197,028 874,185 1,230,392
Income taxes ...................... 22,013 230,783 183,001 38,000 59,106
------------ ----------- ----------- ----------- -----------
Net income .................... $ 2,413,797 $ 2,749,337 $ 4,014,027 $ 836,185 $ 1,171,286
============ =========== =========== =========== ===========
Pro forma data:
Net income ....................... $ 2,413,797 $ 2,749,337 $ 4,014,027 $ 836,185 $ 1,171,286
Pro forma provision for
incremental income taxes
(unaudited) .................... 930,193 851,180 1,500,016 312,000 412,000
------------ ----------- ----------- ----------- -----------
Pro forma net income
(unaudited) ................ $ 1,483,604 $ 1,898,157 $ 2,514,011 $ 524,185 $ 759,286
============ =========== =========== =========== ===========
Pro forma net income per share
(unaudited):
Basic ........................... $ 0.35 $ 0.11
=========== ===========
Diluted ......................... $ 0.31 $ 0.09
=========== ===========
Weighted average shares
outstanding:
Basic ........................... 7,200,000 7,200,000
Diluted ......................... 8,217,390 8,217,390
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-4
<PAGE>
TECHNISOURCE, INC.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------------ RETAINED
SHARES AMOUNT EARNINGS TOTAL
<S> <C> <C> <C> <C>
Balance, December 31, 1994 ..................... 7,200,000 $72,000 $ 1,845,012 $ 1,917,012
Net income .................................... -- -- 2,413,797 2,413,797
Shareholder distributions ..................... -- -- (650,000) (650,000)
--------- ------- ------------ ------------
Balance, December 31, 1995 ..................... 7,200,000 72,000 3,608,809 3,680,809
Net income .................................... -- -- 2,749,337 2,749,337
Shareholder distributions ..................... -- -- (2,516,400) (2,516,400)
--------- ------- ------------ ------------
Balance, December 31, 1996 ..................... 7,200,000 72,000 3,841,746 3,913,746
Net income .................................... -- -- 4,014,027 4,014,027
Shareholder distributions ..................... -- -- (697,721) (697,721)
--------- ------- ------------ ------------
Balance, December 31, 1997 ..................... 7,200,000 72,000 7,158,052 7,230,052
Net income (unaudited) ........................ -- -- 1,171,286 1,171,286
Shareholder distributions (unaudited) ......... -- -- (397,235) (397,235)
--------- ------- ------------ ------------
Balance, March 31, 1998 (unaudited) ............ 7,200,000 $72,000 $ 7,932,103 $ 8,004,103
========= ======= ============ ============
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-5
<PAGE>
TECHNISOURCE, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------------- ----------------------------
1995 1996 1997 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income ....................................... $ 2,413,797 $ 2,749,337 $ 4,014,027 $ 836,185 $ 1,171,286
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation .................................... 119,536 190,235 370,201 30,949 67,763
Changes in assets and liabilities:
Increase in trade accounts receivable .......... (1,021,891) (2,850,130) (1,767,829) (630,474) (2,963,763)
Decrease (increase) in due from
shareholders and employees ................... 5,370 (25,370) 1,937 19,488 15,246
Increase in prepaid expenses and
other assets ................................. (5,471) (34,061) (107,095) (104,942) (182,138)
Increase in accounts payable ................... 89,223 147,130 219,280 437,783 502,427
Increase (decrease) in income taxes payable .... -- 108,771 74,230 (70,771) (173,001)
(Decrease) increase in accrued
expenses ..................................... (25,643) 682,621 950,504 943,711 639,541
------------ ------------ ------------ ---------- ------------
Net cash provided by operating activities ......... 1,574,921 968,533 3,755,255 1,461,929 (922,639)
------------ ------------ ------------ ---------- ------------
Cash flows from investing activities:
Purchases of property and equipment .............. (326,210) (606,344) (890,188) (178,072) (470,668)
------------ ------------ ------------ ---------- ------------
Net cash used in investing activities ............. (326,210) (606,344) (890,188) (178,072) (470,668)
------------ ------------ ------------ ---------- ------------
Cash flows from financing activities:
Proceeds from line of credit ..................... -- 1,723,302 -- 230,721 1,292,538
Principal payments on line of credit ............. (699,900) -- (1,499,942) -- --
Distribution to shareholders ..................... (650,000) (2,516,400) (697,721) (110,637) (397,235)
Increase (decrease) in overdraft ................. -- 599,332 (371,635) (959,741) 191,152
------------ ------------ ------------ ---------- ------------
Net cash (used in) provided by financing activities (1,349,900) (193,766) (2,569,298) (839,657) 1,086,455
------------ ------------ ------------ ---------- ------------
Net (decrease) increase in cash ................... (101,189) 168,423 295,769 444,200 (306,852)
Cash and cash equivalents,
beginning of year ................................ 106,970 5,781 174,204 174,204 469,973
------------ ------------ ------------ ---------- ------------
Cash and cash equivalents, end of year ............ $ 5,781 $ 174,204 $ 469,973 $ 618,404 $ 163,121
============ ============ ============ ========== ============
Supplemental disclosures of cash flow
information:
Interest paid .................................... $ 59,671 $ 108,536 $ 165,165 $ 44,100 $ 37,785
Income taxes paid ................................ 22,013 122,012 108,771 108,771 232,107
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-6
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Technisource, Inc. ("Technisource"), Technisource of Florida, Inc.
("Florida") and Technisource Midwest, Inc. ("Midwest"), each being 100 percent
owned by three shareholders (collectively, the "Company"), are affiliated
through common ownership. Technisource is an information technology ("IT")
consulting and staffing services ("IT services") firm , providing IT
consultants principally on a time-and-materials basis to organizations with
complex IT needs. As of December 31, 1997, the Company had offices in 16
locations.
Technisource was incorporated as a Florida corporation in 1987. In 1994,
Florida and Midwest were incorporated as Florida corporations in order to offer
IT services and administer the payroll and human resources activities related
to the Company's consultants. On January 1, 1997, the Company discontinued the
use of Midwest and transferred all of its consultants to Florida. As of
December 31, 1997, the Company's IT services were principally provided by
employees of Florida.
CASH AND CASH EQUIVALENTS
For purposes of the combined statements of cash flows, the Company
considers all highly liquid investments purchased with original maturities of
less than three months to be cash equivalents.
PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost. Depreciation on property and
equipment is calculated on a straight-line basis over the estimated useful
lives of the assets, which range from three to seven years.
OTHER ASSETS
Other assets consist of security deposits related to operating lease
agreements.
INCOME TAXES
The Company has elected to be treated as a subchapter S corporation for
federal income tax purposes. Under S corporation status, the Company is not
liable for federal income taxes as they are borne by the shareholders.
Therefore, the combined statements of income do not include federal income tax
expense, but include a provision for state income taxes for those states that
do not recognize the Company's S corporation status.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare their combined financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from the Company's estimates.
REVENUE RECOGNITION
The Company derives substantially all of its revenues from IT services.
Revenues are recognized as services are performed.
F-7
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
ADVERTISING COSTS
The Company expenses all advertising costs as incurred. The total amounts
charged to operations for advertising during the years ended December 31, 1995,
1996 and 1997 were approximately $115,000, $299,000 and $638,000, respectively.
The amounts charged to operations for advertising during the three months ended
March 31, 1998 were approximately $293,000 (unaudited).
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets To Be Disposed Of, on January 1, 1996. This
Statement requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
an asset to be held and used is measured by a comparison of the carrying amount
of the asset to future net cash flows expected to be generated by the asset. If
such an asset is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. This pronouncement was
adopted for periods beginning January 1, 1996 and did not have a material
impact on the Company's combined financial statements.
STOCK OPTIONS
Prior to January 1, 1996, the Company accounted for its stock options in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
On January 1, 1996, the Company adopted SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply
the provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based method defined in SFAS No. 123
had been applied. The Company has elected to continue to apply the provisions
of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS
No. 123.
PRINCIPLES OF COMBINATION
All significant intercompany balances and transactions have been
eliminated in combination.
UNAUDITED INTERIM PERIOD
The unaudited interim condensed combined financial statements for the
three-month periods ended March 31, 1997 and 1998 and as of March 31, 1998 have
been prepared on the same basis as the Company's audited combined financial
statements as of and for the year ended December 31, 1997. In the opinion of
management, all adjustments, consisting of normal, recurring accruals,
necessary to
F-8
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
present fairly the financial position of the Company at March 31, 1998, and the
results of operations and cash flows for the three-month periods ended March
31, 1997 and 1998. The results of operations for the three-month period ended
March 31, 1998 are not necessarily indicative of the results expected for the
year ending December 31, 1998.
ACCOUNTING CHANGES
Effective December 31, 1997, the Company adopted SFAS No. 128, EARNINGS
PER SHARE. This Statement requires the presentation of basic and diluted
earnings per share ("EPS"). Basic EPS is computed by dividing net income by the
weighted average number of common shares outstanding. Diluted EPS reflects the
dilutive effect of potential common shares issuable pursuant to securities such
as stock options. All prior years EPS data have been presented to conform with
the provisions of the new Statement.
PRO FORMA NET INCOME AND PRO FORMA NET INCOME PER SHARE (UNAUDITED)
The pro forma net income presented in the statements of income reflects
the pro forma effects for income taxes at an effective rate of approximately
38%, as if the Company had been a taxable entity for all periods presented.
Dilutive common shares consist of shares issued at nominal value at the
date of the grant and were assumed outstanding for all periods presented. The
weighted average shares outstanding-diluted includes: (i) the pro forma effect
of the sale (at an assumed initial public offering price of $13.00 per share)
of 716,441 shares of common stock offered in connection with the Company's
proposed initial public offering ("IPO") needed to generate net proceeds
sufficient to pay the estimated $8.5 million S corporation distribution; and
(ii) the dilutive effect of common stock equivalents using the treasury stock
method. The weighted average shares outstanding is calculated as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
1997 1998
(UNAUDITED)
<S> <C> <C>
Common stock ................................................... 7,200,000 7,200,000
Dilutive effect of nominal issuances of stock options .......... -- --
Dilutive effect of options to be exercised ..................... 300,949 300,949
Dilutive effect of assumed IPO shares for distribution ......... 716,441 716,441
--------- ---------
Weighted average shares outstanding ............................ 8,217,390 8,217,390
========= =========
</TABLE>
RECLASSIFICATIONS
Certain reported amounts for 1995 and 1996 have been reclassified to
conform to the 1997 presentation.
F-9
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(2) PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following as of:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- MARCH 31, USEFUL LIVES
1996 1997 1998 IN YEARS
(UNAUDITED)
<S> <C> <C> <C> <C>
Office equipment ...................... $ 145,779 $ 355,021 $ 441,475 5-7
Computer equipment .................... 915,005 1,459,879 1,658,965 5
Telephone equipment ................... 57,452 180,095 214,796 5
Leasehold improvements ................ 4,325 17,754 24,237 3-5
---------- ---------- ----------
1,122,561 2,012,749 2,339,473
Less accumulated depreciation ......... (412,890) (783,091) (706,910)
---------- ---------- ----------
$ 709,671 $1,229,658 $1,632,563
========== ========== ==========
</TABLE>
(3) LINE OF CREDIT
As of December 31, 1997, the Company maintained a revolving line of credit
with a bank which provides for maximum borrowings of up to $8,000,000. The line
of credit expires on August 31, 1998 and is secured by the Company's accounts
receivable and equipment and guaranteed by two of the Company's shareholders.
As of December 31, 1996 and 1997, the outstanding principal balance under this
line of credit was $1,723,402 and $223,460, respectively. Interest is payable
monthly at a variable rate of 0.5% over the bank's prime rate (9.0% as of
December 31, 1997) through August 31, 1998, at which time any outstanding
balance is due in full.
(4) INCOME TAXES
Income tax expense attributable to income from continuing operations
consists of the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
<S> <C> <C> <C>
Year ended December 31, 1995:
State and local ....................... $ 22,013 $-- $ 22,013
======== === ========
Year ended December 31, 1996:
State and local ....................... $230,783 $-- $230,783
======== === ========
Year ended December 31, 1997:
State and local ....................... $183,001 $-- $183,001
======== === ========
Quarter ended March 31, 1998 (unaudited):
State and local ....................... $ 59,106 $-- $ 59,106
======== === ========
</TABLE>
Deferred income taxes are computed using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
future consequences attributable to differences between the financial
statements carrying amount of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
F-10
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(4) INCOME TAXES--(CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------- MARCH 31,
1995 1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C>
Income taxes as reported ................. $ 22,013 $ 230,783 $ 183,001 $ 59,106
Pro forma adjustment (unaudited) ......... 930,193 851,180 1,500,016 412,000
--------- ---------- ---------- --------
Pro forma income taxes (unaudited) $ 952,206 $1,081,963 $1,683,017 $471,106
========= ========== ========== ========
</TABLE>
The unaudited pro forma provision for income taxes presented on the
statements of income represents the estimated taxes that would have been
recorded had the Company been a C corporation for income tax purposes for each
of the periods presented. The pro forma provision for income taxes is as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------- MARCH 31,
1995 1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C>
Pro forma (unaudited)
Federal ................... $803,534 $ 912,500 $1,418,890 $412,000
State ..................... 148,672 169,463 264,127 59,106
-------- ---------- ---------- --------
Total pro forma ......... $952,206 $1,081,963 $1,683,017 $471,106
======== ========== ========== ========
</TABLE>
The pro forma tax expense differs from the amount which would be provided
by applying the statutory federal rate to income before income taxes, primarily
as a result of state income taxes.
A reconciliation of the statutory federal income tax rate and the pro
forma effective rate is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------ MARCH 31,
1995 1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C>
Statutory tax rate ....................... 34% 34% 34% 34%
Effect of:
State and local income taxes, net of 4 4 4 4
federal tax benefit ..................
Other, net ............................. -- -- 2 2
-- -- -- --
Pro forma effective tax rate ......... 38% 38% 40% 40%
== == == ==
</TABLE>
(5) BUSINESS AND CREDIT CONCENTRATIONS
The Company provides IT services to clients located in the United States
and Canada. Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of accounts receivable. Trade
accounts receivable are not normally collateralized. As of December 31, 1996
and 1997, approximately 19% and 21%, respectively, of the Company's accounts
receivables were
F-11
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(5) BUSINESS AND CREDIT CONCENTRATIONS--(CONTINUED)
represented by one client. As of March 31, 1998, approximately 18% of the
Company's accounts receivable were represented by one client (unaudited). Three
clients accounted for approximately 49% of revenues for the year ended December
31, 1995. Two clients accounted for approximately 32%, 36% and 38% of revenues
for the years ended December 31, 1996 and 1997 and for the three months ended
March 31, 1998 (unaudited), respectively. Concentration of credit risk may be
mitigated by the dispersion of the Company's clients across different
industries. The Company estimates an allowance for doubtful accounts based on
the specific-identification method for creditworthiness of its clients.
Consequently, an adverse change in the financial condition of its clients would
affect the Company's estimate of its bad debts.
(6) TRANSACTIONS WITH RELATED PARTIES
The table below summarizes related party balances and activity as of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C>
Due from shareholders and employees ......... $ 41,923 $39,986 $24,740
======== ======= =======
</TABLE>
(7) EMPLOYEE BENEFIT PLANS
PROFIT-SHARING PLAN
The Company has a contributory 401(k) profit-sharing plan which covers all
employees. Employees may contribute up to 15% of their annual compensation. The
Company makes matching and/or profit-sharing contributions at management's
discretion in amounts not to exceed limitations established by the Internal
Revenue Service. For the years ended December 31, 1995, 1996 and 1997, the
Company contributed $0, $0 and $103,579, respectively. For the three months
ended March 31, 1998, the Company made no contributions to the Plan (unaudited).
KEY EMPLOYEE STOCK OPTIONS
On October 27, 1993, the Company awarded stock options to one of its key
employees. Under the terms of the stock option award, the employee is entitled
to purchase 300,000 shares of the Company's common stock at an exercise price
per share equal to the book value of a share of common stock at December 31,
1993, which approximated fair value at the date of the award. No termination
date for exercisability of the options was specified, and the options vest on
December 31, 1998, and provide for immediate vesting of the pro rata portion of
options granted in the event of a change in the ownership of the Company. These
stock options, which are exercisable at $0.13 per share, were outstanding as of
the beginning and end of the years ended December 31, 1995, 1996 and 1997 and
the three months ended March 31, 1998. No such options were exercisable as of
December 31, 1995, 1996 and 1997 and March 31, 1998 (unaudited).
Effective November 11, 1997, the Company awarded stock options to another
of its key employees. Under the terms of the stock option award, the employee
is entitled to purchase 15,385 shares of
F-12
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(7) EMPLOYEE BENEFIT PLANS--(CONTINUED)
common stock, assuming an initial public offering price of $13.00 per share.
The per share exercise price of such options is equal to $9.75, which is 75% of
the assumed initial public offering price and was considered by management to
be fair value on the date of grant. These options expire ten years from the
effective date of the award and vest ratably over the next three years. None of
these options were exercisable as of December 31, 1997. As of December 31,
1997, these stock options were outstanding with a remaining contractual life of
9.83 years at the exercise price described above.
No compensation cost has been recognized by the Company related to the
November 11, 1997 stock option grant, using the intrinsic value method of APB
Opinion 25. Had compensation cost for this stock option award been determined
consistent with SFAS 123, using the Black-Scholes option pricing model,
excluding a volatility assumption, with the following weighted average
assumptions: no expected dividend yield, risk-free interest rate of return of
7.0%, and an expected life of 10 years, the Company's net income and earnings
per share would have been reduced to the adjusted amounts indicated below for
the year ended December 31, 1997 and the three-month period ended March 31,
1998 (unaudited):
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 31, 1998
<S> <C> <C>
Net income: As reported in pro forma data ............... $ 2,514,011 $ 759,286
As adjusted ............................. ........... 2,509,825 753,008
Earnings per share: As reported in pro forma data .......... $ 0.31 $ 0.09
----------- ---------
As adjusted ................................................ 0.31 0.09
----------- ---------
</TABLE>
(8) COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company has entered into several noncancelable operating leases,
primarily for office space.
Future minimum lease payments under noncancelable operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
<S> <C>
1998 ......................... $ 721,790
1999 ......................... 679,326
2000 ......................... 553,064
2001 ......................... 442,836
2002 ......................... 407,677
Thereafter ................... 93,070
-----------
$ 2,897,763
===========
</TABLE>
Rental expense under operating leases for the years ended December 31,
1995, 1996 and 1997 was approximately $140,000, $279,000 and $552,000,
respectively. The rental expense for the three-month period ended March 31,
1998 was approximately $249,000 (unaudited).
F-13
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(8) COMMITMENTS AND CONTINGENCIES--(CONTINUED)
CONTINGENCIES
The Company is subject to certain legal matters arising in the ordinary
course of business which, in the opinion of management and based on the advice
of its legal counsel, will not have a material adverse effect on the financial
position and results of operations of the Company.
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
Accounts receivable, line of credit facility, accounts payable and accrued
liabilities carrying amounts approximate fair value due to the short maturity
of these instruments.
(10) SUBSEQUENT EVENTS RELATED TO THE INITIAL PUBLIC OFFERING (UNAUDITED)
The Company has filed a registration statement with the Securities and
Exchange Commission in connection with the IPO. In connection therewith, the
Company is offering 3,100,000 shares of common stock. The board of directors
approved an increase in the number of shares authorized of common stock of the
Company to 50,000,000 shares, and reduced par value to $.01 per share. The
Company is authorized to issue 10,000,000 shares of preferred stock, par value
$.01 per share. The board of directors of the Company is authorized, without
further shareholder action, to divide any or all shares of the authorized
preferred stock into series and fix and determine the designations, preferences
and relative rights and qualifications, limitations and restrictions thereon,
of any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. The
amended and restated Articles of Incorporation are to be effective on or before
the effective date of the registration statement filed by the Company.
In anticipation of the IPO, the following corporate actions have been
taken:
REORGANIZATION
Since 1995, the Company has been treated as a Subchapter S corporation for
federal income tax purposes under Subchapter S of the Internal Revenue Code of
1986, as amended (the "Code"), and for certain state income tax purposes. As a
result, substantially all of the income of the Company has been taxed directly
to its shareholders rather than to the Company.
Subsequent to year end and concurrent with the public stock offering, the
Company will terminate the Company's S corporation status. In connection with
the termination of the Company's S corporation status, the Company will record
income taxes in accordance with Statement of Financial Accounting Standards No.
109, ACCOUNTING FOR INCOME TAXES. The income tax effect associated with the
change in tax status is estimated to be a net tax benefit of approximately
$400,000 to record a net deferred tax asset.
The Company will declare an S corporation distribution to the existing
shareholders in an aggregate amount representing all undistributed earnings of
the Company taxed or taxable to its shareholders through the closing of the
offering, payable upon such closing in an amount estimated to be $8.5 million.
F-14
<PAGE>
TECHNISOURCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
(10) SUBSEQUENT EVENTS RELATED TO THE INITIAL PUBLIC OFFERING
(UNAUDITED)--(CONTINUED)
Effective upon the closing of the IPO, Technisource Midwest, Inc. will be
dissolved and all outstanding shares of capital stock of Technisource of
Florida, Inc. will be contributed to Technisource.
STOCK OPTION PLAN
Effective January 1, 1998, the Company has adopted the Technisource, Inc.
Long-Term Incentive Plan (the "Plan") which provides for the grant of awards
such as stock appreciation rights, restricted stock grants, cash awards, stock
awards and incentive stock options to purchase up to an aggregate of 1,590,000
shares of common stock to any employee, non-employee director, consultant,
advisor or independent contractor. The term of an incentive stock option cannot
exceed 10 years with an exercise price equal to or greater than fair market
value of the shares of common stock on the date of grant, or 5 years and 110%
of the fair market value for options granted to a holder of 10 percent or more
of the voting power. The exercise price and term of a nonqualified option shall
be determined by the compensation committee. Options shall become exercisable
on the date or dates specified by the compensation committee. The Plan provides
for a nonqualified stock option grant to the outside directors of the Company.
These directors will be granted a non-statutory option for 5,000 shares of
common stock on such director's initial election as a director and, upon
reelection as a board member thereafter such director shall be granted an
additional option for 2,500 shares of common stock. The options granted to
outside directors will be exercisable on the first anniversary date of the
grant in full at a price equal to the fair market value of common stock on the
date of grant. The options will expire ten years after the date of grant or one
year after the outside director is no longer a director of the Company,
whichever is earlier.
Concurrently with the closing of the IPO, the Company intends to issue
43,077 options to certain of its employees at an exercise price of $6.50 per
share based on an assumed initial public offering price of $13.00 per share.
The options vest over a period of three years.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with the Company's four
executive officers. The agreements are effective January 1, 1998, except for
one which is effective November 11, 1997, and provide for initial terms of
three to five years with total annual base salaries ranging from $110,000 to
$175,000, and the employment agreements for two executives automatically renew
for successive one-year terms unless terminated by either party, and entitle
these executives to stock option awards in the discretion of the Board of
Directors. The four executive officers may also receive a performance bonus.
The agreements also contain a non-competition provision following termination
of employment.
STOCK SPLIT
The Company has authorized a 72,000 for 1 stock split and a change in par
value to $.01 per share. All share and per share data in these combined
financial statements have been retroactively restated to reflect this stock
split and change in par value.
F-15
<PAGE>
================================================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
-----------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary .............................. 3
Risk Factors .................................... 6
The Company ..................................... 12
Use of Proceeds ................................. 12
S Corporation Distribution ...................... 12
Dividend Policy ................................. 13
Capitalization .................................. 13
Dilution ........................................ 14
Selected Financial Data ......................... 15
Management's Discussion and Analysis of
Financial Condition and Results
of Operations ................................ 16
Business ........................................ 21
Management ...................................... 30
Certain Transactions ............................ 37
Principal and Selling Shareholders .............. 38
Description of Capital Stock .................... 39
Shares Eligible for Future Sale ................. 41
Underwriting .................................... 42
Legal Matters ................................... 44
Experts ......................................... 44
Additional Information .......................... 44
Index to Combined Financial Statements .......... F-1
</TABLE>
-----------------------------------
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
3,100,000 SHARES
[TECHNISOURCE LOGO]
COMMON STOCK
------------------------------------------
PROSPECTUS
------------------------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
WILLIAM BLAIR & COMPANY
, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with
the issuance and distribution of the securities being registered hereunder.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee ................. $ 14,750
National Association of Securities Dealers, Inc. filing fee ......... 5,491
Nasdaq National Market listing fee .................................. 78,875
Printing and engraving costs ........................................ 100,000
Accounting fees and expenses ........................................ 150,000
Legal fees and expenses ............................................. 125,000
Directors and officers insurance premium ............................ 150,000
Transfer agent and registrar fees ................................... 10,000
Miscellaneous ....................................................... 65,884
--------
Total ............................................................. $700,000
========
</TABLE>
- ---------------------
All amounts are estimated except for the SEC registration fee and NASD filing
fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act, as amended (the "FBCA"), provides
that, in general, a business corporation may indemnify any person who is or was
a party to any proceeding (other than an action by, or in the right of, the
corporation) by reason of the fact that he or she is or was a director or
officer of the corporation, against liability incurred in connection with such
proceeding, including any appeal thereof, provided certain standards are met,
including that such officer or director acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and provided further that, with respect to any criminal action
or proceeding, the officer or director had no reasonable cause to believe his
or her conduct was unlawful. In the case of proceedings by or in the right of
the corporation, the FBCA provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he or she is or was a director or officer of the corporation
against expenses and amounts paid in settlement actually and reasonably
incurred in connection with the defense or settlement of such proceeding,
including any appeal thereof, provided that such person acted in good faith and
in a manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim as to which such person is adjudged liable unless a court
of competent jurisdiction determines upon application that such person is
fairly and reasonably entitled to indemnity. To the extent that any officers or
directors are successful on the merits or otherwise in the defense of any of
the proceedings described above, the FBCA provides that the corporation is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the FBCA further provides
that, in general, indemnification or advancement of expenses shall not be made
to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, a circumstance
under which the director has voted for or assented to a distribution made in
violation of the FBCA or the corporation's articles of incorporation; or (iv)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
II-1
<PAGE>
The Company's Bylaws provides that the Company shall indemnify any
director, officer or employee or any former director, officer or employee to
the fullest extent permitted by law. The Underwriters, pursuant to the
Underwriting Agreement have also agreed to indemnify the directors and officers
of the Company against certain liabilities.
The Company intends to acquire insurance with respect to, among other
things, certain liabilities that may arise under the statutory provisions
referred to above. The directors and officers of the Company will also be
insured against certain liabilities, including certain liabilities arising
under the Securities Act of 1933, which might be incurred by them in such
capacities and against which they are not indemnified by the Company.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this Registration Statement,
the Company has sold the following securities that were not registered under
the Securities Act of 1933, as amended (the "Securities Act").
On November 11, 1997, the Company granted John A. Morton, in connection
with the Company's hiring him to serve as its Vice President of Finance and
Chief Financial Officer, the option to purchase 15,385 shares of the Company's
Common Stock, based on an initial public offering price of $13.00 per share.
The options are exercisable at $9.75 per share, vest over a three-year period
from the date of grant and expire ten years after such date. These options were
issued pursuant to the exemption from registration provided by Section 4(2) of
the Securities Act and Rule 701 promulgated by the Commission thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
The following exhibits are filed herewith and made a part hereof:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C>
1* Form of Underwriting Agreement among the Company, Donaldson, Lufkin & Jenrette
Securities Corporation and William Blair & Company, as Representatives of the several
Underwriters
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation and Bylaws of the
Company defining the rights of holders of Common Stock of the Company
4.2 Specimen certificate for the Company's Common Stock
5* Opinion of Holland & Knight LLP
10.1 Employment Agreement, dated as of January 1, 1998, between Joseph W. Collard and the
Company
10.2 Employment Agreement, dated as of January 1, 1998, between James F. Robertson and the
Company
10.3 Employment Agreement, dated as of November 11, 1997, between John A. Morton and the
Company
10.4 Employment Agreement, dated as of January 1, 1998, between Paul Cozza and the Company
10.5 Lease, dated January 31, 1998, between Highwoods/Florida Holdings, L.P. and the Company
10.6 Registration Rights Agreement, dated April 21, 1998, between Joseph W. Collard and the
Company
10.7 Registration Rights Agreement, dated April 21, 1998, between James F. Robertson and the
Company
10.8 The Technisource, Inc. Long-Term Incentive Plan
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------
<S> <C>
10.9 Stock Option Agreement between the Company and Paul Cozza
10.10 Stock Option Agreement between the Company and John A. Morton
21 Subsidiaries of the Company
23.1* Consent of Holland & Knight LLP (included in Exhibit 5 of this Registration Statement)
23.2 Consent of KPMG Peat Marwick LLP
24/dagger/ Power of Attorney
27 Financial Data Schedule
</TABLE>
- ----------------
* To be filed by amendment.
/dagger/ Previously filed.
(b) Financial Statement Schedules:
<TABLE>
<CAPTION>
DESCRIPTION
- ----------------
<S> <C>
Schedule II -- Valuation and Qualifying Accounts
</TABLE>
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Technisource,
Inc. has duly caused this Amended Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Ft.
Lauderdale, State of Florida, on the 29th day of May, 1998.
TECHNISOURCE, INC.
By: /s/ Joseph W. Collard
-------------------------
Joseph W. Collard
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------ -------------------------------------- -------------
<S> <C> <C>
/s/ JOSEPH W. COLLARD President, Chief Executive Officer May 29, 1998
- ------------------------------ and Director
Joseph W. Collard (Principal Executive Officer)
/s/ JAMES F. ROBERTSON Executive Vice President, May 29, 1998
- ------------------------------ Chief Operating Officer
James F. Robertson and Director
/S/ JOHN A. MORTON Chief Financial Officer and Director May 29, 1998
- ------------------------------ (Principal Financial and
John A. Morton Accounting Officer)
</TABLE>
II-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Technisource, Inc.:
Under date of February 20, 1998, we reported on the combined balance
sheets of Technisource, Inc., Technisource of Florida, Inc. and Technisource
Midwest, Inc. (collectively, "the Company") as of December 31, 1996 and 1997
and the related combined statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
which are included in the prospectus. In connection with our audits of the
aforementioned combined financial statements, we also audited the related
schedule of Valuation and Qualifying Accounts--Schedule II in the registration
statement. This schedule is the responsiblity of the Company's management. Our
responsibility is to express an opinion on the schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic combined financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Fort Lauderdale, Florida
February 20, 1998
S-1
<PAGE>
SCHEDULE II
TECHNISOURCE, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO AMOUNTS BALANCE AT
BEGINNING COSTS AND DEEMED TO BE END OF
PERIOD ENDED DESCRIPTION OF PERIOD EXPENSES UNCOLLECTIBLE PERIOD
- --------------- -------------------------------------- ------------ ------------ --------------- -----------
<S> <C> <C> <C> <C> <C>
Dec. 31, 1995 Allowance for uncollectible accts.-- $ 0 $ 70 $ 0 $ 70
Dec. 31, 1996 Allowance for uncollectible accts.-- 70 266 0 336
Dec. 31, 1997 Allowance for uncollectible accts.-- 336 178 89 425
</TABLE>
S-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.2 Specimen certificate for the Company's Common Stock
10.1 Employment Agreement, dated as of January 1, 1998, between Joseph W.
Collard and the Company
10.2 Employment Agreement, dated as of January 1, 1998, between James F.
Robertson and the Company
10.3 Employment Agreement, dated as of November 11, 1997, between John A.
Morton and the Company
10.4 Employment Agreement, dated as of January 1, 1998, between Paul Cozza and
the Company
10.5 Lease, dated January 31, 1998, between Highwoods/Florida Holdings, L.P. and
the Company
10.6 Registration Rights Agreement, dated April 21, 1998, between Joseph W. Collard
and the Company
10.7 Registration Rights Agreement, dated April 21, 1998, between James F.
Robertson and the Company
10.8 The Technisource, Inc. Long-Term Incentive Plan
10.9 Stock Option Agreement between the Company and Paul Cozza
10.10 Stock Option Agreement between the Company and John A. Morton
21 Subsidiaries of the Company
23.2 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
</TABLE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TECHNISOURCE, INC.
In accordance with Section 607.1007 of the Florida Statutes, the
Articles of Incorporation of TECHNISOURCE, INC., a Florida corporation (the
"Corporation"), are hereby amended and restated (the "Amended and Restated
Articles") to read in their entirety as follows:
ARTICLE I - NAME
The name of the Corporation is Technisource, Inc.
ARTICLE II - ADDRESS
The mailing address for the Corporation is 1901 W. Cypress Creek Road,
Suite 202, Ft. Lauderdale, Florida 33309.
ARTICLE III - DURATION
The duration of the Corporation shall be perpetual.
ARTICLE IV - PURPOSE
The Corporation is organized to engage in any activity or business
permitted under the laws of the United States and the State of Florida.
ARTICLE V - INCORPORATOR
The name and address of the incorporator of this Corporation is Joseph
W. Collard, 1901 W. Cypress Creek Road, Suite 202, Ft. Lauderdale, Florida
33309.
ARTICLE VI - REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation is 1901 W.
Cypress Creek Road, Suite 202, Ft. Lauderdale, Florida 33309, and the name of
the registered agent of the Corporation at such address is Joseph W. Collard.
ARTICLE VII - CAPITAL STOCK
The total number of shares of all classes of capital stock of the
Corporation which the Corporation shall have the authority to issue is
60,000,000, of which 50,000,000 shares having a par value of $.01 per share
shall be designated as Common Stock and 10,000,000 shares having a par value of
$.01 per share shall be designated as Preferred Stock.
<PAGE>
Shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is authorized to fix the number of shares in
each series, the designation thereof and the relative rights, preferences and
limitations of each series, and specifically, the Board of Directors is
authorized to fix with respect to each series (a) the dividend rate; (b)
redeemable features, if any; (c) rights upon liquidation; (d) whether or not the
shares of such series shall be subject to a purchase, retirement or sinking fund
provision; (e) whether or not the shares of such series shall be convertible
into or exchangeable for shares of any other class and, if so, the rate of
conversion or exchange; (f) restrictions, if any, upon the payment of dividends
on common stock; (g) restrictions, if any, upon the creation of indebtedness;
(h) voting powers, if any, of the shares of each series; and (i) such other
rights, preferences and limitations as shall not be inconsistent with the laws
of the State of Florida.
ARTICLE VIII - BOARD OF DIRECTORS
(a) REMOVAL. Subject to the rights, if any, of the holders of shares of
preferred stock then outstanding, any or all of the directors of the Corporation
may be removed from office by the Board of Directors for cause or by the
shareholders of the Corporation with or without cause by the affirmative vote of
the holders of at least 50% of the outstanding shares of capital stock of the
Corporation generally entitled to vote for the election of directors, voting
together as a single class. The removal of directors by the Board of Directors
or shareholders of the Corporation may be made at any annual or special meeting.
Notice of any such annual or special meeting shall state that the removal of a
director or directors is among the purposes of the meeting.
(b) VACANCIES. Newly created directorships resulting from any increase
in the number of directors or any vacancy on the Board of Directors resulting
from death, resignation, disqualification, removal or other cause shall be
filled solely by the affirmative vote of a majority of the remaining directors
then in office, even though less than a quorum, or by a sole remaining director.
Any director elected in accordance with the preceding sentence shall hold office
until the next annual meeting of the Shareholders of the Corporation and until
such director's successor shall have been elected and qualified. No decrease in
the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
(c) ADVANCE NOTICE OF NOMINATIONS. Advance notice of nominations for
the election of directors, other than by the Board of Directors or a committee
thereof, shall be given within the term and in the manner provided in the Bylaws
of the Corporation.
ARTICLE IX - SHAREHOLDER MEETINGS
(a) ANNUAL MEETINGS. Annual meetings shall be called and conducted in
the manner provided in the Bylaws of the Corporation.
-2 -
<PAGE>
(b) SPECIAL MEETINGS. Special meetings of the shareholders of the
Corporation for any purpose or purposes may be called at any time by (i) the
Chairman of the Board of Directors, the President of the Corporation or a
majority of the Board of Directors or (ii) holders of not less than 50% of all
the votes entitled to be cast on any issue proposed to be considered at the
proposed special meeting, if such shareholders sign, date and deliver to the
Corporation's Secretary one or more written demands for the meeting describing
the purpose or purposes for which it is to be held. Special meetings of the
shareholders of the Corporation may not be called by any other person.
At any special meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been set
forth in the notice of such special meeting.
(c) ADVANCE NOTICE OF SHAREHOLDER PROPOSALS. Advance notice of
shareholder proposals shall be given within the term and in the manner provided
in the Bylaws of the Corporation.
ARTICLE X - NO SHAREHOLDER ACTION BY WRITTEN CONSENT
Effective upon and following the closing of an initial public offering
of the Corporation's Common Stock, any action required or permitted to be taken
at any annual or special meeting of shareholders of the Corporation may be taken
only upon the vote of shareholders at a duly convened meeting of shareholders in
accordance with these Articles of Incorporation and the Bylaws, and may not be
taken by written consent of shareholders.
ARTICLE XI - CONTROL-SHARE ACQUISITIONS
The Corporation elects to be governed by Florida Statute Section
607.0902, as amended, relating to control-share acquisitions (the "Act"). The
Corporation is expressly authorized to the fullest extent permitted by the Act
to redeem control shares acquired in a control-share acquisition at the fair
value thereof pursuant to procedures adopted by the Board of Directors.
ARTICLE XII - AFFILIATED TRANSACTIONS
The Corporation elects to be governed by Florida Statute Section
607.0901, as such may be amended from time to time, concerning affiliated
transactions.
ARTICLE XIII - AMENDMENTS TO ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal
any provision in these Articles of Incorporation in the manner now or hereafter
prescribed by statute, and all rights conferred upon the shareholders herein are
subject to this reservation. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the affirmative vote of the holders
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of at least 60% of the outstanding shares of the capital stock of the
Corporation then entitled to vote generally in the election of directors, voting
together as a single class shall be required to amend these Articles of
Incorporation or to adopt any provision inconsistent therewith.
ARTICLE XIV - BYLAWS
The Board of Directors is expressly authorized to amend, repeal or
adopt any Bylaw of and for the Corporation. The holders of voting stock shall to
the extent such power is at the time conferred on them by applicable law, also
have the power, by the affirmative vote of the holders of at least 60% of the
outstanding shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class, to
make, alter, amend or repeal any By-law of and for the Corporation.
The foregoing Amended and Restated Articles were adopted (i) by means
of a unanimous written consent of the shareholders of the Corporation dated as
of April 21, 1998, in accordance with the terms of Section 607.0704 of the
Florida Statues and (ii) by means of a unanimous written consent of the Board of
Directors of the Corporation dated as of April 21, 1998, in accordance with the
terms of Section 607.0821 of the Florida Statutes.
NOW THEREFORE, the undersigned has executed these Articles of
Incorporation this 30 day of May, 1998.
/S/ JOSEPH W. COLLARD
----------------------------
Joseph W. Collard, President
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CERTIFICATE TO AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF TECHNISOURCE, INC.
The undersigned, Joseph W. Collard, as President of TECHNISOURCE, INC.,
a Florida corporation (the "Corporation"), does hereby certify as follows:
1. In accordance with Section 607.1003 of the Florida Statutes, the
Board of Directors of the Corporation recommended by written consent
on April 21, 1998, that the shareholders of the Corporation approve,
and the shareholders have approved, pursuant to a unanimous written
consent dated as of April 21, 1998, the number of votes cast for the
amendment by the shareholders being sufficient for such approval, in
accordance with Sections 607.1003 and 607.1006 of the Florida
Statutes, the amendment and restatement of the Corporation's
Articles of Incorporation as attached hereto.
2. The undersigned officer of the Corporation has been duly authorized
to submit these Amended and Restated Articles of Incorporation of
the Corporation to the Department of State of Florida for filing in
accordance with Section 607.1007, Florida Statutes.
TECHNISOURCE, INC.
By:/S/ JOSEPH W. COLLARD
----------------------------
Joseph W. Collard, President
Dated: May 30, 1998
AMENDED AND RESTATED
BY-LAWS
OF
TECHNISOURCE, INC.
ARTICLE I
SHAREHOLDERS
Section 1.1 ANNUAL MEETINGS. An annual meeting of shareholders shall be
held for the election of Directors at such date, time and place either within or
without the State of Florida as may be designated by the Board of Directors from
time to time. To the extent notice has been provided in accordance with sections
1.4 and 1.12, any other proper business may be transacted at the annual meeting.
Section 1.2 SPECIAL MEETINGS. Special meetings of the shareholders of
the Corporation for any purpose or purposes may be called at any time by (i) the
Chairman of the Board of Directors, the President of the Corporation or a
majority of the Board of Directors or (ii) upon delivery of one or more written
demands for a meeting describing the purpose or purposes for the meeting and
signed and dated by the holders of not less than 50 percent of all votes
entitled to be cast on any issue proposed to be considered at such special
meeting. Special meetings of shareholders of the Corporation may not be called
by any other person or persons. At any special meeting of shareholders, only
such business shall be conducted, and only such proposals shall be acted upon,
as shall be set forth in the notice of such special meeting.
Section 1.3 SHAREHOLDER ACTION. Any action required or permitted to be
taken at any annual or special meeting of the shareholders of the Corporation
may be taken only upon the vote of shareholders at a duly convened meeting of
shareholders in accordance with the Articles of Incorporation and these By-laws,
and may not be taken by written consent of shareholders.
Section 1.4 NOTICE OF MEETINGS. Whenever shareholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each shareholder entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the shareholder at such shareholders'
addresses as they appear on the records of the Corporation.
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Section 1.5 ADJOURNMENTS. Any meeting of shareholders, annual or
special, may be adjourned from time to time, to reconvene at the same or some
other place, and notice need not be given of any such adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.6 QUORUM. At each meeting of shareholders, except where
otherwise provided by law or the Articles of Incorporation or these By-laws, the
holders of a majority of the outstanding shares of stock entitled to vote on a
matter at the meeting, present in person or represented by proxy, shall
constitute a quorum. For purposes of the foregoing, where a separate vote by
class or classes is required for any matter, the holders of a majority of the
outstanding shares of such class or classes, present in person or represented by
proxy, shall constitute a quorum to take action with respect to that vote on
that matter. Two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum of the holders of any class of stock
entitled to vote on a matter, the holders of such class so present or
represented may, by majority vote, adjourn the meeting of such class from time
to time in the manner provided by Section 1.5 of these By-laws until a quorum of
such class shall be so present or represented. Shares of its own capital stock
belonging on the record date for the meeting to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
Directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 1.7 ORGANIZATION. Meetings of shareholders shall be presided
over by the Chairman of the Board of Directors, if any, or in the absence of the
Chairman of the Board of Directors by the Vice Chairman of the Board of
Directors, if any, or in the absence of the Vice Chairman of the Board of
Directors by the President, or in the absence of the President, by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary, or in the absence of the Secretary an
Assistant Secretary, shall act as secretary of the meeting, but in the absence
of the Secretary and any Assistant Secretary, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
The order of business at each such meeting shall be as determined by
the chairman of the meeting. The chairman of the meeting shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts and things as are necessary or desirable for the proper conduct of the
meeting, including, without limitation, the establishment of procedures for the
maintenance of order and safety, limitations on the time allotted to questions
or comments on the affairs of the Corporation, restrictions on entry to such
meeting after the time prescribed for the commencement thereof and the opening
and closing of the voting polls.
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Section 1.8 INSPECTORS. Prior to any meeting of stockholders, the Board
of Directors or the President shall appoint one or more inspectors to act at
such meeting and make a written report thereof and may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at the meeting of shareholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall ascertain the number of shares outstanding and the
voting power of each, determine the shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors and certify their determination of
the number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons to assist them in
the performance of their duties. The time of the opening and closing of the
polls for each matter upon which the shareholders will vote at a meeting shall
be announced at the meeting. No ballot, proxy or vote, nor any revocation
thereof or change thereto, shall be accepted by the inspectors after the closing
of the polls. In determining the validity and counting of proxies and ballots,
the inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a shareholder who submits a
proxy by telegram, cablegram or other electronic transmission from which it can
be determined that the proxy was authorized by the shareholder, ballots and the
regular books and records of the corporation, and they may also consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the shareholder holds of record. If the
inspectors consider other reliable information for such purpose, they shall, at
the time they make their certification, specify the precise information
considered by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
Section 1.9 VOTING; PROXIES. Unless otherwise provided in the Articles
of Incorporation, each shareholder entitled to vote at any meeting of
shareholders shall be entitled to one vote for each share of stock held by such
shareholder which has voting power upon the matter in question. If the Articles
of Incorporation provides for more or less than one vote for any share on any
matter, every reference in these By-laws to a majority or other proportion of
stock shall refer to such majority or other proportion of the votes of such
stock. Each shareholder entitled to vote at a meeting of shareholders may
authorize another person or persons to act for such shareholder by proxy, but no
such proxy shall be voted or acted upon after eleven months from its date,
unless the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power,
regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the Corporation generally.
A shareholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings
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of shareholders need not be by written ballot unless the holders of a majority
of the outstanding shares of all classes of stock entitled to vote thereon
present in person or represented by proxy at such meeting shall so determine.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of Directors. In all other matters, unless otherwise provided by law or
by the Articles of Incorporation or these Bylaws, the affirmative vote of the
holders of a majority of the shares present in person or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of the
shareholders. Where a separate vote by class or classes is required, the
affirmative vote of the holders of a majority of the shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class or classes, except as otherwise provided by law or by the
Articles of Incorporation or these By-laws.
Section 1.10 FIXING DATE FOR DETERMINATION OF SHAREHOLDERS OF RECORD.
In order that the Corporation may determine the shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting. If no record date is
fixed by the Board of Directors, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
In order that the Corporation may determine the shareholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the shareholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
shareholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 1.11 LIST OF SHAREHOLDERS ENTITLED TO VOTE. The Secretary shall
prepare and make, at least ten (10) days before every meeting of shareholders, a
complete list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each shareholder and the number
of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the
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time and place of the meeting during the whole time thereof and may be inspected
by any shareholder who is present.
Section 1.12 ADVANCE NOTICE OF SHAREHOLDER PROPOSALS. At any annual or
special meeting of shareholders, proposals by shareholders and persons nominated
for election as Directors by shareholders shall be considered only if advance
notice thereof has been timely given as provided herein and such proposals or
nominations are otherwise proper for consideration under applicable law and the
Articles of Incorporation and By-laws of the Corporation. Notice of any proposal
to be presented by any shareholder or of the name of any person to be nominated
by any shareholder for election as a Director of the Corporation at any meeting
of shareholders shall be delivered to the Secretary of the Corporation at its
principal executive office not less than sixty (60) nor more than ninety (90)
days prior to the date of the meeting; provided, however, that if the date of
the meeting is first publicly announced or disclosed (in a public filing or
otherwise) less than seventy (70) days prior to the date of the meeting, such
advance notice shall be given not more than ten (10) days after such date is
first so announced or disclosed. Public notice shall be deemed to have been
given more than seventy (70) days in advance of the annual meeting if the
Corporation shall have previously disclosed, in these By-laws or otherwise, that
the annual meeting in each year is to be held on a determinable date, unless and
until the Board of Directors determines to hold the meeting on a different date.
Any shareholder who gives notice of any such proposal shall deliver therewith
the text of the proposal to be presented and a brief written statement of the
reasons why such shareholder favors the proposal and setting forth such
shareholder's name and address, the number and class of all shares of each class
of stock of the Corporation beneficially owned by such shareholder and any
material interest of such shareholder in the proposal (other than as a
shareholder). Any shareholder desiring to nominate any person for election as a
Director of the Corporation shall deliver with such notice a statement in
writing setting forth the name of the person to be nominated, the number and
class of all shares of each class of stock of the Corporation beneficially owned
by such person, the information regarding such person required by paragraphs
(a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and
Exchange Commission (or the corresponding provisions of any regulation
subsequently adopted by the Securities and Exchange Commission applicable to the
Corporation), such person's signed consent to serve as a Director of the
Corporation if elected, such shareholder's name and address and the number and
class of all shares of each class of stock of the Corporation beneficially owned
by such shareholder. As used herein, shares "beneficially owned" shall mean all
shares as to which such person, together with such person's affiliates and
associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934),
may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as well as all shares as to which such person,
together with such person's affiliates and associates, has the right to become
the beneficial owner pursuant to any agreement or understanding, or upon the
exercise of warrants, options or rights to convert or exchange (whether such
rights are exercisable immediately or only after the passage of time or the
occurrence of conditions). The person presiding at the meeting, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall determine whether such notice has been duly given and shall
direct that proposals and nominees not be considered if such notice has not been
given.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1 POWERS; NUMBER; QUALIFICATIONS. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the Articles of
Incorporation. The Board of Directors shall consist of not less than three (3)
or more than fifteen (15) members, the number thereof to be determined from time
to time by the Board of Directors. Directors need not be shareholders. The
number of directors may be increased or decreased from time to time by action of
the Board of Directors, but no decrease shall have the effect of shortening the
term of any incumbent director.
Section 2.2 ELECTION; TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES.
Any Director may resign at any time upon written notice to the Board of
Directors or to the President or the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. Subject to the rights, if any, of the holders of shares of
preferred stock then outstanding, any or all of the directors of the Corporation
may be removed from office by the Board of Directors for cause or by the
shareholders of the Corporation with or without cause by the affirmative vote of
the holders of at least 50% of the outstanding shares of capital stock of the
Corporation generally entitled to vote for the election of directors, voting
together as a single class. The removal of directors by the Board of Directors
or shareholders of the Corporation may be made at any annual or special meeting.
Notice of any such annual or special meeting shall state the removal of a
director or directors is among the purposes of the meeting. Unless otherwise
provided in the Articles of Incorporation or these By-laws, vacancies and newly
created directorships resulting from any increase in the authorized number of
Directors elected by all of the shareholders having the right to vote as a
single class or from any other cause shall be filled by a majority of the
Directors then in office, although less than a quorum, or by the sole remaining
Director. Any Director elected or appointed to fill a vacancy shall hold office
until the next election of Directors and until his or her successor is elected
and qualified or until his or her earlier resignation or removal in accordance
with the Articles of Incorporation and these By-laws.
Section 2.3 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of Florida and
at such times as the Board of Directors may from time to time determine, and if
so determined notice thereof need not be given.
Section 2.4 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Florida whenever called by the Chairman of the Board of Directors, if any, by
the Vice Chairman of the Board of Directors, if any, by the President or by any
three Directors. Reasonable notice thereof shall be given by the person or
persons calling the meeting.
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Section 2.5 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE
PERMITTED. Unless otherwise restricted by the Articles of Incorporation or these
By-laws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or of
such committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
By-law shall constitute presence in person at such meeting.
Section 2.6 QUORUM; VOTE REQUIRED FOR ACTION. Subject to the Articles
of Incorporation, at all meetings of the Board of Directors one-third of the
entire Board of Directors shall constitute a quorum for the transaction of
business. The vote of a majority of the Directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors unless the
Articles of Incorporation or these By-laws shall require a vote of a greater
number. In case at any meeting of the Board of Directors a quorum shall not be
present, the members of the Board of Directors present may adjourn the meeting
from time to time until a quorum shall be present.
Section 2.7 ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board of Directors, if any, or in the
absence of the Chairman of the Board of Directors by the Vice Chairman of the
Board of Directors, if any, or in the absence of the Vice Chairman of the Board
of Directors by the President, or in his absence by a chairman chosen at the
meeting. The Secretary, or in the absence of the Secretary an Assistant
Secretary, shall act as secretary of the meeting, but in the absence of the
Secretary and any Assistant Secretary, the chairman of the meeting may appoint
any person to act as secretary of the meeting.
Section 2.8 ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Articles of Incorporation or these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 2.9 COMPENSATION OF DIRECTORS. Unless otherwise restricted by
the Articles of Incorporation or these By-laws, the Board of Directors shall
have the authority to fix the compensation of Directors.
ARTICLE III
COMMITTEES
Section 3.1 COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board of Directors may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member
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at any meeting of the committee. Any such committee, to the extent provided in
the resolution of the Board of Directors or in these By-laws, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Articles of Incorporation (except that a committee may, to the extent authorized
in the resolution or resolutions providing for the issuance of shares of stock
adopted by the Board of Directors, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the shareholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the Corporation or a
revocation of a dissolution or amending these By-laws; and, unless the
resolution, these By-laws or the Articles of Incorporation expressly so
provides, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, to adopt a certificate of
ownership and merger or to remove or indemnify Directors.
Section 3.2 COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a provision
by the Board of Directors or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum is then present shall be the act of such committee, and in other respects
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these By-laws.
ARTICLE IV
OFFICERS
Section 4.1 OFFICERS; ELECTION. As soon as practicable after the annual
meeting of shareholders in each year, the Board of Directors shall elect a
President, a Chief Executive Officer, and a Secretary, and it may, if it so
determines, elect from among its members a Chairman of the Board of Directors
and a Vice Chairman of the Board of Directors. The Board of Directors may also
elect one or more Vice Presidents, one or more Assistant Vice Presidents, one or
more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and
such other officers as the Board of Directors may deem desirable or appropriate
and may give any of them such further designations or alternate titles as it
considers desirable. Any number of offices may be held by the same person unless
the Articles of Incorporation or these By-laws otherwise provide.
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Section 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES. Unless
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any officer
may resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. The
Board of Directors may remove any officer with or without cause at any time. Any
such removal shall be without prejudice to the contractual rights of such
officer, if any, with the Corporation, but the election of an officer shall not
of itself create contractual rights. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled by the
Board of Directors at any regular or special meeting or by unanimous written
consent of the Board of Directors.
Section 4.3 POWERS AND DUTIES. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as shall be
stated in these By-laws or in a resolution of the Board of Directors which is
not inconsistent with these By-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors. The Secretary shall have the duty to record the proceedings
of the meetings of the shareholders, the Board of Directors and any committees
in a book to be kept for that purpose. The Board of Directors may require any
officer, agent or employee to give security for the faithful performance of his
or her duties.
ARTICLE V
STOCK
Section 5.1 CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, if any,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
representing the number of shares of stock in the Corporation owned by such
holder. If such certificate is manually signed by one officer or manually
countersigned by a transfer agent or by a registrar, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
If the Corporation is authorized to issue more than one class of stock
or more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise
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provided by law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock a statement that the Corporation will
furnish without charge to each shareholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES: ISSUANCE OF
NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Section 6.1 RIGHT TO INDEMNIFICATION. Any person, his heirs, or
personal representative, made, or threatened to be made a party to any
threatened, pending, or completed action or proceeding, whether civil, criminal,
administrative, regulatory, or investigative ("Proceeding") because he is or was
a director or officer of this Corporation or serves or served any other
corporation or other enterprise in any capacity at the request of this
Corporation, shall be indemnified by this Corporation, to the full extent
permitted by the Florida Business Corporation Act, under Section 607.0850;
provided, however, that the Corporation shall indemnify any such person seeking
indemnity in connection with a Proceeding (or part thereof) initiated by such
person only if such Proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. In discharging his duty, any director or officer,
when acting in good faith, may rely upon information, opinions, reports, or
statements, including financial statements and other financial data, in each
case prepared or presented by (1) one or more officers or employees of the
Corporation whom the director or officer reasonably believes to be reliable and
competent in the matters presented, (2) counsel, public accountants, or other
persons as to matters that the director or officer believes to be within that
person's professional or expert competence, or (3) in the case of a director, a
committee of the board of directors upon which he does not serve, duly
designated according to law, as to matters within its designated authority, if
the director reasonably believes that the committee is competent.
Section 6.2 ADVANCES. The rights set forth above in this Article VI
shall include the right to be paid by the Corporation expenses incurred in
defending or being represented in any such Proceeding in advance of its final
disposition; provided, however, that the payment of such expenses incurred by a
director or officer because he is or was a director or officer of this
Corporation or serves or served any other corporation or enterprise in any
capacity at the request of this Corporation (and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including service to an employee benefit plan) in advance of the final
disposition of such Proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf
10
<PAGE>
of such director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
indemnified under this Article VI or otherwise.
Section 6.3 CONTRACT RIGHT. All rights to indemnification, including
advancement of expenses, shall be deemed to be provided by a contract between
the Corporation and the director or officer who serves in such capacity at any
time while this Article VI and other relevant provisions of the Florida Business
Corporation Act and other applicable law, if any, are in effect, such that any
repeal or modification thereof shall not adversely affect any right existing at
the time of such repeal or modification.
Section 6.4 RIGHT TO BRING SUIT. If a claim under the preceding
paragraphs of this Article VI is not paid in full by the Corporation within 90
days after a written claim therefor has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense, including attorney's
fees, of prosecuting such claim. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking
has been tendered to the Corporation) that the claimant has not met the
applicable standard of conduct which makes it permissible under the Florida
Business Corporation Act for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Florida Business Corporation Act, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant had not met the applicable standard of conduct.
Section 6.5 NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Article VI shall not be exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of these
By-laws, the Articles of Incorporation, agreement, vote of shareholders or
disinterested directors or otherwise.
Section 6.6 INSURANCE. The Corporation may maintain insurance, at its
expense, for the purpose of indemnifying itself and any director, officer,
employee or agent of the Corporation or another corporation, partnership, trust
or other enterprise, whether or not the Corporation would have the power to
provide such indemnity under the Florida Business Corporation Act.
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<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1 FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.2 SEAL. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors. The corporate seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section 7.3 WAIVER OF NOTICE OF MEETINGS OF SHAREHOLDERS, DIRECTORS AND
COMMITTEES. Whenever notice is required to be given by law or under any
provision of the Articles of Incorporation or these By-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the shareholders,
Directors or members of a committee of Directors need be specified in any
written waiver of notice unless so required by the Articles of Incorporation or
these By-laws.
Section 7.4 INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its Directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its Directors or officers are Directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the Director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or (2) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the shareholders. Common or interested
Directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
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<PAGE>
Section 7.5 FORM OF RECORDS. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 7.6 AMENDMENT OF BY-LAWS. The Board of Directors is expressly
authorized to amend, repeal or adopt any By-law of and for the Corporation. The
holders of voting stock shall to the extent such power is at the time conferred
on them by applicable law, also have the power, by the affirmative vote of the
holders of at least 60% of the outstanding shares of capital stock of the
Corporation then entitled to vote generally in the election of directors, voting
together as a single class, to make, alter, amend or repeal any By-law of and
for the Corporation.
13
EXHIBIT 4.2
COMMON STOCK
NUMBER SHARES
TECHNISOURCE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 878553106
THIS CERTIFIES THAT
is the Registered Holder of
FULLY-PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.01 PAR
VALUE, OF
TECHNISOURCE, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
TECHNISOURCE, INC.
CORPORATE SEAL
/S/ JOSEPH W. COLLARD 1987 /S/ JOHN A. MORTON
PRESIDENT FLORIDA SECRETARY
[LANDSCAPED]
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
By _______________________
AUTHORIZED SIGNATURE
(SEE REVERSE SIDE)
<PAGE>
TECHNISOURCE, INC.
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with rights of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - (Cust) ____________ Custodian (Minor) ______________ under
Uniform Gifts to Minors Act (State)
____________________
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________
_______________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE, OR
ASSIGNEE
________________________________________________________________________________
____________________________________________________ shares of the capital stock
represented by and within Certificate and does hereby irrevocably
constitute and appoint _________________________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
DATED ____________________________ SIGNED_____________________
SIGNED_____________________
NOTICE: The signature(s) to
this assignment must
conform with the name as
written upon the face of
the certificate in every
particular, without
alteration or enlargement
or any change whatsoever.
IMPORTANT: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 1, 1998, is entered
into between Technisource, Inc., a Florida corporation (the "Company"), and
Joseph W. Collard (the "Executive").
RECITALS
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key founding officer of the Company, and
consequently has approved the terms and conditions of the continued employment
of Executive as set forth herein and has authorized the execution and delivery
of this Agreement.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall terminate at the close of business on
December 31, 2002, subject to earlier termination in accordance with Section 9
hereof and the other terms, provisions, and conditions set forth herein.
3. DUTIES. Executive shall serve as and have the title of President and Chief
Executive Officer of the Company. Executive agrees to devote substantially his
entire time, energy, and skills to such employment while so employed.
4. COMPENSATION.
(a) Base Compensation. The Company shall pay Executive, and Executive
agrees to accept, base compensation at the rate of not less than $170,000 per
year in equal, monthly installments commencing as of June 1, 1998, through the
term of this Agreement ("Base Compensation"). The Base Compensation specified in
this Section 4(a) may be increased at any time during the term of this Agreement
in the discretion of the Board of Directors and will be reviewed no less
frequently than during the first quarter of each calendar year beginning in
1999. No increase in the Base Compensation pursuant to this Section 4(a) shall
at any time operate as a cancellation of this Agreement; any such increase shall
operate merely as an amendment hereof, without any further action by Executive
or the Company. If any such increase or increases shall be so authorized, all of
the terms, provisions and conditions of this Agreement shall remain in effect as
herein provided,
<PAGE>
except that the Base Compensation set forth in this Section 4(a) shall be deemed
amended to set forth the higher amount of such Base Compensation to Executive.
(b) Bonus Compensation. The Company shall pay Executive an
annual bonus ("Bonus Compensation") within 90 days following the end of each
fiscal year of the Company during the term of Executive's employment under this
Agreement. The amount of Executive's Bonus Compensation shall be determined by
the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year.
5. FRINGE BENEFITS.
(a) GENERALLY. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, automobile allowance and compensation, which
matters shall be governed exclusively by the terms hereof.
(b) VACATION. During the term of this Agreement, Executive
shall be entitled to five (5) weeks paid vacation per calendar year and any
vacation time not taken during any calendar year shall be carried over into
subsequent calendar years; provided that no more than four (4) weeks paid
vacation may be carried over into subsequent years.
(c) AUTOMOBILE. The Company shall provide Executive with full
use of an automobile, appropriate for Executive's position and title, for
Executive's business and personal use, which automobile shall be replaced at
least every three years. The Company agrees to provide adequate insurance for
the automobile and occupants and to pay all maintenance and operating costs
appropriate or necessary to maintain such automobile in prime operating
condition.
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred, but Executive shall be entitled to not less than
first-class for air travel. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment
<PAGE>
under the provision so indicated, and (iii) if the termination date is other
than the date of receipt of such notice, specifies the termination date, which
date shall not be more than sixty (60) calendar days after the giving of such
notice. The death or disability of Executive shall in no event be deemed a
termination of employment by Executive.
(a) MUTUAL. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) DEATH. In the event of the death of Executive, the Company
may terminate Executive's employment under this Agreement.
(c) DISABILITY. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred eighty
(180) days, then the Company may, upon sixty (60) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) CAUSE. Executive's employment under this Agreement may be
terminated by the Company, with or without Cause as herein defined upon giving
Executive sixty (60) days written notice. For purposes of this Agreement, the
term "Cause" shall mean the termination of the Executive by the Board of
Directors of the Company as a result of the existence or occurrence of one or
more of the following conditions or events:
(i) An act or acts of fraud, misappropriation, or embezzlement on the
Executive's part that result in or are intended to result in his personal
enrichment at the expense of the Company or its subsidiaries or affiliates.
(ii) Conviction of a felony that (a) arises in connection with the
Company's business and (b) has a material adverse effect on the Company's
business.
(iii) The Executive's willful or intentional failure to perform his
duties as required under this Agreement; provided, that the Company shall
provide Executive with written notice of such failure and Executive shall have
thirty (30) days from the date Executive receives such notice to remedy such
failure to perform.
(e) CHANGE OF CONTROL. In the event of a "Change in Control"
(as defined in this Section 7(e)), Executive may elect, at any time during the
180-day period immediately following such Change in Control, to deliver 60 days'
written notice to the Company of his termination of employment hereunder.
Termination of Executive's employment under this Agreement pursuant to the
provisions of the preceding sentence shall be deemed a termination without Cause
for purposes of Section 9 hereof and shall not be deemed to be a voluntary
resignation or termination by Executive. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred when:
3
<PAGE>
(i) any person, including a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, who owns less than 20% of the
Company's capital stock on the date hereof, becomes the beneficial owner of
twenty-five percent or more of the capital stock of the Company;
(ii) the Company is merged with or into any other company where members
of the board of directors of the Company immediately prior to such transaction
do not constitute a majority of the board of directors of the Company of the
surviving entity immediately following such transaction, or substantially all of
the Company's assets are acquired by any other company; or
(iv) three or more directors nominated by the Board of Directors to
serve as a director, each having agreed to serve in such capacity, fail to be
elected in a contested election of directors.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives): (i) Executive's Base Compensation, unused vacation
entitlement, and other benefits until December 31, 2002; and (ii) Executive's
Bonus Compensation payable under Section 4 and Executive's Annual Stock Options
for the fiscal year in which Executive's termination occurred, as if Executive
had been employed by the Company for the full fiscal year.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) WITH CAUSE OR VOLUNTARY RESIGNATION. If Executive is
terminated for Cause (as defined in Section 7(d) of this Agreement), or if
Executive voluntarily terminates his employment by the Company, the Company
shall pay Executive, within five (5) business days after the date of
termination, Executive's Base Compensation, unused vacation entitlement and all
expenses in connection with Executive's use of the automobile under Section 5(c)
hereof through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) WITHOUT CAUSE OR DUE TO CHANGE OF CONTROL. If terminated
by the Company without Cause or by the Executive as a result of a Change of
Control, Executive shall receive the Base Compensation, Bonus Compensation,
Annual Stock Options, and the other benefits under this Agreement until the
later to occur of (x) the date thirty-six (36) months from the date of such
termination and (y) December 31, 2002.
4
<PAGE>
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, "know-how," prices,
suppliers, customers, costs or any knowledge or information with respect to
confidential or trade secrets of the Company, it being understood that such
confidential information does not include information that is publicly available
unless such information became publicly available as a result of a breach of
this Agreement. Executive acknowledges and agrees that all notes, records,
reports, sketches, plans, unpublished memoranda or other documents belonging to
the Company, but held by Executive, concerning any information relating to the
Company's business, whether confidential or not, are the property of the Company
and will be promptly delivered to it upon Executive's leaving the employ of the
Company. Executive also agrees to execute such confidentiality agreements that
the Board may adopt, and may modify from time to time, as a standard form to be
executed by all employees of the Company, to the extent such standard forms are
not materially more restrictive than the provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is providing IT consultant staffing and services. Executive shall
take such steps as are deemed necessary to maintain complete and current records
of the Intellectual Property conceived by the Executive, and Executive shall
assign to the Company or its designees, the entire right, title and interest in
said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent (other than as the holder of not more than 10% of the total
outstanding stock of any company the securities of which are traded on a regular
basis on recognized securities exchanges):
5
<PAGE>
(a) while employed under this Agreement and for any period
during which Executive is receiving payments from the Company (pursuant to
Section 8 hereof) following a termination as a result of Employee's Disability,
(i) work for (in any capacity, including without limitation director, officer or
employee) any other business or IT staffing company that competes with the
Company and is located in the United States or within 50 miles of any branch
office of the Company, or (ii) recruit, or otherwise influence or attempt to
induce employees of the Company to leave the employment of the Company; and
(b) for the one-year period immediately following the
termination of this Agreement due to the expiration of the term of this
Agreement, termination of Executive for Cause, or Executive's voluntary
resignation; and for the one-year period immediately following the last date on
which Employee shall receive payments from the Company pursuant to Section 8
hereof following a termination of employment as a result of Employee's
Disability, work for a company or business (in any capacity, including without
limitation as director, officer, or employee) that is in the business of
providing IT consultant staffing or services, that competes with the Company and
is located in the United States or within 50 miles of any branch office of the
Company.
Executive has carefully read and considered the provisions of Sections
10, 11, and 12 hereof and agrees that the restrictions set forth in such
sections are fair and reasonable and are reasonably required for the protection
of the interests of the Company, its officers, directors, shareholders, and
other employees, for the protection of the business of the Company, and to
ensure that Executive devotes his full-time and efforts to the business of the
Company. Executive acknowledges that he is qualified to engage in businesses
other than those that are subject to this Section 12. It is the belief of the
parties, therefore, that the best protection that can be given to the Company
that does not in any way infringe upon the rights of Executive to engage in any
unrelated businesses is to provide for the restrictions described above. In view
of the substantial harm which would result from a breach by Executive of
Sections 10, 11 and 12, the parties agree that the restrictions contained
therein shall be enforced to the maximum extent permitted by law. In the event
that any of said restrictions shall be held unenforceable by any court of
competent jurisdiction, the parties hereto agree that it is their desire that
such court shall substitute a reasonable judicially enforceable limitation in
place of any limitation deemed unenforceable and that as so modified, the
covenant shall be as fully enforceable as if it had been set forth herein by the
parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the Company if
the covenants contained in Sections 10, 11 and 12 were not complied with in
accordance with their terms. Accordingly, Executive agrees that the Company
shall be entitled to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedy which may be
available to the
6
<PAGE>
Company, and that the Company shall be entitled to receive from Executive
reimbursement for reasonable attorneys' fees and expenses incurred by the
Company in enforcing these provisions.
14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Attention: Chairman of the Compensation Committee
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the
Company and Executive, and the Company and Executive hereby acknowledge and
agree that this Agreement supersedes any prior statements, writings, promises,
understandings or commitments.
(b) No future oral statements, promises or commitments with
respect to the subject matter hereof, or other purported modification hereof,
shall be binding upon the parties hereto unless the same is reduced to writing
and signed by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the Executive is not the prevailing party each party shall pay its
own legal fees and expenses except that if such contest is the result of a
claimed breach of Section 10, 11 or 12, and the Company shall be the prevailing
party, the Executive shall pay the reasonable legal fees and expenses of the
Company. The
7
<PAGE>
determination of the prevailing party in any contest shall be made by the
tribunal which shall resolve such contest, or by the parties if such contest is
settled without resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the
laws of the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or the interpretation
of this Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be
sent postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, and enforceable provision which comes closest to the intent of the
parties.
(f) This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation
By:/S/ JAMES F. ROBERTSON
- -------------------------------
Its: Executive Vice President
/S/ JOSEPH W. COLLARD
- -------------------------------
Joseph W. Collard
9
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 1, 1998, is entered
into between Technisource, Inc., a Florida corporation (the "Company"), and
James F. Robertson (the "Executive").
RECITALS
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key founding officer of the Company, and
consequently has approved the terms and conditions of the continued employment
of Executive as set forth herein and has authorized the execution and delivery
of this Agreement.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall terminate at the close of business on
December 31, 2002, subject to earlier termination in accordance with Section 9
hereof and the other terms, provisions, and conditions set forth herein.
3. DUTIES. Executive shall serve as and have the title of Executive Vice
President and Chief Operating Officer of the Company. Executive agrees to devote
substantially his entire time, energy, and skills to such employment while so
employed.
4. COMPENSATION.
(a) BASE COMPENSATION. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$160,000 per year in equal, monthly installments commencing as of June 1, 1998,
through the term of this Agreement ("Base Compensation"). The Base Compensation
specified in this Section 4(a) may be increased at any time during the term of
this Agreement in the discretion of the Board of Directors and will be reviewed
no less frequently than during the first quarter of each calendar year beginning
in 1999. No increase in the Base Compensation pursuant to this Section 4(a)
shall at any time operate as a cancellation of this Agreement; any such increase
shall operate merely as an amendment hereof, without any further action by
Executive or the Company. If any such increase or increases shall be so
authorized, all of
<PAGE>
the terms, provisions and conditions of this Agreement shall remain in effect as
herein provided, except that the Base Compensation set forth in this Section
4(a) shall be deemed amended to set forth the higher amount of such Base
Compensation to Executive.
(b) BONUS COMPENSATION. The Company shall pay Executive an
annual bonus ("Bonus Compensation") within 90 days following the end of each
fiscal year of the Company during the term of Executive's employment under this
Agreement. The amount of Executive's Bonus Compensation shall be determined by
the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year.
5. FRINGE BENEFITS.
(a) GENERALLY. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, automobile allowance and compensation, which
matters shall be governed exclusively by the terms hereof.
(b) VACATION. During the term of this Agreement, Executive
shall be entitled to five (5) weeks paid vacation per calendar year and any
vacation time not taken during any calendar year shall be carried over into
subsequent calendar years; provided that no more than four (4) weeks paid
vacation may be carried over into subsequent years.
(c) AUTOMOBILE. The Company shall provide Executive with full
use of an automobile, appropriate for Executive's position and title, for
Executive's business and personal use, which automobile shall be replaced at
least every three years. The Company agrees to provide adequate insurance for
the automobile and occupants and to pay all maintenance and operating costs
appropriate or necessary to maintain such automobile in prime operating
condition.
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred, but Executive shall be entitled to not less than
first-class for air travel. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the
<PAGE>
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date, which date shall not be more than sixty (60) calendar days
after the giving of such notice. The death or disability of Executive shall in
no event be deemed a termination of employment by Executive.
(a) MUTUAL. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) DEATH. In the event of the death of Executive, the Company
may terminate Executive's employment under this Agreement.
(c) DISABILITY. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred eighty
(180) days, then the Company may, upon sixty (60) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) CAUSE. Executive's employment under this Agreement may be
terminated by the Company, with or without Cause as herein defined upon giving
Executive sixty (60) days written notice. For purposes of this Agreement, the
term "Cause" shall mean the termination of the Executive by the Board of
Directors of the Company as a result of the existence or occurrence of one or
more of the following conditions or events:
(i) An act or acts of fraud, misappropriation, or
embezzlement on the Executive's part that result in or are intended to result in
his personal enrichment at the expense of the Company or its subsidiaries or
affiliates.
(ii) Conviction of a felony that (a) arises in
connection with the Company's business and (b) has a material adverse effect on
the Company's business.
(iii) The Executive's willful or intentional failure
to perform his duties as required under this Agreement; provided, that the
Company shall provide Executive with written notice of such failure and
Executive shall have thirty (30) days from the date Executive receives such
notice to remedy such failure to perform.
(e) CHANGE OF CONTROL. In the event of a "Change in Control"
(as defined in this Section 7(e)), Executive may elect, at any time during the
180-day period immediately following such Change in Control, to deliver 60 days'
written notice to the Company of his termination of employment hereunder.
Termination of Executive's employment under this Agreement pursuant to the
provisions of the preceding sentence shall be deemed a termination without Cause
for purposes of Section 9 hereof and shall not be deemed to be a voluntary
resignation or termination by
3
<PAGE>
Executive. For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred when:
(i) any person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, who owns
less than 20% of the Company's capital stock on the date hereof, becomes the
beneficial owner of twenty-five percent or more of the capital stock of the
Company;
(ii) the Company is merged with or into any other
company where members of the board of directors of the Company immediately prior
to such transaction do not constitute a majority of the board of directors of
the Company of the surviving entity immediately following such transaction, or
substantially all of the Company's assets are acquired by any other company; or
(iv) three or more directors nominated by the Board
of Directors to serve as a director, each having agreed to serve in such
capacity, fail to be elected in a contested election of directors.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives): (i) Executive's Base Compensation, unused vacation
entitlement, and other benefits until December 31, 2002; and (ii) Executive's
Bonus Compensation payable under Section 4 and Executive's Annual Stock Options
for the fiscal year in which Executive's termination occurred, as if Executive
had been employed by the Company for the full fiscal year.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) WITH CAUSE OR VOLUNTARY RESIGNATION. If Executive is
terminated for Cause (as defined in Section 7(d) of this Agreement), or if
Executive voluntarily terminates his employment by the Company, the Company
shall pay Executive, within five (5) business days after the date of
termination, Executive's Base Compensation, unused vacation entitlement and all
expenses in connection with Executive's use of the automobile under Section 5(c)
hereof through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) WITHOUT CAUSE OR DUE TO CHANGE OF CONTROL. If terminated
by the Company without Cause or by the Executive as a result of a Change of
Control, Executive shall receive the
4
<PAGE>
Base Compensation, Bonus Compensation, Annual Stock Options, and the other
benefits under this Agreement until the later to occur of (x) the date
thirty-six (36) months from the date of such termination and (y) December 31,
2002.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, "know-how," prices,
suppliers, customers, costs or any knowledge or information with respect to
confidential or trade secrets of the Company, it being understood that such
confidential information does not include information that is publicly available
unless such information became publicly available as a result of a breach of
this Agreement. Executive acknowledges and agrees that all notes, records,
reports, sketches, plans, unpublished memoranda or other documents belonging to
the Company, but held by Executive, concerning any information relating to the
Company's business, whether confidential or not, are the property of the Company
and will be promptly delivered to it upon Executive's leaving the employ of the
Company. Executive also agrees to execute such confidentiality agreements that
the Board may adopt, and may modify from time to time, as a standard form to be
executed by all employees of the Company, to the extent such standard forms are
not materially more restrictive than the provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is providing IT consultant staffing and services. Executive shall
take such steps as are deemed necessary to maintain complete and current records
of the Intellectual Property conceived by the Executive, and Executive shall
assign to the Company or its designees, the entire right, title and interest in
said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred
5
<PAGE>
to herein, Executive covenants and agrees that Executive will not, directly or
indirectly, whether as principal, agent, trustee or through the agency of any
corporation, partnership, association or agent (other than as the holder of not
more than 10% of the total outstanding stock of any company the securities of
which are traded on a regular basis on recognized securities exchanges):
(a) while employed under this Agreement and for any period
during which Executive is receiving payments from the Company (pursuant to
Section 8 hereof) following a termination as a result of Employee's Disability,
(i) work for (in any capacity, including without limitation director, officer or
employee) any other business or IT staffing company that competes with the
Company and is located in the United States or within 50 miles of any branch
office of the Company, or (ii) recruit, or otherwise influence or attempt to
induce employees of the Company to leave the employment of the Company; and
(b) for the one-year period immediately following the
termination of this Agreement due to the expiration of the term of this
Agreement, termination of Executive for Cause, or Executive's voluntary
resignation; and for the one-year period immediately following the last date on
which Employee shall receive payments from the Company pursuant to Section 8
hereof following a termination of employment as a result of Employee's
Disability, work for a company or business (in any capacity, including without
limitation as director, officer, or employee) that is in the business of
providing IT consultant staffing or services, that competes with the Company and
is located in the United States or within 50 miles of any branch office of the
Company.
Executive has carefully read and considered the provisions of Sections
10, 11, and 12 hereof and agrees that the restrictions set forth in such
sections are fair and reasonable and are reasonably required for the protection
of the interests of the Company, its officers, directors, shareholders, and
other employees, for the protection of the business of the Company, and to
ensure that Executive devotes his full-time and efforts to the business of the
Company. Executive acknowledges that he is qualified to engage in businesses
other than those that are subject to this Section 12. It is the belief of the
parties, therefore, that the best protection that can be given to the Company
that does not in any way infringe upon the rights of Executive to engage in any
unrelated businesses is to provide for the restrictions described above. In view
of the substantial harm which would result from a breach by Executive of
Sections 10, 11 and 12, the parties agree that the restrictions contained
therein shall be enforced to the maximum extent permitted by law. In the event
that any of said restrictions shall be held unenforceable by any court of
competent jurisdiction, the parties hereto agree that it is their desire that
such court shall substitute a reasonable judicially enforceable limitation in
place of any limitation deemed unenforceable and that as so modified, the
covenant shall be as fully enforceable as if it had been set forth herein by the
parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that
6
<PAGE>
monetary damages would not provide an adequate remedy to the Company if the
covenants contained in Sections 10, 11 and 12 were not complied with in
accordance with their terms. Accordingly, Executive agrees that the Company
shall be entitled to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedy which may be
available to the Company, and that the Company shall be entitled to receive from
Executive reimbursement for reasonable attorneys' fees and expenses incurred by
the Company in enforcing these provisions.
14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Attention: Chairman of the Compensation Committee
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the
Company and Executive, and the Company and Executive hereby acknowledge and
agree that this Agreement supersedes any prior statements, writings, promises,
understandings or commitments.
(b) No future oral statements, promises or commitments with
respect to the subject matter hereof, or other purported modification hereof,
shall be binding upon the parties hereto unless the same is reduced to writing
and signed by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each
7
<PAGE>
case plus interest, provided that the Executive is the prevailing party in any
such contest. If the Executive is not the prevailing party each party shall pay
its own legal fees and expenses except that if such contest is the result of a
claimed breach of Section 10, 11 or 12, and the Company shall be the prevailing
party, the Executive shall pay the reasonable legal fees and expenses of the
Company. The determination of the prevailing party in any contest shall be made
by the tribunal which shall resolve such contest, or by the parties if such
contest is settled without resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the
laws of the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or the interpretation
of this Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be
sent postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, and enforceable provision which comes closest to the intent of the
parties.
(f) This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation
By: /S/ JOSEPH W. COLLARD
-------------------------------------------
Its: President
/S/ JAMES F. ROBERTSON
-----------------------------------------------
James F. Robertson
9
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of November 11, 1997, is entered
into between Technisource, Inc., a Florida corporation (the "Company"), and John
Morton (the "Executive").
RECITALS
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key officer of the Company, and
consequently has approved the terms and conditions of the continued employment
of Executive as set forth herein and has authorized the execution and delivery
of this Agreement.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall continue for a period of three years,
subject to earlier termination in accordance with Section 9 hereof and the other
terms, provisions, and conditions set forth herein. Sixty days prior to the end
of the term of the Agreement (or any renewal term), either the Company or the
Employee may give notice to the other of its determination not to renew this
Agreement. If a notice of non-renewal is not delivered, this Agreement will
automatically continue in effect for successive one (1) year renewal terms. If
such notice of non-renewal is given by any party, then Executive's employment
will terminate at the end of such term (or on such other date as the parties
mutually agree).
3. DUTIES. Executive shall serve as and have the title of Vice President of
Finance and Chief Operating Officer of the Company. Executive agrees to devote
substantially his entire time, energy, and skills to such employment while so
employed.
4. COMPENSATION.
(a) BASE COMPENSATION. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$110,000 per year in equal, monthly installments from the effective date hereof
through the end of the term of this Agreement ("Base Compensation"). The Base
Compensation specified in this Section 4(a) may be increased at any time
<PAGE>
during the term of this Agreement in the discretion of the Board of Directors
and will be reviewed no less frequently than during the first quarter of each
calendar year beginning in 1999. No increase in the Base Compensation pursuant
to this Section 4(a) shall at any time operate as a cancellation of this
Agreement; any such increase shall operate merely as an amendment hereof,
without any further action by Executive or the Company. If any such increase or
increases shall be so authorized, all of the terms, provisions and conditions of
this Agreement shall remain in effect as herein provided, except that the Base
Compensation set forth in this Section 4(a) shall be deemed amended to set forth
the higher amount of such Base Compensation to Executive.
(b) BONUS COMPENSATION. Executive shall be eligible for an
annual bonus ("Bonus Compensation") payable within 90 days following the end of
each fiscal year of the Company during the term of Executive's employment under
this Agreement. The amount of Executive's Bonus Compensation shall be determined
by the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year.
(c) ANNUAL STOCK OPTIONS. Executive shall be eligible to
receive an annual stock option award (the "Annual Stock Options") following each
fiscal year of the Company in amounts, at such exercise prices, and on such
terms as the Board of Directors determines, based upon the performance of the
Executive and the Company during such fiscal year.
(d) STOCK OPTION AWARD. The Company has awarded Executive a
stock options on the terms and in the form attached hereto as Exhibit A.
5. FRINGE BENEFITS.
(a) GENERALLY. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, and compensation, which matters shall be governed
exclusively by the terms hereof.
(b) VACATION. During the term of this Agreement, Executive
shall be entitled to four (4) weeks paid vacation per calendar year and any
vacation time not taken during any calendar year shall not be carried over into
subsequent calendar years.
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
<PAGE>
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date, which date shall not be more than sixty (60)
calendar days after the giving of such notice. The death or disability of
Executive shall in no event be deemed a termination of employment by Executive.
(a) MUTUAL. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) DEATH. In the event of the death of Executive, the Company
may terminate Executive's employment under this Agreement.
(c) DISABILITY. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred twenty
(120) days, then the Company may, upon thirty (30) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) CAUSE. Executive's employment under this Agreement may be
terminated by the Company, with or without Cause as herein defined upon giving
Executive thirty (30) days written notice. For purposes of this Agreement, the
term "Cause" shall mean the termination of the Executive by the Board of
Directors of the Company as a result of the existence or occurrence of one or
more of the following conditions or events:
(i) An act or acts of fraud, misappropriation, or
embezzlement on the Executive's part that result in or are intended to result in
his personal enrichment at the expense of the Company or its subsidiaries or
affiliates.
(ii) Conviction of a felony involving moral turpitude
or violation of securities laws.
(iii) The Executive's willful or intentional failure
to perform his duties as required under this Agreement; provided, that the
Company shall provide Executive with written notice of such failure and
Executive shall have ten (10) days from the date Executive receives such notice
to remedy such failure to perform.
(iv) Any material breach of the terms of this
Agreement by Executive.
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<PAGE>
(v) Substantial and continuing neglect or inattention
by Executive of or to the duties described in Section 3 hereof.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives) the payments and benefits indicated below:
(a) TERMINATION DUE TO DEATH. In the event of Executive's death, this
Agreement shall terminate immediately, and the Company shall pay to Executive's
estate or legal representative Executive's Base Compensation through the date of
Executive's death. Subject to Section 5(b), this Agreement does not obligate the
Company to make any other payment to Executive's estate or legal representative
in the event of the Executive's death.
(b) DISABILITY. In the event of Executive's Disability, from and after
the Disability Date, Executive shall receive, instead of his Base Compensation
or any other compensation payable by the Company under this Agreement, the
disability benefits to which Executive is entitled under any and all disability
benefit plans provided by or made available to Executive by the Company.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) WITH CAUSE OR VOLUNTARY RESIGNATION. If Executive is
terminated for Cause (as defined in Section 7(d) of this Agreement), or if
Executive voluntarily terminates his employment by the Company, the Company
shall pay Executive, within five (5) business days after the date of
termination, Executive's Base Compensation, unused vacation entitlement and all
expenses in connection with Executive's use of the automobile under Section 5(c)
hereof through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) WITHOUT CAUSE. If terminated by the Company without Cause,
Executive shall receive the Base Compensation, Bonus Compensation, Annual Stock
Options, and the other benefits under this Agreement until the later to occur of
the date twelve (12) months from the date of such termination and the end of the
term (or any renewal term) of this Agreement.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period
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of five (5) years immediately following the date of termination of this
Agreement, Executive agrees not to disclose or use any confidential information,
including without limitation, information regarding research, developments,
"know-how," prices, suppliers, customers, costs or any knowledge or information
with respect to confidential or trade secrets of the Company, it being
understood that such confidential information does not include information that
is publicly available unless such information became publicly available as a
result of a breach of this Agreement. Executive acknowledges and agrees that all
notes, records, reports, sketches, plans, unpublished memoranda or other
documents belonging to the Company, but held by Executive, concerning any
information relating to the Company's business, whether confidential or not, are
the property of the Company and will be promptly delivered to it upon
Executive's leaving the employ of the Company. Executive also agrees to execute
such confidentiality agreements that the Board may adopt, and may modify from
time to time, as a standard form to be executed by all employees of the Company,
to the extent such standard forms are not materially more restrictive than the
provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is providing IT consultant staffing and services. Executive shall
take such steps as are deemed necessary to maintain complete and current records
of the Intellectual Property conceived by the Executive, and Executive shall
assign to the Company or its designees, the entire right, title and interest in
said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent (other than as the holder of not more than 10% of the total
outstanding stock of any company the securities of which are traded on a regular
basis on recognized securities exchanges):
(a) while employed under this Agreement and for any period
during which Executive is receiving payments from the Company (pursuant to
Section 8 hereof) following a termination as a result of Employee's Disability,
(i) work for (in any capacity, including without
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limitation director, officer or employee) any other business or IT staffing
company that competes with the Company and is located in the United States or
within 50 miles of any branch office of the Company, or (ii) recruit, or
otherwise influence or attempt to induce employees of the Company to leave the
employment of the Company; and
(b) for the two-year period immediately following the
termination of this Agreement due to the expiration of the term of this
Agreement, termination of Executive for Cause, or Executive's voluntary
resignation; and for the two year period immediately following the last date on
which Employee shall receive payments from the Company pursuant to Section 8
hereof following a termination of employment as a result of Employee's
Disability, work for a company or business (in any capacity, including without
limitation as director, officer, or employee) that is in the business of
providing IT consultant staffing or services that competes with the Company and
is located in the United States or within 50 miles of any branch office of the
Company.
Executive has carefully read and considered the provisions of Sections
10, 11, and 12 hereof and agrees that the restrictions set forth in such
sections are fair and reasonable and are reasonably required for the protection
of the interests of the Company, its officers, directors, shareholders, and
other employees, for the protection of the business of the Company, and to
ensure that Executive devotes his full-time and efforts to the business of the
Company. Executive acknowledges that he is qualified to engage in businesses
other than those that are subject to this Section 12. It is the belief of the
parties, therefore, that the best protection that can be given to the Company
that does not in any way infringe upon the rights of Executive to engage in any
unrelated businesses is to provide for the restrictions described above. In view
of the substantial harm which would result from a breach by Executive of
Sections 10, 11 and 12, the parties agree that the restrictions contained
therein shall be enforced to the maximum extent permitted by law. In the event
that any of said restrictions shall be held unenforceable by any court of
competent jurisdiction, the parties hereto agree that it is their desire that
such court shall substitute a reasonable judicially enforceable limitation in
place of any limitation deemed unenforceable and that as so modified, the
covenant shall be as fully enforceable as if it had been set forth herein by the
parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the Company if
the covenants contained in Sections 10, 11 and 12 were not complied with in
accordance with their terms. Accordingly, Executive agrees that the Company
shall be entitled to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedy which may be
available to the Company, and that the Company shall be entitled to receive from
Executive reimbursement for reasonable attorneys' fees and expenses incurred by
the Company in enforcing these provisions.
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14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Attention: President
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the
Company and Executive, and the Company and Executive hereby acknowledge and
agree that this Agreement supersedes any prior statements, writings, promises,
understandings or commitments.
(b) No future oral statements, promises or commitments with
respect to the subject matter hereof, or other purported modification hereof,
shall be binding upon the parties hereto unless the same is reduced to writing
and signed by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the Executive is not the prevailing party each party shall pay its
own legal fees and expenses except that if such contest is the result of a
claimed breach of Section 10, 11 or 12, and the Company shall be the prevailing
party, the Executive shall pay the reasonable legal fees and expenses of the
Company. The determination of the prevailing party in any contest shall be made
by the tribunal which shall resolve such contest, or by the parties if such
contest is settled without resort to any such tribunal.
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18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the
laws of the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or the interpretation
of this Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be
sent postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, and enforceable provision which comes closest to the intent of the
parties.
(f) This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation
By: /s/ Joseph W. Collard
--------------------------------------------
Its: President
/s/ John Morton
------------------------------------------------
John Morton
9
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 1, 1998, is entered
into between Technisource, Inc., a Florida corporation (the "Company"), and Paul
Cozza (the "Executive").
RECITALS
A. Executive is currently employed by the Company as a senior
executive officer and is an integral part of its management.
The Board of Directors of the Company recognizes the Executive
as a key officer of the Company, and consequently has approved
the terms and conditions of the continued employment of
Executive as set forth herein and has authorized the execution
and delivery of this Agreement.
B. Executive was has been employed by the Company pursuant to a
letter agreement dated October 23, 1993 (the "Old Agreement").
This Agreement supersedes and replaces in its entirety the Old
Agreement with respect to the terms and conditions of
Executive's employment by the Company. Upon the effective date
of this Agreement, the Old Agreement shall be deemed
terminated and of no further force and effect.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall continue for a period of three years,
subject to earlier termination in accordance with Section 9 hereof and the other
terms, provisions, and conditions set forth herein. Sixty days prior to the end
of the term of the Agreement (or any renewal term), either the Company or the
Employee may give notice to the other of its determination not to renew this
Agreement. If a notice of non-renewal is not delivered, this Agreement will
automatically continue in effect for successive one (1) year renewal terms. If
such notice of non-renewal is given by any party, then Executive's employment
will terminate at the end of such term (or on such other date as the parties
mutually agree).
<PAGE>
3. DUTIES. Executive shall serve as and have the title of Vice President of
Sales and Director of National Sales of the Company; provided that the Company
may change Executive's duties and titles such that Executive serves as a
Regional Sales Manager. Executive agrees to devote substantially his entire
time, energy, and skills to such employment while so employed.
4. COMPENSATION.
(a) BASE COMPENSATION. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$175,000 per year in equal, monthly installments through the term of this
Agreement ("Base Compensation"). The Base Compensation specified in this Section
4(a) may be increased at any time during the term of this Agreement in the
discretion of the Board of Directors and will be reviewed no less frequently
than during the first quarter of each calendar year beginning in 1999. No
increase in the Base Compensation pursuant to this Section 4(a) shall at any
time operate as a cancellation of this Agreement; any such increase shall
operate merely as an amendment hereof, without any further action by Executive
or the Company. If any such increase or increases shall be so authorized, all of
the terms, provisions and conditions of this Agreement shall remain in effect as
herein provided, except that the Base Compensation set forth in this Section
4(a) shall be deemed amended to set forth the higher amount of such Base
Compensation to Executive.
(b) BONUS COMPENSATION. Executive shall be eligible for an
annual bonus ("Bonus Compensation") payable within 90 days following the end of
each fiscal year of the Company during the term of Executive's employment under
this Agreement. The amount of Executive's Bonus Compensation shall be [formula
to be provided].
(c) ANNUAL STOCK OPTIONS. Executive shall be eligible to
receive an annual stock option award (the "Annual Stock Options") following each
fiscal year of the Company in amounts, at such exercise prices, and on such
terms as the Board of Directors determines, based upon the performance of the
Executive and the Company during such fiscal year.
(d) STOCK OPTION AWARD. The Company has awarded Executive
stock options on the terms and in the form attached hereto as Exhibit A.
5. FRINGE BENEFITS.
(a) GENERALLY. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, and compensation, which matters shall be governed
exclusively by the terms hereof.
(b) VACATION. During the term of this Agreement, Executive
shall be entitled to four (4) weeks paid vacation per calendar year and any
vacation time not taken during any calendar year shall not be carried over into
subsequent calendar years.
<PAGE>
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date, which date shall not be more than sixty (60)
calendar days after the giving of such notice. The death or disability of
Executive shall in no event be deemed a termination of employment by Executive.
(a) MUTUAL. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) DEATH. In the event of the death of Executive, the Company
may terminate Executive's employment under this Agreement.
(c) DISABILITY. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred twenty
(120) days, then the Company may, upon thirty (30) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) CAUSE. Executive's employment under this Agreement may be
terminated by the Company, with or without Cause as herein defined upon giving
Executive thirty (30) days written notice. For purposes of this Agreement, the
term "Cause" shall mean the termination of the Executive by the Board of
Directors of the Company as a result of the existence or occurrence of one or
more of the following conditions or events:
(i) An act or acts of fraud, misappropriation, or
embezzlement on the Executive's part that result in or are intended to result in
his personal enrichment at the expense of the Company or its subsidiaries or
affiliates.
(ii) Conviction of a felony involving moral turpitude
or violation of securities laws.
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(iii) The Executive's willful or intentional failure
to perform his duties as required under this Agreement; provided, that the
Company shall provide Executive with written notice of such failure and
Executive shall have ten (10) days from the date Executive receives such notice
to remedy such failure to perform.
(iv) Any material breach of the terms of this
Agreement by Executive.
(v) Substantial and continuing neglect or inattention
by Executive of or to the duties described in Section 3 hereof.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives) the payments and benefits indicated below:
(a) TERMINATION DUE TO DEATH. In the event of Executive's death, this
Agreement shall terminate immediately, and the Company shall pay to Executive's
estate or legal representative Executive's Base Compensation through the date of
Executive's death. Subject to Section 5(b), this Agreement does not obligate the
Company to make any other payment to Executive's estate or legal representative
in the event of the Executive's death.
(b) DISABILITY. In the event of Executive's Disability, from and after
the Disability Date, Executive shall receive, instead of his Base Compensation
or any other compensation payable by the Company under this Agreement, the
disability benefits to which Executive is entitled under any and all disability
benefit plans provided by or made available to Executive by the Company.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) WITH CAUSE OR VOLUNTARY RESIGNATION. If Executive is
terminated for Cause (as defined in Section 7(d) of this Agreement), or if
Executive voluntarily terminates his employment by the Company, the Company
shall pay Executive, within five (5) business days after the date of
termination, Executive's Base Compensation, unused vacation entitlement and all
expenses in connection with Executive's use of the automobile under Section 5(c)
hereof through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) WITHOUT CAUSE. If terminated by the Company without Cause,
Executive shall receive the Base Compensation, Bonus Compensation, Annual Stock
Options, and the other benefits
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under this Agreement until the later to occur of the date twelve (12) months
from the date of such termination and the end of the term (or any renewal term)
of this Agreement.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, "know-how," prices,
suppliers, customers, costs or any knowledge or information with respect to
confidential or trade secrets of the Company, it being understood that such
confidential information does not include information that is publicly available
unless such information became publicly available as a result of a breach of
this Agreement. Executive acknowledges and agrees that all notes, records,
reports, sketches, plans, unpublished memoranda or other documents belonging to
the Company, but held by Executive, concerning any information relating to the
Company's business, whether confidential or not, are the property of the Company
and will be promptly delivered to it upon Executive's leaving the employ of the
Company. Executive also agrees to execute such confidentiality agreements that
the Board may adopt, and may modify from time to time, as a standard form to be
executed by all employees of the Company, to the extent such standard forms are
not materially more restrictive than the provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is providing IT consultant staffing and services. Executive shall
take such steps as are deemed necessary to maintain complete and current records
of the Intellectual Property conceived by the Executive, and Executive shall
assign to the Company or its designees, the entire right, title and interest in
said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
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principal, agent, trustee or through the agency of any corporation, partnership,
association or agent (other than as the holder of not more than 10% of the total
outstanding stock of any company the securities of which are traded on a regular
basis on recognized securities exchanges):
(a) while employed under this Agreement and for any period
during which Executive is receiving payments from the Company (pursuant to
Section 8 hereof) following a termination as a result of Employee's Disability,
(i) work for (in any capacity, including without limitation director, officer or
employee) any other business or IT staffing company that competes with the
Company and is located in the United States or within 50 miles of any branch
office of the Company, or (ii) recruit, or otherwise influence or attempt to
induce employees of the Company to leave the employment of the Company; and
(b) for the two-year period immediately following the
termination of this Agreement due to the expiration of the term of this
Agreement, termination of Executive for Cause, or Executive's voluntary
resignation; and for the two year period immediately following the last date on
which Employee shall receive payments from the Company pursuant to Section 8
hereof following a termination of employment as a result of Employee's
Disability, work for a company or business (in any capacity, including without
limitation as director, officer, or employee) that is in the business of
providing IT consultant staffing or services that competes with the Company and
is located in the United States or within 50 miles of any branch office of the
Company.
Executive has carefully read and considered the provisions of Sections
10, 11, and 12 hereof and agrees that the restrictions set forth in such
sections are fair and reasonable and are reasonably required for the protection
of the interests of the Company, its officers, directors, shareholders, and
other employees, for the protection of the business of the Company, and to
ensure that Executive devotes his full-time and efforts to the business of the
Company. Executive acknowledges that he is qualified to engage in businesses
other than those that are subject to this Section 12. It is the belief of the
parties, therefore, that the best protection that can be given to the Company
that does not in any way infringe upon the rights of Executive to engage in any
unrelated businesses is to provide for the restrictions described above. In view
of the substantial harm which would result from a breach by Executive of
Sections 10, 11 and 12, the parties agree that the restrictions contained
therein shall be enforced to the maximum extent permitted by law. In the event
that any of said restrictions shall be held unenforceable by any court of
competent jurisdiction, the parties hereto agree that it is their desire that
such court shall substitute a reasonable judicially enforceable limitation in
place of any limitation deemed unenforceable and that as so modified, the
covenant shall be as fully enforceable as if it had been set forth herein by the
parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the Company if
the covenants contained
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in Sections 10, 11 and 12 were not complied with in accordance with their terms.
Accordingly, Executive agrees that the Company shall be entitled to injunctive
and other equitable relief to secure the enforcement of these provisions, in
addition to any other remedy which may be available to the Company, and that the
Company shall be entitled to receive from Executive reimbursement for reasonable
attorneys' fees and expenses incurred by the Company in enforcing these
provisions.
14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Attention: President
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the
Company and Executive, and the Company and Executive hereby acknowledge and
agree that this Agreement supersedes any prior statements, writings, promises,
understandings or commitments.
(b) No future oral statements, promises or commitments with
respect to the subject matter hereof, or other purported modification hereof,
shall be binding upon the parties hereto unless the same is reduced to writing
and signed by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the
7
<PAGE>
Executive is not the prevailing party each party shall pay its own legal fees
and expenses except that if such contest is the result of a claimed breach of
Section 10, 11 or 12, and the Company shall be the prevailing party, the
Executive shall pay the reasonable legal fees and expenses of the Company. The
determination of the prevailing party in any contest shall be made by the
tribunal which shall resolve such contest, or by the parties if such contest is
settled without resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the
laws of the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or the interpretation
of this Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be
sent postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, and enforceable provision which comes closest to the intent of the
parties.
(f) This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation
By: /S/ JOSEPH W. COLLARD
------------------------------------------
Its: President
/S/ PAUL COZZA
----------------------------------------------
Paul Cozza
9
LEASE
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the
31st day of January, 1998 by and between Highwoods/Florida Holdings, L.P.
("Landlord"), whose address for purposes hereof is 3440 Hollywood Boulevard,
Suite #420, Hollywood, Florida 33021 and Technisource, Inc., a Florida
corporation ("Tenant"), whose addresses for purposes hereof is 1901 W. Cypress
Creek Road, Fort Lauderdale, Florida 33309.
1. Subject to and upon the terms, provisions,
covenants and conditions set forth in this Lease, and each in
consideration of the duties, covenants and obligations of the
other hereunder, Landlord leases, demises and lets to Tenant
and Tenant leases, demises and lets from Landlord those
certain premises (the "Premises" or "Leased Premises") in the
building known as GULF-ATLANTIC CENTER (the "Building")
located at 1901 W. Cypress Creek Road, Fort Lauderdale,
Florida 33309 such Premises being more particularly described
as follows:
Suites 200, 202, 401 and 403, which is agreed by
Landlord and Tenant to consist of 16,191 square feet of Net
Rentable Area (defined below) located on the second (2nd) and
fourth (4th) floors of the Building as approximately reflected
on the floor plan attached as Exhibit "A".
The term "Net Rentable Area", as used herein, shall
refer to (i) in the case of a single tenancy floor, all space
measured from the inside surface of the outer glass of the
Building to the inside surface of the opposite outer wall,
excluding only the areas ("Service Areas") within the outside
walls used for building stairs, fire towers, elevator shafts,
flues, vents, pipe shafts and vertical ducts, but including
any such areas which are for the specific use of the
particular tenant such as special stairs or elevators, and
(ii) in the case of a multi-tenancy floor, all space within
the inside surface of the outer glass enclosing the tenant
occupied portion of the floor and measured to the midpoint of
the walls separating areas leased by or held for lease to
other tenants or from areas devoted to corridors, elevators
foyers, rest rooms and other similar facilities for the use of
all tenants on the particular floor ("Common Areas"), but
including a proportionate part of the Common Areas located on
such floor and in the Building, as described in the Standard
Method for Measuring Floor Area in Office Buildings, ANSI
Z65.1-1996, as promulgated by the Building Owners and Managers
Association (BOMA) International.
No deductions from Net Rentable Areas are made for
columns necessary to the Building. The Net Rentable Areas in
the Premises and in the Building have been calculated on the
basis of the foregoing definition, include a common area
factor, and are hereby stipulated above as to the Premises,
whether the same should be more or less as a result of minor
variations resulting from actual construction and completion
of the Premises for occupancy so long as such work is done
substantially in accordance with the approved plans.
TERM
2. This Lease shall be for the term of sixty (60)
calendar months (the "Lease Term" or "Term"), commencing on
May 1, 1998 (Commencement Date") unless sooner terminated or
extended as provided herein.
If Tenant, with Landlord's consent, shall occupy the
Premises prior to the beginning of the term as specified
above, all provisions of this Lease shall be in full force and
effect commencing upon such occupancy, and rent for such
period shall be paid by Tenant at the same rate herein
specified.
BASE RENT
3. Tenant shall pay Landlord a total "Base rent" of
One Million Thirty-Three Thousand Seven Hundred Ninety-Five
and 35/100 Dollars ($1,033,795.35) in monthly installments of,
and computed at, Base Rent Rates as follows:
<TABLE>
<CAPTION>
RATE PER AGREED
NET RENTABLE MONTHLY
LEASE MONTHS SQUARE FOOT INSTALLMENT TOTAL BASE RENT
------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 - 12 $11.79 $15,907.66 $190,891.89
13 - 24 $12.26 $16,541.81 $198,501.66
25 - 36 $12.75 $17,202.94 $206,435.25
37 - 48 $13.26 $17,891.06 $214,692.66
49 - 60 $13.79 $18,606.16 $223,273.89
</TABLE>
Each payment shall be without any offset or deduction
whatever, on or before the first day of the month, in lawful
(legal tender for public or private debts) money of the United
States of America, at the Management Office of the Building or
elsewhere as designated from time to time by Landlord's
written notice to Tenant.
In addition to Base Rent, Tenant shall pay to
Landlord each month a sum equal to any sales tax, tax on
rentals, and any other charges, taxes and/or impositions now
in existence or hereafter imposed based upon the privilege of
renting the space leased hereunder or upon the amount of
rentals collected therefor. Nothing herein shall, however, be
taken to
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Landlord/Tenant
<PAGE>
require Tenant to pay any part of any Federal and State Taxes
on income imposed upon Landlord.
If a Rent payment is not received within five (5)
business days after its due date, Landlord shall be entitled,
in addition to any other remedy that may be available, to an
administrative fee and late charge of five percent (5%) of the
rent payment or Two Hundred Dollars ($200.00), whichever
amount is greater.
ADDITIONAL RENT
3.A. In addition to the Base Rent, Tenant shall pay
to Landlord as "Additional Rent" "Tenant's proportionate
share" of the "Operating Expenses" and "Taxes". As used herein
the term:
(1) "Tenant's proportionate share" shall
mean the percentage which the Net Rentable Area then leased by
Tenant in the Building bears to the total Net Rentable Area
contained in the Building; Tenant's proportionate share is
specified to be 11.0%.
(2) "Operating Expenses" shall mean all
expenses, costs and disbursements, of every kind and nature
which Landlord shall pay or become obligated to pay because of
or in connection with the ownership, leasing, maintenance
and/or operation of the Building and Common Areas and land on
which they are located, (which shall not include cost of
individual tenant improvements or management cost associated
with leasing activities). By way of explanation and
clarification, but not by way of limitation, these Operating
Expenses will include the following:
(a) Wages and salaries of all
employees engaged in operation and maintenance of the
Building, employer's social security taxes, unemployment taxes
or insurance, and any other taxes which may be levied on such
wages and salaries, the cost of disability and hospitalization
insurance, pension or retirement benefits, and any other
fringe benefits for such employees.
(b) All supplies and materials used
in operation and maintenance of the Building.
(c) Cost of all utilities,
including water, sewer, electricity, gas and fuel oil used by
the Building and not charged directly to another tenant.
(d) Cost of Building management,
janitorial services, accounting and legal services, ground
lease payments, trash and garbage removal, servicing and
maintenance of all systems and equipment including, but not
limited to, elevators, plumbing, heating, air conditioning,
ventilating, lighting, electrical, security and fire alarms,
fire pumps, fire extinguishers and hose cabinets, mail chutes,
guard service, alarm system, painting, window cleaning,
landscaping and gardening.
(e) Cost of casualty and liability
insurance applicable to the Building and Landlord's personal
property used in connection therewith.
(f) Cost of capital improvements,
provided said capital improvements are intended to reduce
other Operating Expenses or are a result of government
requirements, excluding any such capital improvements required
to cure existing violations of law as of the date hereof. Said
capital improvements shall be amortized over their deemed
useful life.
(g) Costs arising from
implementation of Legal Requirements of Legal Authorities
(defined below).
Landlord agrees to maintain
accounting books and records reflecting Operating Expenses of
the Building in accordance with generally accepted accounting
principles.
(3) "Taxes" shall mean all impositions,
taxes, assessments (special or otherwise), water and sewer
charges and rents, and other governmental liens or charges of
any and every kind, nature and sort whatsoever, ordinary and
extraordinary, foreseen and unforeseen, and substitutes
therefor, including all taxes whatsoever (except only those
taxes of the following categories: any inheritance, estate
succession, transfer or gift taxes imposed upon Landlord or
any income taxes specifically payable by Landlord as a
separate tax paying entity without regard to Landlord's income
source as arising from or out of the Building and/or the land
on which it is located) attributable in any manner to the
Building, the land on which the Building is located, the
ground leasehold interest of Landlord, or the rents (however
the term may be defined) receivable therefrom or any part
thereof, or any use thereof, or any facility located therein
or thereon or used in conjunction therewith or any charge or
other payment required to be paid to any governmental
authority, whether or not any of the foregoing shall be
designated "real estate tax", "sales tax", "rental tax",
"excise tax", "business tax", or designated in any other
manner.
(4) Landlord shall notify Tenant within
thirty (30) days of the date hereof and within thirty (30)
days after the end of each calendar year hereafter ensuing
during the Term, of the amount which Landlord estimates (as
evidenced by budgets prepared by or on behalf of Landlord)
will be the amount of Tenant's proportionate share of
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Landlord/Tenant
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<PAGE>
Operating Expenses and Taxes for the then current calendar
year and Tenant shall pay such sum in advance to Landlord in
equal monthly installments, during the balance of said
calendar year, on the first day of each remaining month in
said calendar year commencing on the first day of the first
month following Tenant's receipt of such notification. Within
ninety (90) days following the end of each calendar year
during the Term hereof, Landlord shall submit to Tenant a
statement showing the actual amount which should have been
paid by Tenant with respect to Operating Expenses and Taxes
for the past calendar year, the amount thereof actually paid
during that year by Tenant and the amount of the resulting
balance due thereon, or overpayment thereof, as the case may
be. Within thirty (30) days after receipt by Tenant of said
statement, Tenant shall have the right in person to inspect
Landlord's books and records, at Landlord's office, during
normal business hours, after four days' prior written notice,
showing the Operating Expenses and Taxes for the Building for
the calendar year covered by said statement. Said statement
shall become final and conclusive between the parties, their
successors and assigns as to the matters set forth therein
unless Landlord receives written objections with respect
thereto within said thirty (30) day period. Any balance shown
to be due pursuant to said statement shall be paid by Tenant
to Landlord within thirty (30) days following Tenant's receipt
thereof and any overpayment shall be immediately credited
against Tenant's obligation to pay expected additional rent in
connection with anticipated increases in Operating Expenses
and Taxes or, if by reason of any termination of the Lease no
such future obligation exists, refunded to Tenant. Anything
herein to the contrary notwithstanding, Tenant shall not delay
or withhold payment of any balance shown to be due pursuant to
a statement rendered by Landlord to Tenant, pursuant to the
terms hereof, because of any objection which Tenant may raise
with respect thereto and Landlord shall immediately credit any
overpayment found to be owing to Tenant against Tenant's
proportionate share of Operating Expenses and Taxes for the
then current calendar year (and future calendar years, if
necessary) upon the resolution of said objection or, if at the
time of the resolution of said objection the Term has expired,
immediately refund to Tenant any overpayment found to be owing
to Tenant.
With respect to calendar year 1998, Landlord estimates the
Operating Expenses and Taxes to be $6.80 per rentable square
foot. Tenant's monthly payment for its proportionate share of
estimated Operating Expenses and Taxes shall be $9,174.90
("Additional Rent") exclusive of sales or other required
taxes.
B. Additional Rent due by reason of the provisions of
subsection 3A and this subsection 3B for the final months of
this Lease is due and payable even though it may not be
calculated until subsequent to the termination date of the
Lease; the Operating Expenses and Taxes for the calendar year
during which the Lease terminates shall be prorated according
to that portion of said calendar year that this Lease was
actually in effect. Tenant expressly agrees that Landlord, at
Landlord's sole discretion, may apply the security deposit
specified in section 5 hereof, if any, in full or partial
satisfaction of any additional rent due for the final month of
this Lease by reason of the provisions of subsection 3A and
this subsection 3B. If said security deposit is greater than
the amount of any such additional rent and there are no other
sums or amounts owed Landlord by Tenant by reason of any other
terms, provisions, covenants or conditions of this Lease, then
Landlord shall refund the balance of said security deposit to
Tenant as provided in section 5. Nothing herein contained
shall be construed to relieve Tenant, or imply that Tenant is
relieved, of the liability for or the obligation to pay any
Additional Rent due for the final month of this Lease by
reason of the provisions of subsection 3A and this subsection
3B if said security deposit is less than such Additional Rent,
nor shall Landlord be required to first apply said security
deposit to such Additional Rent if there are any other sums or
amounts owed Landlord by Tenant by reason of any other terms,
provisions, covenants or conditions of this Lease.
C. Any reference in this Lease to "Rent" or "rent"
includes Base Rent and Additional Rent.
TIME OF PAYMENT
4. Tenant shall promptly pay Base Rent, as the same
may be adjusted from time to time, and Additional Rent and
Charges for work performed on order of Tenant, and any other
charges that accrue under this Lease, at the times and place
stated in this Lease.
SECURITY DEPOSIT
5. Tenant, concurrently with the execution of this
Lease, has deposited with Landlord the sum of One Thousand
Eight Hundred Seventy-six and 75/100 Dollars ($1,876.75), the
receipt of which is acknowledged by Landlord, which sum shall
be retained by Landlord as security for the payment by Tenant
of the rents and all other payments herein agreed to be paid
by Tenant, and for the faithful performance by Tenant of the
terms, provisions, covenants and conditions of this Lease. It
is agreed that Landlord, at Landlord's option, may at the time
of any default by Tenant under any of the terms, provisions,
covenants or conditions of the Lease apply said sum or any
part thereof toward the payment of the rents and all other
sums payable by Tenant under this Lease, and towards the
performance of each and every one of Tenant's covenants under
this Lease, but such covenants and Tenant's liability under
this Lease shall thereby be discharged only pro tanto; that
Tenant shall remain liable for any amounts that such sum shall
be insufficient to pay; that Landlord does utilize any of the
security deposit during the Term, Tenant shall immediately
repay such amount so that the security deposit shall remain in
the total amount described above; that Landlord may exhaust
any and all rights and remedies against Tenant before
resorting to said sum, but nothing herein contained shall
require or be deemed to require Landlord to do so; that, in
the event this deposit shall not be utilized for any such
purposes, then such deposit shall be returned by Landlord to
Tenant within thirty (30) days next after the expiration of
the Term or the determination and
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Landlord/Tenant
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<PAGE>
payment of the amount due under section 4 of this Lease, if
any, whichever later occurs. Landlord shall not be required to
pay Tenant any interest on said security deposit.
USE
6. Tenant will use and occupy the Premises for the
following use or purpose and for no other use or purpose:
GENERAL OFFICE.
QUIET ENJOYMENT
7. Upon payment by Tenant of the rents herein
provided, and upon the observance and performance of all
terms, provisions, covenants and conditions on Tenant's part
to be observed and performed, Tenant shall, subject to all of
the terms, provisions, covenants and conditions of this Lease,
peaceably and quietly hold and enjoy the Premises for the
Term.
INSURANCE PREMIUMS
8. If Landlord's insurance premiums exceed the
standard premium rates because the nature of Tenant's
operation results in extra hazardous exposure, then Tenant
shall, upon receipt of appropriate invoices from Landlord,
reimburse Landlord for such increase in premiums. It is
understood and agreed between the parties hereto that any such
increase in premiums shall be considered as rent due and shall
be included in any lien for rent.
RULES AND REGULATIONS
9. Tenant agrees to comply with all rules and
regulations Landlord may adopt from time to time for operation
of the Building and parking facilities and protection and
welfare of Building and Parking facilities, its tenants,
visitors and occupants. The present rules and regulations,
which Tenant hereby agrees to comply with, entitled "Rules and
Regulations" are attached to this Lease. Any future rules and
regulations shall become a part of this Lease, and Tenant
hereby agrees to comply with the same upon delivery of a copy
thereof to Tenant providing the same do not materially deprive
Tenant of its rights established under this Lease.
GOVERNMENTAL REQUIREMENTS
10. Tenant shall faithfully observe in the use of the
Premises all Legal Requirements of all Legal Authorities. For
the purposes of this Lease, "Legal Requirements" means any
law, statute, code, rule, regulation, ordinance, order,
judgment, decree, writ, injunction, franchise, permit,
certificate, license (including any beer, wine, or liquor
license), authorization, registration, or other direction or
requirement of any Legal Authority, which is now or in the
future applicable to the Premises, including those not within
the present contemplation of the parties and "Legal Authority"
means any domestic or foreign federal, state, county,
municipal, or other government or governmental or
quasi-governmental department, commission, board, bureau,
court, agency, or instrumentality having jurisdiction or
authority over Landlord, Tenant and/or all or any part of the
Premises.
Tenant shall:
A. neither cause nor permit the Premises to
be used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce, or process
Hazardous Materials, except in compliance with all Legal
Requirements;
B. neither cause nor permit a release or
threatened release of Hazardous Materials onto the Premises or
any other property as a result of any intentional or
unintentional act or omission on the part of Tenant;
C. comply with all applicable Legal
Requirements related to Hazardous Materials;
D. conduct and complete all investigations,
studies, sampling, and testing, and all remedial, removal, and
other actions on, from, or affecting the Premises in
accordance with such applicable Legal Requirements and to the
satisfaction of Landlord;
E. upon the expiration or termination of
this Lease, deliver the Premises to Landlord free of all
Hazardous Materials; and
F. defend, indemnify, and hold harmless
Landlord and Landlord's employees and other agents and other
agents from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses of any
kind or nature, known or unknown, contingent or otherwise
(including, without limitation, accountants' and attorneys'
fees (including fees for the services of paralegals and
similar persons), consultant fees, investigation and
laboratory fees, court costs, and litigation expenses at the
trial and all appellate levels), arising out of, or in any way
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Landlord/Tenant
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<PAGE>
related to (a) the presence, disposal, release, or threatened
release, by or caused by Tenant or its agents, of any
Hazardous Materials which are on, from, or affecting the soil,
water, vegetation, buildings, personal property, persons,
animals or otherwise; (b) any personal injury, including
wrongful death, or damage to property, real or personal,
arising out of or related to such Hazardous Materials; (c) any
lawsuit brought, threatened, or settled by Legal Authorities
or other parties, or order by Legal Authorities, related to
such Hazardous Materials; and/or (d) any violation of Legal
Requirements related in any way to such Hazardous Materials.
The provisions of this Section shall survive the expiration or
termination of this Lease. Hazardous materials are any oil and
petroleum products and their byproducts, asbestos,
polychlorobiphenols, flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or
toxic substances, or related materials as defined under any
Legal Requirements, including, without limitation, the
following statutes and the regulations promulgated under their
authority: (a) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
ss.ss. 9601 et seq.); (b) the Hazardous Materials
Transportation Act, as amended (49 U.S.C. ss.ss. 1801 et
seq.); (c) the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. ss.ss. 6901 et seq.); and (d) the Water
Pollution and Control Act, as amended (33 U.S.C. 1317 et
seq.).
SERVICES
11. Landlord will furnish the following services to
Tenant:
A. Cleaning services, deemed by Landlord to be
normal and usual in comparable office buildings, on Monday
through Friday, except that shampooing and replacement of
carpet as required by Tenant shall be Tenant's expense.
B. Automatically operated elevator service, public
stairs, electrical current for lighting, incidentals and
normal office use, and water at those points of supply
provided for general use of its tenants at all times and on
all days throughout the year.
C. Air conditioning on Monday through Friday from
8:00 a.m. to 6:00 p.m. and Saturday 9:00 a.m. to 1:00 p.m.
except Martin Luther King Jr.'s Birthday, Memorial Day, Fourth
of July, Labor Day, Thanksgiving Day, Christmas Day and New
Year's Day. Landlord shall also furnish air conditioning at
such other times as are not provided for herein, provided
Tenant gives written request to Landlord before 2 p.m. of the
business day preceding the extra usage and if Tenant requires
heat and air conditioning during such hours. Tenant shall be
billed for such service at the rate of $25.00 per hour (per
floor) and said rate may be changed with thirty (30) days'
prior written notice. Tenant's monthly bill shall include a
detailed calculation of any such charges.
No electric current shall be used except that
furnished or approved by Landlord, nor shall electric cable or
wire be brought into the Premises, except upon the written
consent and approval of Landlord. Tenant shall use only office
machines and equipment that operate on the Building's standard
electric circuits, but which in no event shall overload the
Building's standard electric circuits from which Tenant
obtains electric current. Any consumption of electric current
in excess of 4.0 watts per square foot or in excess of that
considered by Landlord to be usual, normal and customary for
all Tenants, or which require special circuits or equipment
(the installation of which shall be at Tenant's expense after
approval in writing by Landlord) shall be paid for by Tenant
as Additional Rent paid to Landlord in an amount to be
determined by Landlord based upon Landlord's estimated cost of
such excess electric current consumption or based upon the
actual cost thereof if such excess electric current
consumption is separately metered.
Such services shall be provided as long as Tenant
is not in default under any of the terms, provisions,
covenants and conditions of this Lease, subject to
interruption caused by repairs, renewals, improvements,
changes to service, alterations, strikes, lockouts, labor
controversies, inability to obtain fuel or power, accidents,
breakdowns, catastrophes, national or local emergencies,
hurricanes, natural disasters, windstorms, acts of God and
conditions and cause beyond the control of Landlord, and upon
such happening, no claim for damages or abatement of rent for
failure to furnish any such services shall be made by Tenant
or allowed by Landlord.
TENANT IMPROVEMENTS
12. Improvements, if any, to be
made to the Premises by Landlord are specifically set forth in
the Work Letter attached as Exhibit "B" and thereto are no
others. All leasehold improvements (as distinguished from
trade fixtures and apparatus) installed in the Premises at any
time, whether by or on behalf of Tenant or by or on behalf of
Landlord, shall not be removed from the Premises at any time,
unless such removal is consented to in advance by Landlord;
and at the expiration of this Lease (either on the Termination
Date or upon such earlier termination as provided in this
Lease), all such leasehold improvements shall be deemed to be
part of the Premises, and title thereto shall vest solely in
Landlord without payment of any nature to Tenant. All trade
fixtures and apparatus (as distinguished from leasehold
improvements) owned by Tenant and installed in the Premises
shall remain the property of Tenant and shall be removable at
any time, including upon the expiration of the Term; provided
Tenant shall not at such time be in default of any terms or
covenants of this Lease, and provided further, that Tenant
shall repair any damage to the Premises caused by the removal
of said trade fixtures and apparatus and shall restore the
Premises to
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Landlord/Tenant
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<PAGE>
substantially the same condition as existed prior to the
installation of said trade fixtures and apparatus. The taking
of possession by Tenant (or any permitted assignee or
subtenant of Tenant) of all or any portion of the Premises for
the conduct of business will be deemed conclusive evidence
that Tenant has found the Premises, and all of their fixtures
and equipment, acceptable.
TENANT WORK
12A. Any charges against Tenant by Landlord for
services or for work done on the Premises by order of Tenant,
or otherwise accruing under this Lease, shall be considered as
rent due and shall be included in any lien for rent.
REPAIR OF LEASED PREMISES
13. Tenant shall, at Tenant's own expense, keep the
Premises in good repair and tenantable condition during the
Term and shall replace at its own expense any and all broken
glass caused by Tenant in and about the Premises. Tenant shall
make no alterations, additions or improvements in or to the
Premises without the written consent of Landlord, which shall
not be unreasonably withheld, but may be predicated upon but
not limited to Tenant's use of contractors who are acceptable
to Landlord; and all additions, fixtures, carpet or
improvements, except only movable office furniture, shall be
the property of Landlord from date of location in the Premises
and shall remain a part of the Premises at the expiration of
this Lease.
It is further agreed that this Lease is made by
Landlord and accepted by Tenant with the distinct
understanding and agreement that Landlord shall have the right
and privilege to make and build additions to the Building of
which the Premises are a part, and make such alterations and
repairs to said Building as it may deem wise and advisable
without any liability to the Tenant therefor.
INDEMNIFICATION
14. Tenant further agrees that Tenant will pay all
liens of contractors, subcontractors, mechanics, laborers,
materialmen, and other items of like character, and will
indemnify Landlord against all expenses, costs, and charges,
including bond premiums for release of liens and attorneys'
fees and costs reasonably incurred in and about the defense of
any suit in discharging the said Premises or any part thereof
from any liens, judgments, or encumbrances caused or suffered
by Tenant. In the event any such lien shall be made or filed,
Tenant shall bond against or discharge the same within ten
(10) days after the same has been made or filed. It is
understood and agreed between the parties hereto that the
expenses, costs and charges above referred to shall be
considered as rent due and shall be included in any lien for
rent.
Tenant herein shall not have any authority to create
any liens for labor or materials on Landlord's interest in the
Premises and all persons contracting with Tenant for the
destruction or removal of any facilities or other improvements
or for the erection, installation, alteration, or repair of
any facilities or other improvements on or about the Premises,
and all materialmen, contractors, subcontractors, mechanics,
and laborers are hereby charged with notice that they must
look only to Tenant and to Tenant's interests in the Premises
to secure the payment of any bill for work done or material
furnished at the request or instruction of Tenant.
PARKING
15. Landlord shall provide Tenant sixty-four (64)
unassigned parking spaces at Zero Dollars ($0.00) per space
per month. Landlord reserves the right to increase the charge
for parking at any time by giving Tenant written notice.
Tenant shall comply with Landlord's procedures and policies in
operating the Building parking areas. Landlord shall not be
liable for any damage of any nature whatsoever to, or any
theft of, automobiles or other vehicles or the contents of
them, while in or about Building parking areas.
ESTOPPEL STATEMENT
16. From time to time, upon not less than ten (10)
days prior request by Landlord, Tenant shall deliver to
Landlord a statement in writing certifying (a) that this Lease
is unmodified and in full force and effect (or, if there have
been modifications, that the Lease as modified is in full
force and effect and stating the modifications); (b) the dates
to which the rent and other charges have been paid; (c) that
Landlord is not in default under any provisions of this Lease
or, if in default, the nature thereof in detail; and (d) such
other matters pertaining to the Lease as Landlord may request.
It is intended that any such statement delivered pursuant to
this section may be relied upon by any prospective purchaser
or mortgagee and their respective successors and assigns and
Tenant shall be liable for all loss, cost or expense resulting
from the failure of any sale or funding of any loan caused by
any failure to furnish the estoppel statement or misstatement
contained in such estoppel statement. Tenant hereby
irrevocably appoints Landlord as attorney-in-fact for Tenant
with full power and authority to execute and deliver in the
name of Tenant such estoppel certificate if Tenant fails to
deliver the same within ten (10) days of Landlord's request
therefor. This appointment is a power coupled with interest
and is a material inducement to Landlord to enter into this
Lease.
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SUBORDINATION
17. If the Building and/or Premises are at any time
subject to a mortgage and/or deed of trust or ground lease,
and Tenant has received written notice from Mortgagee or
ground lessor of same, then in any instance in which Tenant
gives notice to Landlord alleging default by Landlord
hereunder, Tenant will also simultaneously give a copy of such
notice to each Landlord's Mortgagee and/or ground lessor and
each Landlord's Mortgagee and/or ground lessor shall have the
right (but not the obligation) to cure or remedy such default
during the period that is permitted to Landlord hereunder,
plus an additional period of thirty (30) days, and Tenant will
accept such curative or remedial action (if any) taken by
Landlord's Mortgagee and/or ground lessor with the same effect
as if such action had been taken by Landlord.
This Lease shall be subject and subordinate to any
mortgage and/or ground lease now or hereafter encumbering the
Building. This provision shall be self-operative without the
execution of any further instruments. Notwithstanding the
foregoing, however, Tenant hereby agrees to execute any
instrument(s) which Landlord may deem desirable to evidence
the subordination of this Lease to any and all such mortgages
and/or ground lease.
ATTORNMENT
18. If the interests of Landlord under this Lease
shall be transferred voluntarily or by reason of foreclosure
or other proceedings for enforcement of any mortgage and/or
ground lease on the Premises, Tenant shall be bound to such
transferee (herein sometimes called the "Purchaser") for the
remaining balance of the Term, and any extensions or renewals
thereof which may be effective in accordance with the terms
and provisions hereof with the same force and effect as if the
Purchaser were Landlord under this Lease, and Tenant does
hereby agree to attorn to the Purchaser, including the
Mortgagee under any such mortgage and/or lessor under any such
ground lease if it be the Purchaser, as its Landlord, said
attornment to be effective and self-operative without the
execution of any further instruments upon the Purchaser
succeeding to the interest of Landlord under this Lease. The
respective rights and obligations of Tenant and the Purchaser
upon such attornment, to the extent of the then remaining
balance of the Term of this Lease and any such extensions and
renewals, shall be and are the same as those set forth herein.
In the event of such transfer of Landlord's interests,
Landlord shall be released and relieved from all liability and
responsibility thereafter accruing to Tenant under this Lease
or otherwise and Landlord's successor by acceptance of rent
from Tenant hereunder shall become liable and responsible to
Tenant in respect in all obligations of the Landlord under
this Lease.
ASSIGNMENT
19. Without the written consent of Landlord first
obtained in each case, Tenant shall not sublease, assign,
transfer, mortgage, pledge, or otherwise encumber or dispose
of this Lease or underlet the Premises or any part thereof or
permit the Premises to be occupied by other persons. Transfer
of ownership interests in Tenant shall be deemed an assignment
for purposes of this section. In the case of a subletting,
Landlord's consent may be predicated, among other things, upon
Landlord becoming entitled to collect and retain all rentals
payable under the sublease. If this Lease be assigned, or if
the Premises or any part thereof be underlet or occupied by
anybody other than Tenant, Landlord may, after default by
Tenant, collect or accept rent from the assignee, undertenant,
or occupant and apply the net amount collected or accepted to
the rent herein reserved, but no such collection or acceptance
shall be deemed a waiver of this covenant or the acceptance of
the assignee, undertenant, or occupant as Tenant, nor shall it
be construed as or implied to be a release of Tenant from the
further observance and performance by Tenant of the terms,
provisions, covenants and conditions herein contained.
In lieu of consenting or not consenting, Landlord may
at its option (i) in the case of the proposed assignment or
subletting of Tenant's entire leasehold interest, terminate
this lease in its entirety, or (ii) in the case of the
proposed assignment or subletting of a portion of the
Premises, terminate this Lease as to that portion of the
Premises which Tenant has proposed to assign or sublet. In the
event Landlord elects to terminate this Lease pursuant to
Clause (ii) of this section, Tenant's obligations as to Base
Rent and Additional Rent shall be reduced in the same
proportion that the Net Rentable Area of the portion of the
Premises taken by the proposed assignee or subtenant bears to
the total Net Rentable Area of the Premises.
SUCCESSORS AND ASSIGNS
20. All terms, provisions, covenants and conditions
to be observed and performed by Tenant shall be applicable to
and binding upon Tenant's respective heirs, administrators,
executors, successors and assigns, subject, however, to the
restrictions as to assignment or subletting by Tenant as
provided herein. All expressed covenants of this Lease shall
be deemed to be covenants running with the land.
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HOLD HARMLESS OF LANDLORD
21. In consideration of said Premises being leased to
Tenant for the above rent, Tenant agrees that Tenant, at all
times, shall indemnify and keep Landlord harmless from all
losses, damages, liabilities and expenses, which may arise or
be claimed against Landlord and be in favor of any persons,
firms or corporations, consequent upon or arising from the use
of occupancy of the Premises by Tenant, or consequent upon or
arising from any acts, omissions, neglect or fault of Tenant,
his agents, servants, employees, licensees, visitors,
customers, patrons or invitees, or consequent upon or arising
from Tenant's failure to comply with any laws, statutes,
ordinances, codes or regulations as herein provided; that
Landlord shall not be liable to Tenant for any damages, losses
or injuries to the persons or property of Tenant which may be
caused by the acts, neglect, omissions or faults of any
persons, firms or corporations, except when such injury, loss
or damage results from gross negligence of Landlord, his
agents or employees, and that Tenant will indemnify and keep
harmless Landlord from all damages, liabilities, losses,
injuries, or expenses which may arise or be claimed against
Landlord and be in favor of any persons, firms or
corporations, for any injuries or damages to the person or
property of any persons, firms or corporations, where said
injuries or damages arose about or upon said Premises as a
result of the negligence of Tenant, his agents, employees,
servants, licensees, visitors, customers, patrons, and
invitees. All personal property placed or moved into the
Premises or Building shall be at the risk of Tenant or the
owner thereof, and Landlord shall not be liable to Tenant for
any damage to said personal property. Tenant shall maintain at
all times during the Term an insurance policy or policies in
an amount or amounts sufficient, in Landlord's opinion, to
indemnify Landlord or pay Landlord's damages, if any,
resulting from any matters set forth in this section.
In case Landlord shall be made a party to any
litigation commenced against Tenant, then Tenant shall protect
and hold Landlord harmless and shall pay all costs, expenses
and reasonable attorneys' fees incurred or paid by Landlord in
connection with such litigation and any appeal thereof.
ATTORNEYS' FEES
22. If either party defaults in the performance of
any of the terms, provisions, covenants and conditions of this
Lease and by reason thereof the other party employees the
services of an attorney to enforce performance of the
covenants, or to perform any service based upon defaults, then
in any of said events the prevailing party shall be entitled
to reasonable attorneys' fees and all expenses and costs
incurred by the prevailing party pertaining thereto (including
costs and fees relating to any appeal) and in enforcement of
any remedy. Tenant shall be responsible to pay Landlord's
attorneys' fees for enforcement of Tenant's obligations under
this Lease, whether suit be brought or not.
DAMAGE OR DESTRUCTION
23. In the event all or part of the Premises shall be
destroyed or so damaged or injured by fire, windstorm,
hurricane, natural disaster, or other casualty, during the
Term, whereby the same shall be rendered untenantable, then
Landlord shall have the right, but not the obligation, to
render such Premises tenantable by repairs within 360 days
therefrom; Landlord shall have the further right, at its
election, to cancel this Lease as to all or the untenantable
portion of the Premises.
Landlord agrees that, within 60 days following damage
or destruction, it shall notify Tenant with respect to whether
or not Landlord intends to restore the Premises. If said
Premises are not rendered tenantable within the aforesaid 360
days it shall be optional with either party hereto, no later
than the date that Premises are in fact rendered tenantable,
to cancel this Lease as to the tenantable portion, and in the
event of such cancellation the rent shall be paid only to the
date of such fire or casualty. The cancellation herein
mentioned shall be evidenced in writing. During any time that
all or a portion of the Premises are untenantable due to
causes set forth in this Section, the Base Rent or a just and
fair proportion thereof shall be abated.
Notwithstanding the foregoing, (a) should damage or
destruction occur during the last twelve months of the Term,
either Landlord or Tenant shall have the option to terminate
this Lease as to the untenantable portion of the Premises,
effective on the date of damage or destruction, provided
notice to terminate is given within 30 days of the date of
such damage or destruction; (b) should damage, destruction or
injury occur by reason of Tenant's negligence, Landlord shall
have the right, but not the obligation, to render the Premises
tenantable within 360 days of the date of damage, destruction
or injury and no abatement of Rent shall occur and Tenant
shall not have such option to terminate.
INSURANCE
23A. The Landlord assumes no
liability or responsibility whatsoever with respect to the
conduct and operation of the business to be conducted in the
Premises. The Landlord shall not be liable for any accident to
or injury to any person or persons or property in or about the
Premises or the Project which are caused by the conduct and
operation of said business or by virtue of equipment or
property of the Tenant in said Premises. The Tenant agrees to
hold the Landlord harmless against all such claims.
(1) Tenant shall, at
Tenant's sole expense, obtain and keep in force
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during the Term and any extension or renewal hereof: (i) fire
and extended coverage insurance with vandalism and malicious
mischief endorsements and a sprinkler leakage endorsement
(where applicable), on all of its personal property, including
removable trade fixtures, located in the Premises, and on all
leasehold improvements and any future additions and
improvements made by Tenant; and (ii) comprehensive general
liability insurance, including contractual liability coverage,
insuring Landlord (as an additional insured) and Tenant
against any liability arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas
appurtenant thereto.
(2) Said insurance shall be
with insurance companies approved by Landlord, which approval
shall not be unreasonably withheld. Such companies shall be
responsible insurance carriers authorized to issue the
relevant insurance, authorized to do business in Florida and
at least A-rated in the most current edition of BEST'S
INSURANCE Reports. Comprehensive general liability insurance,
including contractual liability coverage, shall have minimum
limits of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) for
any loss of or damage to property from any one accident, and
ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) for death of or
injury to any one person from any one accident. Fire and
extended coverage insurance with vandalism and malicious
mischief endorsements and a sprinkler leakage endorsement
shall have limits not less than the replacement cost of all
property (personal or otherwise) and capital improvements in
the premises. The limits of said insurance shall not, however,
limit the liability of the Tenant hereunder. The policies
cannot contain provisions which deny coverage because the loss
is due to the fault of Landlord or Tenant. If Tenant shall
fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain same, but at
the expense of Tenant. Tenant shall deliver to Landlord, prior
to occupancy of the Premises, copies of policies of liability
insurance required herein, or certificates evidencing the
existence and amounts of such insurance, with loss payable
clauses satisfactory to Landlord. No policy shall be
cancelable or subject to reduction of coverage except after
thirty (30) days prior written notice to Landlord.
Notwithstanding anything herein to the contrary, Landlord
shall have the right to review the Tenant's insurance once
every year and to reasonably require Tenant to alter its
insurance coverage to cover the effects of inflation and to
include or eliminate certain provisions in the Tenant's
insurance policy which reflect the then-current industry
standards for this type of insurance coverage.
EMINENT DOMAIN
24. If there shall be taken during the Term any part
of the Premises, parking facilities or Building, other than a
part not interfering with maintenance, operations, or use of
the Building, Landlord may elect to terminate this Lease or to
continue same in effect. If Landlord elects to continue the
Lease, the rent shall be reduced in proportion to the area of
the Premises so taken and Landlord shall repair any damage to
the Premises, resulting from such taking. If any part of the
Premises is taken by condemnation or Eminent Domain which
renders the Premises unsuitable for its intended use, the
Tenant may elect to terminate this Lease, or if any part of
the Premises is so taken which does not render the Premises
unsuitable for its intended use, this Lease shall continue in
effect and the rental shall be reduced in proportion to the
area of the Premises so taken and Landlord shall repair any
damage to the Premises resulting from such taking. If all of
the Premises is taken by condemnation or Eminent Domain, this
Lease shall terminate on the date of the taking. All sums
awarded (or agreed upon between Landlord and the condemning
authority) for the taking of the interest of Landlord and/or
Tenant, whether as damages or as compensation, and whether for
partial or total condemnation, will be the property of
Landlord. If this Lease should be terminated under any
provisions of this section, Rent shall be payable up to the
date that possession is taken by the authority, and Landlord
will refund to Tenant any prepaid unaccrued Rent less any sum
or amount then owing by Tenant to Landlord.
ABANDONMENT
25. If, during the Term, Tenant shall abandon, vacate
or remove from the Premises the major portion of the goods,
wares, equipment or furnishings usually kept on said Premises,
or shall cease doing business in the Premises, or shall suffer
the rent to be in arrears, Landlord may, at its option,
declare a default of this Lease and seek remedies in the
manner stated in Section 27 hereof, or Landlord may enter the
Premises as the agent of Tenant by force or otherwise, without
being liable in any way therefor and relet the Premises with
or without any furniture that may be therein, as the agent of
Tenant, at such price and upon such terms and for such
duration of time as Landlord may determine, and receive the
rent therefor, applying the same to the payment of Rent, and
if the full Rent shall not be realized by Landlord over the
expenses to Landlord of such reletting, Tenant shall pay any
deficiency.
DEFAULT
26. The occurrence of any of the following during the
Term shall constitute an Event of Default by Tenant:
A. Tenant shall fail to pay when due Base Rent,
Additional Rent or any under charges that accrue under this
Lease;
B. Tenant shall fail to pay when due any other sums,
fees, charges, costs, or expenses which are payable under this
Lease;
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C. Tenant shall, other than in the manner permitted
under this Lease, make or permit or suffer to occur any
assignment (including any transfer of interest in Tenant which
is deemed to be an assignment under this Lease), sublease or
occupancy arrangement, conveyance, transfer, conditional or
collateral assignment, pledge, hypothecation, or other
encumbrance, whether by operation of law or otherwise, of this
Lease or any interest in this Lease;
D. Tenant shall fail in any other way in the
performance or observance of any of the non-material terms and
conditions of this Lease and within ten (10) days shall not
have cured such default or, if impossible of cure within such
time but possible of cure within sixty (60) days, begun and
diligently pursued such cure to completion;
E. There shall be filed by or against Tenant or any
Guarantor of this Lease in any court or other tribunal a
petition in bankruptcy or insolvency proceedings or for
reorganization or for the appointment of a receiver or trustee
of all or substantially all of Tenant's, or any Guarantor's,
property, unless such petition shall be filed against Tenant
or any Guarantor of this Lease and Tenant or such Guarantor
shall in good faith promptly thereafter commence and
diligently prosecute any and all proceedings appropriate to
secure the dismissal of such petition and shall secure such
dismissal within thirty (30) days of its filing;
F. Tenant or any Guarantor of this Lease shall be
adjudicated a bankrupt or an insolvent or take the benefit of
any federal reorganization or composition proceeding, make an
assignment for the benefit of creditors, or take the benefit
of an insolvency law;
G. A trustee in bankruptcy or a receiver shall be
appointed or elected or had for Tenant or any Guarantor of
this Lease, whether under federal or state laws;
H. Tenant's interest under this Lease shall be sold
under any execution or process of law;
I. The Premises shall be abandoned or deserted or
Tenant shall fail to make continuous use of the Premises for
one (1) month for the Use; or
J. Tenant shall fail to maintain current, duly issued
occupational licenses, or any other permit or license required
by an applicable legal authority for its operations at the
Premises or Tenant shall fail to meet the insurance
requirements of this Lease and provide Certificates of
Insurance (and policies if requested) evidencing such
compliance.
REMEDIES
27. A. In the event of the occurrence of an Event of
Default by Tenant, Landlord, at Landlord's option, may elect
to do one or more of the following:
(1) Accelerate all of the remaining
Rent for the Term, in which event all Rent shall become
immediately due and payable;
(2) Terminate this Lease as
provided by this Section and re-enter the Premises and remove
all persons and property from the Premises, either by summary
proceedings or by any other suitable action or proceeding at
law, or otherwise; or
(3) Without terminating this Lease,
re-enter the Premises and remove all persons and property from
the Premises, either by summary proceedings or by any other
suitable action or proceeding at law, or otherwise, and relet
all or any part of the Premises.
B. If Landlord elects to terminate this
Lease:
(1) Landlord shall give notice of
such termination, which shall take effect ten (10) days after
such notice is given, or such greater number of days as is set
forth in such notice, fully and completely as if the effective
date of such termination were the date originally set forth in
this Lease for the expiration of the Term;
(2) Tenant shall quit and
peacefully surrender the Premises to Landlord, without any
payment by Landlord for doing so, on or before the effective
date of termination; and
(3) All Rent, including all Base
Rent and Additional Rent (including arrearages), shall become
due and shall be paid up to the effective date of termination,
together with such expenses, including attorneys' fees, as
Landlord shall incur in connection with such termination.
C. No receipts of monies by Landlord from
Tenant after termination of this Lease shall reinstate,
continue, or extend the Term, affect any Notice previously
given by Landlord to Tenant, or operate as a waiver of the
right of Landlord to enforce the payment of Rent.
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D. If Landlord shall terminate this Lease,
Landlord shall be entitled to retain, free of trust, all sums
then held by Landlord pursuant to any of the provisions of
this Lease. In the interim following such termination until
the retention of such sums by Landlord free of trust, such
sums shall be available to Landlord, but not to Tenant,
pursuant to and for the purposes provided by the terms and
conditions of this Lease.
E. In the event of any re-entry and/or
dispossession by summary proceedings or otherwise without
termination of this Lease:
(1) All Rent shall become due and
shall be paid up to the time of such re-entry and/or
dispossession, together with such expenses, including
attorneys' fees, as Landlord shall incur in connection with
such re-entry and/or dispossession by summary proceedings or
otherwise; and
(2) All Rent for the remainder of
the Term may be accelerated and due in full, the collection of
such sums being subject to the provisions of Subsection F,
below; and
(3) Landlord may relet all or any
part of the Premises, either in the name of Landlord or
otherwise, for a term or terms which may, at Landlord's
option, be equal to, less than, or greater than the period
which would otherwise have constituted the balance of the
Term. In connection with such reletting:
(a) Tenant or Tenant's
representative shall pay, as Additional Rent, to Landlord, as
they are incurred by Landlord, such reasonable expenses as
Landlord may incur in connection with reletting, including,
without limitation, legal expenses, attorneys' fees, brokerage
commissions, and expenses incurred in altering, repairing, and
putting the Premises in good order and condition and in
preparing the Premises for reletting;
(b) Tenant or Tenant's
representative shall pay to Landlord, in monthly installments
on the due dates for Rent payments for each month of the
balance of the Term, the amount by which any Rent payment
exceeds the net amount, if any, of the rents for such period
collected on account of the reletting of the Premises; any
suit brought to collect such amount for any month or months
shall not prejudice in any way the rights of Landlord to
collect the deficiency for any subsequent month or months by a
similar action or proceeding;
(c) At Landlord's option
exercised at any time, Landlord shall be entitled to recover
immediately from Tenant, in addition to any other proper
claims, but in lieu of and not in addition to any amount which
would thereafter become payable under the preceding
subsection, a sum equal to the amount by which the sum of the
Rent for the balance of the Term, compound discounted at a
reasonable rate selected by Landlord to its then-present
worth, exceeds the net rental value of the Premises, compound
discounted at the same annual rate to its then-present worth,
for the balance of the Term. In determining such net rental
value of the Premises, the rent realized by any reletting of
the Premises, if such reletting is upon terms (other than
rental amounts) generally comparable to the terms of this
Lease, shall be deemed to be such net rental value; and
(d) At Landlord's option,
Landlord may make such alterations and/or decorations in or
upon the Premises as Landlord, in Landlord's sole judgment,
considers advisable and necessary for the purpose of reletting
the Premises; the making of such alterations and/or
decorations shall not operate or be construed to release
Tenant from liability under this Section; the cost of all such
alterations and/or decorations shall be paid by Tenant to
Landlord as Additional Rent.
F. Landlord shall have, receive, and enjoy
as Landlord's sole and absolute property, any and all sums
collected by Landlord as rent or otherwise upon reletting the
Premises after Landlord shall resume possession of the
Premises as provided by this Lease, including, without
limitation, any amounts by which the sum or sums so collected
shall exceed the continuing liability of Tenant under this
Lease. If Landlord shall have accelerated Rent payments and
collected same from Tenant, and subsequently shall have relet
the Premises, then Landlord, after deducting all costs related
to reletting, including, but not limited to, those described
or anticipated in this Section, shall pay to Tenant the amount
remaining which is collected as Rent for each month, to the
extent Landlord shall have previously received the Rent for
such month from Tenant.
G. Landlord and Tenant agree that after the
commencement of suit for possession of the Premises or after
final order or judgment for the possession of the Premises,
Landlord may demand, receive, and collect any monies due or
coming due without in any manner affecting such suit, order,
or judgment. All such monies collected shall be deemed to be
payments on account of the use and occupation of the Premises,
or, at the election of Landlord, on account of Tenant's
liability under this Lease.
H. The words "re-enter" and "re-entry", as
used in this Section, are not and shall not be restricted to
their technical legal meaning, but are used in the broadest
sense.
I. Tenant waives all rights of redemption
which may otherwise be provided by any legal
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requirement in the event that Landlord shall, because of the
occurrence of an Event of Default by Tenant, obtain possession
of the Premises under legal proceedings, or pursuant to
present or future law or to the terms and conditions of this
Lease.
J. Landlord, in addition to other rights and
remedies it may have, shall have the right to (a) keep in
place and use all of the furniture, fixtures, and equipment in
the Premises, including that which is owned by or leased to
Tenant, and (b) to remove all or any part of Tenant's property
from the Premises and any property removed may be sold,
disposed of, or stored in any public warehouse or elsewhere at
the cost of and for the account of Tenant. Landlord shall not
be responsible for the care or safekeeping of such property,
whether in transport, storage or otherwise. Tenant waives any
and all claim against Landlord for loss, destruction and/or
damage or injury which may be occasioned by any of the
aforesaid acts; Tenant shall be liable to Landlord for costs
incurred by Landlord in connection with any storage, transport
or other acts anticipated in this Section and shall hold
harmless and indemnify Landlord from all loss, damage, cost,
expense and liability in connection therewith. No re-entry or
taking possession of the Premises by Landlord shall be
construed as an election on Landlord's part to terminate this
Lease unless a written notice of such intention is given to
Tenant. Notwithstanding any such re-letting without
termination, Landlord may at all times thereafter elect to
terminate this Lease for such previous default. Any such
re-entry shall be allowed by Tenant without hindrance, and
Landlord shall not be liable in damages for any such re-entry,
or guilty of trespass or forcible entry.
K. Landlord shall be entitled, without
notice or bond, to the issuance of pre-judgment writs of
replevin, pre-judgment distress writs, attachment writs, break
open orders, orders authorizing the locking of the Premises to
protect Landlord's lien on personal property, fixtures and
equipment, and such other orders as may be issued by a court
of law or equity. Landlord shall have the right to take
possession as allowed under Chapter 78, Florida Statutes. The
remedies described in this Section are cumulative and in
addition to and without waiver of all remedies allowed
Landlord by this Lease or by case law, common law and statute
now or hereinafter in effect. Tenant agrees that the rights
and remedies granted Landlord in this Section are commercially
reasonable.
ADMINISTRATIVE CHARGES
28. In the event a Rent payment is not received
within five (5) business days after its due date, interest
shall be due thereon at the rate of 18% per annum, on the then
total Rent due and unpaid. This interest shall accrue on the
amount unpaid, including prior interest and administrative
fees and late charges, and shall become immediately due and
payable from Tenant to Landlord, without notice or demand, at
the place of payment. In the event any check, bank draft or
negotiable instrument given for any payment under this Lease
shall be dishonored at any time for any reason whatsoever not
attributable to Landlord, Landlord shall be entitled, in
addition to any other remedy that may be available, to an
administrative charge of Two Hundred Dollars ($200.00). These
provisions for administrative fees and late charges are not,
and shall not be deemed, grace periods. Such administrative
fees and late charges are not penalties, but liquidated
damages to defray administrative, collection, and related
expenses due to Tenant's failure to make such Rent payment
when due or failure to process the dishonored instrument. An
additional administrative fee and late charge shall become
immediately due and payable on the first day of each month for
which all or a portion of a Rent payment (together with any
administrative fee and late charge) remains unpaid, and for
each dishonored instrument.
LIEN FOR PAYMENT OF RENT
29. Landlord shall have, and Tenant grants to
Landlord, a security interest in any furnishings, equipment,
fixtures, inventory, accounts receivable, licenses and other
personal property of any kind belonging to Tenant, or the
equity of Tenant in such items, on the Premises or elsewhere.
Such security interest is granted for the purposes of securing
the payment of Rent and other charges, assessments, penalties,
and damages required under this Lease to be paid by Tenant,
and of securing the performance of all other obligations of
Tenant under this Lease. Upon Tenant's default or breach of
any terms and conditions of this Lease, Landlord shall have
all remedies available under applicable law, equity or as
provided in this Lease including without limitation, the right
to take possession of any or all of the items referred to in
this Section and dispose of them by public or private sale in
a commercially reasonable manner. Landlord shall also have the
right to relinquish possession of all or any portion of such
furniture, fixtures, equipment and other property to any
person ("Claimant") claiming to be entitled to possession
thereof who presents to Landlord a copy of any instruments
represented to Landlord by Claimant to have been executed by
Tenant (or any predecessor of Tenant) granting Claimant the
right under various circumstances to take possession of such
furniture, fixtures, equipment or other property, without the
necessity on the part of Landlord to inquire into the
authenticity of said instrument's copy of Tenant's or Tenant's
predecessor's signature thereon and without the necessity of
Landlord making any nature of investigation or inquiry as to
the validity of the factual or legal basis upon which Claimant
purports to act; and Tenant agrees to indemnify and hold
Landlord harmless from all cost, expense, loss, damage and
liability incident to Landlord's relinquishment of possession
of all or any portion of such furniture, fixtures, equipment
or other property to Claimant. The provision for a landlord's
lien as described in this Article shall be in addition to, and
not in substitution for, any landlord's lien and similar
remedies otherwise provided by statutory or common law.
To the extent, if any, that this Lease
grants Landlord any lien or lien rights greater than provided
by the laws of the State of Florida pertaining to landlords'
liens, this Lease is intended as and constitutes a security
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<PAGE>
agreement within the meaning of the Uniform Commercial Code.
Landlord, in addition to the rights prescribed in this Lease,
shall have a Security Interest, as that term is defined under
this state's Uniform Commercial Code, in the items referred to
in this Section to secure the payment to Landlord of the
various amounts provided for in this Lease. Tenant agrees to
and shall execute and deliver to Landlord such financing
statements and such further assurances as Landlord may, from
time to time, consider necessary to create, perfect, and
preserve the lien described and all additional substitutions,
replacements, and accessions thereto, and all proceeds of its
or their sale or the disposition (under the Uniform Commercial
Code, other statutory provisions, or otherwise). Landlord, at
the expense of Tenant, may cause such financing statements and
assurances to be recorded and re-recorded, filed and re-filed,
and renewed or continued, at such times and places as may be
required or permitted by law to create, perfect, and preserve
such items. In the event Tenant fails to promptly execute and
return to Landlord such financing statements and other
instruments as Landlord may require to create, preserve, and
perfect its lien, Tenant shall and does hereby designate
Landlord to act as Tenant's agent and attorney in fact for the
sole and limited purpose of executing such financing
statements and other instruments and any such execution by
Landlord pursuant to this Lease shall be effective and binding
upon Tenant as though executed originally by Tenant, such
designation being a power coupled with an interest which gives
full power and authority to execute and deliver the designated
documentation on behalf of Landlord and which is a material
inducement to Landlord to enter into this Lease. Tenant's
designation of Landlord as agent and attorney-in-fact
hereunder shall not be subject to revocation until this Lease
is terminated.
WAIVER OF DEFAULT
30. Failure of Landlord to declare any default
immediately upon occurrence thereof, or delay in taking any
action in connection therewith, shall not waive such default,
but Landlord shall have the right to declare any such default
at any time and take such action as might be lawful or
authorized hereunder, in law and/or in equity. No waiver by
Landlord of a default by Tenant shall be implied, and no
express waiver by Landlord shall affect any default other than
the default specified in such waiver and that only for the
time and extension therein stated.
No waiver of any term, provision, condition or
covenant of this Lease by Landlord shall be deemed to imply or
constitute a further waiver by Landlord of any other term,
provision, condition or covenant of this Lease. In addition to
any rights and remedies specifically granted Landlord herein,
Landlord shall be entitled to all rights and remedies
available at law and in equity, whether existing at time of
execution or of enforcement of this Lease, in the event that
Tenant shall fail to perform any of the terms, provisions,
covenants or conditions of this Lease on Tenant's part to be
performed or fails to pay Base Rent, Additional Rent or any
other sums due Landlord when due. All rights and remedies
specifically granted to Landlord herein, by law and in equity
shall be cumulative and not mutually exclusive.
RIGHT OF ENTRY
31. Landlord, or any of its agents, shall have the
right to enter the Premises during all reasonable hours to
examine the same or to make such repairs, additions or
alterations as may be deemed necessary for the safety,
comfort, or preservation thereof, or to said Building, or to
exhibit said Premises at any time within one hundred fifty
(150) days before the expiration of this Lease. Said right of
entry shall likewise exist for the purpose of removing
placards, signs, fixtures, alterations, or additions which do
not conform to this Lease.
NOTICE
32. Any notice given Landlord as provided for in this
Lease shall be sent to Landlord by registered mail addressed
to Landlord at Landlord's Management Office. Any notice to be
given Tenant under the terms of this Lease, unless otherwise
stated herein, shall be in writing and shall be personally
delivered or sent by registered mail or by nationally (U.S.)
recognized overnight delivery service to the office of Tenant
in the Building. Either party, from time to time, by such
notice, may specify another address in the continental United
States to which subsequent notice shall be sent.
LANDLORD CONTROLLED AREAS
33. All automobile parking areas, driveways,
entrances and exits thereto, Common Areas, and other
facilities furnished by Landlord, including all parking areas,
truck way or ways, loading areas, pedestrian walkways and
ramps, landscaped areas, stairways, corridors, and other areas
and improvements provided by Landlord for the general use, in
common, of tenants, their officers, agents, employees,
servants, invitees, licensees, visitors, patrons and
customers, shall be at all times subject to the exclusive
control and management of Landlord, and Landlord shall have
the right from time to time to establish, modify and enforce
rules and regulations with respect to all facilities and areas
and improvements; to police same; from time to time to change
the area, level and location and arrangement of parking areas
and other facilities hereinabove referred to; to restrict
parking by and enforce parking charges (by operation of meters
or otherwise) to tenants, their officers, agents, invitees,
employees, servants, licensees, visitors, patrons and
customers; to close all or any portion of said areas or
facilities to such extent as may in the opinion of Landlord's
counsel be legally sufficient to prevent a dedication thereof
or the accrual of any rights to any person or the public
therein; to close temporarily all or any portion of the public
areas, Common Areas or facilities; to discourage non-tenant
parking; and to
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<PAGE>
do and perform such other acts in and to said areas and
improvements as, in the sole judgment of Landlord, Landlord
shall determine to be advisable with a view to the improvement
of the convenience and use thereof by tenants, their officers,
agents, employees, servants, invitees, visitors, patrons,
licensees and customers. Landlord will operate and maintain
the Common Areas and other facilities referred to in such
reasonable manner as Landlord shall determine from time to
time. Without limiting the scope of such discretion, Landlord
shall have the full right and authority to designate a manager
of the parking facilities and/or Common Areas and other
facilities who shall have full authority to make and enforce
rules and regulations regarding the use of the same or to
employ all personnel and to make and enforce all rules and
regulations pertaining to and necessary for the proper
operation and maintenance of the parking areas and/or Common
Areas and other facilities. Reference in this section to
parking areas and/or facilities shall in no way be construed
as giving Tenant hereunder any rights and/or privileges in
connection with such parking areas and/or facilities unless
such rights and/or privileges are expressly set forth in this
Lease.
CONDITION OF PREMISES
ON TERMINATION OF LEASE
AND HOLDING OVER
34. Tenant agrees to surrender to Landlord, at the
end of the Term and/or upon any cancellation of this Lease,
said Premises in as good condition as said Premises were at
the beginning of the Term of this Lease, ordinary wear and
tear and damage by fire or other casualty not caused by
Tenant's negligence excepted. Tenant agrees that if Tenant
does not surrender said Premises to Landlord at the end of the
Term then Tenant will pay to Landlord double the amount of the
current rental for each month or portion thereof that Tenant
holds over plus all damages that Landlord may suffer on
account of Tenant's failure to so surrender to Landlord
possession of said Premises, and will indemnify and hold
Landlord harmless from and against all claims made by any
succeeding Tenant of said Premises against Landlord on account
of delay of Landlord in delivering possession of said Premises
to said succeeding tenant so far as such delay is caused by
failure of Tenant to so surrender the Premises.
No receipt of money by Landlord from Tenant after
termination of this Lease or the service of any notice of
commencement of any suit or final judgment for possession
shall reinstate, continue or extend the Term or affect any
such notice, demand, suit or judgment.
No act or thing done by Landlord or its agents during
the Term shall be deemed an acceptance of a surrender of the
Premises, and no agreement to accept a surrender of the
Premises shall be valid unless it be made in writing and
subscribed by a duly authorized officer or agent of Landlord.
OCCUPANCY TAX
35. Tenant shall be responsible for and shall pay
before delinquency all municipal, county or state taxes
assessed during the Term of this Lease against any occupancy
interest or personal property of any kind, owned by or placed
in, upon or about the Premises by Tenant.
SIGNS
36. Landlord shall have the right to install signs on
the interior or exterior of the Building and Premises and/or
change the Building's name or street address. Landlord shall
provide space on the Building tenant directory for the name of
Tenant.
TRIAL BY JURY
37. LANDLORD AND TENANT WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM
AGAINST THE OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, AND TENANT'S USE OR OCCUPANCY OF THE PREMISES. Tenant
further agrees that it shall not interpose any counterclaim or
counterclaims, except compulsory counterclaims, in a summary
proceeding or in any action based upon nonpayment of rent or
any other payment required of Tenant hereunder. Upon
Landlord's request, Tenant shall participate in mediation of a
dispute between Landlord and Tenant; the cost of a mediator
shall be borne equally by Landlord and Tenant.
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<PAGE>
RELOCATION OF TENANT
38. Landlord expressly reserves the right at
Landlord's sole cost and expense, to remove Tenant from the
Premises and to relocate Tenant in some other space within the
Building, which other space shall be decorated by Landlord at
Landlord's expense. Landlord shall have the right, in
Landlord's sole discretion, to use such decorations and
materials as may have been used in the original Premises.
Nothing herein contained shall be construed to relieve Tenant
or imply that Tenant is relieved of the liability for or
obligation to pay any Additional Rent due by reason of the
provisions of Section 3A of this Lease, the provisions of
which section shall be applied to the space in which Tenant is
relocated on the same basis as said provisions were applied to
the Premises from which Tenant is removed. Tenant agrees that
Landlord's exercise of its election to remove and relocate
Tenant shall not terminate this Lease or release Tenant, in
whole or in part, from Tenant's obligation to pay the rents
and perform the covenants and agreements hereunder for the
full Term.
CROSS DEFAULT
39. If the term of any lease, other than this Lease,
made by Tenant for any other space in the Building shall be
terminated or terminable after the making of this Lease
because of any default by Tenant under such other lease, such
default shall, ipso facto, constitute a default hereunder and
empower Landlord, at Landlord's sole option, to terminate this
Lease as herein provided in the event of default.
INVALIDITY OF PROVISION
40. If any term, provision, covenant or condition of
this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease or the application
of such term, provision, covenant or condition to persons or
circumstances other than those as to which it is held invalid
or unenforceable shall not be affected thereby and each term,
provision, covenant or condition of this Lease shall be valid
and be enforceable to the fullest extent permitted by law.
This Lease shall be construed in accordance with the laws of
the State of Florida.
TIME OF ESSENCE
41. Time is of the essence of all the terms,
provisions, covenants and conditions of this Lease.
MISCELLANEOUS
42. The terms Landlord and Tenant as herein contained
shall include singular and/or plural, masculine, feminine
and/or neuter, heirs, successors, executors, administrators,
personal representatives and/or assigns wherever the context
so requires or admits. The terms, provisions, covenants and
conditions of this Lease are expressed in the total language
of this Lease Agreement and the section headings are solely
for the convenience of the reader and are not intended to be
all inclusive. Any exhibit or attachment or formally executed
addendum to or modification of this Lease shall be expressly
deemed incorporated by reference herein unless a contrary
intention is clearly stated therein.
EFFECTIVE DATE
43. Submission of this instrument for examination
does not constitute an offer, right of first refusal,
reservation of or option for the Premises or any other space
or premises in, on or about the Building. This instrument
becomes effective as a lease only upon execution and delivery
by both Landlord and Tenant.
ENTIRE AGREEMENT
44. This Lease contains the sole and entire agreement
between the parties hereto and supersedes all previous written
or oral negotiations or agreements between the parties with
respect to the subject matter of this Lease, and it may be
modified only by an agreement in writing signed by Landlord
and Tenant. No surrender of the Premises, or of the remainder
of the term of this Lease, shall be valid unless accepted by
Landlord in writing. Tenant acknowledges and agrees that
Tenant has not relied upon any statement, representation,
prior written or contemporaneous oral promises, agreements or
warranties except such as are expressed herein. All of the
parties to this Lease have participated in its negotiations
and preparation; accordingly, this Lease shall not be more
strictly construed against any one of the parties.
BROKERAGE
45. Tenant represents and warrants that it has dealt
with no broker, agent or other person other than Landlord and
Landlord's broker Highwoods Properties, Inc. (which entity is
related to Landlord) in connection with this transaction and
that no broker, agent or other person, other than Tenant,
Landlord or Landlord's broker Highwoods Properties, Inc.,
brought about this transaction. Tenant agrees to indemnify and
hold harmless Landlord from and against any claims by any
other broker, agent or other person claiming a commission or
other form of compensation by virtue or
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<PAGE>
having dealt with Tenant with regard to this leasing
transaction. The provisions of this section shall survive the
termination of this Lease.
FORCE MAJEURE
46. Landlord shall not be required to perform any
term, condition, or covenant in this Lease so long as such
performance is delayed or prevented by force majeure, which
shall mean acts of God, labor disputes (whether lawful or
not), material or labor shortages, restrictions by any
governmental authority, civil riots, floods, and any other
cause not reasonably within the control of Landlord and which
by the exercise of due diligence Landlord is unable, wholly or
in part, to prevent or overcome. Lack of money shall not be
deemed force majeure.
STATUTORY RADON GAS NOTICE
47. Radon Gas: Radon is a naturally occurring
radioactive gas that when it has accumulated in a building in
sufficient quantity, may present health risks to persons who
are exposed to it over time. Levels of Radon that exceed
Federal and State guidelines have been found in buildings in
Florida. Additional information regarding Radon and Radon
testing may be obtained from your County Public Health Unit.
NO WAIVER
48. No waiver by Landlord of any breach by Tenant of
any term or condition of this Lease, and no failure by
Landlord to exercise any right or remedy in respect of any
such breach, shall constitute a waiver or relinquishment for
the future, or bar any right or remedy of Landlord, in respect
of any other breach of such term or condition or any breach of
any other term or condition of this Lease. No payment by
Tenant or receipt of payment by Landlord of an amount less
than the full amount then due Landlord under this Lease shall
be construed as anything other than a partial payment of such
sum then due and owing. No endorsement or statement on any
check or letter or any form of payment of accompanying
document shall be deemed to be an accord or satisfaction or
other form of settlement; Landlord may accept any such payment
without prejudice to its rights to recover the balance of sums
due and owing under this Lease or to pursue any other remedy
permitted under this Lease.
SURVIVAL
49. All obligations of Tenant which are or may be
intended by their nature to be performed and/or complied with
after the expiration or earlier termination of this Lease
shall survive such expiration or termination. Express
provisions in this Lease which require or permit survival in
specific instances, or as to specific obligations, shall not
be deemed a limitation upon the generality of this survival
clause.
PROVISIONS SEVERABLE
50. Every provision of this Lease shall be valid and
be enforced to the fullest extent permitted by law. If any
provision of this Lease, or the application of such provision
to any person or circumstance, shall be determined by
appropriate judicial authority to be illegal, invalid, or
unenforceable to any extent, such provision shall, only to
such extent, be deemed stricken from this Lease as if never
included. The remainder of this Lease, and the application of
such provision to persons or circumstances other than those as
to which such provision is held illegal, invalid, or
unenforceable, shall not be affected.
BINDING EFFECT
51. The terms and conditions of this Lease shall bind
the parties and their respective successors and assigns, and
shall inure to the benefit of the parties and their respective
permitted successors and assigns. Any waiver of rights by
either party shall be deemed not only to be a waiver of such
rights by such party but also a waiver of such rights for and
on behalf of such party's successors and assigns. This Lease
may be changed, amended, or modified only by an agreement in
writing signed by the party against whom such change,
amendment, or modification is sought to be enforced. If
Tenant, with Landlord's consent, shall occupy the Premises
prior to the beginning of the Term as specified above, all
provisions of this Lease shall be in full force and effect
connecting upon such occupancy, and rent for such period shall
be paid by Tenant at the same rate herein specified. Tenant
recognizes and acknowledges that the provisions of this
paragraph are material inducements to Landlord to enter into
this Lease.
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<PAGE>
RIGHT OF FIRST OFFER
52. Provided Tenant is not in default as of the date
of exercise of its right of first offer, Tenant shall have a
one-time right of first offer on available space on the second
(2nd) floor of the Building (subject to the existing rights of
any other tenant). Between the date space becomes available in
the Building (or Landlord learns space will become available)
and the date Landlord leases such vacant space to a tenant,
Landlord will advise Tenant in writing of the vacancy. Tenant
will have 5 business days from receipt of Landlord's notice to
notify Landlord in writing that Tenant desires to lease the
vacant space. Landlord will notify Tenant of the proposed
rental terms for such space to Tenant. The proposed rental
terms for such additional space will be for a minimum term of
five years, will not include any tenant improvements and will
be at market rental rates as determined by Landlord in good
faith. Tenant shall have five business days to accept or
reject the subject space on the terms proposed by Landlord. If
Tenant rejects Landlord's proposal (a failure of Tenant to
respond within the five business day period will be deemed a
rejection), Landlord shall be free to lease the space to a
third party on terms not materially more favorable than those
proposed to Tenant within 30 days of Tenant's rejection of the
right of first offer, and on any terms whatsoever thereafter.
If Tenant accepts Landlord's proposal, Tenant will enter a
lease for the space, furnished by Landlord and consistent with
Landlord's offer within 15 days. The Right of First Offer
shall become null and void should Tenant reduce its square
footage pursuant to Paragraph 53 of the Lease or for any
reason during the term of the Lease.
FOURTH FLOOR CANDELLATION
53. Provided Tenant is not in default as of the date
of exercise of this provision, Tenant shall have the right to
terminate its occupancy of Suite 401 and 403 (identified on
Exhibit A) by providing Landlord with at least 6 months prior
written notice.
IN WITNESS WHEREOF, the parties hereto, have signed, sealed and delivered this
Lease in quadruplicate at Broward County, Florida, on the date and year first
above written.
<TABLE>
<S> <C>
WITNESSES: LANDLORD: HIGHWOODS/FLORIDA HOLDINGS, L.P.
/s/ LORRI DUNNE
___________________________________ By: Highwoods Properties, Inc.
Name: its Agent
/s/ ILLEGIBLE
___________________________________
Name: By: /S/ ILLEGIBLE
-------------------------------
Its: Vice President
WITNESSES: TENANT: TECHNISOURCE, INC.
/s/ ILLEGIBLE
___________________________________ By: /S/ JAMES F. ROBERTSON
-------------------------------
Its: Vice President
/s/ CYNTHIA A. FREDRICK
___________________________________
Name:
</TABLE>
EXHIBITS:
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-17-
EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into effective as of April 21, 1998, by and between Technisource, Inc.,
a Florida corporation (the "Company"), and Joseph W. Collard ("Shareholder").
RECITALS
A. Shareholder is a founder of the Company and owns 3,635,280
shares (the "Shares") of the Company's common stock, par value
$.01 per share (the "Common Stock"). The Company has agreed to
grant the Shareholder certain registration rights in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the meanings set forth
below:
a. "COMMISSION" means the Securities and Exchange Commission,
or any other Federal agency at the time administering the Federal securities
laws.
b. "CUTBACK REGISTRATION" means any registration in connection
with an underwritten public offering in which the managing underwriter advises
the Company that marketing factors require a limitation of the number of the
Company's securities to be underwritten in such public offering (including a
limitation to zero).
c. "1933 ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
d. "1934 ACT" means the Securities Exchange Act of 1934 or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
e. "REGISTRATION STATEMENT" means a registration statement
filed by the Company with the Commission for a public offering and sale of
securities of the Company (other than any registration statement that effects
the Company's initial public offering, any registration statement on Form S-4 or
Form S-8, or their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation or entity).
f. "REGISTRATION EXPENSES" means the expenses described in
Section 4.
<PAGE>
g. "REGISTRABLE SHARES" means all of the Shares, and any other
shares of Common Stock or other securities of the Company or any other issuer
issued or issuable in respect of such Shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, mergers, combinations or
similar events, if applicable); PROVIDED, HOWEVER, that the Shares which are
Registrable Shares shall cease to be Registrable Shares upon any sale or
transfer of such shares pursuant to a Registration Statement, Section 4(1) of
the 1933 Act, Rule 144 under the 1933 Act or otherwise, except that the Shares
which are Registrable Shares shall remain Registrable Shares notwithstanding any
transfer of the Shares to any of Shareholder's affiliates or by the Shareholder
or such affiliates to any member of the Shareholder's immediate family or to a
trust established for the benefit of the Shareholder or any family member of the
Shareholder or to any corporation or other entity which is wholly owned by the
Shareholder, such affiliates, such family members, or such trusts (Shareholder,
such affiliates, such family members such trusts and such entities referred to
herein collectively as "Permitted Transferees"). As a condition to effecting any
registration pursuant to this Agreement, the Company may require that any
Permitted Transferees, on whose behalf a registration hereunder is being
effected, execute an agreement further acknowledging their obligations under
Section 7 of this Agreement. All references in this Agreement to the term
"Shareholder" shall be read to include any Permitted Transferee that owns or
holds any Registrable Shares.
2. REGISTRATION RIGHTS.
a. REQUESTED REGISTRATION.
i. Subject to the other provisions of this Agreement,
Shareholder shall have the right (a "Request Right") to require the Company to
effect an aggregate of three registrations with respect to the Registrable
Shares (each such registration being a "Requested Registration"). (The Company
is required to effect a total of only three Requested Registrations pursuant to
this Section 2(a) notwithstanding that Registrable Shares may have been
transferred to one or more Permitted Transferees.) To effect a Requested
Registration, Shareholder shall make a written request (a "Request Notice") to
the Company which shall describe in detail the contemplated sale of Registerable
Securities, including the number of Registerable Securities to be registered.
The Company shall be entitled to include in any Requested Registration shares of
Common Stock to be sold by holders of either Common Stock or rights to acquire
Common Stock to whom the Company has previously granted or in the future does
grant any registration rights and shares of Common Stock to be sold by the
Company for its own account, provided that such inclusion shall not limit the
number of Registrable Shares included in such Registration Statement.
ii. Shareholder may revoke its Request Notice in the event
of a Cutback Registration that would limit the total number of Registrable
Shares that can be sold pursuant to such Requested Registration to a number that
is less than 90% of the number of the Registrable Shares specified to be sold in
the Request Notice.
2
<PAGE>
iii. The Company shall, as soon as practicable, but in no
event more than 120 days after receipt of a Request Notice, file a Registration
Statement covering the Registrable Shares to be included in the registration
requested by such Request Notice and cause such Registration Statement to become
effective as soon as practicable thereafter.
b. PIGGYBACK REGISTRATION.
i. At any time and from time to time after the date of this
Agreement, whenever the Company proposes to file a Registration Statement, the
Company will prior to such filing give written notice to Shareholder of its
intention to do so and, upon the written request of Shareholder given within
fifteen (15) days after the Company provides such notice, the Company shall use
its good faith efforts to cause all Registrable Shares which the Company has
been requested by Shareholder to register to be registered under the 1933 Act to
the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of
Shareholder; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2.b. without
obligation to Shareholder.
ii. In connection with any registration under Section 2.b.
involving an underwritten offering of the Company's securities, the Company
shall not be required to include any Registrable Shares in such underwriting
unless Shareholder accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it, and then only in such quantity
as will not, in the sole discretion of the underwriters, jeopardize the success
of the offering by the Company. If in the sole discretion of the managing
underwriter or underwriters the registration of all, or part of, the Registrable
Shares which Shareholder has requested to be included would adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of Registrable Shares, if any, which the managing
underwriter or underwriters believe may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of shares which
Shareholder has requested to be included, then Shareholder and each participant
in such underwriting shall participate in the underwriting pro rata based upon
their total ownership of Registrable Shares.
3. REGISTRATION PROCEDURES. When the Company is required by the
provisions of this Agreement to effect the registration of any of the
Registrable Shares under the 1933 Act, the Company shall:
a. file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
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b. prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus included in the
Registration Statement as may be necessary to keep the Registration Statement
effective until the earlier to occur of (i) such time as all Registrable Shares
included therein have been sold or (ii) the expiration of two years;
c. furnish to Shareholder such reasonable numbers of copies of
the prospectus, including a preliminary prospectus and any amended or
supplemental prospectus, in conformity with the requirements of the 1933 Act,
and such other documents as Shareholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares; and
d. use its best efforts to register or qualify the Registrable
Shares covered by the Registration Statement under the securities or Blue Sky
laws of such states as Shareholder shall reasonably request, and do any and all
other acts and things that may be necessary or desirable to enable Shareholder
to consummate the public sale or other disposition of the Registrable Shares
owned by Shareholder in such jurisdiction; PROVIDED, HOWEVER, that the Company
shall not be required in connection with this Section 3 to qualify as a foreign
corporation in any jurisdiction nor register or qualify the securities in any
state which as a condition to such registration or qualification would impose
material restrictions or other material conditions on the Company or any of its
officers, directors or shareholders (including with respect to any shares held
by such persons or entities) unless such restrictions or other conditions are
approved by the party adversely affected.
If the Company advises Shareholder that any preliminary or
final prospectus is no longer in compliance with the requirements of the 1933
Act, or that at such time it is otherwise a violation of any applicable
securities laws to offer or sell securities pursuant to a preliminary or final
prospectus, Shareholder shall immediately cease offering or selling the
Registrable Securities and, if requested, return all old prospectus to the
Company. Shareholder may recommence offers and sales of Registrable Securities
upon receipt from the Company of an amended prospectus, if applicable, or
receipt of ratification from the Company that the offer and sale of Registrable
Securities may resume.
4. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. The term "Registration
Expenses" shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions attributable to the Registrable
Shares and the fees and expenses of Shareholder's own counsel and accountants,
which shall be borne by such party.
5. INFORMATION BY SHAREHOLDER. Shareholder shall promptly furnish to
the Company such information regarding Shareholder and the distribution proposed
by Shareholder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
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6. "LOCK-UP" AGREEMENT. If requested by the Company or an underwriter
or both in connection with an underwritten offering of Common Stock or other
securities of the Company, Shareholder shall agree not to sell or otherwise
transfer or dispose of any Registrable Shares or other securities of the Company
held by Shareholder for a specified period of time before and/or after the
effective date of a Registration Statement, provided that the same request shall
have been made of other holders of the Company's Common Stock or other
securities (including affiliates of the Company) and such other holders have
complied with such request. Such agreement shall be in writing in a form
satisfactory to the Company and any such underwriter. The Company may impose
stop transfer instructions with respect to the Registrable Shares or other
securities subject to the foregoing restriction until the end of the lock-up
period.
7. INDEMNIFICATION.
a. BY THE COMPANY. In the event of any registration of any of
the Registrable Shares under the 1933 Act pursuant to this Agreement, the
Company will indemnify and hold harmless the sellers of such Registrable Shares
against any losses, claims, damages or liabilities, joint or several, to which
such sellers may become subject under the 1933 Act, 1934 Act, state securities
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the Company will
reimburse such sellers for any legal or any other expenses reasonably incurred
by such sellers in connection with investigating and defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company by or on behalf of such
sellers, specifically for use in the preparation thereof, or as a result of the
failure of such sellers, or any agent of such sellers, to deliver any amendments
and supplements to any Registration Statement and the prospectus included in any
such Registration Statement (provided such amended or supplemental prospectus
has been delivered to sellers or their agent).
b. BY SELLERS OF REGISTRABLE SHARES. In the event of any
registration of any of the Registrable Shares under the 1933 Act pursuant to
this Agreement, each seller of Registrable Shares, severally and not jointly,
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the 1933 Act, 1934 Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of
5
<PAGE>
a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and each seller of Registrable Shares will reimburse the Company, each of its
directors and officers, each underwriter and each controlling person, severally
and not jointly, for any legal or other expenses reasonably incurred by the
Company, each director and officer, each underwriter and each controlling person
in connection with investigating and defending any such loss, claim, damage,
liability or action, if the statement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on behalf of such
seller, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement.
c. CLAIMS. Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; PROVIDED, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 7. The Indemnified
Party may participate in such defense at such party's expense. No Indemnifying
Party, in the defense of any such claim or litigation, except with the consent
of the Indemnified Party, shall consent to entry of any judgment or enter into
any settlement, which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation.
8. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the state of Florida.
b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
c. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by the Company and Shareholder.
6
<PAGE>
d. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally by hand or nationally
recognized courier addressed as follows:
If to Shareholder:
Joseph W. Collard
c/o Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
If to the Company:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Facsimile No. (954) 493-8603
Attention:
or at such other address as a party shall have furnished to the other party in
writing. All such notices and other written communications shall be effective on
the earlier of the date of mailing or delivery.
e. SEPARABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
f. TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
g. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
7
<PAGE>
NOW THEREFORE, the parties hereto have executed this Agreement
effective as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation.
By: /S/ JAMES F. ROBERTSON
-------------------------------------
Its: Vice President
/S/ JOSEPH W. COLLARD
-----------------------------------------
Joseph W. Collard
8
EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into effective as of April 21, 1998, by and between Technisource, Inc.,
a Florida corporation (the "Company"), and James F. Robertson ("Shareholder").
RECITALS
A. Shareholder is a founder of the Company and owns 3,492,720
shares (the "Shares") of the Company's common stock, par value
$.01 per share (the "Common Stock"). The Company has agreed to
grant the Shareholder certain registration rights in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the meanings set forth
below:
a. "COMMISSION" means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Federal securities laws.
b. "CUTBACK REGISTRATION" means any registration in connection
with an underwritten public offering in which the managing underwriter advises
the Company that marketing factors require a limitation of the number of the
Company's securities to be underwritten in such public offering (including a
limitation to zero).
c. "1933 ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
d. "1934 ACT" means the Securities Exchange Act of 1934 or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
e. "REGISTRATION STATEMENT" means a registration statement
filed by the Company with the Commission for a public offering and sale of
securities of the Company (other than any registration statement that effects
the Company's initial public offering, any registration statement on Form S-4 or
Form S-8, or their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation or entity).
f. "REGISTRATION EXPENSES" means the expenses described in
Section 4.
<PAGE>
g. "REGISTRABLE SHARES" means all of the Shares, and any other
shares of Common Stock or other securities of the Company or any other issuer
issued or issuable in respect of such Shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, mergers, combinations or
similar events, if applicable); PROVIDED, HOWEVER, that the Shares which are
Registrable Shares shall cease to be Registrable Shares upon any sale or
transfer of such shares pursuant to a Registration Statement, Section 4(1) of
the 1933 Act, Rule 144 under the 1933 Act or otherwise, except that the Shares
which are Registrable Shares shall remain Registrable Shares notwithstanding any
transfer of the Shares to any of Shareholder's affiliates or by the Shareholder
or such affiliates to any member of the Shareholder's immediate family or to a
trust established for the benefit of the Shareholder or any family member of the
Shareholder or to any corporation or other entity which is wholly owned by the
Shareholder, such affiliates, such family members, or such trusts (Shareholder,
such affiliates, such family members such trusts and such entities referred to
herein collectively as "Permitted Transferees"). As a condition to effecting any
registration pursuant to this Agreement, the Company may require that any
Permitted Transferees, on whose behalf a registration hereunder is being
effected, execute an agreement further acknowledging their obligations under
Section 7 of this Agreement. All references in this Agreement to the term
"Shareholder" shall be read to include any Permitted Transferee that owns or
holds any Registrable Shares.
2. REGISTRATION RIGHTS.
a. REQUESTED REGISTRATION.
i. Subject to the other provisions of this Agreement, Shareholder
shall have the right (a "Request Right") to require the Company to effect an
aggregate of three registrations with respect to the Registrable Shares (each
such registration being a "Requested Registration"). (The Company is required to
effect a total of only three Requested Registrations pursuant to this Section
2(a) notwithstanding that Registrable Shares may have been transferred to one or
more Permitted Transferees.) To effect a Requested Registration, Shareholder
shall make a written request (a "Request Notice") to the Company which shall
describe in detail the contemplated sale of Registerable Securities, including
the number of Registerable Securities to be registered. The Company shall be
entitled to include in any Requested Registration shares of Common Stock to be
sold by holders of either Common Stock or rights to acquire Common Stock to whom
the Company has previously granted or in the future does grant any registration
rights and shares of Common Stock to be sold by the Company for its own account,
provided that such inclusion shall not limit the number of Registrable Shares
included in such Registration Statement.
ii. Shareholder may revoke its Request Notice in the event of a
Cutback Registration that would limit the total number of Registrable Shares
that can be sold pursuant to such Requested Registration to a number that is
less than 90% of the number of the Registrable Shares specified to be sold in
the Request Notice.
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<PAGE>
iii. The Company shall, as soon as practicable, but in no event
more than 120 days after receipt of a Request Notice, file a Registration
Statement covering the Registrable Shares to be included in the registration
requested by such Request Notice and cause such Registration Statement to become
effective as soon as practicable thereafter.
b. PIGGYBACK REGISTRATION.
i. At any time and from time to time after the date of this
Agreement, whenever the Company proposes to file a Registration Statement, the
Company will prior to such filing give written notice to Shareholder of its
intention to do so and, upon the written request of Shareholder given within
fifteen (15) days after the Company provides such notice, the Company shall use
its good faith efforts to cause all Registrable Shares which the Company has
been requested by Shareholder to register to be registered under the 1933 Act to
the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of
Shareholder; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2.b. without
obligation to Shareholder.
ii. In connection with any registration under Section 2.b.
involving an underwritten offering of the Company's securities, the Company
shall not be required to include any Registrable Shares in such underwriting
unless Shareholder accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it, and then only in such quantity
as will not, in the sole discretion of the underwriters, jeopardize the success
of the offering by the Company. If in the sole discretion of the managing
underwriter or underwriters the registration of all, or part of, the Registrable
Shares which Shareholder has requested to be included would adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of Registrable Shares, if any, which the managing
underwriter or underwriters believe may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of shares which
Shareholder has requested to be included, then Shareholder and each participant
in such underwriting shall participate in the underwriting pro rata based upon
their total ownership of Registrable Shares.
3. REGISTRATION PROCEDURES. When the Company is required by the
provisions of this Agreement to effect the registration of any of the
Registrable Shares under the 1933 Act, the Company shall:
a. file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
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<PAGE>
b. prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus included in the
Registration Statement as may be necessary to keep the Registration Statement
effective until the earlier to occur of (i) such time as all Registrable Shares
included therein have been sold or (ii) the expiration of two years;
c. furnish to Shareholder such reasonable numbers of copies of
the prospectus, including a preliminary prospectus and any amended or
supplemental prospectus, in conformity with the requirements of the 1933 Act,
and such other documents as Shareholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares; and
d. use its best efforts to register or qualify the Registrable
Shares covered by the Registration Statement under the securities or Blue Sky
laws of such states as Shareholder shall reasonably request, and do any and all
other acts and things that may be necessary or desirable to enable Shareholder
to consummate the public sale or other disposition of the Registrable Shares
owned by Shareholder in such jurisdiction; PROVIDED, HOWEVER, that the Company
shall not be required in connection with this Section 3 to qualify as a foreign
corporation in any jurisdiction nor register or qualify the securities in any
state which as a condition to such registration or qualification would impose
material restrictions or other material conditions on the Company or any of its
officers, directors or shareholders (including with respect to any shares held
by such persons or entities) unless such restrictions or other conditions are
approved by the party adversely affected.
If the Company advises Shareholder that any preliminary or
final prospectus is no longer in compliance with the requirements of the 1933
Act, or that at such time it is otherwise a violation of any applicable
securities laws to offer or sell securities pursuant to a preliminary or final
prospectus, Shareholder shall immediately cease offering or selling the
Registrable Securities and, if requested, return all old prospectus to the
Company. Shareholder may recommence offers and sales of Registrable Securities
upon receipt from the Company of an amended prospectus, if applicable, or
receipt of ratification from the Company that the offer and sale of Registrable
Securities may resume.
4. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. The term "Registration
Expenses" shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions attributable to the Registrable
Shares and the fees and expenses of Shareholder's own counsel and accountants,
which shall be borne by such party.
5. INFORMATION BY SHAREHOLDER. Shareholder shall promptly furnish to
the Company such information regarding Shareholder and the distribution proposed
by Shareholder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
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<PAGE>
6. "LOCK-UP" AGREEMENT. If requested by the Company or an underwriter
or both in connection with an underwritten offering of Common Stock or other
securities of the Company, Shareholder shall agree not to sell or otherwise
transfer or dispose of any Registrable Shares or other securities of the Company
held by Shareholder for a specified period of time before and/or after the
effective date of a Registration Statement, provided that the same request shall
have been made of other holders of the Company's Common Stock or other
securities (including affiliates of the Company) and such other holders have
complied with such request. Such agreement shall be in writing in a form
satisfactory to the Company and any such underwriter. The Company may impose
stop transfer instructions with respect to the Registrable Shares or other
securities subject to the foregoing restriction until the end of the lock-up
period.
7. INDEMNIFICATION.
a. BY THE COMPANY. In the event of any registration of any of
the Registrable Shares under the 1933 Act pursuant to this Agreement, the
Company will indemnify and hold harmless the sellers of such Registrable Shares
against any losses, claims, damages or liabilities, joint or several, to which
such sellers may become subject under the 1933 Act, 1934 Act, state securities
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the Company will
reimburse such sellers for any legal or any other expenses reasonably incurred
by such sellers in connection with investigating and defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company by or on behalf of such
sellers, specifically for use in the preparation thereof, or as a result of the
failure of such sellers, or any agent of such sellers, to deliver any amendments
and supplements to any Registration Statement and the prospectus included in any
such Registration Statement (provided such amended or supplemental prospectus
has been delivered to sellers or their agent).
b. BY SELLERS OF REGISTRABLE SHARES. In the event of any
registration of any of the Registrable Shares under the 1933 Act pursuant to
this Agreement, each seller of Registrable Shares, severally and not jointly,
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the 1933 Act, 1934 Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of
5
<PAGE>
a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the 1933 Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and each seller of Registrable Shares will reimburse the Company, each of its
directors and officers, each underwriter and each controlling person, severally
and not jointly, for any legal or other expenses reasonably incurred by the
Company, each director and officer, each underwriter and each controlling person
in connection with investigating and defending any such loss, claim, damage,
liability or action, if the statement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on behalf of such
seller, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement.
c. CLAIMS. Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; PROVIDED, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 7. The Indemnified
Party may participate in such defense at such party's expense. No Indemnifying
Party, in the defense of any such claim or litigation, except with the consent
of the Indemnified Party, shall consent to entry of any judgment or enter into
any settlement, which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation.
8. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the state of Florida.
b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
c. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by the Company and Shareholder.
6
<PAGE>
d. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally by hand or nationally
recognized courier addressed as follows:
If to Shareholder:
James Robertson
c/o Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
If to the Company:
Technisource, Inc.
1901 W. Cypress Creek Road
Suite 202
Ft. Lauderdale, FL 33309
Facsimile No. (954) 493-8603
Attention:
or at such other address as a party shall have furnished to the other party in
writing. All such notices and other written communications shall be effective on
the earlier of the date of mailing or delivery.
e. SEPARABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
f. TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
g. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
7
<PAGE>
NOW THEREFORE, the parties hereto have executed this Agreement
effective as of the day and year first above written.
TECHNISOURCE, INC., a Florida corporation.
By: /S/ JOSEPH W. COLLARD
--------------------------------------
Its: President
/S/ JAMES F. ROBERTSON
------------------------------------------
James F. Robertson
8
EXHIBIT 10.8
TECHNISOURCE INC.
LONG-TERM INCENTIVE PLAN
I. PURPOSE
The Technisource Long-Term Incentive Plan is adopted effective January
1, 1998. The Plan is designed to attract, retain and motivate selected Key
Employees and Key Non-Employees of the Company and its Affiliates, and reward
them for making major contributions to the success of the Company and its
Affiliates. These objectives are accomplished by making long-term incentive
awards under the Plan that will offer Participants an opportunity to have a
greater proprietary interest in, and closer identity with, the Company and its
Affiliates and their financial success.
The Awards may consist of:
1. Incentive Options;
2. Nonstatutory Options;
3. Formula Options;
4. Restricted Stock;
5. Rights;
6. Dividend Equivalents;
7. Performance Awards;
8. Cash Awards; or
9. IT Professional Options;
or any combination of the foregoing, as the Committee may determine.
II. DEFINITIONS
A. AFFILIATE means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that, for purposes of Section 422 of the Code,
is a parent or subsidiary of the Company, direct or indirect.
B. AWARD means the grant to any Key Employee or Key Non-Employee of any
form of Option, Restricted Stock, Right, Performance Award, or Cash Award,
whether granted singly, in combination, or in tandem, and pursuant to such
terms, conditions, and limitations as the Committee may establish in order to
fulfill the objectives of the Plan.
<PAGE>
C. AWARD AGREEMENT means a written agreement entered into between the
Company and a Participant under which an Award is granted and which sets forth
the terms, conditions, and limitations applicable to the Award.
D. BOARD means the Board of Directors of the Company.
E. CASH AWARD means an Award of cash, subject to the requirements of
Article XIV and such other restrictions as the Committee deems appropriate or
desirable.
F. CODE means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. References to any provision of the
Code shall be deemed to include regulations thereunder and successor provisions
and regulations thereto.
G. COMMITTEE means the committee to which the Board delegates the power
to act under or pursuant to the provisions of the Plan, or the Board if no
committee is selected. If the Board delegates powers to a committee, and if the
Company is or becomes subject to Section 16 of the Exchange Act, then, if
necessary for compliance therewith, such committee shall consist initially of
not less than two (2) members of the Board, each member of which must be a
"non-employee director", within the meaning of the applicable rules promulgated
pursuant to the Exchange Act. If the Company is or becomes subject to Section 16
of the Exchange Act, no member of the Committee shall receive any Award pursuant
to the Plan or any similar plan of the Company or any Affiliate while serving on
the Committee, unless the Board determines that the grant of such an Award
satisfies the then current Rule 16b-3 requirements under the Exchange Act.
Notwithstanding anything herein to the contrary, and insofar as it is necessary
in order for compensation recognized by Participants pursuant to the Plan to be
fully deductible to the Company for federal income tax purposes, each member of
the Committee also shall be an "outside director" (as defined in regulations or
other guidance issued by the Internal Revenue Service under Code Section
162(m)).
H. COMMON STOCK means the common stock of the Company.
I. COMPANY means Technisource, Inc., a Florida corporation, and
includes any successor or assignee corporation or corporations into which the
Company may be merged, changed, or consolidated; any corporation for whose
securities the securities of the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of the Company.
J. DISABILITY OR DISABLED means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
K. DIVIDEND EQUIVALENT means an Award subject to the requirements of
Article XII.
L. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute thereto. References to any provision
of the Exchange Act shall be deemed to include rules thereunder and successor
provisions and rules thereto.
M. FAIR MARKET VALUE means, if the Shares are listed on any national
securities exchange, the closing sales price, if any, on the largest such
exchange on the valuation date, or, if none, on the
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most recent trade date immediately prior to the valuation date provided such
trade date is no more than thirty (30) days prior to the valuation date. If the
Shares are not then listed on any such exchange, the fair market value of such
Shares shall be the closing sales price if such is reported, or otherwise the
mean between the closing "Bid" and the closing "Ask" prices, if any, as reported
in the National Association of Securities Dealers Automated Quotation System
("NASDAQ") for the valuation date, or if none, on the most recent trade date
immediately prior to the valuation date provided such trade date is no more than
thirty (30) days prior to the valuation date. If the Shares are not then either
listed on any such exchange or quoted in NASDAQ, or there has been no trade date
within such thirty (30) day period, the fair market value shall be the mean
between the average of the "Bid" and the average of the "Ask" prices, if any, as
reported in the National Daily Quotation System for the valuation date, or, if
none, for the most recent trade date immediately prior to the valuation date
provided such trade date is no more than thirty (30) days prior to the valuation
date. If the fair market value cannot be determined under the preceding three
sentences, it shall be determined in good faith by the Committee.
N. FORMULA OPTION means a Nonstatutory Option granted automatically to
a Non-Employee Board Member upon his or her initial election, and any subsequent
re-election, as a Non-Employee Board Member.
O. INCENTIVE OPTION means an Option that, when granted, is intended to
be an "incentive stock option", as defined in Section 422 of the Code.
P. IT PROFESSIONAL means a consultant hired by the Company..
Q. IT PROFESSIONAL OPTION means an Option granted to an IT Professional
in accordance with Article IX.
R. KEY EMPLOYEE means an employee of the Company or of an Affiliate who
is designated by the Committee as being eligible to be granted one or more
Awards under the Plan.
S. KEY NON-EMPLOYEE means a Non-Employee Board Member, consultant,
advisor or independent contractor of the Company or of an Affiliate who is
designated by the Committee as being eligible to be granted one or more Awards
under the Plan.
T. NON-EMPLOYEE BOARD MEMBER means a director of the Company who is not
an employee of the Company or any of its Affiliates.
U. NONSTATUTORY OPTION means an Option that, when granted, is not
intended to be an "incentive stock option", as defined in Section 422 of the
Code.
V. OPTION means a right or option to purchase Common Stock, including
Restricted Stock if the Committee so determines.
W. PARTICIPANT means a Key Employee or Key Non-Employee to whom one or
more Awards are granted under the Plan.
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X. PERFORMANCE AWARD means an Award subject to the requirements of
Article XIII, and such performance conditions as the Committee deems appropriate
or desirable.
Y. PLAN means the Technisource Inc. Long-Term Incentive Plan, as
amended from time to time.
Z. RESTRICTED STOCK means an Award made in Common Stock or denominated
in units of Common Stock and delivered under the Plan, subject to the
requirements of Article XI, such other restrictions as the Committee deems
appropriate or desirable, and as awarded in accordance with the terms of the
Plan.
AA. RIGHT means a stock appreciation right delivered under the Plan,
subject to the requirements of Article XII and as awarded in accordance with the
terms of the Plan.
BB. SHARES means the following shares of the capital stock of the
Company as to which Options or Restricted Stock have been or may be granted
under the Plan and upon which Rights or units of Restricted Stock may be based :
treasury or authorized but unissued Common Stock, $.01 par value, of the
Company, or any shares of capital stock into which the Shares are changed or for
which they are exchanged within the provisions of Article XX of the Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Awards may be granted from
time to time shall be 1,500,000 Shares (subject to adjustment for stock splits,
stock dividends, and other adjustments described in Article XX hereof);
provided, however, that the number of Shares available for issuance under the
Plan shall automatically increase on the first trading day of each calendar year
by an amount equal to ten percent (10%) of the increase, if any, outstanding on
December 31 of the preceding year over the number of shares of the capital stock
of the Company outstanding on January 1 of the preceding calendar year. No
Incentive Options may be granted on the basis of the additional Shares resulting
from such annual increases.
From time to time, the Committee and appropriate officers of the
Company shall take whatever actions are necessary to file required documents
with governmental authorities and stock exchanges so as to make Shares available
for issuance pursuant to the Plan. Shares subject to Awards that are forfeited,
terminated, expire unexercised, canceled by agreement of the Company and the
Participant, settled in cash in lieu of Common Stock or in such manner that all
or some of the Shares covered by such Awards are not issued to a Participant, or
are exchanged for Awards that do not involve Common Stock, shall immediately
become available for Awards. Awards payable in cash shall not reduce the number
of Shares available for Awards under the Plan.
Except as otherwise set forth herein, the aggregate number of Shares as
to which Awards may be granted shall be subject to change only by means of an
amendment of the Plan duly adopted by the Company and approved by the
stockholders of the Company within one year before or after the date of the
adoption of the amendment.
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IV. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum at any meeting thereof (including by
telephone conference) and the acts of a majority of the members present, or acts
approved in writing by a majority of the entire Committee without a meeting,
shall be the acts of the Committee for purposes of this Plan. The Committee may
authorize one or more of its members or an officer of the Company to execute and
deliver documents on behalf of the Committee. A member of the Committee shall
not exercise any discretion respecting himself or herself under the Plan. The
Board shall have the authority to remove, replace or fill any vacancy of any
member of the Committee upon notice to the Committee and the affected member.
Any member of the Committee may resign upon notice to the Board. The Committee
may allocate among one or more of its members, or may delegate to an officer of
the Company, such responsibility and authority as it determines. Subject to the
provisions of the Plan, the Committee is authorized to:
A. Interpret the provisions of the Plan and any Award or Award
Agreement, and make all rules and determinations that it deems necessary or
advisable to the administration of the Plan;
B. Determine which employees of the Company or an Affiliate shall be
designated as Key Employees and which of the Key Employees shall be granted
Awards;
C. Determine the Key Non-Employees to whom Awards, other than Incentive
Options and Performance Awards for which Key Non-Employees shall not be
eligible, shall be granted;
D. Determine whether an Option to be granted shall be an Incentive
Option or Nonstatutory Option;
E. Determine the number of Shares for which an Option, an IT
Professional Option or Restricted Stock shall be granted;
F. Determine the number of Rights, the Cash Award or the Performance
Award to be granted;
G. Provide for the acceleration of the right to exercise any Award; and
H. Specify the terms, conditions, and limitations upon which Awards may
be granted;
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be made and
prescribed in the context of preserving the tax status of the Incentive Options
as incentive stock options within the meaning of Section 422 of the Code.
The Committee may delegate to one or more employees of the Company or
its Affiliates any duty, responsibility or authority of the Committee under the
Plan pursuant to such conditions or limitations as the Committee may establish
except that only the Committee may select and grant Awards to Participants who
are subject to Section 16 of the Exchange Act. All determinations of the
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<PAGE>
Committee shall be made by a majority of its members. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Award.
The Committee shall have the authority at any time to cancel Awards for
reasonable cause and to provide for the conditions and circumstances under which
Awards shall be forfeited.
Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion, and in the case of any
determination relating to an Award, may be made at the time of the grant of the
Award or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Company and the Participants. No determination shall be subject to
DE NOVO review if challenged in court.
V. ELIGIBILITY FOR PARTICIPATION
Awards may be granted under this Plan only to Key Employees and Key
Non-Employees of the Company or its Affiliates. The foregoing notwithstanding,
each Participant receiving an Incentive Option must be a Key Employee of the
Company or of an Affiliate at the time the Incentive Option is granted.
The Committee may at any time and from time to time grant one or more
Awards to one or more Key Employees or Key Non-Employees and may designate the
number of Shares, if applicable, to be subject to each Award so granted,
provided, however that no Incentive Option shall be granted after the expiration
of ten (10) years from the earlier of the date of the adoption of the Plan by
the Company or the approval of the Plan by the stockholders of the Company, and
provided further, that the Fair Market Value of the Shares (determined at the
time the Option is granted) as to which Incentive Options are exercisable for
the first time by any Key Employee during any single calendar year (under the
Plan and under any other incentive stock option plan of the Company or an
Affiliate) shall not exceed One Hundred Thousand Dollars ($100,000). To the
extent that the Fair Market Value of such Shares exceeds One Hundred Thousand
Dollars ($100,000), the Shares subject to Option in excess of One Hundred
Thousand Dollars ($100,000) shall, without further action by the Committee,
automatically be converted to Nonstatutory Options.
Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Award to a person not then in the employ of, or
engaged by, the Company or of an Affiliate, conditioned upon such person
becoming eligible to be granted an Award at or prior to the execution of the
Award Agreement evidencing the actual grant of such Award.
VI. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards may be
granted under the Plan on a stand alone, combination, or tandem basis:
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A. INCENTIVE OPTION
An Award in the form of an Option that shall comply with the
requirements of Section 422 of the Code. Subject to adjustments in accordance
with the provisions of Article XX, the aggregate number of Shares that may be
subject to Incentive Options under the Plan shall not exceed one million
(1,000,000).
B. NONSTATUTORY OPTION
An Award in the form of an Option that shall not be intended to comply
with the requirements of Section 422 of the Code.
C. FORMULA OPTION
An Award in the form of an Option granted to a Non-Employee Board
Member at the time of his or her initial election to the Board, or any
subsequent re-election.
D. RESTRICTED STOCK
An Award made to a Participant in Common Stock or denominated in units
of Common Stock, subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the Award
Agreement, including but not limited to continuous service with the Company or
its Affiliates, achievement of specific business objectives, increases in
specified indices, attaining growth rates, and other measurements of Company or
Affiliate performance.
E. STOCK APPRECIATION RIGHT
An Award in the form of a Right to receive the excess of the Fair
Market Value of a Share on the date the Right is exercised over the Fair Market
Value of a Share on the date the Right was granted.
F. DIVIDEND EQUIVALENTS
An Award in the form of and based upon the value of dividends of
Shares.
G. PERFORMANCE AWARDS
An Award made to a Participant that is subject to performance
conditions specified by the Committee, including but not limited to continuous
service with the Company or its Affiliates, achievement of specific business
objectives, increases in specified indices, attaining growth rates, and other
measurements of Company or Affiliate performance.
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<PAGE>
H. CASH AWARDS
An Award made to a Participant and denominated in cash, with the
eventual payment subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the Award
Agreement.
I. IT PROFESSIONAL OPTIONS
An Award in the form of an Option granted to an IT Professional subject
to the exercise and duration requirements specified in Article IX.
Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of
an Award Agreement to each Participant shall constitute an agreement between the
Company and the Participant as to the terms and conditions of the Award.
VII. TERM AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS
Each Option shall be set forth in an Award Agreement, duly executed on
behalf of the Company and by the Participant to whom such Option is granted.
Except for the setting of the Option price under Paragraph A, no Option shall be
granted and no purported grant of any Option shall be effective until such Award
Agreement shall have been duly executed on behalf of the Company and by the
Participant. Each such Award Agreement shall be subject to at least the
following terms and conditions:
A. OPTION PRICE
The purchase price of the Shares covered by each Option granted under
the Plan shall be determined by the Committee. The Option price per share of the
Shares covered by each Nonstatutory Option shall be at such amount as may be
determined by the Committee in its sole discretion on the date of the grant of
the Option. In the case of an Incentive Option, if the Participant owns directly
or by reason of the applicable attribution rules ten percent (10%) or less of
the total combined voting power of all classes of share capital of the Company,
the Option price per share of the Shares covered by each Incentive Option shall
be not less than the Fair Market Value of the Shares on the date of the grant of
the Incentive Option. In all other cases of incentive Options, the Option price
shall be not less than one hundred ten percent (110%) of the Fair Market Value
on the date of grant.
B. NUMBER OF SHARES
Each Option shall state the number of Shares to which it pertains.
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<PAGE>
C. TERM OF OPTION
Each Incentive Option shall terminate not more than ten (10) years from
the date of the grant thereof, or at such earlier time as the Award Agreement
may provide, and shall be subject to earlier termination as herein provided,
except that if the Option price is required under Paragraph A of this Article
VII to be at least one hundred ten percent (110%) of Fair Market Value, each
such Incentive Option shall terminate not more than five (5) years from the date
of the grant thereof, and shall be subject to earlier termination as herein
provided. The Committee shall determine the time at which a Nonstatutory Option
shall terminate.
D. DATE OF EXERCISE
Upon the authorization of the grant of an Option, or at any time
thereafter, the Committee may, subject to the provisions of Paragraph C of this
Article VII, prescribe the, date or dates on which the Option becomes
exercisable, and may provide that the Option become exercisable in installments
over a period of years, or upon the attainment of stated goals. The Committee,
in its discretion, shall have the power to accelerate the date or dates on which
the Option becomes exercisable.
E. MEDIUM OF PAYMENT
The Option price shall be payable upon the exercise of the Option, as
set forth in Paragraph A. It shall be payable in such form (permitted by Section
422 of the Code in the case of Incentive Options) as the Committee shall, either
by rules promulgated pursuant to the provisions of Article IV of the Plan, or in
the particular Award Agreement, provide.
F. TERMINATION OF EMPLOYMENT
1. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for any reason other
than death, Disability, or termination "for cause", as defined in
subparagraph (2) below, may exercise any Option granted to such
Participant, to the extent that the right to purchase Shares thereunder
has become exercisable on the date of such termination, but only within
three (3) months after such date, or, if earlier, within the originally
prescribed term of the Option. A Participant's employment shall not be
deemed terminated by reason of a transfer to another employer that is
the Company or an Affiliate.
2. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate "for cause" shall, upon
such termination, cease to have any right to exercise any Option. For
purposes of this Plan, cause shall mean (i) a Participant's theft or
embezzlement, or attempted theft or embezzlement, of money or property
of the Company or of an Affiliate, a Participant's perpetration or
attempted perpetration of fraud, or a Participant's participation in a
fraud or attempted fraud, on the Company or an Affiliate or a
Participant's unauthorized appropriation of, or a Participant's attempt
to misappropriate, any tangible or intangible assets or property of the
Company or an Affiliate; (ii) any act or acts of disloyalty,
dishonesty, misconduct, moral turpitude, or any other act or acts by a
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Participant injurious to the interest, property, operations, business
or reputation of the Company or an Affiliate; (iii) a Participant's
commission of a felony or any other crime the commission of which
results in injury to the Company or an Affiliate; or (iv) any violation
of any restriction on the disclosure or use of confidential information
of the Company or an Affiliate, or client, prospect, or merger or
acquisition target, or on competition with the Company or an Affiliate
or any of its businesses as then conducted. The determination of the
Committee as to the existence of cause shall be conclusive and binding
upon the Participant and the Company.
3. A Participant who is absent from work with the Company or
an Affiliate because of temporary disability (any disability other than
a Disability), or who is on leave of absence for any purpose permitted
by any authoritative interpretation (i.e., regulation, ruling, case
law, etc.) of Section 422 of the Code, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to have
terminated his or her employment or relationship with the Company or
with an Affiliate, except as the Committee may otherwise expressly
provide or determine.
4. Paragraph F(1) shall control and fix the rights of a
Participant who ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate for any reason other than Disability, death,
or termination "for cause", and who subsequently becomes Disabled or
dies. Nothing in Paragraphs Q and H of this Article VII shall be
applicable in any such case except that, in the event of such a
subsequent Disability or death within the three (3) month period after
the termination of employment or, if earlier, within the originally
prescribed term of the Option, the Participant or the Participant's
estate or personal representative may exercise the Option permitted by
this Paragraph F within twelve (12) months after the date of Disability
or death of such Participant, but in no event beyond the originally
prescribed term of the Option.
G. TOTAL AND PERMANENT DISABILITY
A Participant who ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant (i) to the extent that the right to purchase Shares
thereunder has become exercisable on or before the date such Participant becomes
Disabled as determined by the Committee, and (ii) if the Option becomes
exercisable periodically, to the extent of any additional rights that would have
become exercisable had the Participant not become so Disabled until after the
close of business on the next periodic, exercise date.
A Disabled Participant shall exercise such rights, if at all, only
within a period of not more than twelve (12) months after the date that the
Participant became Disabled as determined by the Committee (notwithstanding that
the Participant might have been able to exercise the Option as to some or all of
the Shares on a later date if the Participant had not become Disabled) or, if
earlier, within the originally prescribed term of the Option.
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H. DEATH
In the event that a Participant to whom an Option has been granted
ceases to be an employee or Key Non-Employee of the Company or of an Affiliate
by reason of such Participant's death, such Option, to the extent that the right
is exercisable but not exercised on the date of death, may be exercised by the
Participant's estate or personal representative within twelve (12) months after
the date of death of such Participant or, if earlier, within the originally
prescribed term of the Option, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
the Participant were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. EXERCISE OF OPTION AND ISSUANCE OF STOCK
Options shall be exercised by giving written notice to the Company.
Such written notice shall: (i) be signed by the person exercising the Option;
(ii) state the number of Shares with respect to which the Option is being
exercised; (iii) contain the warranty required by paragraph M of this Article
VII, if applicable; and (iv) specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10) days after the date
of such written notice, as the date on which the Shares will be purchased. Such
tender and conveyance shall take place at the principal office of the Company
during ordinary business hours, or at such other hour and place agreed upon by
the Company and the person or persons exercising the Option. On the date
specified in such written notice (which date may be extended by the Company in
order to comply with any law or regulation that requires the Company to take any
action with respect to the Option Shares prior to the issuance thereof), the
Company shall accept payment for the Option Shares in cash, by bank or certified
check, by wire transfer, or by such other means as may be approved by the
Committee and shall deliver to the person or persons exercising the Option in
exchange therefor an appropriate certificate or certificates for fully paid
nonassessable Shares or undertake to deliver certificates within a reasonable
period of time. In the event of any failure to take up and pay for the number of
Shares specified in such written notice on the date set forth therein (or on the
extended date as above provided), the right to exercise the Option shall
terminate with respect to such number of Shares, but shall continue with respect
to the remaining Shares covered by the Option and not yet acquired pursuant
thereto.
If approved in advance by the Committee, payment in full or in part
also may be made (i) by delivering Shares already owned by the Participant
having a total Fair Market Value on the date of such delivery equal to the
Option price; (ii) by the execution and delivery of a note or other evidence of
indebtedness (and any security agreement thereunder) satisfactory to the
Committee; (iii) by authorizing the Company to retain Shares that otherwise
would be issuable upon exercise of the Option having a total Fair Market Value
on the date of delivery equal to the Option price; (iv) by the delivery of cash
or the extension of credit by a broker-dealer to whom the Participant has
submitted a notice of exercise or otherwise indicated an intent to exercise an
Option (in accordance with part 220, Chapter II, Title 12 of the Code of Federal
Regulations, a so-called "cashless" exercise); or (v) by any combination of the
foregoing.
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J. RIGHTS AS A STOCKHOLDER
No participant to whom an Option has been granted shall have rights as
a stockholder with respect to any Shares covered by such Option except as to
such Shares as have been registered in the Company's share register in the name
of such Participant upon the due exercise of the Option and tender of the full
Option price.
K. ASSIGNABILITY AND TRANSFERABILITY OF OPTION
Unless otherwise permitted by the Code and by Rule 16b-3 of the
Exchange Act, if applicable, and approved in advance by the Committee, an Option
granted to a Participant shall not be transferable by the Participant and shall
be exercisable, during the Participant's lifetime, only by such Participant or,
in the event of the Participant's incapacity, his guardian or legal
representative. Except as otherwise permitted herein, such Option shall not be
assigned, pledged, or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, or similar process
and any attempted transfer, assignment, pledge, hypothecation or other
disposition of any Option or of any rights granted thereunder contrary to the
provisions of this Paragraph K, or the levy of any attachment or similar process
upon an option or such rights, shall be null and void.
L. OTHER PROVISIONS
The Award Agreement for an Incentive Option shall contain such
limitations and restrictions upon the exercise of the Option as shall be
necessary in order that such Option can be an "incentive stock option" within
the meaning of Section 422 of the Code. Further, the Award agreements authorized
under the Plan shall be subject to such other terms and conditions including,
without limitation, restrictions upon the exercise of the Option, as the
Committee shall deem advisable and which, in the case of Incentive Options, are
not inconsistent with the requirements of Section 422 of the Code.
M. PURCHASE FOR INVESTMENT
If Shares to be issued upon the particular exercise of an Option shall
not have been effectively registered under the Securities Act of 1933, as now in
force or hereafter amended, the Company shall be under no obligation to issue
the Shares covered by such exercise unless and until the following conditions
have been fulfilled. The person who exercises such Option shall warrant to the
Company that, at the time of such exercise, such person is acquiring his or her
Option Shares for investment and not with a view to, or for or in connection
with, the distribution of any such Shares, and shall make such other
representations, warranties, acknowledgments, and affirmations, if any, as the
Committee may require. In such event, the person acquiring such Shares shall be
bound by the provisions of the following legend (or similar legend) which shall
be endorsed upon the certificate(s) evidencing his or her Option Shares issued
pursuant to such exercise.
"The shares represented by this certificate have been
acquired for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933
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or an opinion of counsel satisfactory to the Company that an
exemption from registration is then available."
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining any consent that the
Company deem necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
VIII. FORMULA OPTIONS
A. Each Non-Employee Board Member shall be granted automatically a
Formula Option to purchase five thousand (5,000) Shares upon his or her initial
election and qualification as a Non-Employee Board Member, and, thereafter,
shall be granted automatically a Formula Option to purchase two thousand, five
hundred (2,500) Shares upon each re-election and qualification as a Non-Employee
Board Member.
B. The purchase price of the Shares subject to the Formula Option shall
be equal to one hundred percent (100%) of the Fair Market Value as of the date
of grant.
C. The Shares subject to the Formula Option granted to a Non-Employee
Board Members shall become exercisable cumulatively, in accordance with the
following schedule:
PERCENTAGE OF
YEARS ELAPSED SHARES FOR WHICH FORMULA
SINCE DATE OF GRANT OPTION MAY BE EXERCISED
------------------- -----------------------
Less than 1 0%
1 or more 100%
The foregoing schedule notwithstanding, if a Non-Employee Board Member shall
cease to be a director of the Company because of death or Disability, all Shares
for which a Formula Option has been granted shall become immediately exercisable
and shall be exercisable in accordance with Paragraphs G and H of Article VII.
If a Non-Employee Board Member ceases to be a director of the Company for any
reason other than death or Disability, his or her right to exercise the Formula
Option, and the timing of such exercise, shall be governed by the applicable
provisions of Paragraph F of Article VII.
D. Formula Options shall be evidenced by an Award Agreement which shall
conform to the requirements of the Plan, and may contain such other provisions
not inconsistent therewith, as the Committee shall deem advisable. The
provisions of Article VII governing Nonstatutory Options, and the exercise and
issuance thereof, shall apply to Formula Options to the went such provisions we
not inconsistent with this Article VIII.
IX. IT PROFESSIONAL OPTIONS
A. NUMBER OF SHARES
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Each IT Professional Option shall state the number of Shares to which
it pertains. An IT Professional Option shall not be intended to be an "incentive
stock option" as defined in Section 422 of the Code.
B. PURCHASE PRICE
The purchase price of the Shares subject to each IT Professional Option
shall be equal to one hundred percent (100%) of the Fair Market Value as of the
date of grant.
C. EXERCISABILITY
Upon the authorization of the grant of an IT Professional Option, or at
any time thereafter, the Committee may, subject to the provisions of Paragraph D
of this Article IX, prescribe the date or dates on which the IT Professional
Option becomes exercisable, and may provide that the IT Professional Option
becomes exercisable in installments over a period of years, or upon the
attainment of stated goals. The Committee, in its discretion, shall have the
power to accelerate the date or dates on which the IT Professional Option
becomes exercisable.
D. TERM OF OPTION
Each IT Professional Option shall terminate not more than ten (10)
years from the date of the grant thereof, or at such earlier time as the Award
Agreement may provide, and shall be subject to earlier termination as herein
provided.
E. MEDIUM OF PAYMENT
The Option price shall be payable upon the exercise of the Option, as
set forth in Paragraph B. It shall be payable in such form as the Committee
shall, either by rules promulgated pursuant to the provisions of Article IV of
the Plan, or in the particular Award Agreement, provide.
F. TERMINATION FOR CAUSE
1. A Participant who ceases to be an IT Professional "for
cause" shall, upon such termination, cease to have any right to
exercise any Option. For purposes of this Plan, cause shall mean (i) a
Participant's theft or embezzlement, or attempted theft or
embezzlement, of money or property of the Company or of an Affiliate, a
Participant's perpetration or attempted perpetration of fraud, or a
Participant's participation in a fraud or attempted fraud, on the
Company or an Affiliate or a Participant's unauthorized appropriation
of, or a Participant's attempt to misappropriate, any tangible or
intangible assets or property of the Company or an Affiliate; (ii) any
act or acts of disloyalty, dishonesty, misconduct, moral turpitude, or
any
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other act or acts by a Participant injurious to the interest, property,
operations, business or reputation of the Company or an Affiliate;
(iii) a Participant's commission of a felony or any other crime the
commission of which results in injury to the Company or an Affiliate;
or (iv) any violation of any restriction on the disclosure or use of
confidential information of the Company or an Affiliate, or client,
prospect, or merger or acquisition target, or on competition with the
Company or an Affiliate or any of its businesses as then conducted. The
determination of the Committee as to the existence of cause shall be
conclusive and binding upon the Participant and the Company.
G. EXERCISE OF OPTION AND ISSUANCE OF STOCK
IT Professional Options shall be exercised by giving written notice to
the Company. Such written notice shall: (i) be signed by the person exercising
the IT Professional Option; (ii) state the number of Shares with respect to
which the IT Professional Option is being exercised; (iii) contain the warranty
required by Paragraph J of this Article IX, if applicable; and (iv) specify a
date (other than a Saturday, Sunday or legal holiday) not less than five (5) nor
more than ten (10) days after the date of such written notice, as the date on
which the Shares will be purchased. Such tender and conveyance shall take place
at the principal office of the Company during ordinary business hours, or at
such other hour and place agreed upon by the Company and the person or persons
exercising the IT Professional Option. On the date specified in such written
notice (which date may be extended by the Company in order to comply with any
law or regulation that requires the Company to take any action with respect to
the IT Professional Option Shares prior to the issuance thereof), the Company
shall accept payment for the IT Professional Option Shares in cash, by bank or
certified check, by wire transfer, or by such other means as may be approved by
the Committee and shall deliver to the person or persons exercising the IT
Professional Option in exchange therefor an appropriate certificate or
certificates for fully paid nonassessable Shares or undertake to deliver
certificates within a reasonable period of time. In the event of any failure to
take up and pay for the number of Shares specified in such written notice on the
date set forth therein (or on the extended date as above provided), the right to
exercise the IT Professional Option shall terminate with respect to such number
of Shares, but shall continue with respect to the remaining Shares covered by
the IT Professional Option and not yet acquired pursuant thereto.
If approved in advance by the Committee, payment in full or in part
also may be made (i) by delivering Shares already owned by the Participant
having a total Fair Market Value on the date of such delivery equal to the
Option price; (ii) by the execution and delivery of a note or other evidence of
indebtedness (and any security agreement thereunder) satisfactory to the
Committee; (iii) by authorizing the Company to retain Shares that otherwise
would be issuable upon exercise of the Option having a total Fair Market Value
on the date of delivery equal to the Option price; (iv) by the delivery of cash
or the extension of credit by a broker-dealer to whom the Participant has
submitted a notice of exercise or otherwise indicated an intent to exercise an
Option (in accordance with part 220, Chapter II, Title 12 of the Code of Federal
Regulations, a so-called "cashless" exercise); or (v) by any combination of the
foregoing.
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H. RIGHTS AS A STOCKHOLDER
No participant to whom an IT Professional Option has been granted shall
have rights as a stockholder with respect to any Shares covered by such IT
Professional Option except as to such Shares as have been registered in the
Company's share register in the name of such Participant upon the due exercise
of the IT Professional Option and tender of the full IT Professional Option
price.
I. ASSIGNABILITY AND TRANSFERABILITY OF OPTION
An IT Professional Option granted to a Participant shall not be
transferable by the Participant and shall be exercisable, during the
Participant's lifetime, only by such Participant or, in the event of the
Participant's incapacity, his guardian or legal representative. Such IT
Professional Option shall not be assigned, pledged, or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment, or similar process and any attempted transfer,
assignment, pledge, hypothecation or other disposition of any IT Professional
Option or of any rights granted thereunder contrary to the provisions of this
Paragraph I, or the levy of any attachment or similar process upon an option or
such rights, shall be null and void.
J. PURCHASE FOR INVESTMENT
If Shares to be issued upon the particular exercise of an IT
Professional Option shall not have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended, the Company shall
be under no obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled. The person who exercises
such IT Professional Option shall warrant to the Company that, at the time of
such exercise, such person is acquiring his or her IT Professional Option Shares
for investment and not with a view to, or for or in connection with, the
distribution of any such Shares, and shall make such other representations,
warranties, acknowledgments, and affirmations, if any, as the Committee may
require. In such event, the person acquiring such Shares shall be bound by the
provisions of the following legend (or similar legend) which shall be endorsed
upon the certificate(s) evidencing his or her IT Professional Option Shares
issued pursuant to such exercise.
"The shares represented by this certificate have been
acquired for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining any consent that the
Company deem necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
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X. TERMS AND CONDITIONS OF RESTRICTED STOCK
A. The Committee may from time to time grant an Award in Shares of
Common Stock or grant an Award denominated in units of Common Stock, for such
consideration, if any, as the Committee deems appropriate (which amount may be
less than the Fair Market Value of the Common Stock on the date of the Award),
and subject to such restrictions and conditions and other terms as the Committee
may determine at the time of the Award (including, but not limited to,
continuous service with the Company or its Affiliates, achievement of specific
business objectives, increases in specified indices, attaining growth rates, and
other measurements of Company or Affiliate performance), and subject further to
the general provisions of the Plan, the applicable Award Agreement and the
following specific rules.
B. If Shares of Restricted Stock are awarded, such Shares cannot be
assigned, sold, transferred, pledged, or hypothecated prior to the lapse of the
restrictions applicable thereto, and, in no event, absent Committee approval,
prior to six (6) months from the date of the Award. The Company shall issue, in
the name of the Participant, stock certificates representing the total number of
Shares of Restricted Stock awarded to the Participant, as soon as may be
reasonably practicable after the grant of the Award, which certificates shall be
held by the Secretary of the Company as provided in Paragraph G.
C. Restricted Stock issued to a Participant under the Plan shall be
governed by an Award Agreement that shall specify whether Shares of Common Stock
are awarded to the Participant, or whether the Award shall be one not of Shares
of Common Stock but one denominated in units of Common Stock, any consideration
required thereto, and such other provisions as the Committee shall determine.
D. Subject to the provisions of Paragraphs B and E hereof and the
restrictions set forth in the related Award Agreement, the Participant receiving
an Award of Shares of Restricted Stock shall thereupon be a stockholder with
respect to all of the Shares represented by such certificate or certificates and
shall have the rights of a stockholder with respect to such Shares, including
the right to vote such Shares and to receive dividends and other distributions
made with respect to such Shares. All Common Stock received by a Participant as
the result of any dividend on the Shares of Restricted Stock, or as the result
of any stock split, stock distribution, or combination of the Shares affecting
Restricted Stock, shall be subject to the restrictions set forth in the related
Award Agreement.
E. Restricted Stock or units of Restricted Stock awarded to a
Participant pursuant to the Plan will be forfeited, and any Shares of Restricted
Stock or units of Restricted Stock sold to a Participant pursuant to the Plan
may, at the Company's option, be resold to the Company for an amount equal to
the price paid therefor, and in either case, such Restricted Stock or units of
Restricted Stock shall revert to the Company, if the Company so determines in
accordance with Article XV or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment with the Company
or its Affiliates terminates, other than for reasons set forth in Article XV,
prior to the expiration of the forfeiture or restriction provisions set forth in
the Award Agreement.
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F. The Committee, in its discretion, shall have the power to accelerate
the date on which the restrictions contained in the Award Agreement shall lapse
with respect to any or all Restricted Stock awarded under the Plan.
G. The Secretary of the Company shall hold the certificate or
certificates representing Share of Restricted Stock issued under the Plan,
properly endorsed for transfer, on behalf of each Participant who holds such
Shares, until such time as the Shares of Restricted Stock are forfeited, resold
to the Company, or the restrictions lapse. Any Restricted Stock denominated in
units of Common Stock, if not previously forfeited, shall be payable in
accordance with Article XVII as soon as practicable after the restrictions
lapse.
H. The Committee may prescribe such other restrictions, conditions, and
terms applicable to Restricted Stock issued to a Participant under the Plan that
are neither inconsistent with nor prohibited by the Plan or the Award Agreement,
including, without limitation, terms providing for a lapse of the restrictions
of this Article or any Award Agreement in installments.
XI. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the Company,
a Participant may be granted a Right. Each Right shall be granted subject to
such restrictions and conditions and other terms as the Committee may specify in
the Award Agreement at the time the Right is granted, subject to the general
provisions of the Plan, and the following specific rules.
A. Rights may be granted, if at all, either singly, in combination with
another Award, or in tandem with another Award. At the time of grant of a Right,
the Committee shall specify the base price of Common Stock to be used in
connection with the calculation described in Paragraph B below, provided that
the base price shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant, unless approved by
the Board.
B. Upon exercise of a Right, which shall be not less than six (6)
months from the date of the grant, the Participant shall be entitled to receive
in accordance with Article XVII, and as soon as practicable after exercise, the
excess of the Fair Market Value of one Share of Common Stock on the date of
exercise over the base price specified in such Right, multiplied by the number
of Shares of Common Stock then subject to the Right, or the portion thereof
being exercised.
C. Notwithstanding anything herein to the contrary, if the Award
granted to a Participant allows him or her to elect to cancel all or any portion
of an unexercised Option by exercising an additional or tandem Right, then the
Option price per Share of Common Stock shall be used as the base price specified
in Paragraph A to determine the value of the Right upon such exercise and, in
the event of the exercise of such Right, the Company's obligation with respect
to such Option or portion thereof shall be discharged by payment of the Right so
exercised, In the event of such a cancellation, the number of Shares as to which
such Option was canceled shall become available for use under the Plan, less the
number of Shares, if any, received by the Participant upon such cancellation in
accordance with Article XVII.
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D. A Right may be exercised only by the Participant (or, if applicable
under Article XV, by a legatee or legatees of such Right, or by the
Participant's executors, personal representatives or distributees).
XII. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENTS
A Participant may be granted an Award in the form of Dividend
Equivalents. Such an Award shall entitle the Participant to receive cash,
Shares, other Awards or other property equal in value to dividends paid with
respect to a specified number of Shares. Dividend Equivalents may be awarded on
a free-standing basis or in connection with another Award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Shares, Awards or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may specify.
XIII. TERMS AND CONDITIONS OF PERFORMANCE AWARDS
A. A Participant may be granted an Award that is subject to performance
conditions specified by the Committee. The Committee may use business criteria
and other measures of performance it deems appropriate in establishing any
performance conditions (including, but not Limited to, continuous service with
the Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and may exercise its discretion to reduce
or increase the amounts payable under any Award subject to performance
conditions, except as otherwise limited under Paragraphs C and D, below, in the
case of a Performance Award intended to qualify under Code Section 162(m).
B. Any Performance Award will be forfeited if the Company so determines
in accordance with Article XVI or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment with the Company
or its Affiliates terminates, other than for reasons set forth in Article XV,
prior to the expiration of the time period over which the performance conditions
are to be measured.
C. If the Committee determines that a Performance Award to be granted
to a Key Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant and/or settlement of such Performance
Award shall be contingent upon achievement of preestablished performance goals
and other terms set forth in this Paragraph C.
1. PERFORMANCE GOALS GENERALLY. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to such criteria,
as specified by the Committee consistent with this Paragraph C.
Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m), including the requirement that the
level or levels of performance targeted by the Committee result in the
performance goals being "substantially uncertain". The Committee may
determine that more than one performance goal must be achieved as a
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condition to settlement of such Performance Awards. Performance goals
may differ for Performance Awards granted to any one Participant or to
different Participants.
2. BUSINESS CRITERIA. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Affiliates or business units of the Company (except with respect to the
total stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance goals for
such Performance Awards: (a) total stockholder return; (b) such total
stockholder return as compared to the total return (on a comparable
basis) of a publicly available index such as, but not limited to, the
Standard & Poor's 500 or the Nasdaq-U.S. Index; (c) net income; (d)
pre-tax earnings; (e) EBITDA; (f) pre-tax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or
special items; (g) operating margin; (h) earnings per share; (i) return
on equity; (j) return on capital; (k) return on investment; (l)
operating income, excluding the effect of charges for acquired
in-process technology and before payment of executive bonuses; (m)
earnings per share, excluding the effect of charges for acquired
in-process technology and before payment of executive bonuses; (n)
working capital; (o) sales; and (p) total revenues. The foregoing
business criteria also may be used in establishing performance goals
for Cash Awards granted under Article XIII hereof.
D. Achievement of performance goals in respect of such Performance
Awards shall be measured over such periods as may be specified by the Committee.
Performance goals shall be established on or before the dates that are required
or permitted for "performance-based compensation" under Code Section 162(m).
E. Settlement of Performance Awards may be in cash or Shares, or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable in respect of a Performance Award that is subject to Code
Section 162(m).
XIV. TERMS AND CONDITIONS OF CASH AWARDS
A. The Committee may from time to time authorize the award of cash
payments under the Plan to Participants, subject to such restrictions and
conditions and other terms as the Committee may determine at the time of
authorization (including, but not limited to, continuous service with the
Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and subject to the general provisions of
the Plan, the applicable Award Agreement, and the following specific rules.
B. Any Cash Award will be forfeited if Company so determines in
accordance with Article XVI or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment or engagement with
the Company or its Affiliates terminates, other than for reasons set forth in
Article XV, prior to the attainment of any goals set forth in the Award
Agreement
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or prior to the expiration of the forfeiture or restriction provisions set forth
in the Award Agreement, whichever is applicable.
C. The Committee, in its discretion, shall have the power to change the
date on which the restrictions contained in the Award Agreement shall lapse, or
the date on which goals are to be measured, with respect to any Cash Award.
D. Any Cash Award, if not previously forfeited, shall be payable in
accordance with Article XVII as soon as practicable after the restrictions lapse
or the goals are attained.
E. The Committee may prescribe such other restrictions, conditions, and
terms applicable to the Cash Awards issued to a Participant under the Plan that
are neither inconsistent with nor prohibited by the Plan or the Award Agreement,
including, without limitation, terms providing for a lapse of the restrictions,
or a measurement of the goals, in installments.
XV. TERMINATION OF EMPLOYMENT
Except as may otherwise be (i) provided in Article VIII for Options,
(ii) provided for under the Award Agreement, or (iii) permitted pursuant to
Paragraphs A through C of this Article XV (subject to the limitations under the
Code for Incentive Options), if the employment of a Participant terminates, all
unexpired, unpaid, unexercised, or deferred Awards shall be canceled
immediately.
A. RETIREMENT UNDER A COMPANY OR AFFILIATE RETIREMENT PLAN. When a
Participant's employment terminates as a result of retirement as defined under a
Company or Affiliate retirement plan, the Committee may permit Awards to
continue in effect beyond the date of retirement in accordance with the
applicable Award Agreement, and/or the exercisability and vesting of any Award
may be accelerated.
B. RESIGNATION IN THE BEST INTERESTS OF THE COMPANY OR AN AFFILIATE.
When a Participant resigns from the Company or an Affiliate and, in the judgment
of the chief executive officer or other senior officer designated by the
Committee, the acceleration and/or continuation of outstanding Awards would be
in the best interests of the Company, the Committee may (i) authorize, where
appropriate, the acceleration and/or continuation of all or any part of Awards
granted prior to such termination and (ii) permit the exercise, vesting, and
payment of such Awards for such period as may be set forth in the applicable
Award Agreement, subject to earlier cancellation pursuant to Article XVI or at
such time as the Committee shall deem the continuation of all or any part of the
Participants Awards are not in the Company's or its Affiliate's best interests.
C. DEATH OR DISABILITY OF A PARTICIPANT.
1. In the event of a Participant's death, the Participant's
estate or beneficiaries shall have a period up to the earlier of (i)
the expiration date specified in the Award Agreement, or (ii) the
expiration date specified in Paragraph H of Article VIII, within which
to receive or exercise any outstanding Awards held by the Participant
under such terms as may be specified in the applicable Award Agreement.
Rights to any such outstanding Awards
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shall pass by will or the laws of descent and distribution in the
following order: (a) to beneficiaries so designated by the Participant;
(b) to a legal representative of the Participant; or (c) to the persons
entitled thereto as determined by a court of competent jurisdiction.
Awards so passing shall be made at such times and in such manner as if
the Participant were living.
2. In the event a Participant is determined by the Company to
be Disabled, and subject to the limitations of Paragraph G of Article
VIII, Awards may be paid to, or exercised by, the Participant, if
legally competent, or by a legally designated guardian or other
representative if the Participant is legally incompetent by virtue of
such Disability.
3. After the death or Disability of a Participant, the
Committee may in its sole discretion at any time (i) terminate
restrictions in Award Agreements; (ii) accelerate any or all
installments and rights; and/or (iii) instruct the Company to pay the
total of any accelerated payments in a lump sum to the Participant, the
Participant's estate, beneficiaries or representative, notwithstanding
that, in the absence of such termination of restrictions or
acceleration of payments, any or all of the payments due under the
Awards ultimately might have become payable to other beneficiaries.
XVI. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may
cancel any unexpired, unpaid, unexercised, or deferred Awards at any time if the
Participant is not in compliance with the applicable provisions of the Award
Agreement, the Plan, or with the following conditions:
A. A Participant shall not breach any protective agreement entered into
between him or her and the Company or any Affiliates, or render services for any
organization or engage directly or indirectly in any business which, in the
judgment of the chief executive officer of the Company or other senior officer
designated by the Committee, is or becomes competitive with the Company, or
which organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company. For a Participant whose employment has
terminated, the judgment of the chief executive officer shall be based on terms
of the protective agreement, if applicable, or on the Participant's position and
responsibilities while employed by the Company or its Affiliates, the
Participant's post-employment responsibilities and position with the other
organization or business, the extent of past, current, and potential competition
or conflict between the Company and the other organization or business, the
effect of the Participants assuming the post employment position on the
Company's or its Affiliates customers, suppliers, investors, and competitors,
and such other considerations as are deemed relevant given the applicable facts
and circumstances. A Participant may, however, purchase as an investment or
otherwise, stock or other securities of any organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity interest
in the organization or business.
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B. A Participant shall not, without prior written authorization from
the Company, disclose to anyone outside the Company or its Affiliates, or use in
other than the Company's or Affiliate's business, any confidential information
or materials relating to the business of the Company or its Affiliates, acquired
by the Participant either during or after employment or engagement with the
Company or its Affiliates.
C. A Participant shall disclose promptly and assign to the Company all
right, title, and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment with the Company or an Affiliate,
relating in any manner to the actual or anticipated business, research, or
development work of the Company or its Affiliates, and shall do anything
reasonably necessary to enable the Company or its Affiliates to secure a patent,
trademark, copyright, or other protectable interest where appropriate in the
United States and in foreign countries.
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall
certify on a form acceptable to the Committee that he or she is In compliance
with the terms and conditions of the Plan, including the provisions of
Paragraphs A, B or C of this Article XVI. Failure to comply with the provisions
of Paragraphs A, B or C of this Article XVI prior to, or during the one (1) year
period after, any exercise, payment, or delivery pursuant to an Award shall
cause such exercise, payment, or delivery to be rescinded. The Company shall
notify the Participant in writing of any such rescission within two (2) years
after such exercise, payment, or delivery. Within ten (10) days after receiving
such a notice from the Company, the Participant shall pay to the Company the
amount of any gain realized or payment received as a result of the rescinded
exercise, payment, or delivery pursuant to the Award. Such payment shall be made
either in cash or by returning to the Company the number of Shares of Common
Stock that the Participant received in connection with the rescinded exercise,
payment, or delivery.
XVII. PAYMENT OF RESTRICTED STOCK, RIGHTS, PERFORMANCE AWARDS AND CASH AWARDS
Payment of Restricted Stock, Rights, Performance Awards and Cash Awards
may be made, as the Committee shall specify, in the form of cash, Shares of
Common Stock, or combinations thereof; provided, however, that a fractional
Share of Common Stock shall be paid in cash equal to the Fair Market Value of
the fractional Share of Common Stock at the time of payment
XVIII. WITHHOLDING
Except as otherwise provided by the Committee,
A. The Company shall have the power and right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local taxes required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan; and
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B. In the case of payments of Awards, or upon any other taxable event
hereunder, a Participant may elect, subject to the approval in advance by the
Committee, to satisfy the withholding requirement, if any, in whole or in part,
by having the Company withhold Shares of Common Stock that would otherwise be
transferred to the Participant having a Fair Market Value, on the date the tax
is to be determined, equal to the minimum marginal tax that could be imposed on
the transaction. All elections shall be made in writing and signed by the
Participant.
XIX. SAVINGS CLAUSE; COMPLIANCE WITH LAW
This Plan is intended to comply in all respects with applicable law and
regulations, including, (1) with respect to those Participants who are officers
or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the
Securities and Exchange Commission, if applicable, and (ii) with respect to
executive officers, Code Section 162(m). In case any one or more provisions of
this Plan shall be held invalid, illegal, or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3 and Code Section 162(m)),
the validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby and the invalid, illegal, or
unenforceable provision shall be deemed null and void; however, to the extent
permitted by law, any provision that could be deemed null and void shall first
be construed, interpreted, or revised retroactively to permit this Plan to be
construed in compliance with all applicable law (including Rule 16b-3 and Code
Section 162(m)) so as to foster the intent of this Plan. Notwithstanding
anything herein to the contrary, with respect to Participants who are officers
and directors for purposes of Section 16 of the Exchange Act, if applicable; and
if required to comply with rules promulgated thereunder, no grant of, or Option
to purchase, Shares shall permit unrestricted ownership of Shares by the
Participant for at least six (6) months from the, date of grant or Option,
unless the Board determines that the grant of, or Option to purchase, Shares
otherwise satisfies the then current Rule 16b-3 requirements.
The Committee may grant Awards and the Company may deliver Shares under
the Plan only in compliance with all applicable federal and state laws and
regulations and the rules of all stock exchanges on which the Company's stock is
listed at any time. An Option is exercisable only if either (i) a registration
statement pertaining to the Shares to be issued upon exercise of the Option has
been filed with and declared effective by the Securities and Exchange Commission
and remains effective on the date of exercise, or (ii) an exemption from the
registration requirements of applicable securities laws is available. The
Company is not required to file such a registration statement or to assure the
availability of such exemptions.
XX. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, spin-off, reclassification, change in
par value, stock split, combination of shares or dividends payable in capital
stock, or the like, appropriate adjustments to prevent dilution or enlargement
of the Awards granted to, or available for,
24
<PAGE>
Participants shall be made in the manner and kind of Shares for the purchase of
which Awards may be granted under the Plan, and, in addition, appropriate
adjustment shall be made in the number and kind of Shares and in the Option
price per share subject to outstanding Options. The foregoing notwithstanding,
no such adjustment shall be made, in an Incentive Option which shall, within the
meaning of Section 424 of the Code, constitute such a modification, extension,
or renewal of an Option as to cause it to be considered as the grant of a new
Option.
Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions of any
Award in the event of a tender offer for the Company's Shares, the adoption of a
plan of merger or consolidation under which a majority of the Shares of the
Company would be eliminated, or a sale of all or any portion of the Company's
assets or capital stock. Alternatively, the Company may, in its sole discretion,
cancel any or all Awards upon any of the foregoing events and provide for the
payment to Participants in cash of an amount equal to the value or appreciated
value, whichever is applicable, of the Award, as determined in good faith by the
Committee, at the close of business on the date of such event. The preceding two
sentences of this Article XX notwithstanding, the Company shall be required to
accelerate the timing of the exercise provisions of any Award if (i) any such
business combination is to be accounted for as a pooling-of-interests under APB
Opinion 16 and (ii) the timing of such acceleration does not prevent such
pooling-of-interests treatment.
Upon a business combination by the Company or any of its Affiliates
with any corporation or other entity through the adoption of a plan of merger or
consolidation or a share exchange or through the purchase of all or
substantially all of the capital stock or assets of such other corporation or
entity, the Board or the Committee may, in its sole discretion, grant Options
pursuant hereto to all or any persons who, on the effective date of such
transaction, hold outstanding options to purchase securities of such other
corporation or entity and who, on and after the effective date of such
transaction, will become employees or directors of, or consultants or advisors
to, the Company or its Affiliates. The number of Shares subject to such
substitute Options shall be determined in accordance with the terms of the
transaction by which the business combination is effected. Notwithstanding the
other provisions of this Plan, the other terms of such substitute Options shall
be substantially the same as or economically equivalent to the terms of the
options for which such Options are substituted, all as determined by the Board
or by the Committee, as the case may be. Upon the grant of substitute Options
pursuant hereto, the options to purchase securities of such other corporation or
entity for which such Options are substituted shall be canceled immediately.
XXI. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which Article XX is applicable, all Awards
granted hereunder shall terminate and become null and void; provided, however,
that if the rights of a Participant under the applicable Award have not
otherwise terminated and expired, the Participant may, if the Committee, in its
sole discretion so permits, have the right immediately prior to such dissolution
or liquidation to exercise any Award granted hereunder to the extent that the
right thereunder has become exercisable as of the date immediately prior to such
dissolution or liquidation.
25
<PAGE>
XXII. TERMINATION OF THE PLAN
The Plan shall terminate ten (10) years from the earlier of the date of
its adoption by the Board or the date of its approval by the stockholders. The
Plan may be terminated at an earlier date by vote of the stockholders or the
Board; provided, however, that any such earlier termination shall not affect any
Award Agreements executed prior to the effective date of such termination.
Notwithstanding anything in this Plan to the contrary, any Options granted prior
to the effective date of the Plan's termination may be exercised until the
earlier of (i) the date set forth in the Award Agreement, or (ii) in the case of
an Incentive Option, ten (10) years from the date the Option is granted; and the
provisions of the Plan with respect to the full and final authority of the
Committee under the Plan shall continue to control.
XXIII. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any amendment
shall be subject to the approval of the stockholders of the Company at or before
the next annual meeting of the stockholders of the Company if such stockholder
approval is required by the Code, any federal or state law or regulation, the
rules of any stock exchange or automated quotation system on which the Shares
may be listed or quoted, or if the Board, in its discretion, determines to
submit such changes to the Plan to its stockholders for approval.
XXIV. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from. terminating the employment of a Participant, nor to prevent a
Participant from terminating the Participant's employment with the Company or an
Affiliate.
XXV. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have
as directors or as members of the Committee, the members of the Committee shall
be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken by them
as directors or members of the Committee and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Board) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that the director or Committee member is liable for gross
negligence or willful misconduct in the performance of his or her duties. To
receive such indemnification, a director or Committee member must first offer in
writing to the Company the opportunity, at its own expense, to defend any such
action, suit or proceeding.
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XXVI. UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with Article
XVII, or otherwise, the Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock, or rights thereto under the Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Company, the Board, or the Committee be deemed to be a trustee of any
cash, Common Stock, or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant of cash,
Common Stock, or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award Agreement;
no such obligation of the Company shall be deemed to be secured by any pledge or
other encumbrance on any property of the Company. Neither the Company nor the
Board nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by the Plan.
XXVII. MITIGATION OF EXCISE TAX
If any payment or right accruing to a Participant under this Plan
(without the application of this Article XXVII), either alone or together with
other payments or rights accruing to the Participant from the Company or an
Affiliate, would constitute a "parachute payment" (as defined in Section 280G of
the Code and regulations thereunder), such payment or right shall be reduced to
the largest amount or greatest right that will result in no portion of the
amount payable or right accruing under the Plan being subject to an excise tax
under Section 4999 of the Code or being disallowed as a deduction under Section
280G of the Code. The determination of whether any reduction in the rights or
payments under this Plan is to apply shall be made by the Company. The
Participant shall cooperate in good faith with the Company in making such
determination and providing any necessary information for this purpose.
XXVIII. GOVERNING LAW
This Plan shall be governed by the laws of the State of Florida and
construed in accordance therewith.
Adopted this 21st day of April, 1998.
27
EXHIBIT 10.9
TECHNISOURCE, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement"), effective as of January
2, 1993, is made by and between Technisource, Inc., a Florida corporation (the
"Company"), and Paul Cozza (the "Recipient").
In consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Recipient agree as follows:
1. GRANT OF OPTION. The Company grants to the Recipient an option to
purchase 300,000 shares of the Company's common stock in accordance
with the terms and conditions of this Agreement (the "Option").
2. OPTION PRICE. The purchase price of the shares of stock covered by the
Option shall be $.1256 per share.
3. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of
stock subject to the Option are changed into or exchanged for a
different number or kind of shares of the Company or other securities
of the Company by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend or combination of shares,
the shares subject to the Option and the price per share shall be
equitably adjusted to reflect such changes. Such adjustment in the
Option shall be made without change in the total price applicable to
the unexercised portion of the Option (except for any change in the
aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option
price per share. Any such adjustment made by the Company shall be final
and binding upon the Recipient, the Company and all other interested
persons.
4. PERSON ELIGIBLE TO EXERCISE OPTION. During the lifetime of the
Recipient, only the Recipient may exercise the Option or any portion
thereof. After the death of the Recipient, any exercisable portion of
the Option may, prior to the date on which the Option expires under the
terms of this Agreement, be exercised by the Recipient's personal
representative or by any other person empowered to do so under the
Recipient's will, trust or under the then applicable laws of descent
and distribution.
5. MANNER OF EXERCISE. The Option, or any portion thereof, may be
exercised only in accordance with the terms of this Agreement and
solely by delivery to the Secretary of the Company of all of the
following items prior to the time when the Option or such portion
becomes unexercisable under the terms of this Agreement:
a. Notice in writing signed by the Recipient or the other person
then entitled to exercise the Option or portion thereof,
stating that the Option or
<PAGE>
portion thereof is thereby exercised, such notice complying
with all applicable rules (if any) established by the Company;
b. Full payment (in cash or by cashiers' or certified check) for
the shares with respect to which the Option or portion thereof
is exercised;
c. Full payment (in cash or by cashiers' or certified check) upon
demand of an amount sufficient to satisfy any federal
(including FICA and FUTA amounts), state, and/or local
withholding tax requirements at the time the Recipient or his
beneficiary recognizes income for federal, state, and/or local
tax purposes as the result of the receipt of Shares pursuant
to the exercise of the Option or portion thereof;
d. Unless a registration statement is filed with the Securities
and Exchange Commission and is effective with respect to the
shares underlying the Option, a bona fide written
representation and agreement, in a form satisfactory to the
Company, signed by the Recipient or other person then entitled
to exercise the Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for
investment and without any present intention of distributing
or reselling said shares or any of them except as may be
permitted under the Securities Act of 1933, as amended (the
"Act"), and then applicable rules and regulations thereunder,
and that the Recipient or other person then entitled to
exercise such Option or portion will indemnify the Company
against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Company
may, in its absolute discretion, take whatever additional
actions it deems appropriate to ensure the observance and
performance of such representations and agreement and to
effect compliance with all federal and state securities laws
or regulations. Without limiting the generality of the
foregoing, the Company may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of
shares acquired on an Option exercise does not violate the Act
and may issue stop-transfer orders covering such shares.
6. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares of stock
deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued
shares which have been reacquired by the Company. Such shares shall be
fully paid and nonassessable. Shares may be delivered under this
Agreement only in compliance with all applicable federal and state laws
and regulations and the rules of all stock exchanges on which the
Company's stock is listed at any time. The Option is exercisable only
if either (a) a registration statement pertaining to the shares to be
issued upon exercise of the Option has been filed with and declared
effective
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<PAGE>
by the Securities and Exchange Commission and remains effective on the
date of exercise, or (b) an exemption from the registration
requirements of applicable securities laws is available. This Agreement
does not require the Company, however, to file such a registration
statement or to assure the availability of such exemptions. Any
certificate issued to evidence shares issued under this Agreement may
bear such legends and statements, and shall be subject to such transfer
restrictions, as the Company deems advisable to assure compliance with
federal and state laws and regulations and with the requirements of
this Section 6. The Option may not be exercised, and shares may not be
issued under this Agreement, until the Company has obtained the consent
or approval of every regulatory body, federal or state, having
jurisdiction over such matters as the Company deems advisable.
7. RIGHTS OF SHAREHOLDERS. The Recipient shall not be, nor have any of the
rights or privileges of, a shareholder of the Company in respect of any
shares purchasable upon the exercise of any part of the Option unless
and until certificates representing such shares shall have been issued
by the Company to the Recipient.
8. VESTING AND EXERCISABILITY. The Recipient's interest in the option
shall vest according to the schedule described in this Section 8 and
shall be exercisable as to not more than the vested portion of the
shares subject to the option at any point in time. To the extent an
option is either unexercisable or unexercised, the unexercised portion
shall accumulate until the option both becomes exercisable and is
exercised, subject to the provisions of Section 9 of the Agreement.
Except as otherwise provided in this Section 8, the option granted
shall become vested according to the following schedule:
DATE VESTED PERCENTAGE
January 2, 1993 0%
December 31, 1998 100%
A portion of the Option may become vested prior to December 31, 1998,
in the event of a Sale of the Company. For purposes of this Section 8,
a "Sale" shall occur when (i) the acquisition by any person, including
a "group" as defined in Section 13(d)(3) of the Securities Act of 1934,
as amended, of beneficial ownership of 50 percent or more of the total
number of shares entitled to vote in the election of directors of the
Board, (ii) the merger of the Company into any other company or the
sale of substantially all of the assets of the Company, or (iii) the
closing of an underwritten public offering by the Company pursuant to a
registration statement filed and declared effective under the
Securities Act of 1933, as amended, covering the offer and sale of the
Company's common stock for the account of the Company. If a Sale occurs
prior to December 31, 1998, (i) the Option shall become vested and
exercisable on the effective date of the Sale,
3
<PAGE>
with respect to the number of shares equal to 300,000 multiplied by a
fraction, the numerator of which is the number of full months that have
elapsed from January 2, 1993, to the effective date of the Sale, and
the denominator of which is 71, and (ii) the Option shall become 100
percent vested and exercisable on December 31, 1998. Following the
Recipient's death or termination of the Recipient's employment as a
result of his total and permanent disability, the vesting and
exercisability of the Option shall continue to be determined in
accordance with this Section 8 as if the Recipient had not died or
terminated employment.
9. DURATION OF OPTION. Except as specified below, the Option shall expire
on January 2, 2004. Notwithstanding the foregoing, the Option may
expire prior to January 2, 2004, in the following circumstances:
a. If the Recipient's employment with the Company terminates as a
result of his total and permanent disability, the Option shall
expire on the first anniversary of the Recipient's last day of
employment.
b. If the Recipient ceases employment with the Company for any
reason other than death or disability, the Option shall expire
three months following the last day that the Recipient is
employed by the Company. After the last day that the Recipient
is employed by the Company, the Option may be exercised only
for the number of shares for which it could have been
exercised on such last day pursuant to Section 8 of this
Agreement, subject to any adjustment under Section 3 of this
Agreement.
c. Notwithstanding any provisions set forth above in this Section
9, if the Recipient shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or its affiliates, (ii)
breach any covenant not to compete or employment agreement
with the Company or any affiliate, or (iii) engage in conduct
that would warrant the Recipient's discharge for cause, any
unexercised part of the Option shall expire immediately upon
the earlier of the occurrence of such event or the last day
the Recipient is employed by the Company.
10. TRANSFERABILITY. To the extent permitted by tax, securities or other
applicable laws to which the Company or the Recipient are subject, the
Recipient may transfer the Option to (i) the Recipient's spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, (ii) a trust for the benefit of the
Recipient's spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter- in-law, brother-in-law, or sister-in-law, or (iii) a
partnership whose partners consist solely of the Recipient's spouse,
child, stepchild, grandchild, parent,
4
<PAGE>
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law.
11. NOTICES. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary
and any notice to be given to the Recipient shall be addressed to him
at the address given beneath his signature below. By a notice given
pursuant to this Section 11, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to the Recipient shall, if the Recipient is then
deceased, be given to the Recipient's personal representative if such
representative has previously informed the Company of his status and
address by written notice under this Section 11. Any notice shall have
been deemed duly given when enclosed in a properly sealed envelope
addressed as aforesaid, deposited (with postage prepaid) in a United
States postal receptacle.
12. TITLES. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
13. MODIFICATIONS. Any modifications or amendment of any provision of this
Agreement must be in writing and bear the signature of the duly
authorized representatives of both parties.
14. APPLICABLE LAW. The validity of this Agreement and the rights,
obligations and relations of the parties hereunder shall be construed
and determined under and in accordance with the laws of the State of
Florida.
15. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the Company and the Recipient with respect to the
Option, and merges all prior discussions between them and supersedes
and replaces any and every other agreement or understanding which may
have existed between the Company and the Recipient to the extent that
any such agreements or understandings relate to stock options issued or
to be issued to the Recipient.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the Company and the Recipient effective as of the date first written above.
TECHNISOURCE, INC.
By: /S/ JOSEPH W. COLLARD
-------------------------------------
Its: President
/S/ PAUL COZZA
--------------------------------------
Paul Cozza
5
EXHIBIT 10.10
TECHNISOURCE, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement"), effective as of
November 11, 1997 (the "Date of Grant"), is made by and between Technisource,
Inc., a Florida corporation (the "Company"), and John Morton (the
"Participant").
BACKGROUND
The Company has established the Technisource, Inc. Long-Term Incentive Plan (the
"Plan"). The Company wishes to grant to the Participant a Nonqualified Stock
Option pursuant to the terms of the Plan.
Therefore, in consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the Company and the Participant agree
as follows:
1. GRANT OF OPTION. In consideration of service to the Company and for
other good and valuable consideration, the Company grants to the
Participant a Nonqualified Stock Option (the "Option") to purchase the
number of shares of the Company's common stock (the "Common Stock")
determined by dividing $200,000 by the initial public offering price
per share of the Common Stock in connection with the initial public
offering of the Company's Common Stock. The Company grants the Option
in accordance with the terms and conditions of the Plan and this
Agreement.
2. OPTION PRICE. The purchase price of each share of stock covered by the
Option shall be 75 percent of the initial public offering price of a
share of the Common Stock.
3. ADJUSTMENTS IN OPTION. If the outstanding shares of stock subject to
the Option are changed into or exchanged for a different number or kind
of shares of the Company or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock
split, stock dividend or combination of shares, the shares subject to
the Option and the price per share shall be equitably adjusted to
reflect such changes. Such adjustment in the Option shall be made
without change in the total price applicable to the unexercised portion
of the Option (except for any change in the aggregate price resulting
from rounding-off of share quantities or prices) and with any necessary
corresponding adjustment in the Option price per share. Any such
adjustment made by the Committee shall be final and binding upon the
Participant, the Company and all other interested persons.
1
<PAGE>
4. PERSON ELIGIBLE TO EXERCISE OPTION. During the lifetime of the
Participant, only the Participant may exercise the Option or any
portion of the Option. After the death of the Participant, any
exercisable portion of the Option may, prior to the time when the
Option becomes unexercisable under the terms of the Plan, be exercised
by the Participant's personal representative or by any other person
empowered to do so under the Participant's will, trust or under then
applicable laws of descent and distribution.
5. MANNER OF EXERCISE. The Option, or any portion of the Option, shall be
exercised only in accordance with the provisions of the Plan and this
Agreement. The person exercising the Option shall give to the Company a
written notice that shall: (i) state the number of Shares with respect
to which the Option is being exercised; and (ii) specify a date (other
than a Saturday, Sunday or legal holiday) not less than five nor more
than ten days after the date of such written notice, as the date on
which the Shares will be purchased. Such tender and conveyance shall
take place at the principal office of the Company during ordinary
business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option. On the date
specified in such written notice, the Company shall accept payment for
the Option Shares in cash, by bank or certified check, by wire
transfer, or by such other means as may be approved by the Committee
and shall deliver to the person or persons exercising the Option in
exchange therefor an appropriate certificate or certificates for fully
paid nonassessable Shares or undertake to deliver certificates within a
reasonable period of time. In the event of any failure to take up and
pay for the number of Shares specified in such written notice on the
date set forth therein (or on the extended date as above provided), the
right to exercise the Option shall terminate with respect to such
number of Shares, but shall continue with respect to the remaining
Shares covered by the Option and not yet acquired pursuant thereto.
The person who exercises the Option shall warrant to the Company that,
at the time of such exercise, such person is acquiring his or her
Option Shares for investment and not with a view to, or for or in
connection with, the distribution of any such Shares, and shall make
such other representations, warranties, acknowledgments, and
affirmations, if any, as the Committee may require. In such event, the
person acquiring such Shares shall be bound by the provisions of an
appropriate legend which shall be endorsed upon the certificate(s)
evidencing his or her Option Shares issued pursuant to such exercise.
The Company may delay issuance of the Shares until completion of any
action or obtaining any consent that the Company deem necessary under
any applicable law (including without limitation state securities or
"blue sky" laws).
2
<PAGE>
6. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares of stock
deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued
shares which have been reacquired by the Company. Such shares shall be
fully paid and nonassessable.
7. RIGHTS OF SHAREHOLDERS. The Participant shall not be, nor have any of
the rights or privileges of, a shareholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option
unless and until certificates representing such shares shall have been
issued by the Company to the Participant.
8. VESTING AND EXERCISABILITY. A Participant's interest in the Option
shall vest according to the provisions of this Section 8 and shall be
exercisable as to not more than the vested percentage of the shares
subject to the Option at any point in time. To the extent the Option is
either unexercisable or unexercised, the unexercised portion shall
accumulate until the Option both becomes exercisable and is exercised,
subject to the provisions of Section 9 of the Agreement. The Option
shall become vested as follows:
DATE VESTED PERCENTAGE OF OPTION
November 11, 1997 0%
November 11, 1998 33-1/3%
November 11, 1999 66-2/3%
November 11, 2000 100%
The Committee, in its sole and absolute discretion, may accelerate the
vesting of the Option at any time.
9. DURATION OF OPTION. Except as specified below, the Option shall expire
on November 11, 2007. Notwithstanding the foregoing, the Option may
expire prior to November 11, 2007, in the following circumstances:
A. In the case of the Participant's death, the Option shall
expire on the one-year anniversary of the Participant's death.
B. If the Participant's employment or affiliation with the
Company terminates as a result of his total and permanent
disability, the Option will expire on the one-year anniversary
of the Participant's last day of employment.
C. If the Participant ceases employment or affiliation with the
Company for any reason other than death or disability, the
Option shall expire 90 days following the last day that the
Participant is employed by the Company.
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<PAGE>
D. Notwithstanding any provisions set forth above in this Section
9, if the Participant shall (i) commit any act of malfeasance
or wrongdoing affecting the Company or its affiliates, (ii)
breach any covenant not to compete or employment agreement
with the Company or any affiliate, or (iii) engage in conduct
that would warrant the Participant's discharge for cause, any
unexercised part of the Option shall expire immediately upon
the earlier of the occurrence of such event or the last day
the Participant is employed by the Company.
10. ADMINISTRATION. The Committee shall have the power to interpret this
Agreement and to adopt such rules for the administration,
interpretation and application of the Agreement as are consistent
herewith and to interpret or revoke any such rules. All actions taken
and all interpretations and determinations made by the Committee in
good faith shall be final and binding upon the Participant, the Company
and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made
in good faith with respect to this Agreement or any similar agreement
to which the Company is a party.
11. TRANSFER OF OPTION. Unless otherwise permitted by applicable laws and
approved in advance by the Committee, the Option shall not be
transferable by the Participant and shall be exercisable, during the
Participant's lifetime, only by such Participant or, in the event of
the Participant's incapacity, his guardian or legal representative.
Except as otherwise permitted herein, the Option shall not be assigned,
pledged, or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, or
similar process and any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Option or of any rights
granted thereunder contrary to the provisions of this Section 11, or
the levy of any attachment or similar process upon an option or such
rights, shall be null and void. This Section 11 shall not prevent
transfers by will or by the applicable laws of descent and
distribution.
12. SHARES TO BE RESERVED. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of stock
as will be sufficient to satisfy the requirements of this Agreement.
13. NOTICES. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary
and any notice to be given to the Participant shall be addressed to him
at the address given beneath his signature below. By a notice given
pursuant to this Section 13, either party may hereafter designate a
different address for notices to be given to him. Any notice which is
required to be given to the Participant shall, if the Participant is
then deceased, be given to the Participant's personal representative if
such representative has previously informed the Company of his
4
<PAGE>
status and address by written notice under this Section 13. Any notice
shall have been deemed duly given when enclosed in a properly sealed
envelope addressed as aforesaid, deposited (with postage prepaid) in a
United States postal receptacle.
14. TITLES. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
15. INCORPORATION OF PLAN BY REFERENCE. The Option is granted in accordance
with the terms and conditions of the Plan, the terms of which are
incorporated herein by reference, and the Agreement shall in all
respects be interpreted in accordance with the Plan. Any term used in
the Agreement that is not otherwise defined in the Agreement shall have
the meaning assigned to it by the Plan.
The Company and the Participant have executed this Agreement effective as of the
date first written above.
TECHNISOURCE, INC.
By: /S/ JOSEPH W. COLLARD
--------------------------------
Its: President
/S/ JOHN A. MORTON
------------------------------------
John A. Morton
5
EXHIBIT 21
SUBSIDIARIES OF TECHNISOURCE, INC
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
Technisource of Florida, Inc. Florida
EXHIBIT 23.2
The Board of Directors
Technisource, Inc.
We consent to the use of our reports included herein and to the reference
to our firm under the headings "Selected Financial Data" and "Experts" in the
prospectus.
KPMG Peat Marwick LLP
Fort Lauderdale, Florida
May 28, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1998 DEC-31-1997 DEC-31-1996
<CASH> 163,121 469,973 174,204
<SECURITIES> 0 0 0
<RECEIVABLES> 12,202,393 9,168,630 7,311,801
<ALLOWANCES> (495,000) (425,000) (336,000)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 12,171,950 9,361,924 7,216,267
<PP&E> 2,339,473 2,012,749 1,122,561
<DEPRECIATION> (706,910) (783,091) (412,890)
<TOTAL-ASSETS> 13,864,292 10,637,584 7,948,841
<CURRENT-LIABILITIES> 5,850,189 3,397,532 4,025,095
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 72,000 72,000 72,000
<OTHER-SE> 7,932,103 7,158,052 3,841,746
<TOTAL-LIABILITY-AND-EQUITY> 13,864,292 10,637,584 7,948,841
<SALES> 22,780,380 67,326,805 40,359,792
<TOTAL-REVENUES> 22,780,380 67,326,805 40,359,792
<CGS> 17,210,443 50,774,870 30,624,300
<TOTAL-COSTS> 17,210,443 50,774,870 30,624,300
<OTHER-EXPENSES> 4,226,167 12,017,496 6,384,170
<LOSS-PROVISION> 75,593 177,760 266,000
<INTEREST-EXPENSE> 37,785 159,651 105,202
<INCOME-PRETAX> 1,230,392 4,197,028 2,980,120
<INCOME-TAX> 471,106<F1> 1,683,017<F1> 1,081,963<F1>
<INCOME-CONTINUING> 759,286<F1> 2,514,011<F1> 1,898,157<F1>
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 759,286<F1> 2,514,011<F1> 1,898,157<F1>
<EPS-PRIMARY> 0.11<F1> 0.35<F1> 0
<EPS-DILUTED> 0.09<F1> 0.31<F1> 0
<FN>
<F1> Proforma as if the Company were subject to federal and all applicable state
corporate income taxes for each of the periods presented.
</FN>
</TABLE>
