<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1996.
REGISTRATION NO. 33-[ ]
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERIM SERVICES INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7363 36-3536544
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FL 33309
(954) 938-7600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
JOHN B. SMITH, ESQ.
SENIOR VICE PRESIDENT
INTERIM SERVICES INC.
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FL 33309
(954) 938-7600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPY TO:
<TABLE>
<S> <C>
Kendrick T. Wallace, Esq. Michael W. Zelenty, Esq.
Bryan Cave LLP Pitney, Hardin, Kipp & Szuch
1200 Main Street, Suite 3500 P.O. Box 1945
Kansas City, MO 64105 Morristown, NJ 07962-1945
(816) 374-3200 (201) 966-6300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE
AND ALL OTHER CONDITIONS TO THE MERGER (THE "MERGER") OF A SUBSIDIARY OF THE
REGISTRANT WITH AND INTO BRANDON SYSTEMS CORPORATION ("BRANDON") PURSUANT TO THE
AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") DESCRIBED IN THE ENCLOSED
PROXY STATEMENT/PROSPECTUS HAVE BEEN SATISFIED OR WAIVED.
If any the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED (1) REGISTERED PER SHARE OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Common Stock........... 4,897,546 Shares (2) Not Applicable $147,538,574 (3) $20,242 (3)
</TABLE>
(1) This Registration Statement relates to securities of the Registrant issuable
to holders of capital stock of Brandon in the proposed Merger.
(2) The Registrant also registers hereby such additional shares of its common
stock as may be issuable pursuant to the anti-dilution provisions of the
Merger Agreement.
(3) Pursuant to 457(f), the registration fee was computed on the basis of the
market value of the Brandon common stock to be exchanged in the Merger,
computed in accordance with 457(c) on the basis of the average of the high
and low prices per share of such stock on the American Stock Exchange on
April 17, 1996. On that basis, the amount of the registration fee is
$50,875. A filing fee of $30,633 accompanied the Registrant's preliminary
proxy materials and was paid on April 1, 1996 pursuant to Rule 0-11(c). The
balance of the filing fee due is $20,242 and is being paid herewith via wire
transfer to the Securities and Exchange Commission.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
INTERIM SERVICES INC.
Cross Reference Sheet pursuant to Rule 404(a) of the Securities Act of 1933,
as amended, and Item 501(b) of Regulation S-K showing the location or heading in
the Proxy Statement/Prospectus of information required by Part I of Form S-4.
<TABLE>
<CAPTION>
ITEM IN FORM S-4 LOCATION OR HEADING IN PROXY STATEMENT/PROSPECTUS
------------------------------------------------------------ -------------------------------------------------
<C> <C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION.
1. Forepart of Registration Statement and Outside
Front Cover Page of
Prospectus...................................... Facing Page; Cross Reference Sheet; Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus...................................... Available Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges,
and Other Information........................... Summary; Certain Considerations
4. Terms of the Transaction......................... Summary; The Special Meetings; Information About
Interim Services; Information About Brandon; The
Merger; Certain Provisions of the Merger
Agreement; Comparative Rights of Stockholders
5. Pro Forma Financial Information.................. Summary; Unaudited Pro Forma Combined Condensed
Financial Information
6. Material Contracts With the Company Being
Acquired........................................ Summary; The Merger; Certain Provisions of the
Merger Agreement
7. Additional Information Required For Reoffering by
Persons and Parties Deemed to be Underwriters... Not Applicable
8. Interests of Named Experts and Counsel........... Legal Matters; Accountants
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities..................................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT.
10. Information With Respect to S-3 Registrants...... Available Information; Incorporation of Certain
Documents by Reference
11. Incorporation of Certain Information by
Reference....................................... Available Information; Incorporation of Certain
Documents by Reference
12. Information With Respect to S-2 or S-3
Registrants..................................... Not Applicable
13. Incorporation of Certain Information by
Reference....................................... Not Applicable
14. Information With Respect to Registrants Other
Than S-3 or S-2 Registrants..................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S> <C>
ITEM IN FORM S-4
------------------------------------------------------------ LOCATION OR HEADING IN PROXY STATEMENT/PROSPECTUS
-------------------------------------------------
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED.
15. Information With Respect to S-3 Companies........ Available Information; Incorporation of Certain
Documents by Reference
16. Information With Respect to S-2 or S-3
Companies....................................... Not Applicable
17. Information With Respect to Companies Other Than
S-2 or S-3 Companies............................ Not Applicable
D. VOTING AND MANAGEMENT INFORMATION.
18. Information if Proxies, Consents or
Authorizations Are to be Solicited.............. Available Information; Incorporation of Certain
Documents by Reference; Summary; The Merger; The
Special Meetings
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited, or in an
Exchange Offer.................................. Not Applicable
</TABLE>
<PAGE>
INTERIM SERVICES INC.
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309
April 23, 1996
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Interim Services Inc. ("Interim Services"), which will be held at the offices of
Bryan Cave LLP, 245 Park Avenue, New York, New York 10167-0034, at 10:00 a.m.,
local time, on Thursday, May 23, 1996 (together with all adjournments and
postponements thereof, the "Interim Special Meeting").
At the Interim Special Meeting, you as holders of shares of common stock,
par value $0.01 per share, of Interim Services ("Interim Common Stock"), will be
asked to consider and vote upon a proposal to approve the issuance of Interim
Common Stock pursuant to the Agreement and Plan of Merger, dated February 27,
1996 (the "Merger Agreement"), by and among Interim Services, Delco Merger
Corp., a wholly-owned subsidiary of Interim Services ("Merger Sub"), and Brandon
Systems Corporation ("Brandon"). The Merger Agreement provides for the merger of
Merger Sub with and into Brandon (the "Merger"), with Brandon as the surviving
corporation and a wholly-owned subsidiary of Interim Services. Upon the
effectiveness of the Merger, each outstanding share of common stock, par value
$0.10 per share, of Brandon ("Brandon Common Stock") will be converted into the
right to receive 0.88 shares (the "Exchange Ratio") of Interim Common Stock,
subject to certain anti-dilution adjustments. However, no fractional shares of
Interim Common Stock will be issued, and cash will be paid in lieu thereof. A
copy of the Merger Agreement is attached to the accompanying Proxy
Statement/Prospectus as Exhibit A.
The Board of Directors of Interim Services has carefully reviewed and
considered the terms and conditions of the proposed Merger. In addition, the
Board of Directors of Interim Services has received an opinion from its
financial advisor, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
that, as of April 23, 1996 the consideration to be paid by Interim Services
pursuant to the Merger Agreement is fair to the holders of Interim Common Stock
from a financial point of view. A copy of the fairness opinion is attached to
the accompanying Proxy Statement/Prospectus as Exhibit C. We urge you to read
the opinion in its entirety, including certain assumptions and limitations set
forth therein.
THE INTERIM BOARD BELIEVES THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF, INTERIM SERVICES
AND ITS STOCKHOLDERS. ACCORDINGLY, THE INTERIM BOARD HAS UNANIMOUSLY APPROVED
THE ISSUANCE OF INTERIM COMMON STOCK PURSUANT TO THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT ALL INTERIM STOCKHOLDERS VOTE FOR THE ISSUANCE OF
INTERIM COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
All stockholders are invited to attend the Interim Special Meeting in
person. The affirmative vote of the holders of a majority of the shares of
Interim Common Stock voting at the Interim Special Meeting is necessary for
approval of the issuance of Interim Common Stock pursuant to the Merger
Agreement.
The accompanying Proxy Statement/Prospectus constitutes a prospectus for the
Interim Common Stock to be issued in connection with the transactions
contemplated by the proposed Merger Agreement. We urge you to carefully review
and consider the accompanying Notice of Special Meeting of Stockholders, Proxy
Statement/Prospectus and Proxy, which contain information about Interim Services
and Brandon and describe the proposed Merger and certain related matters.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE INTERIM SPECIAL MEETING,
YOU ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
INTERIM SPECIAL MEETING. Any stockholder returning a blank executed Proxy will
be authorizing the named proxies to vote the shares covered by the Proxy in
favor of the Merger Agreement. If you attend the Interim Special Meeting in
person, you may, if you wish, vote personally on all matters on which you are
entitled to vote which are brought before the Interim Special Meeting even if
you have previously returned your Proxy. Your prompt cooperation will be
appreciated.
Very truly yours,
RAYMOND MARCY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
INTERIM SERVICES INC.
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 23, 1996
------------------------
To the Stockholders of Interim Services Inc.:
A Special Meeting of the Stockholders (the "Interim Special Meeting") of
Interim Services Inc., a Delaware corporation ("Interim Services"), will be held
at the offices of Bryan Cave LLP, 245 Park Avenue, New York, New York
10167-0034, at 10:00 a.m., local time, on Thursday, May 23, 1996 for the
following purposes:
1. To consider and vote upon a proposal to approve the issuance of Interim
Services common stock pursuant to the Agreement and Plan of Merger, dated
February 27, 1996 (the "Merger Agreement"), by and among Interim
Services, Brandon Systems Corporation, a Delaware corporation
("Brandon"), and Delco Merger Corp., a Delaware corporation and a
wholly-owned subsidiary of Interim Services ("Merger Sub"), under which
Merger Sub will be merged with and into Brandon (the "Merger"), with
Brandon to be the surviving corporation and a wholly-owned subsidiary of
Interim Services, and stockholders of Brandon will receive 0.88 shares of
Interim Services common stock for each share of Brandon Common Stock held
by them, subject to certain anti-dilution adjustments, as more fully
described in the Merger Agreement. However, no fractional shares of
Interim Services common stock will be issued, and cash will be paid in
lieu thereof. The terms of the Merger are described in the accompanying
Proxy Statement/Prospectus. The Merger Agreement is attached to the
accompanying Proxy Statement/Prospectus as Exhibit A.
2. To consider and transact such other business as may properly come before
the Interim Special Meeting or any adjournments or postponements thereof.
The Board of Directors of Interim Services has fixed the close of business
on April 23, 1996 as the record date for the Interim Special Meeting to
determine the Interim Services stockholders entitled to receive notice of and to
vote at the Interim Special Meeting and any adjournments or postponements
thereof. A list of Interim Services stockholders entitled to vote at the Interim
Special Meeting will be available for examination, during ordinary business
hours, at the location of the Interim Special Meeting, at least ten days prior
to the Interim Special Meeting.
A form of Proxy and a Proxy Statement/Prospectus containing more detailed
information with respect to the matters to be considered at the Interim Special
Meeting accompany this notice.
INTERIM SERVICES' BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTEREST OF, INTERIM SERVICES AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND THE ISSUANCE OF INTERIM COMMON
STOCK PURSUANT TO THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT ALL
STOCKHOLDERS OF INTERIM SERVICES VOTE FOR THE APPROVAL OF THE ISSUANCE OF THE
INTERIM COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE INTERIM SPECIAL MEETING,
PLEASE COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY, WHICH IS BEING
SOLICITED BY THE BOARD OF DIRECTORS OF INTERIM SERVICES, WHETHER OR NOT YOU PLAN
TO ATTEND THE INTERIM SPECIAL MEETING. A POSTAGE PRE-PAID RETURN ENVELOPE IS
ENCLOSED FOR SUCH PURPOSE. Any stockholder returning a blank executed proxy will
be authorizing the named proxies to vote the shares covered by the proxy in
favor of the Merger Agreement. If you attend the Interim Special Meeting in
person and desire to revoke your proxy and vote in person, you may do so. In any
event, a proxy may be revoked at any time before it is voted. Your prompt
cooperation will be greatly appreciated.
By Order of the Board of Directors
RAYMOND MARCY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Fort Lauderdale, Florida
April 23, 1996
THE PROXY SOLICITOR FOR INTERIM SERVICES:
D. F. KING & CO., INC.
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
<PAGE>
BRANDON SYSTEMS CORPORATION
9 POLITO AVENUE
LYNDHURST, NEW JERSEY 07071
April 23, 1996
Dear Stockholder:
A Special Meeting of Stockholders of Brandon Systems Corporation ("Brandon")
will be held on May 23, 1996 at 1:00 p.m. at the American Stock Exchange, Board
of Governors Room, 13th Floor, 86 Trinity Place, New York, New York. The Special
Meeting is being called to consider and vote upon an Agreement and Plan of
Merger among Brandon, Interim Services Inc. ("Interim Services") and Delco
Merger Corp., a wholly-owned subsidiary of Interim Services ("Merger Sub").
Pursuant to the Merger Agreement, Merger Sub will merge with Brandon, which will
become a wholly-owned subsidiary of Interim Services, and stockholders of
Brandon will receive 0.88 shares of Interim Services common stock for each share
of Brandon common stock held by them, subject to certain anti-dilution
adjustments and with cash paid in lieu of fractional shares.
Attached is a Notice of Special Meeting and Joint Proxy Statement/Prospectus
of Brandon and Interim Services which also is a prospectus of Interim Services
for the shares of Interim common stock to be issued in the merger. The Proxy
Statement/Prospectus describes the material features of the proposed merger, the
agreement among the parties, the details of the exchange and other information
about the parties to the merger.
Stockholders of Interim Services will consider the merger proposal at a
meeting on the same day. The Interim Services Board of Directors has unanimously
approved the proposed merger and has recommended that Interim Services'
stockholders vote to approve the issuance of Interim Services common stock
pursuant to the Merger Agreement.
The Board of Directors of Brandon has carefully reviewed and considered the
terms and conditions of the proposed merger and an opinion from its financial
advisor, Goldman, Sachs & Co., to the effect that, as of April 23, 1996, the
Exchange Ratio pursuant to the Merger Agreement is fair to the holders of
Brandon Common Stock.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED MERGER AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF IT.
Consummation of the merger is subject to certain conditions, including
approval by the affirmative vote at the meeting of the holders of a majority of
the outstanding common stock of Brandon. Your vote is important regardless of
the number of shares that you own. Whether or not you are planning to attend the
meeting, it is important that your shares be represented. Please complete, sign
and date the enclosed proxy and mail it at your earliest convenience in the
return envelope provided.
Very truly yours,
DOMENICA L. SCHULZ-SCARPULLA
PRESIDENT AND CHIEF OPERATING OFFICER
<PAGE>
BRANDON SYSTEMS CORPORATION
9 POLITO AVENUE
LYNDHURST, NEW JERSEY 07071
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 1996
------------------------
To the Stockholders of Brandon Systems Corporation:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of Brandon Systems Corporation ("Brandon") will be held at the
American Stock Exchange, Board of Governors Room, 13th Floor, 86 Trinity Place,
New York, New York on Thursday, May 23, 1996 at 1:00 p.m., for the purpose of
considering and voting upon the following matters:
1. A proposal to approve an Agreement and Plan of Merger (the "Merger
Agreement") dated February 27, 1996 among Brandon, Interim Services Inc.
("Interim Services"), and Delco Merger Corp., a wholly-owned subsidiary
of Interim Services ("Merger Sub"), providing for the Merger (the
"Merger") of Merger Sub with and into Brandon, pursuant to which each
outstanding share of Brandon common stock on the effective date of the
Merger will be exchanged for 0.88 shares of Interim Services common
stock, subject to certain anti-dilution adjustments and with cash paid
in lieu of fractional shares, as more fully set forth in the Merger
Agreement.
2. Such other business as may properly come before the Meeting or any
adjournment or postponement thereof.
Only those stockholders of record as of the close of business on April 23,
1996 will be entitled to notice of, and to vote at, the Meeting. A list of such
stockholders will be available at the Meeting.
Consummation of the Merger is subject to certain conditions, including
approval of the Merger by the affirmative vote at the Meeting of the holders of
a majority of the outstanding shares of Brandon Common Stock. Your vote is
important regardless of the number of shares that you own. Whether or not you
plan to attend the Meeting, please mark, date and sign the enclosed proxy and
return it as soon as possible in the enclosed stamped envelope. You may revoke
the proxy at any time prior to its exercise, but only by delivering written
notice of revocation to the Secretary of Brandon prior to the Meeting at
Brandon's main office, or to the Secretary of the Meeting while the Meeting is
in progress.
By Order of the Board of Directors
DOMENICA L. SCHULZ-SCARPULLA
PRESIDENT AND CHIEF OPERATING OFFICER
Lyndhurst, New Jersey
April 23, 1996
The Proxy Solicitor For Brandon:
D.F. King & Co., Inc.
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
<PAGE>
INTERIM SERVICES INC. BRANDON SYSTEMS CORPORATION
2050 SPECTRUM BOULEVARD 9 POLITO AVENUE
FORT LAUDERDALE, FLORIDA 33309 LYNDHURST, NEW JERSEY 07071
PROXY STATEMENT/PROSPECTUS
SPECIAL MEETING OF STOCKHOLDERS SPECIAL MEETING OF STOCKHOLDERS
OF INTERIM SERVICES INC. OF BRANDON SYSTEMS CORPORATION
TO BE HELD ON MAY 23, 1996 TO BE HELD ON MAY 23, 1996
This Proxy Statement and Prospectus (the "Proxy Statement/Prospectus") is
being furnished to the stockholders of Interim Services Inc., a Delaware
corporation ("Interim Services"), and to the stockholders of Brandon Systems
Corporation, a Delaware corporation ("Brandon"), in connection with the
solicitation of proxies by the Boards of Directors of Interim Services (the
"Interim Board") and Brandon (the "Brandon Board") for use at their respective
special meetings of stockholders (individually, the "Interim Special Meeting"
and the "Brandon Special Meeting," and together, the "Special Meetings"). The
Interim Board and the Brandon Board have each fixed the close of business on
April 23, 1996 (the "Record Date") as the record date for their respective
Special Meetings.
At the Brandon Special Meeting, holders of common stock, par value $0.10 per
share, of Brandon ("Brandon Common Stock") will vote upon a proposal to approve
and adopt the Agreement and Plan of Merger, dated February 27, 1996 (the "Merger
Agreement"), by and among Interim Services, Delco Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Interim Services ("Merger Sub"),
and Brandon. A copy of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Exhibit A and incorporated herein by reference.
At the Interim Special Meeting, holders of common stock, par value $0.01 per
share, of Interim Services (the "Interim Common Stock") will vote upon a
proposal to approve the issuance of Interim Common Stock pursuant to the Merger
Agreement.
SEE "RISK FACTORS" RELATING TO THE INTERIM COMMON STOCK BEGINNING ON PAGE 17
HEREOF.
Pursuant to the Merger Agreement, Merger Sub will be merged with and into
Brandon (the "Merger"), with Brandon as the corporation surviving the Merger
(the "Surviving Corporation") and as a wholly-owned subsidiary of Interim
Services, and each outstanding share of Brandon Common Stock will be converted
into the right to receive 0.88 shares (the "Exchange Ratio") of Interim Common
Stock, subject to certain anti-dilution adjustments and with cash paid in lieu
of fractional shares. However, upon consummation of the Merger, shares of
Brandon Common Stock which are held by Brandon as treasury shares, and shares of
Brandon Common Stock held by Interim Services, Merger Sub or any other direct or
indirect subsidiary of Interim Services, will be cancelled and thus not
converted into Interim Common Stock. SEE "THE MERGER -- MERGER CONSIDERATION."
Additionally, upon consummation of the Merger, each option to purchase Brandon
Common Stock (a "Brandon Stock Option") will be converted into an option to
purchase shares of Interim Common Stock, rather than shares of Brandon Common
Stock, at a ratio of 0.88 shares of Interim Common Stock for each share of
Brandon Common Stock covered by the Brandon Stock Options, subject to certain
anti-dilution adjustments. SEE "THE MERGER -- TREATMENT OF OPTIONS."
The Merger is subject to numerous conditions, among them (i) approval and
adoption of the Merger Agreement and the Merger by the affirmative vote of a
majority of the outstanding shares of Brandon Common Stock (which approval is
required under Delaware law), (ii) receipt of an opinion from Bryan Cave LLP,
legal counsel to Interim Services, to the effect that, subject to certain
assumptions, the Merger will constitute a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), (iii)
receipt of reports from Deloitte & Touche LLP, independent accountants to
Interim Services, and Coopers & Lybrand L.L.P., independent accountants to
Brandon, regarding qualification of the Merger as a pooling of interests for
accounting purposes and (iv) approval of the issuance of the Interim Common
Stock pursuant to the Merger Agreement by the affirmative vote of a majority of
the shares of Interim Common Stock voting at the Interim Special Meeting (which
approval is required under the rules of The Nasdaq Stock Market, on which
Interim Common Stock is quoted). SEE "THE MERGER -- CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT -- CONDITIONS TO
THE CONSUMMATION OF THE MERGER."
Ira B. Brown and Myra Brown, who together own 1,099,760 shares of Brandon
Common Stock, or 25.0% of the outstanding shares as of the Record Date, have
irrevocably granted to designees of Interim Services the power to vote their
shares of Brandon Common Stock for approval and adoption of the Merger Agreement
pursuant to an irrevocable proxy which is attached as Exhibit B to this Proxy
Statement/Prospectus and is incorporated herein by reference. SEE "THE MERGER --
IRREVOCABLE PROXY." Additionally, the directors and executive officers of
Brandon (other than the Browns) hold in
<PAGE>
the aggregate 104,555 shares of Brandon Common Stock, or approximately 2.4% of
the outstanding shares as of the Record Date, and have indicated that they will
vote all of their shares of Brandon Common Stock for approval and adoption of
the Merger Agreement.
The Interim Board has retained the services of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), on the basis of DLJ's experience in transactions
similar to the Merger, to provide an opinion to the Interim Board concerning the
fairness of the consideration to be paid by Interim Services in the Merger from
a financial point of view. Before approving the Merger on February 27, 1996, the
Interim Board received the oral opinion of DLJ that, as of February 26, 1996,
the consideration to be paid by Interim Services in the Merger was fair to the
holders of Interim Common Stock from a financial point of view. DLJ subsequently
delivered to the Interim Board a written opinion dated February 27, 1996
confirming its oral opinion. DLJ subsequently confirmed its February 27, 1996
opinion by delivery of its written opinion dated as of April 23, 1996. A copy of
such opinion is attached to this Proxy Statement/Prospectus as Exhibit C and is
incorporated herein by reference. HOLDERS OF INTERIM COMMON STOCK ARE URGED TO
READ SUCH OPINION IN ITS ENTIRETY.
The Brandon Board has retained the services of Goldman, Sachs & Co.
("Goldman Sachs"), on the basis of Goldman Sachs' experience in transactions
similar to the Merger, to provide an opinion to the Brandon Board concerning the
fairness of the Exchange Ratio to the holders of Brandon Common Stock. Before
approving the Merger on February 26, 1996, the Brandon Board received the oral
opinion of Goldman Sachs to the effect that, as of February 26, 1996, the
Exchange Ratio pursuant to the Merger Agreement was fair to the holders of
Brandon Common Stock. Goldman Sachs subsequently delivered to the Brandon Board
a written opinion dated February 27, 1996 confirming its oral opinion. Goldman
Sachs subsequently confirmed its February 27, 1996 opinion by delivery of its
written opinion dated as of April 23, 1996. A copy of such opinion is attached
to this Proxy Statement/ Prospectus as Exhibit D and is incorporated herein by
reference. HOLDERS OF BRANDON COMMON STOCK ARE URGED TO READ SUCH OPINION IN ITS
ENTIRETY.
Interim Common Stock is traded on The Nasdaq Stock Market under the symbol
"INTM." On April 23, 1996, the closing sale price for Interim Common Stock was
$38 1/4 per share. Brandon Common Stock is traded on the American Stock Exchange
under the symbol "BRA." On February 26, 1996 (the date immediately prior to the
date of the public announcement of the Merger Agreement), and April 23, 1996,
the closing sale price for Brandon Common Stock was $26 5/8 per share and $33
per share, respectively.
This Proxy Statement/Prospectus also constitutes the prospectus for the
shares of Interim Common Stock to be issued in the Merger. Interim Services has
filed a Registration Statement on Form S-4 (together with any amendments
thereto, the "Registration Statement") pursuant to the Securities Act of 1933,
as amended (the "Securities Act") with the Securities and Exchange Commission
(the "Commission") of which this Proxy Statement/Prospectus is a part. All
information concerning Brandon contained or incorporated by reference in this
Proxy Statement/Prospectus has been furnished by Brandon, and all information
concerning Interim Services contained or incorporated by reference in this Proxy
Statement/Prospectus has been furnished by Interim Services.
------------------------
THE SHARES OF INTERIM COMMON STOCK TO BE ISSUED IN THE MERGER 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 PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute the
solicitation of a proxy or an offer or solicitation to sell or a solicitation of
an offer to buy any securities other than the Interim Common Stock to which it
relates nor an offer nor a solicitation to any person in any jurisdiction where
such an offer or solicitation would be unlawful. Neither the delivery of this
Proxy Statement/Prospectus nor any distribution of the securities offered hereby
shall, under any circumstances, create any implication that there has been no
change in the affairs of Interim Services or Brandon since the date hereof.
The approximate date on which this Proxy Statement/Prospectus and the
accompanying proxies will first be mailed to the holders of Interim Common Stock
and Brandon Common Stock is on or about April 24, 1996.
------------------------
The date of this Proxy Statement/Prospectus is April 24, 1996.
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TABLE OF CONTENTS
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SUMMARY.............................................................................. 1
General............................................................................ 1
Business of Interim Services....................................................... 1
Business of Brandon................................................................ 2
The Special Meetings............................................................... 2
General.......................................................................... 2
Matters to be Considered......................................................... 2
Votes Required................................................................... 2
Record Date; Shares Entitled to Vote............................................. 3
Voting of Proxies................................................................ 3
Revocation of Proxies............................................................ 3
Solicitation of Proxies.......................................................... 3
The Merger......................................................................... 4
Form of the Merger............................................................... 4
Reasons for the Merger........................................................... 4
Recommendations of the Boards of Directors....................................... 4
Opinions of Financial Advisors................................................... 5
Interests of Certain Persons in the Merger....................................... 5
Treatment of Options............................................................. 5
Operations After the Merger...................................................... 5
Conditions to Consummation of the Merger......................................... 6
Termination...................................................................... 6
Termination Fee.................................................................. 7
Regulatory Approvals............................................................. 7
Accounting Treatment............................................................. 7
Certain Federal Income Tax Consequences.......................................... 7
No Appraisal Rights.............................................................. 8
Comparison of Stockholder Rights................................................. 8
Risk Factors....................................................................... 8
Comparative Market Prices and Dividends............................................ 9
Selected and Supplementary Historical and Pro Forma Financial Data................. 11
Interim Services Inc. Selected and Supplementary Historical and Pro Forma
Financial Data................................................................... 12
Brandon Systems Corporation Selected Unaudited Historical Financial Data........... 13
Interim Services Inc. and Brandon Systems Corporation Selected Unaudited Pro
Forma Financial Data............................................................. 14
Supplementary Unaudited Historical and Pro Forma Financial Data.................... 15
RISK FACTORS......................................................................... 17
THE SPECIAL MEETINGS................................................................. 19
INFORMATION ABOUT INTERIM SERVICES................................................... 21
Business........................................................................... 21
Growth Strategy.................................................................... 22
Industry Overview.................................................................. 22
Description of Interim Services Capital Stock...................................... 23
Merger Sub......................................................................... 25
INFORMATION ABOUT BRANDON............................................................ 25
Business........................................................................... 25
Description of Brandon Capital Stock............................................... 26
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THE MERGER........................................................................... 27
General............................................................................ 27
Background of Brandon's Entry into the Merger Agreement............................ 27
Reasons for Approval of the Merger Agreement by the Brandon Board; Recommendation
of the Brandon Board.............................................................. 29
Interim Services' Reasons for the Merger; Recommendation of Interim Services' Board
of Directors...................................................................... 29
Effective Time; Closing Date....................................................... 30
Form of the Merger................................................................. 31
Merger Consideration............................................................... 31
Treatment of Options............................................................... 31
Irrevocable Proxy.................................................................. 31
No Appraisal Rights................................................................ 32
Opinion of Financial Advisor to Interim Services................................... 32
Opinion of Financial Advisor to Brandon............................................ 35
Certain Federal Income Tax Consequences............................................ 39
Accounting Treatment............................................................... 40
Regulatory Approvals............................................................... 40
Interests of Certain Persons in the Merger......................................... 40
Operations After the Merger........................................................ 42
Resale Considerations With Respect to the Interim Common Stock..................... 42
CERTAIN PROVISIONS OF THE MERGER AGREEMENT........................................... 43
Exchange Procedures................................................................ 43
Certain Representations and Warranties............................................. 44
Conduct of Business Pending the Merger............................................. 44
No Solicitation of Transactions.................................................... 46
Pooling-of-Interests Accounting Treatment.......................................... 46
Conditions to Consummation of the Merger........................................... 46
Termination; Termination Fee....................................................... 47
Expenses........................................................................... 48
Amendment and Waiver............................................................... 49
INFORMATION REGARDING FORWARD LOOKING STATEMENTS..................................... 50
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION..................................................... 51
COMPARATIVE RIGHTS OF STOCKHOLDERS................................................... 57
LEGAL MATTERS........................................................................ 61
EXPERTS.............................................................................. 61
AVAILABLE INFORMATION................................................................ 61
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 62
EXHIBIT A -- AGREEMENT AND PLAN OF MERGER............................................ A-1
EXHIBIT B -- IRREVOCABLE PROXY....................................................... B-1
EXHIBIT C -- FAIRNESS OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION......................................................................... C-1
EXHIBIT D -- FAIRNESS OPINION OF GOLDMAN, SACHS & CO................................. D-1
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/ PROSPECTUS AND THE EXHIBITS HERETO, WHICH ARE INCORPORATED
HEREIN BY REFERENCE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS AND THE
EXHIBITS. STOCKHOLDERS ARE URGED TO CAREFULLY READ THIS PROXY
STATEMENT/PROSPECTUS AND THE EXHIBITS IN THEIR ENTIRETY.
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GENERAL......................... This Proxy Statement/Prospectus solicits, on behalf of the
Board of Directors of Brandon Systems Corporation, a
Delaware corporation ("Brandon"), the approval of the
holders of shares of common stock of Brandon, par value
$0.10 per share ("Brandon Common Stock"), of the Agreement
and Plan of Merger dated February 27, 1996 (the "Merger
Agreement") between Brandon, Interim Services Inc., a
Delaware corporation ("Interim Services") and Delco Merger
Corp., a Delaware corporation and a wholly-owned
subsidiary of Interim Services ("Merger Sub"). This Proxy
Statement/Prospectus also solicits, on behalf of the Board
of Directors of Interim Services, the approval of the
holders of shares of common stock of Interim Services, par
value $0.01 per share ("Interim Common Stock") of the
issuance of Interim Common Stock pursuant to the Merger
Agreement. Pursuant to the Merger Agreement, Merger Sub
will be merged with and into Brandon (the "Merger"), with
Brandon surviving as a wholly-owned subsidiary of Interim
Services. In the Merger, each outstanding share of Brandon
Common Stock will be converted into the right to receive
0.88 shares of Interim Common Stock, subject to certain
anti-dilution adjustments and with cash paid in lieu of
fractional shares. SEE "THE MERGER."
BUSINESS OF INTERIM SERVICES.... Interim Services has evolved significantly since its
founding in 1946. Interim Services is a leading provider
of customized staffing solutions on a national basis
including flexible staffing, home health care, full-time
placement, consulting and other value-added services to
businesses, professional and service organizations,
government agencies, health care facilities and in-
dividuals. As of December 29, 1995, Interim Services
operated through a network of 908 offices in 48 states,
the District of Columbia, Puerto Rico, Canada, The
Netherlands and the United Kingdom.
Interim Services is organized into two divisions: the
Commercial Division and the HealthCare Division. Each of
these divisions provides a wide range of services to
Interim Services' clients. Interim Services' Commercial
Division serves client requirements for traditional
temporary clerical and light industrial skills as well as
increasingly filling needs for specialty professional
skills such as information technology ("IT"), legal and
accounting. The HealthCare Division provides a broad range
of personnel including home health aides, nurses, home
companions, therapists and physicians.
Interim Services is a Delaware corporation with its
corporate headquarters at 2050 Spectrum Boulevard, Fort
Lauderdale, Florida 33309. Interim Services' telephone
number is (954) 938-7600. SEE "INFORMATION ABOUT INTERIM
SERVICES."
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BUSINESS OF BRANDON............. Founded in 1968, Brandon is a nationwide provider of IT
staffing services including short-term supplemental
staffing, long-term outsourcing of computer operations,
communications operations, help desk support,
client-server support, computer programming and computer
technology training.
Brandon is a Delaware corporation with its corporate
headquarters at 9 Polito Avenue, Lyndhurst, New Jersey
07071. Brandon's telephone number is (201) 842-0700. SEE
"INFORMATION ABOUT BRANDON."
THE SPECIAL MEETINGS
GENERAL..................... INTERIM SERVICES. A special meeting of the stockholders
of Interim Services (the "Interim Special Meeting") is
scheduled to be held on Thursday, May 23, 1996, at 10:00
a.m., local time, at the offices of Bryan Cave LLP, 245
Park Avenue, New York, New York 10167-0034.
BRANDON. A special meeting of the stockholders of Brandon
(the "Brandon Special Meeting") is scheduled to be held on
Thursday, May 23, 1996, at 1:00 p.m., local time, at the
American Stock Exchange, Board of Governors Room, 13th
Floor, 86 Trinity Place, New York, New York.
MATTERS TO BE CONSIDERED.... INTERIM SERVICES. At the Interim Special Meeting, holders
of Interim Common Stock will consider and vote upon a
proposal to approve the issuance of Interim Common Stock
pursuant to the Merger Agreement and such other matters as
may properly be brought before the meeting or any
adjournments or postponements thereof.
BRANDON. At the Brandon Special Meeting, holders of
Brandon Common Stock will consider and vote upon a
proposal to approve and adopt the Merger Agreement and the
Merger and such other matters as may properly be brought
before the meeting or any adjournments or postponements
thereof.
VOTES REQUIRED.............. INTERIM SERVICES. The affirmative vote of the holders of
a majority of all shares of Interim Common Stock voting
(whether in person or by proxy) at the Interim Special
Meeting is required to approve the issuance of Interim
Common Stock pursuant to the Merger Agreement. This
approval is required under the rules of The Nasdaq Stock
Market, which are applicable to Interim Services because
its securities are quoted thereon. As a result, ab-
stentions, failures to vote and broker non-votes will have
no effect on the vote in respect of the share issuance
pursuant to the Merger Agreement except to the extent that
failures to vote and broker non-votes affect the quorum
required for the Interim Special Meeting.
Directors and executive officers of Interim Services hold
in the aggregate approximately 0.4% of the outstanding
shares of Interim Common Stock as of the Record Date and
have indicated that they will vote all of their shares of
Interim Common Stock for the approval of the issuance of
Interim Common Stock pursuant to the Merger Agreement.
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BRANDON. The affirmative vote of the holders of a
majority of the outstanding shares of Brandon Common Stock
as of the Record Date is required to approve and adopt the
Merger Agreement and the Merger. As a result, abstentions,
failures to vote and broker non-votes will have the same
effect as votes against the Merger Agreement and the
Merger.
Ira B. Brown and Myra Brown, holders of 1,099,760 shares
of Brandon Common Stock, or 25.0% of the outstanding
shares of Brandon Common Stock as of the Record Date, have
irrevocably granted to designees of Interim Services the
power to vote their shares of Brandon Common Stock in
favor of approval and adoption of the Merger Agreement and
the Merger. SEE "THE MERGER -- IRREVOCABLE PROXY."
Additionally, the directors and executive officers of
Brandon (other than the Browns) hold in the aggregate
104,555 shares of Brandon Common Stock, or 2.4% of the
outstanding shares as of the Record Date, and have
indicated that they will vote all of their shares of
Brandon Common Stock in favor of the approval and adoption
of the Merger Agreement and the Merger.
RECORD DATE; SHARES ENTITLED
TO VOTE.................... Each of the Interim Board and Brandon Board has fixed the
close of business on April 23, 1996 as the record date for
their respective Special Meetings (the "Record Date"). As
of the Record Date, 11,540,109 shares of Interim Common
Stock were outstanding and held of record by approximately
508 stockholders, and 4,399,146 shares of Brandon Common
Stock were outstanding and held of record by approximately
564 stockholders.
VOTING OF PROXIES........... Each holder of Interim Common Stock and Brandon Common
Stock as of the Record Date will be entitled to vote at
their respective Special Meetings. Votes may be cast
either in person or by proxy. Shares of Interim Common
Stock and Brandon Common Stock represented by properly
executed proxies which have been received at or prior to
the respective Special Meetings, and which have not been
revoked, will be voted in accordance with the instructions
indicated therein. If no instructions are indicated such
proxies will be voted, in the case of Interim Services, in
favor of approval of the issuance of Interim Common Stock
pursuant to the Merger Agreement, and in the case of
Brandon, in favor of the approval and adoption of the
Merger Agreement and the Merger, and in the discretion of
the proxy holder as to any other matter which may properly
come before the respective Special Meetings or any
adjournments or postponements thereof.
REVOCATION OF PROXIES....... An Interim Services or Brandon stockholder who has given a
proxy may revoke such proxy at any time prior to its
exercise by following certain procedures. Attendance at
the Special Meeting will not in and of itself revoke a
proxy. SEE "THE SPECIAL MEETINGS -- REVOCATION OF
PROXIES."
SOLICITATION OF PROXIES..... This Proxy Statement/Prospectus is being furnished in
connection with the solicitation, on behalf of the Interim
Board and Brandon Board, of proxies for use at their
respective Special
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Meetings. D. F. King & Co., Inc. will assist in the
solicitation of proxies by Interim Services and Brandon.
SEE "THE SPECIAL MEETINGS -- SOLICITATION OF PROXIES."
THE MERGER
FORM OF THE MERGER.......... At the date and time the Merger becomes effective (the
"Effective Time"), Merger Sub will be merged with and into
Brandon, with Brandon as the surviving corporation and a
wholly-owned subsidiary of Interim Services.
REASONS FOR THE MERGER...... INTERIM SERVICES. Numerous factors were taken into
consideration by Interim Services in entering into the
Merger Agreement, including, without limitation, the
personnel, products, operations, prospects, assets,
obligations and earnings of Brandon and Interim Services'
judgments with respect to the prospects for both Interim
Services and Brandon. Interim Services' management
believes that the addition of Brandon's operation to the
IT unit of Interim Services offers a number of advantages,
including (i) broad geographic coverage of its offices
which complement current operations, (ii) achievement of a
critical mass for the total IT operation, including
Brandon, and (iii) vertical expansion of the scope of
services which the IT unit can offer. SEE "THE MERGER --
INTERIM SERVICES' REASONS FOR THE MERGER; RECOMMENDATION
OF INTERIM SERVICES' BOARD OF DIRECTORS."
BRANDON. Numerous factors were taken into account by the
Brandon Board in approving the Merger Agreement and the
Merger, including the strategic business benefits of the
Merger, the financial benefits of the Merger to the
Brandon stockholders, the complementary business
philosophies of Brandon and Interim Services and various
market factors. For a detailed discussion of the factors
considered by the Brandon Board, SEE "THE MERGER --
REASONS FOR APPROVAL OF THE MERGER AGREEMENT BY THE
BRANDON BOARD; RECOMMENDATION OF THE BRANDON BOARD."
RECOMMENDATIONS OF THE
BOARDS OF DIRECTORS........ INTERIM SERVICES. THE INTERIM BOARD BELIEVES THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY
ARE FAIR TO, AND IN THE BEST INTEREST OF, INTERIM SERVICES
AND ITS STOCKHOLDERS. ACCORDINGLY, THE INTERIM BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE ISSUANCE
OF INTERIM COMMON STOCK PURSUANT TO THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT INTERIM SERVICES'
STOCKHOLDERS VOTE FOR APPROVAL OF THE ISSUANCE OF INTERIM
COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
BRANDON. THE BRANDON BOARD BELIEVES THAT THE MERGER
AGREEMENT AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTEREST OF, BRANDON AND ITS STOCKHOLDERS. ACCORDINGLY,
THE BRANDON BOARD HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS
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THAT BRANDON STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AND THE MERGER.
OPINIONS OF FINANCIAL
ADVISORS................... INTERIM SERVICES. DLJ has delivered its written opinion
to the Interim Board that, as of April 23, 1996, the
consideration to be paid by Interim Services pursuant to
the Merger Agreement is fair to the holders of Interim
Common Stock, from a financial point of view. The full
text of the written opinion of DLJ, which sets forth
assumptions made, matters considered and limitations on
the review undertaken in connection with the opinion, is
attached hereto as Exhibit C and is incorporated herein by
reference. HOLDERS OF INTERIM COMMON STOCK ARE URGED TO
READ SUCH OPINION IN ITS ENTIRETY. SEE "THE MERGER --
OPINIONS OF FINANCIAL ADVISORS -- INTERIM SERVICES."
BRANDON. Goldman Sachs has delivered its written opinion
to the Brandon Board to the effect that, as of April 23,
1996, the Exchange Ratio pursuant to the Merger Agreement
is fair to the holders of Brandon Common Stock. The full
text of the written opinion of Goldman Sachs, which sets
forth assumptions made, matters considered and limitations
on the review undertaken in connection with the opinion,
is attached hereto as Exhibit D and is incorporated herein
by reference. HOLDERS OF BRANDON COMMON STOCK ARE URGED TO
READ SUCH OPINION IN ITS ENTIRETY. SEE "THE MERGER --
OPINIONS OF FINANCIAL ADVISORS -- BRANDON."
INTERESTS OF CERTAIN PERSONS
IN THE MERGER.............. Certain members of Brandon's management and the Brandon
Board may be deemed to have interests in the Merger in
addition to their interests as stockholders of Brandon
generally, including, among other things, accelerated
vesting of certain Brandon Stock Options upon consummation
of the Merger, provisions in the Merger Agreement relating
to indemnification, and the continuation of employment and
change in control agreements. Interim Services expects to
continue the employment of Brandon's officers after the
Merger under the terms and conditions of the employment
arrangements presently in effect between Brandon and its
officers. SEE "THE MERGER -- INTERESTS OF CERTAIN PERSONS
IN THE MERGER."
TREATMENT OF OPTIONS........ Upon consummation of the Merger, each outstanding Brandon
Stock Option will be converted into an option to purchase
shares of Interim Common Stock, rather than shares of
Brandon Common Stock, at a ratio of 0.88 shares of Interim
Common Stock for each share of Brandon Common Stock
covered by the Brandon Stock Options, subject to certain
anti-dilution adjustments. The vesting of certain Brandon
Stock Options will be accelerated by virtue of the Merger
constituting a change in control under the applicable
stock option plan. SEE "THE MERGER -- TREATMENT OF
OPTIONS."
OPERATIONS AFTER THE
MERGER..................... Upon consummation of the Merger, Brandon will operate as a
wholly-owned subsidiary of Interim Services. Following the
Merger, the President and Chief Operating Officer of
Brandon
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will continue to manage the business of Brandon, reporting
to the Interim Services' Executive Vice President,
Operations. Except for Ira B. Brown, Brandon's Chief
Executive Officer, who will retire following the Merger,
other officers and management of Brandon are expected to
continue in their prior roles.
Pursuant to the Merger Agreement, Brandon has the right to
select, subject to Interim Services' approval, which will
not be unreasonably withheld, a person who will be
appointed by the Interim Board to serve as a director of
Interim Services and who will, subject to the requirements
of the Delaware General Corporation Law, be included
within a class of Interim Services directors whose
three-year term expires at the Annual Meeting of Interim
Services' stockholders to be held in 1999. Such person
will be one of the directors of Brandon at the time of the
Merger but will not be any of the persons who will be
employees of the Surviving Corporation following the
Effective Time.
CONDITIONS TO CONSUMMATION
OF THE MERGER.............. The respective obligations of Interim Services and Brandon
to consummate the Merger are each subject to various
conditions, including, without limitation, obtaining the
approval of the issuance of Interim Common Stock pursuant
to the Merger Agreement by the holders of a majority of
the shares of Interim Common Stock voting at the Interim
Special Meeting, obtaining the approval of the Merger
Agreement by the holders of a majority of the outstanding
shares of Brandon Common Stock, receipt of an opinion of
counsel of Interim Services regarding qualification of the
Merger as a tax-free reorganization, receipt of reports of
both Interim Services' and Brandon's independent
accountants regarding qualification of the Merger as a
pooling of interests for accounting purposes, and no
withdrawal or adverse modification of the fairness
opinions of DLJ and Goldman Sachs set forth as Exhibits C
and D to this Proxy Statement/Prospectus. For additional
information regarding these and other conditions to con-
summation of the Merger, SEE "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT -- CONDITIONS TO CONSUMMATION OF THE
MERGER."
TERMINATION................. The Merger Agreement and the transactions contemplated
thereby may be terminated prior to the Effective Time
(whether or not prior to or after stockholder approval)
under certain circumstances, including without limitation:
(i) by Brandon if the average closing price of Interim
Common Stock during the first ten of the 13 consecutive
trading days prior to the Brandon Special Meeting is less
than $33.00, or if the Brandon Board enters into a
definitive acquisition agreement with a party other than
Interim Services in the exercise of its fiduciary duties,
(ii) by mutual written consent of Brandon and Interim
Services, and (iii) by either Brandon or Interim Services
for failure of the Merger to close by August 31, 1996
(unless such failure is caused by the party seeking to
terminate), or if there is a material adverse change in
the other party's financial condition. For additional
information regarding these and other events which may
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give one or both parties the right to terminate the Merger
Agreement, SEE "CERTAIN PROVISIONS OF THE MERGER AGREEMENT
-- TERMINATION; TERMINATION FEE."
TERMINATION FEE............. In certain circumstances, generally involving the
termination of the Merger Agreement and Brandon entering
into an acquisition agreement with a party other than
Interim Services, Brandon may be required to pay Interim
Services a termination fee equal to $1.5 million. SEE
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT --
TERMINATION; TERMINATION FEE."
REGULATORY APPROVALS........ Consummation of the Merger requires notifications to,
and/or approvals from, certain governmental authorities,
including without limitation, notifications under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"H-S-R Act") and the rules promulgated thereunder by the
Federal Trade Commission. Interim Services and Brandon
filed notification and report forms under the H-S-R Act
with the FTC and the Antitrust Division in early April
1996, and the required waiting periods for such filings
under the H-S-R Act were terminated on April 12, 1996. SEE
"THE MERGER -- REGULATORY APPROVALS."
ACCOUNTING TREATMENT........ The Merger is expected to be accounted for using the
pooling-of-interests method of accounting. Under the
Merger Agreement, it is a condition precedent to the
obligation of each of Interim Services and Brandon to
consummate the Merger that each will have received reports
from Deloitte & Touche LLP, independent accountants to
Interim Services, and Coopers & Lybrand L.L.P.,
independent accountants to Brandon, regarding
qualification of the Merger as a pooling of interests for
accounting purposes. In this regard, Interim Services
expects to receive an opinion from Deloitte & Touche LLP
to the effect that the Merger will be accounted for as a
pooling of interests. Brandon expects to receive from
Coopers & Lybrand L.L.P. a letter to the effect that
Coopers & Lybrand L.L.P. concurs with the conclusions of
Brandon's management that no conditions exist with respect
to Brandon which would preclude accounting for the Merger
as a pooling of interests. The pooling-of-interests method
of accounting is intended to present as a single interest
two or more common stockholder interests which were
previously independent. The pooling-of-interests method of
accounting treats the combining companies as having been
merged from inception. Consequently, the historical
financial statements for periods prior to the consummation
of the Merger will be restated as though the companies had
been combined from the beginning of such periods. SEE
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT -- CONDITIONS
TO CONSUMMATION OF THE MERGER," "UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION" AND "THE MERGER
-- ACCOUNTING TREATMENT."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The Merger is intended to qualify, for federal income tax
purposes, as a "tax-free" reorganization so that no gain
or loss will be recognized by Brandon stockholders on the
exchange of their Brandon Common Stock for Interim Common
Stock, except in
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respect of cash received in lieu of fractional shares.
Although no ruling will be requested from the Internal
Revenue Service ("IRS") regarding the tax consequences of
the Merger, under the Merger Agreement it is a condition
to the obligation of each of Brandon and Interim Services
to consummate the Merger that they each receive an opinion
from Bryan Cave LLP, legal counsel to Interim Services, to
the effect that, if the Merger is consummated in
accordance with the terms of the Merger Agreement, for
federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the
Code. For a more complete description of the federal
income tax consequences of the Merger, SEE "THE MERGER --
CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
NO APPRAISAL RIGHTS......... Neither Brandon stockholders nor Interim Services
stockholders are entitled to dissenter's rights of
appraisal in connection with the Merger.
COMPARISON OF STOCKHOLDER
RIGHTS..................... SEE "COMPARATIVE RIGHTS OF STOCKHOLDERS" for a summary of
certain differences between the rights of holders of
Interim Common Stock and Brandon Common Stock.
RISK FACTORS.................... STOCKHOLDERS OF BRANDON SHOULD CAREFULLY EVALUATE THE
MATTERS SET FORTH UNDER "RISK FACTORS."
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COMPARATIVE MARKET PRICES AND DIVIDENDS
INTERIM SERVICES INC.
Interim Common Stock is listed for trading on The Nasdaq Stock Market under
the symbol "INTM." The following table sets forth the range of sale prices of
Interim Common Stock as reported on The Nasdaq Stock Market.
INTERIM COMMON STOCK
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HIGH LOW
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Fiscal 1994 (from January 27, 1994)
First Quarter ended 3/25............................................................ $28 1/4 $22 1/8
Second Quarter ended 6/24........................................................... 27 1/2 22 1/8
Third Quarter ended 9/23............................................................ 25 3/8 20 1/8
Fourth Quarter ended 12/30.......................................................... 26 1/4 22 1/2
Fiscal 1995
First Quarter ended 3/31............................................................ 29 3/4 23 1/4
Second Quarter ended 6/30........................................................... 31 23 1/8
Third Quarter ended 9/29............................................................ 28 1/8 23 5/8
Fourth Quarter ended 12/29.......................................................... 35 3/8 26 1/2
Fiscal 1996
First Quarter ended 3/29............................................................ 40 3/4 34 1/4
Second Quarter through 4/23......................................................... 38 1/4 34 1/2
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On April 23, 1996, the closing sale price for Interim Common Stock on The
Nasdaq Stock Market was $38.25 per share. As of the Record Date, the number of
holders of record of Interim Common Stock was approximately 508.
No dividend or other distribution with respect to Interim Common Stock has
ever been paid by Interim Services. Interim Services currently intends to
retain any earnings for use in its business and does not anticipate paying any
cash dividends in the foreseeable future.
STOCKHOLDERS OF INTERIM SERVICES AND BRANDON ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR SHARES OF INTERIM COMMON STOCK.
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BRANDON SYSTEMS CORPORATION
Brandon Common Stock is listed for trading on the American Stock Exchange
under the symbol "BRA." The following table sets forth the range of sale prices
of Brandon Common Stock as reported by the American Stock Exchange and the per
share quarterly dividends declared during the periods indicated.
BRANDON COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
------- ------- --------
<S> <C> <C> <C>
Fiscal 1994
First Quarter ended 1/2................................................... $12 7/8 $ 9 3/8 $ .055
Second Quarter ended 4/3.................................................. 16 11 5/8 .055
Third Quarter ended 7/3................................................... 17 1/8 11 7/8 .055
Fourth Quarter ended 10/2................................................. 17 1/4 14 .070
Fiscal 1995
First Quarter ended 1/1................................................... 19 1/8 15 3/8 .070
Second Quarter ended 4/2.................................................. 22 1/2 17 1/4 .070
Third Quarter ended 7/2................................................... 24 3/8 20 1/2 .070
Fourth Quarter ended 10/1................................................. 22 18 1/4 .070
Fiscal 1996
First Quarter ended 12/31................................................. 25 5/8 17 1/2 .085
Second Quarter ended 3/31................................................. 34 1/2 25 .085
Third Quarter through 4/23................................................ 33 29 7/8 .085
</TABLE>
On February 26, 1996 (the date immediately prior to the date of the public
announcement of the Merger Agreement) and April 23, 1996, the closing sale price
for Brandon Common Stock on the American Stock Exchange was $26 5/8 per share
and $33.00 per share, respectively. As of the Record Date, the number of holders
of record of Brandon Common Stock was approximately 564.
STOCKHOLDERS OF INTERIM SERVICES AND BRANDON ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR SHARES OF BRANDON COMMON STOCK.
10
<PAGE>
SELECTED AND SUPPLEMENTARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables set forth selected historical consolidated financial
data of Interim Services and Brandon and combined pro forma financial data
giving effect to the Merger using the pooling-of-interests method of accounting
and reflecting the Exchange Ratio and the pro forma adjustments described in the
accompanying notes.
The selected consolidated financial information of Interim Services set
forth below as of December 29, 1995 and December 30, 1994 and for each of the
three years in the period ended December 29, 1995, are derived from, and are
qualified by reference to, Interim Services' audited consolidated financial
statements and related notes thereto, which together with the related report of
Deloitte & Touche LLP, independent accountants, are included in Interim
Services' Annual Report on Form 10-K for the fiscal year ended December 29, 1995
which is incorporated by reference in this Proxy Statement/Prospectus. The
consolidated statement of income data of Interim Services set forth below with
respect to the fiscal years ended December 25, 1992 and December 27, 1991, and
the consolidated balance sheet data, as of December 24, 1993, December 25, 1992
and December 27, 1991 are derived from the audited consolidated financial
statements of Interim Services not included herein.
Brandon's fiscal year ends on the Sunday nearest to the end of the month of
September. Accordingly, Brandon has prepared historical consolidated financial
statements and related notes thereto as of October 1, 1995, October 2, 1994,
October 3, 1993, September 27, 1992 and September 29, 1991 and for each of the
five fiscal years in the period ended October 1, 1995. Brandon's consolidated
financial statements and related notes thereto, as of October 1, 1995 and
October 2, 1994 and for each of the three fiscal years in the period ended
October 1, 1995, together with the related report of Coopers & Lybrand L.L.P.,
independent accountants, are included in Brandon's Annual Report on Form 10-K
for the fiscal year ended October 1, 1995 which is incorporated by reference in
this Proxy Statement/ Prospectus. The historical consolidated statement of
income data of Brandon for the fiscal years ended December 31, 1995, January 1,
1995, January 2, 1994, December 27, 1992 and December 29, 1991 are unaudited and
have been derived from the audited consolidated statements of income of Brandon
by subtracting the results of operations as reported in Brandon's Quarterly
Reports on Form 10-Q for the first quarter of each respective fiscal year and
adding the results of operations as reported in Brandon's Quarterly Reports on
Form 10-Q for the first quarter of the subsequent respective fiscal year. The
historical consolidated balance sheet data of Brandon as of December 31, 1995,
January 1, 1995, January 2, 1994, December 27, 1992 and December 29, 1991 are
unaudited and represent the financial position of Brandon as reported in
Brandon's Quarterly Reports on Form 10-Q for the fiscal quarters ended on these
dates.
This data should be read in conjunction with the separate consolidated
financial statements and notes thereto of Interim Services and Brandon
incorporated by reference in this Proxy Statement/ Prospectus.
The following selected unaudited pro forma financial data is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the Merger had been
consummated, nor is it necessarily indicative of future operating results or
financial position. This data does not include any expenses or restructuring
charges related to the Merger. Total Merger-related direct expenses are expected
to approximate $1.9 million. In addition, the data excludes any potential
benefits from synergies that may result from the Merger. The selected pro forma
financial data should be read in conjunction with "Unaudited Pro Forma Combined
Condensed Financial Information." There were no material transactions between
Interim Services and Brandon during any of the periods presented.
11
<PAGE>
INTERIM SERVICES INC.
SELECTED AND SUPPLEMENTARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------
DECEMBER 29, 1995
-------------------------
UNAUDITED DEC. 30, DEC. 24, DEC. 25, DEC. 27,
PRO FORMA(1) ACTUAL 1994 1993(2) 1992(2) 1991(2)
------------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
REVENUES
Branch Revenues........................ $ 632,716 $ 526,972 $ 410,686 $ 367,520 $ 330,890 $ 330,248
Licensee Revenues...................... 224,489 224,489 192,983 122,457 74,271 28,131
Franchise Royalties.................... 23,977 24,316 22,790 20,458 20,193 20,094
Other Income........................... 5,109 5,109 7,958 4,598 3,647 3,261
------------- ---------- ---------- ---------- --------- ---------
Total Revenues......................... 886,291 780,886 634,417 515,033 429,001 381,734
------------- ---------- ---------- ---------- --------- ---------
EXPENSES
Cost of Services....................... 615,339 549,323 449,175 366,045 302,171 266,216
Operating Expenses..................... 201,806 162,849 124,959 109,757 98,707 97,529
Licensee Commissions................... 37,295 37,295 33,796 20,586 12,142 4,022
------------- ---------- ---------- ---------- --------- ---------
Total Expenses......................... 854,440 749,467 607,930 496,388 413,020 367,767
------------- ---------- ---------- ---------- --------- ---------
EARNINGS BEFORE TAXES.................. 31,851 31,419 26,487 18,645 15,981 13,967
Taxes on Earnings...................... 14,083 13,892 12,330 9,235 8,157 7,199
------------- ---------- ---------- ---------- --------- ---------
NET EARNINGS........................... $ 17,768 $ 17,527 $ 14,157 $ 9,410 $ 7,824 $ 6,768
------------- ---------- ---------- ---------- --------- ---------
------------- ---------- ---------- ---------- --------- ---------
NET EARNINGS PER SHARE................. $ 1.52 $ 1.50 $ 1.24 $ 0.94 $ 0.78 $ 0.68
Weighted Average Shares Outstanding.... 11,652 11,652 11,427 10,000 10,000 10,000
<CAPTION>
AS OF THE YEAR ENDED
--------------------------------------------------------
DEC. 29, DEC. 30, DEC. 24, DEC. 25, DEC. 27,
1995 1994 1993(2) 1992(2) 1991(2)
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total Assets........................... $ 406,617 $ 260,735 $ 228,539 $ 219,733 $ 207,055
Working Capital........................ 40,741 58,421 59,600 56,463 44,694
Long-term Obligations.................. 60,000 -- 30,000 89,107 94,337
Stockholders' Equity................... 196,369 178,626 136,456 74,767 65,890
</TABLE>
See accompanying Notes to Selected and Supplementary
Historical and Pro Forma Financial Data
12
<PAGE>
BRANDON SYSTEMS CORPORATION
SELECTED UNAUDITED HISTORICAL FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------
DEC. 31, JAN. 1, JAN. 2, DEC. 27, DEC. 29,
1995 1995 1994 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues............................................... $ 83,361 $ 70,279 $ 59,227 $ 48,462 $ 38,335
--------- --------- --------- --------- ---------
Expenses
Cost of Services....................................... 50,846 42,229 35,994 29,611 22,763
Selling, General and Administrative Expenses........... 22,936 19,469 17,783 14,924 12,974
--------- --------- --------- --------- ---------
Total Expenses......................................... 73,782 61,698 53,777 44,535 35,737
--------- --------- --------- --------- ---------
Earnings From Operations............................... 9,579 8,581 5,450 3,927 2,598
Other, net (principally interest income)............... 806 416 319 430 558
--------- --------- --------- --------- ---------
Earnings Before Taxes.................................. 10,385 8,997 5,769 4,357 3,156
Taxes on Earnings...................................... 4,179 3,698 2,329 1,698 1,061
--------- --------- --------- --------- ---------
Net Earnings........................................... $ 6,206 $ 5,299 $ 3,440 $ 2,659 $ 2,095
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net Earnings Per Share(3).............................. $ 1.36 $ 1.18 $ 0.78 $ 0.61 $ 0.48
Weighted Average Shares Outstanding.................... 4,557 4,505 4,401 4,370 4,354
Cash Dividends Per Share............................... $ 0.30 $ 0.25 $ 0.21 $ 0.20 $ 0.19
<CAPTION>
AS OF THE YEAR ENDED
-----------------------------------------------------
DEC. 31, JAN. 1, JAN. 2, DEC. 27, DEC. 29,
1995 1995 1994 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total Assets........................................... $ 35,011 $ 30,915 $ 25,439 $ 21,883 $ 19,398
Working Capital........................................ 26,785 23,576 19,298 16,918 15,489
Stockholders' Equity................................... 29,920 26,273 21,538 18,912 17,021
</TABLE>
See accompanying Notes to Selected and Supplementary
Historical and Pro Forma Financial Data
13
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------------------
1995(1) 1994 1993(2) 1992(2) 1991(2)
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF INCOME DATA:
REVENUES
Branch Revenues........................... $ 716,077 $ 480,965 $ 426,747 $ 379,352 $ 368,583
Licensee Revenues......................... 224,489 192,983 122,457 74,271 28,131
Franchise Royalties....................... 23,977 22,790 20,458 20,193 20,094
Other Income.............................. 5,109 7,958 4,598 3,647 3,261
------------- ------------- ------------- ----------- -----------
Total Revenues............................ 969,652 704,696 574,260 477,463 420,069
------------- ------------- ------------- ----------- -----------
EXPENSES
Cost of Services.......................... 666,185 491,404 402,039 331,782 288,979
Operating Expenses........................ 223,936 144,012 127,221 113,201 109,945
Licensee Commissions...................... 37,295 33,796 20,586 12,142 4,022
------------- ------------- ------------- ----------- -----------
Total Expenses............................ 927,416 669,212 549,846 457,125 402,946
------------- ------------- ------------- ----------- -----------
EARNINGS BEFORE TAXES..................... 42,236 35,484 24,414 20,338 17,123
TAXES ON EARNINGS......................... 18,262 16,028 11,564 9,855 8,260
------------- ------------- ------------- ----------- -----------
NET EARNINGS.............................. $ 23,974 $ 19,456 $ 12,850 $ 10,483 $ 8,863
------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ----------- -----------
Net Earnings Per Share(2)(3).............. $ 1.53 $ 1.26 $ 0.93 $ 0.76 $ 0.64
Weighted Average Shares Outstanding....... 15,662 15,391 13,873 13,846 13,832
Cash Dividends Per Share(4)............... $ 0.08 $ 0.07 $ 0.07 $ 0.06 $ 0.06
<CAPTION>
AS OF THE YEAR ENDED
---------------------------------------------------------------------
1995 1994 1993(2) 1992(2) 1991(2)
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
COMBINED BALANCE SHEET DATA:
Total Assets.............................. $ 441,628 $ 291,650 $ 253,978 $ 241,616 $ 226,453
Working Capital........................... 67,526 81,997 78,898 73,381 60,183
Long-term Obligations..................... 60,000 -- 30,000 89,107 94,337
Stockholders' Equity...................... 226,289 204,899 157,994 93,679 82,901
</TABLE>
See accompanying Notes to Selected and Supplementary
Historical and Pro Forma Financial Data
14
<PAGE>
INTERIM SERVICES INC.
SUPPLEMENTARY UNAUDITED HISTORICAL FINANCIAL DATA
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------
DECEMBER 29, 1995
-------------------------
UNAUDITED DEC. 30, DEC. 24, DEC. 25, DEC. 27,
PRO FORMA(1) ACTUAL 1994 1993(2) 1992(2) 1991(2)
------------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALES DATA(5):
Commercial:
Traditional.......................... $ 693,127 $ 693,127 $ 607,362 $ 524,767 $ 454,108 $ 402,946
Professional Services................ 152,537 55,933 30,956 21,491 11,608 5,565
HealthCare............................. 661,839 661,839 570,742 480,274 458,921 458,148
------------- ---------- ---------- ---------- --------- ---------
Total Sales............................ $ 1,507,503 $1,410,899 $1,209,060 $1,026,532 $ 924,637 $ 866,659
------------- ---------- ---------- ---------- --------- ---------
------------- ---------- ---------- ---------- --------- ---------
</TABLE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
SUPPLEMENTARY UNAUDITED PRO FORMA FINANCIAL DATA
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------------------
1995(1) 1994 1993(2) 1992(2) 1991(2)
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
COMBINED SALES DATA(5):
Commercial:
Traditional....................................... $ 693,127 $ 607,362 $ 524,767 $ 454,108 $ 402,946
Professional Services............................. 235,898 101,235 80,718 60,070 43,900
HealthCare............................................ 661,839 570,742 480,274 458,921 458,148
---------- ---------- ---------- --------- ---------
Total Sales........................................... $1,590,864 $1,279,339 $1,085,759 $ 973,099 $ 904,994
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
</TABLE>
See accompanying Notes to Selected and Supplementary
Historical and Pro Forma Financial Data
15
<PAGE>
INTERIM SERVICES AND BRANDON
NOTES TO SELECTED AND SUPPLEMENTARY HISTORICAL
AND PRO FORMA FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) Interim Services made certain significant acquisitions in 1995 which were
accounted for under the purchase method of accounting. The unaudited pro
forma consolidated statement of income and sales data give effect to the
acquisitions as though they occurred at the beginning of 1995 with pro forma
adjustments to give effect to amortization of goodwill, interest expense on
additional borrowings used to fund the acquisitions, and other adjustments,
together with income tax effects. SEE NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION.
(2) Prior to its January 27, 1994 initial public offering ("IPO"), Interim
Services' working capital and acquisition financing were provided by its
former parent, H&R Block, Inc. ("Block"). Effective September 25, 1993,
Block formalized its financing arrangement by (i) providing a revolving
credit facility in the amount of $20,000 to fund operating requirements of
Interim Services; (ii) converting $30,000 of intercompany indebtedness on
such date to a term loan, and (iii) contributing $51,289 to the capital of
Interim Services. The consolidated statement of income and balance sheet
data for the three years ended December 24, 1993 (unaudited) give effect to
this arrangement as if it occurred at the beginning of the respective years.
Interest expense has been computed at 6% and income taxes at the statutory
rate.
(3) Per share data for Brandon in 1991 has been retroactively restated for the
five-for-four stock split occurring in 1992.
(4) Pro forma cash dividends per share amounts represent Brandon's historical
cash dividends per share amounts after converting each share of Brandon
Common Stock into 0.88 shares of Interim Common Stock. Interim Services has
not paid, and does not expect to pay in the foreseeable future, any cash
dividends on Interim Common Stock.
(5) The Supplementary Historical Financial Data is unaudited and represents the
branch and licensee revenues of Interim Services and the sales of its
franchises from which Interim Services' franchise royalty revenues are
earned. Sales data for Interim Services' franchised offices are derived from
unaudited reports provided by its franchisees. The Supplementary Unaudited
Pro Forma Financial Data includes the Supplementary Unaudited Historical
Financial Data of Interim Services and the historical revenues of Brandon.
16
<PAGE>
RISK FACTORS
IF THE MERGER IS CONSUMMATED, STOCKHOLDERS OF BRANDON WILL BECOME
STOCKHOLDERS OF INTERIM SERVICES. IN ADDITION TO THE OTHER INFORMATION IN THIS
PROXY STATEMENT/PROSPECTUS, THE FOLLOWING INFORMATION RELATING TO INTERIM
SERVICES SHOULD BE CONSIDERED CAREFULLY.
COMPETITIVE MARKET
The flexible staffing industry is competitive, with limited barriers to
entry. Interim Services competes in national, regional and local markets with
full service agencies and with specialized temporary services agencies and home
care providers. The majority of competitors are significantly smaller than
Interim Services. However, several competitors have greater marketing and
financial resources than those of Interim Services. Interim Services expects
that the level of competition will remain high in the future.
ABILITY TO CONTINUE AND MANAGE COMPANY GROWTH
Interim Services has experienced significant growth in the past, principally
through the acquisition of existing businesses and the opening of new offices,
as well as through licensing and franchising. There can be no assurance that, in
the future, Interim Services will continue to be able to establish and expand
its market presence, or to successfully enter other markets or integrate
acquired businesses into its operations. The ability of Interim Services to
continue and manage its growth will depend on a number of other factors,
including existing and emerging competition and the availability of capital to
support such growth as well as Interim Services' ability to maintain margins in
the face of pricing pressures, to manage costs in changing regulatory
environments and to recruit and train additional qualified personnel.
Additionally, there can be no assurance that Interim Services will continue to
identify suitable acquisition candidates or complete the acquisitions on terms
favorable to Interim Services.
RELIANCE ON KEY PERSONNEL
Interim Services is highly dependent on its management. The success of
Interim Services depends in large part on the abilities and continued services
of Raymond Marcy, its President and Chief Executive Officer, and certain other
officers and key employees. The loss of Mr. Marcy or other officers and key
employees could have a material adverse effect on Interim Services' operations.
INFORMATION TECHNOLOGY TRENDS
The size and growth in the use of flexible staffing in the IT area in recent
years has been driven largely by rapid technological advances. As the
sophistication and complexity of business information systems increases, and as
the general corporate trend towards downsizing continues, businesses are
increasingly turning to specialized, outside technical personnel to staff their
IT operations. The success of Interim Services in the IT area depends in large
part on its ability to keep pace with existing technology and predict new
technological changes and advancements. Although Interim Services attempts to
follow industry trends closely and anticipate new changes, there can be no
assurance that Interim Services will be able to anticipate and successfully
respond to new technological advancements in the future.
EFFECT OF FLUCTUATIONS IN THE GENERAL ECONOMY
Demand for commercial staffing services is significantly affected by the
general level of economic activity in the country. When economic activity
increases, flexible staff are often added before full-time employees are hired.
Similarly, as economic activity slows, many companies reduce their usage of
flexible staff before undertaking layoffs of their regular employees. In
addition, in the early stages of a recovery, before employment returns to
previous levels, it is easier to hire employees for placement on a temporary
basis. Traditionally, demand for the health care services of Interim Services
has not been directly affected by the overall state of the economy. There can be
no assurance, however, that Interim Services' HealthCare Division will continue
to be unaffected by changes in the overall economy.
DEPENDENCE ON AVAILABILITY OF QUALIFIED PERSONNEL
Interim Services depends upon its ability to attract qualified personnel who
possess the skills and experience necessary to meet the staffing requirements of
its clients. Interim Services must continually evaluate and upgrade its base of
available qualified personnel to keep pace with the changing
17
<PAGE>
client needs and emerging technologies. Competition for individuals with proven
professional skills, particularly home health care providers, IT professionals
and other skilled employees, is intense. There can be no assurance that
qualified personnel will continue to be available to Interim Services in
sufficient numbers in the future.
GOVERNMENTAL REGULATION
A number of states have adopted laws that regulate companies that provide
health care services. In many of the states with such laws, Interim Services
need only be licensed. In approximately 23 states, home care providers must
receive a certificate of need ("CON") from the state. CON laws restrict the
types of care that may be provided and can limit or prohibit a company's ability
to provide certain services and to establish or expand its operations within
such state. CON requirements and restrictions vary substantially from state to
state.
LIABILITY/INDUSTRY RISKS
Flexible staffing providers employ and place people in the work place of
other businesses. Attendant risks of such activity include possible claims of
discrimination and harassment, employment of illegal aliens, errors and
omissions by Interim Services' flexible staff, particularly for the action of
temporary professionals (e.g., accountants and attorneys), misuse or
misappropriation of client funds or proprietary information and other similar
claims. Such claims may result in negative publicity, injunctive relief or the
payment of monetary damages or fines by Interim Services. While Interim Services
maintains insurance policies covering general liability, errors and omissions
and employee theft, there can be no assurance that such insurance coverage will
be adequate in scope or amount to cover any such liability.
FRANCHISING RISKS
For fiscal year 1995, 46.8% of Interim Services' sales (representing 3.1% of
revenues) were derived from franchised operations. Moreover, the largest ten
franchisees (based on sales volume) accounted for 21% of the total sales of
Interim Services in fiscal 1995. Franchisees may leave the franchise system at
the end of the term of their franchise agreements and have in the past
terminated their franchise agreements before the end of the franchise agreement
term. While Interim Services' agreements contain non-competition covenants, such
covenants may not prevent the loss of sales.
UNEMPLOYMENT INSURANCE; WORKERS' COMPENSATION
Interim Services is required to pay unemployment insurance premiums and
workers' compensation costs for its flexible staff. Unemployment insurance
premiums have continued to increase generally as a result of increased levels of
unemployment and the extension of periods of time for which benefits are
available. Workers' compensation costs have continued to increase as states have
raised benefit levels and liberalized allowable claims. In addition, Interim
Services' health-related costs could increase as the result of future health
care reforms. Specifically, certain federal and state legislative proposals have
included provisions requiring employers to extend health insurance benefits to
flexible staff who do not presently receive such benefits. There can be no
assurance that Interim Services will be able to increase the fees charged to its
clients to absorb the increased costs related to workers' compensation,
unemployment insurance, or employer-paid health insurance benefits that must be
extended to flexible staff.
ANTI-TAKEOVER CONSIDERATIONS
Interim Services' Restated Certificate of Incorporation and the Delaware
General Corporation Law contain certain provisions that could have the effect of
making it more difficult for a party to acquire, or of discouraging a party from
attempting to acquire control of Interim Services without approval of the
Interim Board. In addition, the Interim Board has adopted a stockholder's rights
plan. The foregoing may discourage tender offers or other bids for Interim
Common Stock at a premium over the market price of the Interim Common Stock. In
addition, the requirement that a change of control of Interim Services be
approved by the Public Health Council of the New York State Department of Public
Health may have a similar effect.
18
<PAGE>
THE SPECIAL MEETINGS
GENERAL
This Proxy Statement/Prospectus is being furnished to the stockholders of
Interim Services in connection with the solicitation of proxies by the Interim
Board for use at the Interim Special Meeting to be held on Thursday, May 23,
1996, at 10:00 a.m., local time, at the offices of Bryan Cave LLP, 245 Park
Avenue, New York, New York 10167-0034, and at any adjournments or postponements
thereof.
This Proxy Statement/Prospectus is also being furnished to the stockholders
of Brandon in connection with the solicitation of proxies by the Brandon Board
for use at the Brandon Special Meeting to be held on Thursday, May 23, 1996, at
1:00 p.m., local time, at the American Stock Exchange, Board of Governors Room,
13th Floor, 86 Trinity Place, New York, New York, and at any adjournments or
postponements thereof.
This Proxy Statement/Prospectus also constitutes the Prospectus with respect
to the shares of Interim Common Stock issuable in connection with the Merger.
MATTERS TO BE CONSIDERED
INTERIM SERVICES. At the Interim Special Meeting, holders of Interim Common
Stock will consider and vote upon a proposal to approve the issuance of Interim
Common Stock pursuant to the Merger Agreement and such other matters as may
properly be brought before the Interim Special Meeting or any adjournments or
postponements thereof.
BRANDON. At the Brandon Special Meeting, holders of Brandon Common Stock
will consider and vote upon a proposal to approve and adopt the Merger Agreement
and the Merger and such other matters as may properly be brought before the
Brandon Special Meeting or any adjournments or postponements thereof.
VOTES REQUIRED
INTERIM SERVICES. The affirmative vote of the holders of a majority of all
shares of Interim Common Stock voting (whether in person or by proxy) at the
Interim Special Meeting is required to approve the issuance of Interim Common
Stock pursuant to the Merger Agreement. This approval is required under the
rules of The Nasdaq Stock Market, which are applicable to Interim Services
because its securities are quoted thereon. As a result, abstentions, failures to
vote and broker non-votes will have no effect on the vote in respect of the
share issuance pursuant to the Merger Agreement except to the extent that
failures to vote and broker non-votes affect the quorum required for the Interim
Special Meeting.
Directors and executive officers of Interim Services hold in the aggregate
approximately 0.4% of the outstanding shares of Interim Common Stock as of the
Record Date and have indicated that they will vote all of their shares of
Interim Common Stock for the approval of the issuance of Interim Common Stock
pursuant to the Merger Agreement.
BRANDON. The affirmative vote of the holders of a majority of the
outstanding shares of Brandon Common Stock as of the Record Date is required to
approve and adopt the Merger Agreement and the Merger. As a result, abstentions,
failures to vote and broker non-votes will have the same effect as votes against
the Merger Agreement.
Ira B. Brown and Myra Brown, holders of 1,099,760 shares of Brandon Common
Stock, or 25.0% of the outstanding shares of Brandon Common Stock as of the
Record Date, have irrevocably granted to designees of Interim Services, the
power to vote their shares of Brandon Common Stock in favor of the approval and
adoption of the Merger Agreement and the Merger. SEE "THE MERGER -- IRREVOCABLE
PROXY." Additionally, the directors and executive officers of Brandon (other
than the Browns) hold in the aggregate 104,555 shares of Brandon Common Stock,
or 2.4% of the outstanding shares as of the Record Date, and have indicated that
they will vote all of their shares of Brandon Common Stock in favor of the
approval and adoption of the Merger Agreement and the Merger.
19
<PAGE>
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Each of the Interim Board and Brandon Board has fixed the close of business
on April 23, 1996 as the Record Date for the determination of the Interim
Services stockholders and Brandon stockholders entitled to vote at their
respective Special Meetings. As of the Record Date, there were 10,000,000
authorized shares of Brandon Common Stock of which 4,399,146 shares were issued
and outstanding and held of record by approximately 564 stockholders, and
25,000,000 authorized shares of Interim Common Stock of which 11,540,109 shares
were issued and outstanding and held of record by approximately 508
stockholders. Each share of Brandon Common Stock and each share of Interim
Common Stock will be entitled to one vote on the matters set forth at their
respective Special Meetings.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Interim Common Stock or Brandon Common Stock, as the case
may be, entitled to vote at the Interim Special Meeting or the Brandon Special
Meeting, as the case may be, is necessary to constitute a quorum for the
transaction of business at such Special Meeting. If a quorum is not obtained at
either Special Meeting, such Special Meeting may be adjourned for the purpose of
obtaining additional proxies or votes or for any other purpose, and, at any
subsequent reconvening of such Special Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
VOTING OF PROXIES
Each holder of Interim Common Stock and Brandon Common Stock as of the
Record Date will be entitled to vote at their respective Special Meeting. Votes
may be cast either in person or by proxy. Shares of Interim Common Stock and
Brandon Common Stock represented by properly executed proxies which have been
received at or prior to the respective Special Meeting and which have not been
revoked, will be voted in accordance with the instructions indicated therein. If
no instructions are indicated, such proxies will be voted, in the case of
Interim Services, in favor of approval of the issuance of Interim Common Stock
pursuant to the Merger Agreement, and in the case of Brandon, in favor of the
approval and adoption of the Merger Agreement and the Merger, and in the
discretion of the proxy holder as to any other matter which may properly come
before the respective Special Meetings.
REVOCATION OF PROXIES
An Interim Services or Brandon stockholder who has given a proxy may revoke
such proxy at any time prior to its exercise by (i) giving written notice of
revocation to the Secretary of Interim Services or Brandon, as appropriate, (ii)
properly submitting to Interim Services or Brandon, as appropriate, a duly
executed proxy bearing a later date, or (iii) attending the appropriate Special
Meeting and voting in person. Attendance at the Special Meeting will not in and
of itself revoke a proxy. However, a stockholder can revoke a proxy by attending
the Special Meeting and notifying the secretary of the Special Meeting, prior to
the vote at the Special Meeting, that such holder would like to revoke the
proxy. All written notices of revocation and other communications with respect
to revocation of proxies by Interim Services stockholders should be addressed as
follows: Interim Services Inc., 2050 Spectrum Boulevard, Fort Lauderdale,
Florida 33309, Attn: John B. Smith, Esq., Senior Vice President, Secretary and
General Counsel. All written notices of revocation and other communications with
respect to revocation of proxies by Brandon stockholders should be addressed as
follows: Brandon Systems Corporation, 9 Polito Avenue, Lyndhurst, New Jersey
07071, Attn: Patricia G. Byrnes, Esq., General Counsel.
SOLICITATION OF PROXIES
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation on behalf of the Interim Board and Brandon Board of proxies for use
at their respective Special Meetings.
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D.F. King & Co., Inc. will assist in the solicitation of proxies by Interim
Services and Brandon. For its services D.F. King & Co., Inc. will be paid a fee
of $7,500, plus reimbursement of reasonable out-of-pocket expenses.
Each of Interim Services and Brandon will bear the cost of solicitation of
proxies from its own stockholders, except that Interim Services and Brandon will
share equally the cost of filing the Registration Statement of which this Proxy
Statement/Prospectus is a part.
IF THE MERGER AGREEMENT IS APPROVED AND THE MERGER IS CONSUMMATED, THE
HOLDERS OF BRANDON COMMON STOCK WILL BE SENT A LETTER OF TRANSMITTAL WITH
INSTRUCTIONS FOR SURRENDERING THEIR CERTIFICATES REPRESENTING SHARES OF BRANDON
COMMON STOCK. HOLDERS OF BRANDON COMMON STOCK SHOULD NOT SEND THEIR STOCK
CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL.
INFORMATION ABOUT INTERIM SERVICES
BUSINESS
BACKGROUND
Interim Services has evolved significantly since its founding in 1946.
Interim Services was originally formed to provide temporary industrial and light
industrial staffing services. Nursing and home care staffing services were first
provided in 1966, and Interim Services has since expanded to provide a wide
range of flexible staffing services.
On August 16, 1978, Interim Services, then known as Personnel Pool of
America, Inc., was acquired by H&R Block, Inc. ("Block"). On January 22, 1991,
Block acquired another temporary service business, Interim Systems Corporation
("ISC"). At the time of the acquisition, ISC was providing clerical,
secretarial, light industrial and health care personnel through 178 branch
offices in 20 states and three Canadian provinces. The businesses of Interim
Services and ISC were combined on December 31, 1991. On June 15, 1992, Interim
Services changed its name to "Interim Services Inc."
On January 27, 1994, Interim Services completed an initial offering of its
common stock to the public at $20 per share ("IPO"). Since its IPO, Interim
Services has acquired ten flexible staffing companies including five companies
acquired in fiscal year 1994 and five companies acquired in fiscal year 1995.
The five companies acquired in 1994 had pro forma combined revenue of $42.0
million (assuming full year results). The five companies acquired in 1995 had
pro forma combined revenue of $119.0 million (assuming full year results).
Interim Services is a Delaware corporation whose corporate headquarters are
located at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309. Interim
Services' telephone number is (954) 938-7600.
BUSINESS OVERVIEW
Interim Services provides customized staffing solutions on a national basis
including flexible staffing, home health care, full-time placement, consulting
and other value-added services to businesses, professional and service
organizations, governmental agencies, health care facilities and individuals. As
of December 29, 1995, Interim Services operated through a network of 908 offices
in 48 states, the District of Columbia, Puerto Rico, Canada, The Netherlands and
the United Kingdom.
Interim Services operates through two divisions: the Commercial Division,
which generated 53% of system-wide sales, and the HealthCare Division, which
generated 47% of system-wide sales in 1995. Interim Services' management
believes that, based on system-wide sales, Interim Services is the fourth
largest provider of commercial staffing services and the second largest provider
of temporary health care personnel in North America. Interim Services'
management also believes that Interim Services offers the broadest selection of
staffing services available in the flexible staffing industry.
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The Commercial Division serves client requirements for traditional temporary
clerical and light industrial skills as well as increasingly filling needs for
specialty professional skills such as IT, legal and accounting. The HealthCare
Division provides a broad range of personnel including home health aides,
nurses, home companions, therapists and physicians. In 1995, approximately 80%
of the HealthCare Division's services (based on revenues) were provided in the
home environment, the fastest growing portion of the health care industry.
Interim Services' goal is to become the leading full service provider of
flexible staffing services to commercial and health care organizations and to
individuals throughout North America. Interim Services' strategy emphasizes
expansion of the number of locations and markets in which services are offered
as well as the breadth of services provided. Interim Services' management
believes that an important component of Interim Services' success is its
decentralized entrepreneurial environment operating under an umbrella of the
common "INTERIM" brand identity and a collective vision of client service.
GROWTH STRATEGY
Interim Services' acquisition strategy focuses on those markets where
Interim Services lacks sufficient offices and those specialized service niches
where Interim Services believes opportunities for growth exist. Interim Services
intends to focus on expansion through licenses and new franchises in the smaller
and mid-size markets where having independent local management is often an
advantage. In larger markets, where it can centralize its regional and area
management and other administrative functions to support a cluster of offices,
Interim Services intends to expand company-owned branches. Management has found
that Interim Services' strong reputation and decentralized management style have
assisted its efforts to acquire small, independent offices that are seeking
alliances as size and national presence increasingly become a strategic
advantage.
INDUSTRY OVERVIEW
COMMERCIAL FLEXIBLE STAFFING INDUSTRY
Revenues for the flexible staffing industry were expected to exceed $60
billion in 1995 according to the Staffing Industry Report, a staffing services
industry publication. Further, temporary help, the largest staffing services
sector, was estimated to have 1995 revenues of approximately $41 billion and has
grown at an average annual rate of approximately 17.5% over the past four years.
According to the Bureau of Labor Statistics, the flexible staffing industry is
the seventh fastest growing industry in the United States with a projected
growth rate of 58.1% from 1994 to 2005.
The use of temporary personnel has become widely accepted as a valuable tool
for managing personnel costs, supplementing permanent workforces and meeting
specialized or fluctuating employment requirements. Effective use of flexible
staff enables businesses to staff their organizations with a core level of
full-time personnel by supplementing their full-time work force only as needed.
Organizations have also begun using flexible staffing to reduce administrative
overhead by outsourcing operations that are not part of their core business
functions. Outsourcing not only shifts cost from fixed to variable but also
benefits the client by providing the efficiencies of professional management of
their workforce. An ancillary benefit, particularly for small businesses, is
that outsourcing shifts employment costs and risks (e.g., workers' compensation
and unemployment insurance) to the flexible staffing companies, which can spread
the costs and risks over a larger pool of employees.
The range of flexible staffing services available has expanded substantially
since the early days of the industry. Over the last decade, the increased use of
technology has led to a dramatic rise in demand for technical project support,
software development and other computer-related services. Corporations have
outsourced many of these departments and/or have utilized flexible staffing
firms in an attempt to meet the increased demand for computer-skilled personnel.
In addition, changing attitudes towards workforce management have propelled a
dramatic increase in flexible professional personnel,
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such as accountants, paralegals, attorneys and computer programmers. These
specialty and professional sectors of the flexible staffing industry are growing
considerably faster than the industry as a whole.
The flexible staffing industry is highly fragmented and is currently
experiencing a trend towards consolidation. This trend reflects the increasing
demand by large companies for centralized staffing services and growth of
national and regional accounts resulting from the centralization of staffing
decisions which has increased the importance of staffing companies being able to
offer a wide range of services over a broad geographic area. Smaller staffing
companies that are unable to provide national services and that have limited
capital and management resources are increasingly finding it difficult to
compete.
HEALTH CARE STAFFING INDUSTRY
Health care staffing services can be divided into two service sectors based
on the location of care delivery. The health care staffing sector provides
general and specialized health care personnel for hospitals, nursing homes, HMOs
and other health care facilities. The home care sector consists of providing the
same health care skills, as well as companionship, in the home environment.
Historically, home care has been one of the fastest growing sectors of the
health care industry, and has grown at an estimated average annual rate of 16.4%
since 1988 according to the Bureau of Labor Statistics.
Contributing to the growth of home health care is national pressure to
reduce health care costs. Studies indicate that the cost of home health care
averages 40% to 70% of that of institutional care. In addition, industry growth
is driven by the increase in overall demand for health care for the aging
American population and by technological advances, which have made it possible
to perform many sophisticated medical procedures in the home. Interim Services
believes that most patients, when given a choice, prefer to be cared for at
home.
Size and national presence are becoming increasingly important factors in
the home health care industry. Private insurers use case managers and contract
managers who purchase home care services in volume, while private individuals
rely on physicians, HMOs, hospital discharge planners and insurers for referrals
to home care providers. As national and regional payor organizations
increasingly dominate health care purchases, the ability to provide home care
services nationally is becoming a competitive advantage. A national distribution
network is important to obtaining business from these organizations which often
prefer to have one or two suppliers who can provide health care personnel over a
broad geographic region.
DESCRIPTION OF INTERIM SERVICES CAPITAL STOCK
The authorized capital stock of Interim Services consists of 27,500,000
shares of which 25,000,000 shares are Interim Common Stock and 2,500,000 shares
are Interim Preferred Stock. As of April 23, 1996, there were 11,540,109 issued
and outstanding shares of Interim Common Stock and no issued and outstanding
shares of Interim Preferred Stock.
COMMON STOCK
Generally, the vote of the holders of a majority of all shares of stock of
Interim Services voting (whether in person or by proxy) on a matter will decide
such matter, unless express provisions of law or the Interim Services
Certificate of Incorporation require a different vote. All shares of Interim
Common Stock are deemed to be voting stock of Interim Services, and all holders
thereof are entitled to one vote for each share of stock standing in their
names. Holders of Interim Common Stock have no pre-emptive rights to purchase or
subscribe for any stock or other securities of Interim Services. The outstanding
Interim Common Stock is, and the Interim Common Stock to be issued in the
Merger, when issued and delivered will be, fully paid and non-assessable. Each
holder of Interim Common Stock on the applicable record date is entitled to
receive such dividends as may be declared by the Interim Board at any meeting
out of funds legally available therefor. No dividend or other distribution
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with respect to Interim Common Stock has ever been paid by Interim Services,
other than in connection with the stockholders rights plan discussed below.
Interim Services currently intends to retain any earnings for use in its
business and does not anticipate paying any cash dividends in the forseeable
future.
Interim Services has in place a stockholder rights plan designed to deter
coercive or unfair takeover tactics and to prevent a potential acquirer from
gaining control of Interim Services without offering a fair price. Under the
plan, a dividend of one right (a "Right") per share was declared and paid on
each share of Interim Common Stock outstanding on April 1, 1994 and with respect
to shares of Interim Common Stock issued after such date, Rights will
automatically attach to them after their issuance. Under the plan, holders of
each Right may purchase from Interim Services one one-hundredth of a share of a
new class of Interim Services' Preferred Stock, par value $.01 per share, at a
price of $98.00, subject to adjustment, when the Rights become exercisable. The
Rights become exercisable when a person or group of persons acquires 15% or more
of the outstanding shares of Interim Common Stock without prior written approval
of the Interim Board ("Unapproved Stock Acquisition"), and after ten business
days following the commencement of a tender offer that would result in an
Unapproved Stock Acquisition. If a person or group of persons makes an
Unapproved Stock Acquisition, the registered holder of each Right has the right
to purchase, for the exercise price of the Right, a number of shares of Interim
Common Stock having a market value equal to twice the exercise price of the
Right. Following an Unapproved Stock Acquisition, if Interim Services is
involved in a merger, or 50% or more of Interim Services' assets or earning
power are sold, the registered holder of each Right has the right to purchase,
for the exercise price of the Right, a number of shares of the common stock of
the acquiring company having a market value equal to twice the exercise price of
the Right. After an Unapproved Stock Acquisition, but before any person or group
of persons acquires 50% or more of the outstanding shares of Interim Common
Stock, the Interim Board may exchange all or part of the then outstanding and
exercisable Rights for Interim Common Stock at an exchange ratio of one share of
Interim Common Stock per Right. Upon any such exchange, the right of any holder
to exercise a Right terminates. Interim Services may redeem the Rights at a
price of $.01 per Right at any time prior to an Unapproved Stock Acquisition
(and after such time in certain circumstances). The Rights expire on April 1,
2004, unless extended by the Interim Board. Until a Right is exercised, the
holder thereof, as such, has no rights as a stockholder of Interim Services,
including the right to vote or to receive dividends. The issuance of the Rights
alone has no dilutive effect and does not affect reported earnings per share.
PREFERRED STOCK
The Interim Board has the authority to issue up to 2,500,000 shares of
preferred stock, par value $.01 per share, of Interim Services ("Interim
Preferred Stock") in one or more series and to fix, by resolution, the number of
shares constituting any such series, the designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, including the dividend rights, dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights, amounts payable on liquidation and liquidation preferences of the shares
constituting any series, without any further vote or action by the stockholders.
No shares of Interim Preferred Stock are outstanding. Any shares of Interim
Preferred Stock so authorized and issued may have priority over the Interim
Common Stock with respect to dividend and liquidation rights.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Interim Services' authorized but unissued shares are available for future
issuance without stockholder approval. These additional shares may be utilized
for a variety of proper corporate purposes, including future public offerings to
raise additional capital, to facilitate corporate acquisitions and for employee
benefit plans.
One of the effects of the existence of unissued and unreserved Interim
Preferred Stock and Interim Common Stock may be to enable the Interim Board to
issue shares to persons friendly to
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current management which could render more difficult or discourage an attempt to
obtain control of Interim Services by means of a merger, tender offer, proxy
contest or otherwise, and thereby protect the continuity of Interim Services'
management. Issuance of Interim Preferred Stock might, under certain
circumstances, deter the acquisition of Interim Services or its securities by a
person concerned about the terms or effect of such Interim Preferred Stock.
MERGER SUB
Merger Sub, a wholly-owned subsidiary of Interim Services, was incorporated
on February 20, 1996 by Interim Services solely for the purpose of effecting the
Merger. Merger Sub is a Delaware corporation whose corporate headquarters are
located at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309. Merger Sub's
telephone number is (954) 938-7600.
INFORMATION ABOUT BRANDON
BUSINESS
Founded in 1968, Brandon is a nationwide outsourcing service company
supplying technical and professional computer staff specializing in IT services.
Brandon provides a broad range of services to its customers to enable them to
meet their information systems needs. Services provided by Brandon consist of
computer services (technical and professional short-term supplemental staffing
services), BRANDON INSOURCING-TM- services (a unique type of outsourcing
service) and training services. Brandon offers all of its services from branch
offices located in, or in close proximity to, major cities throughout the United
States under its SYSTEMP-REGISTERED TRADEMARK- trademark, Brandon Systems trade
name, BRANDON INSOURCING-TM- trademark, and Brandon Training trade name.
SYSTEMP-REGISTERED TRADEMARK- TECHNICAL SERVICES
Under its SYSTEMP-REGISTERED TRADEMARK- trademark, Brandon offers technical
computer services to commercial businesses and governmental agencies to
supplement its customers' staffs. Brandon's technical staff performs a broad
range of tasks required for the operation of data centers and personal
computers. Technical computer services include computer operations, operations
analysis, communications, operations support, and personal computer support. In
fiscal 1995, Brandon derived approximately 69% of its revenues by providing
SYSTEMP-REGISTERED TRADEMARK- technical computer support services to its
clients.
BRANDON PROFESSIONAL SERVICES
Under its Brandon Systems trade name, Brandon offers professional computer
services to systems developers and computer users. Services provided by Brandon
primarily include systems analysis, systems design, application development and
programming for most large scale computers, minicomputers and microcomputers,
emphasizing on-line and database applications. In fiscal 1995, Brandon derived
approximately 17% of its revenues from professional computer services.
BRANDON INSOURCING-TM- SERVICES
Brandon provides a unique type of outsourcing service to its clients under
the name of BRANDON INSOURCING-TM-. Unlike traditional outsourcing arrangements,
where the service provider takes full control of a customer's information
systems facility, under a typical BRANDON INSOURCING-TM- arrangement the
customer maintains complete strategic control, and is relieved of technology
staffing and performance issues which might tend to detract customer management
from focusing on its core business. BRANDON INSOURCING-TM- takes responsibility
for the day-to-day performance of the customer's information systems facility,
including the functions of staffing, day-to-day supervision, and meeting
pre-determined service levels. Brandon believes that BRANDON INSOURCING-TM-
engenders a partnering relationship, providing customers with the traditional
savings of outsourcing, yet enabling customers to preserve strategic control
over their information systems and data. During fiscal 1995, BRANDON
INSOURCING-TM- contracts accounted for approximately 13% of Brandon's revenues.
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TRAINING SERVICES
Under its Brandon Training trade name, Brandon provides instruction in open
systems technologies and traditional technologies to information systems
managers, software engineers and end users. Courses are delivered at client
sites and at Brandon's training center in Jersey City, New Jersey. Historically,
training services have been offered to existing and prospective customers,
although this service has not been a significant revenue source. During fiscal
1995, approximately 1% of Brandon's revenues were derived from training
services.
CUSTOMERS AND MARKETING
Historically, Brandon's customers have been among the largest corporations
in the United States with substantial data processing operations. During fiscal
1995, Brandon provided services to approximately 1,200 customers. Brandon's
customers consist primarily of telecommunication companies, banking and
financial services firms, utilities, major corporations and state governmental
agencies. Most of Brandon's customers are located in or in close proximity to
major metropolitan areas. During fiscal 1995, no one customer represented 10% or
more of Brandon's revenues.
Brandon relies on repeat orders and referrals from its existing customers,
as well as marketing to potential customers. Most of Brandon's engagements,
except for BRANDON INSOURCING-TM- contracts, are terminable by customers on
short notice. Brandon markets its services primarily through direct solicitation
by its sales staff supplemented by its management team. In addition, Brandon
markets its services by using national and local advertising, participation in
trade exhibitions and competitive bidding.
COMPETITION
Brandon believes that it is a leading provider of its
SYSTEMP-REGISTERED TRADEMARK- Technical Services to computer users in a majority
of the market areas in which its branch offices are presently located. Brandon
competes with temporary help services, contract programming companies, training
companies, system integrators and technical staffing companies. Competition in
the market areas in which Brandon provides its computer services is intense.
Brandon's competitors include a large number of small, local firms, public
companies or divisions thereof. A number of Brandon's competitors are
significantly larger and have greater capital resources than Brandon. Brandon
competes with these firms for potential employees as well as for customers.
Brandon competes both on the basis of cost and quality of service.
Brandon is a Delaware corporation with its corporate headquarters located at
9 Polito Avenue, Lyndhurst, New Jersey 07071. Brandon's telephone number is
(201) 842-0700.
DESCRIPTION OF BRANDON CAPITAL STOCK
The authorized capital stock of Brandon consists of 10,000,000 shares of
Brandon Common Stock. As of April 23, 1996, there were 4,399,146 issued and
outstanding shares of Brandon Common Stock and 498,400 shares of Brandon Common
Stock were reserved for issuance upon exercise of outstanding Brandon Stock
Options.
COMMON STOCK
Each holder of Brandon Common Stock on the applicable record date is
entitled to receive such dividends as may be declared by the Brandon Board at
any meeting out of funds legally available therefor. Generally, the vote of the
holders of a majority of shares voting on a given matter is required to decide
matters presented to a vote of stockholders of Brandon, unless express
provisions of law, Brandon's Certificate of Incorporation or Brandon's By-Laws
requires a different vote. Shares of Brandon Common Stock have no pre-emptive
rights to purchase or subscribe for any stock or other securities of Brandon.
The outstanding Brandon Common Stock is fully paid and non-assessable.
PREFERRED STOCK
The Brandon Board has the authority to issue up to 1,000,000 shares of
preferred stock, par value $1.00 per share ("Brandon Preferred Stock") in one or
more series and to fix, by resolution, the number of shares constituting any
such series, the designation, preferences and relative, participating, optional
or other rights and qualification, limitations or restrictions thereof,
including the dividend rights, dividend rates, terms of redemption (including
sinking fund provisions), redemption
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prices, conversion rights, amounts payable on liquidation and liquidation
preferences of the shares constituting any series, without further vote or
action by Brandon stockholders. Any shares of Brandon Preferred Stock so
authorized and issued may have priority over Brandon Common Stock with respect
to dividend and liquidation rights. No shares of Brandon Preferred Stock are
outstanding.
THE MERGER
GENERAL
The discussion in this Proxy Statement/Prospectus of the Merger and the
description of the principal terms of the Merger Agreement are subject to and
qualified in their entirety by reference to the Merger Agreement, a copy of
which is attached to this Proxy Statement/Prospectus as Exhibit A and
incorporated herein by reference.
BACKGROUND OF BRANDON'S ENTRY INTO THE MERGER AGREEMENT
Historically, Brandon has sought to expand its operations and diversify the
fields of expertise in which it provides IT flexible staffing solutions to
businesses. Brandon has successfully fostered internal expansion by opening new
branches (including six new branch offices opened in various locations
throughout the United States during calendar 1995, which brought the total to 30
branches) and by expanding its range of services to include additional staffing
needs such as outsourcing and technical training.
In the view of Brandon management, expansion and diversification has become
increasingly important in light of the trend in recent years for corporate
clients to move toward meeting many of their supplemental staffing needs through
either one provider or a limited number of providers. This trend appears to be a
factor in industry consolidation, with many staffing providers growing in size
and scope in order to compete effectively as primary providers for their
clients.
In November 1995, in view of this background and prompted by another
staffing provider's expression of interest in a business combination, the
Brandon Board undertook to analyze the range of strategies which Brandon might
adopt, including continued internal growth, growth through acquisitions of
smaller businesses, or pursuit of a business combination with another entity.
From November 1995 through February 1996, through a series of more than a dozen
Board and Special Committee meetings, the Brandon Board examined and analyzed
the merger opportunities and other strategic options available to Brandon. To
assist with this process, the Brandon Board retained Goldman Sachs to act as
Brandon's financial advisor. The Board also sought and received the advice of
Brandon's management team and its legal and accounting professionals.
With the assistance of its advisors, the Brandon Board considered some of
the advantages which could be derived from a business combination, including
enhanced ability to make subsequent acquisitions, greater stockholder liquidity,
increased market recognition, additional product offerings and potential
efficiencies and economies of scale. The Board also reviewed Brandon
management's internal business plan and the merger premiums then being obtained
in other industry transactions, and considered the possibility that Brandon's
stockholders might receive more value through a merger than with Brandon
remaining an independent institution.
Beginning in early December 1995, at the direction of the Brandon Board,
Goldman Sachs initiated discussions with a number of potential partners for a
strategic combination with Brandon, some of whom had informally expressed a
possible interest in such an alliance prior to November 1995. Entities which
expressed interest in a possible alliance and signed a confidentiality agreement
were provided with a package of confidential information about Brandon. Over the
course of its engagement, Goldman Sachs contacted 19 entities which it, with the
assistance of Brandon management, had identified to the Brandon Board as
possible partners. A number of these entities requested and received a package
of confidential information about Brandon, and initially expressed interest in
pursuing transactions at nominal values to Brandon stockholders ranging from $27
to $32 per Brandon share. One entity preliminarily indicated that it might
assign a value as high as $40-45 per
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Brandon share in a business combination, but also indicated that it was
precluded from making any binding commitment until at least November 1996. That
entity never submitted a firm proposal, nor did it further refine its tentative
price estimate. Because these expressions of interest generally contemplated
stock-for-stock rather than cash mergers, the actual value which would be
realized by Brandon stockholders over time could vary significantly from the
value indicated by the entity expressing interest due to pre- and post-closing
fluctuations in the stock price of that entity.
On behalf of Brandon, and at times with the direct involvement of various
Brandon management and non-management directors, Goldman Sachs held discussions
with various interested parties. Brandon's management, its advisors and certain
of its directors performed due diligence on, and conducted management group
meetings with, certain of the interested parties, including Interim Services.
With the advice of its outside legal and financial advisors, the Brandon
Board sought to consider all possible courses of action, including remaining an
independent entity. While not committing itself to a particular strategy, the
Brandon Board, through Goldman Sachs, solicited firm and unconditional proposals
in an effort to arrive at a proposal for a strategic business combination upon
terms and conditions that the Brandon Board believed were fair to and in the
best interests of Brandon's stockholders. Brandon, through its financial
advisors and management team, negotiated to obtain increases in the
consideration proposed by those potential business combination partners which
had expressed current interest in a transaction at values in the higher end of
the range covered by the expressions of interest. On February 18, 1996, a
Special Committee of the Board, which was composed of Messrs. Elbaum (Chairman),
DeGhetto and Tse, was given the responsibility, through Brandon's legal and
financial advisors, of serving as an interface on behalf of the Brandon Board
with interested parties, and making recommendations to the full Board of
Directors on a course of action. During the latter part of February 1996,
Interim Services offered to enter into the transaction contemplated by the
Merger Agreement, at the consideration and on the terms and conditions specified
therein.
These matters were all addressed by the Brandon Board in a series of
meetings, culminating in a meeting on February 26, 1996. During the course of
those meetings, the Brandon Board considered, among other things: the value to
Brandon stockholders of the Interim Common Stock which they would receive in the
Merger, the terms and conditions proposed by Interim Services, the background
and status of Brandon's contacts with Interim Services and other potential
business combination partners, the financial condition and prospects of Interim
Services, the historical trends and future prospects for the business of Brandon
on a stand-alone basis, Brandon's strategic options and Goldman Sachs' advice on
each of these matters. In deciding to approve the Merger Agreement, the Brandon
Board also considered the expressions of interest which it had received from
other entities, including an expression of interest at a higher nominal value
than that contemplated by the Merger. Brandon had held discussions with the
entity whose expression of interest in early November 1995 prompted the process
in an effort to obtain that entity's best and final proposal. Subsequent to
having submitted such a proposal at a substantially lower value, that entity in
late February 1996 proposed a stock-for-stock merger at an exchange ratio with
an implied value of $42 per Brandon share based on the other entity's then
current stock price. However, the entity imposed material conditions to a
definitive merger agreement, and efforts by Brandon to satisfy or eliminate
those conditions were unsuccessful. At the time that the Brandon Board was
considering Interim Services' final proposal, which Interim Services had
indicated would not be held open for an extended period of time, the other
entity informed Brandon that it was not in a position to proceed with any
unconditional merger proposal, although it might consider making a proposal at a
later date, with price and other terms unspecified.
After review and consideration of these matters, at the February 26 meeting
the Brandon Board, with all members of the Special Committee present and
participating, unanimously approved the Merger Agreement and the Merger with
Interim Services as being fair to and in the best interests of Brandon and its
stockholders. On February 27, 1996, the Merger Agreement was executed and
delivered by Brandon and Interim Services.
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REASONS FOR APPROVAL OF THE MERGER AGREEMENT BY THE BRANDON BOARD;
RECOMMENDATION OF THE BRANDON BOARD
The reasons the Brandon Board approved the Merger Agreement included the
following: (i) the strategic business benefits of a combination of Brandon and
Interim Services; (ii) the immediate and potential long-term financial benefits
to Brandon shareholders inherent in the terms of the Merger, including the
Exchange Ratio; (iii) the opinion of Goldman Sachs to the effect that, as of
February 26, 1996, the Exchange Ratio pursuant to the Merger Agreement was fair
to the holders of Brandon Common Stock; (iv) the likelihood of further
consolidation in the temporary staffing industry and the potential of the
Interim Services-Brandon combination to enhance Brandon's competitiveness in
such an environment; (v) the size and stability of Interim Services' established
business; (vi) the complementary business philosophies and strategies of Brandon
and Interim Services, and the expectation that the executives and employees of
the combined entity will work together effectively to create a strong company
with enhanced potential for success; (vii) the complementary strengths of
Brandon and Interim Services and the ability of the combined entity to offer its
customers a broader range of products and services than either Brandon or
Interim Services presently offers; (viii) the potential for the combined entity
to achieve economies of scale which will ultimately benefit Brandon's
stockholders; (ix) the existence of Interim Services' facilities in over 900
locations, which is expected to enhance significantly Brandon's post-Merger
ability to enter markets in which it currently has no offices; (x) the prospects
for future growth and increased market recognition of the combined entity; (xi)
the relative share ownership which Brandon stockholders will have in the
combined Brandon-Interim Services entity; (xii) the greater public float of
Interim Common Stock compared with Brandon Common Stock; (xiii) the existence of
market conditions which favored a business combination transaction in the
current time frame; (xiv) the fact that the Merger Agreement was viewed
favorably by Ira B. Brown and Myra Brown, who together control approximately 25%
of the outstanding Brandon Common Stock; (xv) the expressed desire of Ira B.
Brown, age 69, to retire from an active management role with Brandon and the
implications of such retirement to Brandon as an independent entity; (xvi) the
specific terms and conditions contained in the Merger Agreement; (xvii) the
other expressions of interest which the Brandon Board had received; (xviii)
information regarding the entities making such expressions of interest; (xix)
the uncertainties associated with such expressions of interest; and (xx) the
relative value being offered to Brandon stockholders in the Merger compared with
the value which such stockholders were likely to receive over the coming years
if Brandon management continued to operate the company independently.
In approving the Merger, the Brandon Board did not specifically identify any
one factor or group of factors as being more significant than any other factor
in the decision making process, although individual directors may have given one
or more factors more weight than other factors.
THE BRANDON BOARD BELIEVES THAT THE MERGER AGREEMENT AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTEREST OF, BRANDON AND ITS STOCKHOLDERS. ACCORDINGLY, THE
BRANDON BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT BRANDON STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AND THE MERGER.
INTERIM SERVICES' REASONS FOR THE MERGER; RECOMMENDATION OF INTERIM SERVICES'
BOARD OF DIRECTORS
Numerous factors were taken into consideration by Interim Services in
entering into the Merger Agreement, including, without limitation, the
personnel, operations, prospects, assets, obligations, and earnings of Brandon
and judgments with respect to the prospects for both Interim Services and
Brandon, as well as Interim Services' belief that combining Brandon with Interim
Services' existing operations will enhance the presence of both companies in the
flexible staffing market, and, in particular, in the IT staffing sector of such
market, thereby enabling them to offer their customers a broader and more varied
array of services. In addition, the Interim Board received and reviewed an
opinion from DLJ, its financial advisor, stating in part that, as of February
27, 1996, the consideration to be paid by Interim Services pursuant to the
Merger Agreement was fair to the holders of Interim Common Stock from a
financial point of view.
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Interim Services' management believes that the addition of Brandon's
operations to the IT unit of Interim Services offers a number of advantages,
including (i) broad geographic coverage of its offices which complement current
operations; (ii) achievement of a critical mass for the total IT operation
including Brandon; and (iii) vertical expansion of the scope of services which
the IT unit can offer. Brandon's service offering is complementary to the skills
that Interim Services currently offers in that Brandon provides skills which are
the foundation of information resource staffing needs, particularly in the area
of help desk and data-center operations. These services supplement primarily the
consulting and testing skills offered by Interim Services.
Interim Services' management believes that there are substantial
opportunities for cross-selling between the companies, particularly through the
Interim On-Premise concept. In addition, the national accounts of Interim
Services will provide many opportunities to offer Brandon's skills to clients
and enhance the scope of services currently provided. Further, as part of
Interim Services, Brandon will have the advantage of introduction at high levels
to the clients of Interim Services.
Interim Services expects to benefit from access to Brandon's client base in
regard to cross-selling of clerical, light industrial, legal, accounting and
other skills as well as many Interim On-Premise opportunities. Interim Services'
management believes that, after the Merger, expansion of Brandon's network may
be enhanced through a number of factors, including lower start-up costs as a
result of the possibility for sharing space with the network of more than 900
Interim Services offices and increased revenue growth through opportunities with
Interim Services' established client base.
In view of the wide variety of factors considered, Interim Services did not
find it practicable to quantify or otherwise attempt to assign relative weights
to the specific factors considered in making its determination. Consequently,
the Interim Board did not quantify the assumptions and results of its analysis
in reaching its decision to enter into the Merger Agreement.
THE INTERIM BOARD BELIEVES THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF, INTERIM SERVICES
AND ITS STOCKHOLDERS. ACCORDINGLY, THE INTERIM BOARD HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND THE ISSUANCE OF INTERIM COMMON STOCK PURSUANT TO THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT INTERIM STOCKHOLDERS VOTE FOR
APPROVAL OF THE ISSUANCE OF INTERIM SERVICES COMMON STOCK PURSUANT TO THE MERGER
AGREEMENT.
EFFECTIVE TIME; CLOSING DATE
If (i) the issuance of the Interim Common Stock pursuant to the Merger
Agreement is approved by holders of a majority of the Interim Common Stock
voting at the Interim Special Meeting; (ii) the Merger Agreement is approved at
the Brandon Special Meeting by holders of a majority of the outstanding shares
of Brandon Common Stock; and (iii) all other conditions to the Merger are
satisfied or waived (SEE "CERTAIN PROVISIONS OF THE MERGER -- CONDITIONS TO
CONSUMMATION OF THE MERGER"), the Merger will be consummated and effected at the
time a Certificate of Merger is filed with the Secretary of State of Delaware.
The time at which the Merger becomes effective is referred to as the "Effective
Time." The Merger Agreement provides that Interim Services and Brandon will
cause Certificates of Merger to be filed and recorded on the Closing Date in
accordance with the applicable provisions of the Delaware General Corporation
Law. The Merger Agreement may be terminated prior to the Effective Time by
either Interim Services or Brandon in certain circumstances, whether before or
after the approval of the Merger Agreement and the approval of the issuance of
Interim Common Stock pursuant to the Merger Agreement, by the stockholders of
Brandon and Interim Services, respectively. SEE "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT -- TERMINATION." The closing of the Merger (the "Closing") will
take place as soon as practicable after satisfaction or waiver of the conditions
set forth in the Merger Agreement (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing),
but in no event later than five business days thereafter (the "Closing Date") at
such time and place as Interim Services and Brandon shall mutually agree.
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FORM OF THE MERGER
At the Effective Time, Merger Sub will be merged with and into Brandon, with
Brandon as the Surviving Corporation and a wholly-owned subsidiary of Interim
Services.
MERGER CONSIDERATION
At the Effective Time, each outstanding share of Brandon Common Stock will
be converted into the right to receive 0.88 shares of Interim Common Stock,
subject to certain anti-dilution adjustments. However, shares of Brandon Common
Stock which are held by Brandon as treasury shares, and shares of Brandon Common
Stock held by Interim Services, Merger Sub or any other direct or indirect
subsidiary of Interim Services, will be cancelled and thus not converted into
Interim Common Stock. Cash shall be paid in lieu of fractional shares of Interim
Common Stock, based upon the Median Pre-Closing Price per whole share of Interim
Common Stock. The "Median Pre-Closing Price" is defined in the Merger Agreement
as the Median Price of Interim Common Stock calculated based upon the closing
price of Interim Common Stock during the first 20 of the 25 consecutive trading
days immediately preceding the closing date. The "Median Price" will be
determined by taking the average of the closing prices of Interim Common Stock
left after discarding the seven lowest and seven highest closing prices in the
20-day period. Therefore, after the Effective Time and upon surrender of
certificates representing their Brandon Common Stock, each holder of such
certificates will receive: (i) a certificate evidencing that number of whole
shares of Interim Common Stock which such holder has the right to receive in
exchange for Brandon Common Stock in accordance with the Exchange Ratio, (ii)
cash in lieu of fractional shares of Interim Common Stock to which such holder
may be entitled, and (iii) any dividends or other distributions on Interim
Common Stock due and payable (with a record date after the Effective Time) to
which such holder is entitled (collectively, the "Merger Consideration").
TREATMENT OF OPTIONS
At the Effective Time, each outstanding Brandon Stock Option will be
converted into an option to purchase Interim Common Stock, wherein (i) the right
to purchase shares of Brandon Common Stock pursuant to the Brandon Stock Option
will be converted into the right to purchase that same number of shares of
Interim Common Stock multiplied by the Exchange Ratio, (ii) the option exercise
price per share of Interim Common Stock will be the previous option exercise
price per share of Brandon Common Stock divided by the Exchange Ratio, and (iii)
in all other material respects, the option will be subject to the same terms and
conditions as governed the Brandon Stock Option on which it was based, including
the length of time within which the option may be exercised and for any options
which are "incentive stock options" (as defined in Section 422 of the Code), the
conversions will be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
Under the stock option plans pursuant to which the Brandon Stock Options
were issued, all Brandon Stock Options held by participants in the plans which
are not yet exercisable become immediately exercisable and vested upon the
occurrence of a "Change in Control," which is defined such that the Merger will
constitute a Change in Control. As a result, all outstanding Brandon Stock
Options will be converted by virtue of the Merger into fully vested and
exercisable options to purchase shares of Interim Common Stock. The number of
shares of Interim Common Stock purchasable under the options will be equal to
the number of shares of Brandon Common Stock previously purchasable, multiplied
by the Exchange Ratio.
IRREVOCABLE PROXY
Ira B. Brown and Myra Brown, who collectively own 1,099,760 shares of
Brandon Common Stock, or 25.0% of the shares of Brandon Common Stock outstanding
on the Record Date, have each entered into an Irrevocable Proxy, dated February
27, 1996 (the "Irrevocable Proxy"). Pursuant to the Irrevocable Proxy, the
Browns have irrevocably granted to Raymond Marcy, Roy Krause and John B. Smith,
designees of Interim Services, the power to vote their shares of Brandon Common
Stock in favor of the Merger and the approval and adoption of the Merger
Agreement. The Browns have not given any Interim Services designees a proxy to
vote on any matters other than the Merger.
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The Irrevocable Proxy will automatically terminate (i) on the earlier of
August 27, 1996 or the termination of the Merger Agreement in accordance with
its terms, (ii) if the Brandon Board does not recommend, or modifies or rescinds
its recommendation, that Brandon stockholders vote in favor of the Merger, or
modifies or rescinds its approval of the Merger Agreement, or resolves to do any
of the foregoing, or (iii) if the Brandon Board enters into a definitive
agreement contemplating, announces or approves an Acquisition Transaction (as
hereinafter defined) after determining, in good faith and upon advice of outside
counsel, that such approval was necessary in the exercise of its fiduciary
duties under applicable laws.
The Irrevocable Proxy is attached as Exhibit B to this Proxy
Statement/Prospectus and is incorporated herein by reference.
NO APPRAISAL RIGHTS
Neither Brandon stockholders nor Interim Services stockholders are entitled
to dissenter's rights of appraisal in connection with the Merger.
OPINION OF FINANCIAL ADVISOR TO INTERIM SERVICES
In its role as financial advisor to Interim Services, DLJ was asked by
Interim Services to render its opinion to the Interim Board as to the fairness
from a financial point of view to its stockholders of the consideration to be
paid by Interim Services pursuant to the Merger Agreement.
On February 27, 1996 and April 23, 1996, DLJ delivered its written opinions
(the April 23, 1996, opinion herein referred to as the "DLJ Opinion") to the
Interim Board that, as of such date and subject to the assumptions and
limitations described in such opinions, the consideration to be paid by Interim
Services pursuant to the Merger Agreement was fair to Interim Services'
stockholders from a financial point of view.
A COPY OF THE DLJ OPINION IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS
EXHIBIT C. STOCKHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY FOR
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF
THE REVIEW OF DLJ. THE SUMMARY OF THE OPINION OF DLJ SET FORTH IN THIS PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION. THE DLJ OPINION WAS PREPARED FOR THE INTERIM BOARD AND IS
DIRECTED ONLY TO THE FAIRNESS AS OF APRIL 23, 1996, FROM A FINANCIAL POINT OF
VIEW, OF THE CONSIDERATION TO BE PAID BY INTERIM SERVICES PURSUANT TO THE MERGER
AGREEMENT AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW
TO VOTE AT EITHER THE INTERIM SPECIAL MEETING OR THE BRANDON SPECIAL MEETING.
The DLJ Opinion does not constitute an opinion as to the price at which
Interim Common Stock will actually trade at any time. No restrictions or
limitations were imposed by the Interim Board upon DLJ with respect to the
investigations made or the procedures followed by DLJ in rendering its opinion.
In arriving at its opinion, DLJ reviewed the Merger Agreement and financial
and other information that was publicly available or furnished to it by Interim
Services and Brandon, including information provided during discussions with
their respective managements. Included in the information provided during
discussions with the respective managements were certain financial projections
of Brandon for the period beginning October 2, 1995 and ending October 1, 1998
prepared by the management of Brandon and certain financial projections of
Interim Services for the period beginning January 1, 1996 and ending December
31, 1999 prepared by the management of Interim Services. In addition, DLJ
compared certain financial and securities data of Interim Services and Brandon
with various other companies whose securities are traded in public markets,
reviewed prices and premiums paid in other business combinations and conducted
such other financial studies, analyses and investigations as DLJ deemed
appropriate for purposes of its opinion.
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In arriving at its opinion, DLJ relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information provided
or that was otherwise reviewed by DLJ. With respect to the financial projections
reviewed and discussed, DLJ assumed that they were reasonably prepared on the
basis reflecting the best currently available estimates and judgments of the
managements of Interim Services and Brandon as to the future operating and
financial performance of Interim Services and Brandon, respectively. DLJ relied
as to all legal matters on the advice of Interim Services' counsel. The
following is a summary of certain of the analyses performed by DLJ:
COMPARABLE COMPANIES ANALYSIS. DLJ reviewed and analyzed certain publicly
available financial and market information for selected staffing companies,
including Accustaff, Inc., Barrett Business Services, Inc., Butler
International, Inc., Career Horizons, Inc., CDI Corp., Corestaff, Inc., Heist
Corp., Hooper Holmes, Inc., Keane, Inc., Kelly Services, Inc., Manpower, Inc.,
Norrell Corp., Olsten Corp., On Assignment, Inc., Right Management Consultants,
Robert Half International, Inc., Staff Builders, Inc., and Volt Information
Sciences, Inc. (the "Comparable Staffing Companies"), and for selected
information technology staffing companies, including Analysts International
Corp., Computer Sciences Corp., Alternative Resources Corp., American Management
Systems, Inc., Computer Horizons Corp., Technology Solutions Co., Computer Task
Group, Inc., Keane, Inc. and CIBER, Inc. (the "Comparable Information Technology
Staffing Companies" and, together with the Comparable Staffing Companies,
collectively the "Comparable Companies"). DLJ noted that no company reviewed was
identical to Brandon and that, accordingly, the Comparable Companies analysis
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of Brandon and other factors that
would affect the value of the companies to which it is being compared. DLJ
calculated a range of market multiples for the Comparable Companies including
the equity market price as a multiple of historical and projected (based on Wall
Street equity research analysts' estimates) earnings per share and the
enterprise value (defined as market capitalization plus total debt less excess
cash and cash equivalents) as a multiple of historical revenues, earnings before
interest, taxes, depreciation and amortization ("EBITDA") and earnings before
interest and taxes ("EBIT") after removing the high and low contributions. This
analysis indicated that the mean multiples, excluding the high and low values,
of revenues, EBITDA, EBIT and net income for the Comparable Staffing Companies
were 1.0x, 13.8x, 15.4x and 28.1x, respectively, and for the Comparable
Information Technology Staffing Companies were 2.0x, 17.5x, 23.3x and 41.1x,
respectively, as of April 22, 1996. DLJ applied those same multiples to Brandon
and derived a reference range of implied equity values for Brandon of $22.02 to
$55.72 per share.
ANALYSIS OF COMPARABLE TRANSACTIONS. DLJ analyzed the purchase prices and
multiples paid or proposed to be paid, to the extent publicly available, of
selected merger and acquisition transactions of companies in the information
technology services industry that were announced since January 1, 1993
(collectively, the "Comparable Transactions"). DLJ noted that none of the
selected transactions reviewed was identical to the Merger and that,
accordingly, the analysis of comparable transactions necessarily involves
complex consideration and judgments concerning differences in financial and
operating characteristics of Brandon and other factors that would affect the
acquisition value of the Comparable Transactions. DLJ determined that the
relevant multiples derived from the Comparable Transactions were 1.8 x revenues
and 17.2 x EBITDA after removing the high and low contributions. Applying such
multiples, DLJ derived a reference range of equity values for Brandon of $36.43
to $42.95 per share.
DISCOUNTED CASH FLOW ANALYSIS. DLJ performed a discounted cash flow
analysis of the projected cash flows of Brandon for the five fiscal years ending
December 31, 2000, based upon certain projections of Brandon's future financial
performance as provided to DLJ from Brandon and its representatives and reviewed
by Interim Services' management. Using such financial information, DLJ
calculated the unlevered after-tax cash flows and discounted such projected cash
flows back to January 1, 1996 using discount rates ranging from 12% to 16%
(chosen to reflect the weighted average cost of capital for Brandon based on the
betas of Comparable Information Technology Staffing Companies). To estimate the
terminal value of Brandon at the end of the five-year period, DLJ applied
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a range of terminal multiples of 10.0x to 13.0x projected fiscal 2000 EBITDA and
discounted such value estimates back to January 1, 1996 using discount rates
ranging from 12% to 16%. DLJ then summed the present value of the unlevered
after-tax cash flows and terminal value to derive a reference range of equity
values for Brandon of $34.62 to $49.87 per share.
CONTRIBUTION ANALYSIS. DLJ analyzed Interim Services' and Brandon's
relative contribution to the combined company with respect to certain financial
measurements, including revenues, EBITDA, EBIT, net income, total assets and
book value of equity. As a result of the Merger, Brandon stockholders will own
approximately 25.5% of the outstanding Interim Common Stock which compares to
Brandon's contribution based on Brandon's twelve months ended December 31, 1995
and Interim Services' estimated fiscal year ended December 29, 1995, to the
combined companies of 9.6% of revenues, 18.3% of EBITDA, 22.4% of EBIT, 26.2% of
net income, 7.9% of total assets and 13.2% of book value of equity.
PREMIUMS PAID ANALYSIS. DLJ determined the percentage premium represented
by the offer price over the trading prices one day, one week, and four weeks
prior to the announcement date of selected merger and acquisition transactions
involving companies not necessarily comparable to Brandon. These transactions
ranged in enterprise value from $100 million to $500 million and occurred since
January 1, 1995. The average of the premiums paid for such selected transactions
over the trading prices, one day, one week, and four weeks prior to the
announcement date were 29.5%, 32.5% and 43.5%, respectively. DLJ also determined
the percentage premium paid represented by the offer price over the trading
prices one day, one week, and four weeks prior to the announcement date of
selected merger and acquisition transactions involving companies in the software
development and computer services industries. These transactions ranged in
enterprise value from $100 million to $3.5 billion and occurred since January 1,
1993. The average of the premiums paid for such selected transactions over the
trading prices, one day, one week, and four weeks prior to the announcement date
were 33.1%, 35.2% and 47.0%, respectively. For the proposed transaction, DLJ
derived the premium to be paid by Interim Services based on the implied purchase
price of Brandon's stock, which is equal to the exchange ratio of 0.88
multiplied by Interim Services' stock price on April 22, 1996 of $37.50, one
day, one week, and four weeks prior to the announcement date. The premiums paid
for the proposed transaction over the trading prices one day, one week and four
weeks prior to the announcement date were 24.5%, 30.0%, and 22.2%, respectively.
PRO FORMA MERGER ANALYSIS. DLJ analyzed certain pro forma financial effects
resulting from the Merger. In conducting its analysis, DLJ relied upon certain
assumptions described above and financial projections provided by the
managements of both Interim Services and Brandon. DLJ analyzed the pro forma
financial effect of combining Interim Services and Brandon. Such analysis
indicated, among other things, that earnings per share ("EPS") for the pro forma
combined company would be modestly greater than EPS for Interim Services alone.
The results of the pro forma combination analysis are not necessarily indicative
of future operating results or financial position.
The summary set forth above does not purport to be a complete description of
the presentation by DLJ to the Interim Board or the analyses performed by DLJ in
arriving at its opinion. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily suited to summary description.
The preparation of a fairness opinion does not involve a mathematical evaluation
or weighing of the results of the individual analyses performed, but requires
DLJ to exercise its professional judgement - based on its experience and
expertise - in considering a wide variety of analyses taken as a whole. Each of
the analyses conducted by DLJ was carried out in order to provide a different
perspective on the transaction and add to the total mix of information
available. DLJ did not form a conclusion as to whether any individual analysis,
considered in isolation, supported or failed to support an opinion as to
fairness. Rather, in reaching its conclusion, DLJ considered the results of the
analyses in light of each other and ultimately reached its opinion based on the
results of all analyses taken as a whole. DLJ did not place particular reliance
or weight on any individual analysis, but instead concluded that its analyses,
taken as a whole, supported its determination. In performing its analyses, DLJ
made numerous assumptions
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with respect to industry performance, business and economic conditions and other
matters. The analyses performed by DLJ are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses.
DLJ's opinion is necessarily based on economic, market, financial and other
conditions as they existed on, and on the information made available to DLJ as
of April 23, 1996. It should be understood that, although subsequent
developments may affect its opinion, DLJ does not have any obligation to update,
revise or reaffirm its opinion.
DLJ, as part of its investment banking services, is regularly engaged in the
valuation of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. In
the ordinary course of business, DLJ may actively trade the equity securities of
Interim and Brandon for its own account and for the account of its customers and
may at any time hold a long or short position in such securities.
For its services as financial advisor, DLJ will receive an aggregate
transaction fee of $1.3 million, of which $350,000 became payable upon delivery
of DLJ's opinion of February 27, 1996, $50,000 became payable upon delivery of
DLJ's opinion of April 23, 1996, and the balance becomes payable upon
consummation of the Merger. Interim Services has also agreed to reimburse DLJ
for its reasonable out-of-pocket expenses. In addition, Interim Services has
agreed to indemnify DLJ and its affiliates against certain liabilities,
including those arising under the federal securities laws.
OPINION OF FINANCIAL ADVISOR TO BRANDON
On February 26, 1996, Goldman Sachs delivered its oral opinion to the
Brandon Board that as of the date of such opinion, the Exchange Ratio pursuant
to the Merger Agreement was fair to the holders of Brandon Common Stock. Goldman
Sachs subsequently delivered to the Brandon Board a written opinion dated
February 27, 1996 confirming its oral opinion. Goldman Sachs subsequently
confirmed its February 27, 1996 opinion by delivery of its written opinion dated
as of April 23, 1996.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AS OF APRIL 23,
1996, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
EXHIBIT D TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. HOLDERS OF BRANDON COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH
OPINION IN ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Merger Agreement; (ii) this Proxy Statement/Prospectus; (iii) the Annual
Reports to Stockholders and Annual Reports on Form 10-K of Brandon for the five
fiscal years ended October 2, 1995; (iv) the Annual Reports to Stockholders and
Annual Reports on Form 10-K of Interim Services for the fiscal year ended March
25, 1994, the fiscal year ended December 30, 1994 and the fiscal year ended
December 29, 1995 and the Prospectus of Interim Services dated January 27, 1994
which includes audited financial statements of Interim Services for the three
fiscal years ended March 26, 1993 and for the 26 weeks ended September 24, 1993;
(v) certain interim reports to stockholders and Quarterly Reports on Form 10-Q
of Brandon and Interim Services; (vi) certain other communications from Brandon
and Interim Services to their respective stockholders; and (vii) certain
internal financial analyses and forecasts for Brandon and Interim Services
prepared by their respective managements. Goldman Sachs also held discussions
with members of the senior management of Brandon and Interim Services regarding
the past and current business operations, financial condition, and future
prospects of their respective companies. In addition, Goldman Sachs reviewed the
reported price and trading activity for the Brandon Common Stock and the Interim
Common Stock, compared certain financial and stock market information for
Brandon and Interim Services with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the temporary staffing industry
specifically and other industries generally and performed such other studies and
analyses as it considered appropriate.
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Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of its opinion. In addition, Goldman Sachs has not made an independent
evaluation or appraisal of the assets and liabilities of Brandon or Interim
Services or any of their subsidiaries and Goldman Sachs has not been furnished
with any such evaluation or appraisal.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to Brandon's Board
of Directors on February 26, 1996. Goldman Sachs utilized substantially the same
type of financial analyses in connection with providing its written opinion
dated February 27, 1996 and the written opinion attached hereto as Exhibit D.
(i) HISTORICAL STOCK TRADING ANALYSIS. Goldman Sachs reviewed the
historical trading prices and volumes for the Brandon Common Stock and
Interim Common Stock. In addition, Goldman Sachs analyzed the
consideration to be received by holders of Brandon Common Stock pursuant
to the Merger in relation to the historical average exchange ratios
between Brandon Common Stock and Interim Common Stock. Such analysis
indicated that the Exchange Ratio pursuant to the Merger represented
premiums over the exchange ratio between the weighted average price per
share of Brandon Common Stock and the weighted average price per share
of Interim Common Stock over the 60 day, 6 month, 12 month and 18 month
periods to February 23, 1996 of 24.4%, 31.6%, 18.6% and 18.7%,
respectively.
(ii) SELECTED COMPANIES ANALYSIS. Goldman Sachs reviewed and
compared certain financial information relating to Brandon and Interim
Services to corresponding financial information, ratios and public
market multiples for six publicly traded specialty staffing
corporations, Alternative Resources Corporation, CDI Corporation, Keane,
Inc., Olsten Corporation, On Assignment, Inc. and Robert Half
International, Inc. (the "Specialty Staffing Selected Companies") and
for ten publicly traded traditional staffing corporations, Affiliated
Computer Services, Inc., Barrett Business Services, Inc., Career
Horizons, Inc., CORESTAFF, Inc., Kelly Services, Inc., Manpower Inc.,
Norrell Corporation, Personnel Group of America, SOS Staffing Services,
Inc. and Staff Builders, Inc. (the "Traditional Staffing Selected
Companies" and, collectively with the Specialty Staffing Selected
Companies, the "Selected Companies"). Goldman Sachs calculated and
compared various financial multiples and ratios. The multiples of
Brandon and Interim Services were calculated using prices of $26.25 per
share and $39.63 per share, respectively, the closing prices on February
23, 1996. The multiples and ratios for Brandon were based on information
provided by its management and the multiples for Interim Services and
for each of the Selected Companies were based on the most recent
publicly available information. With respect to the Selected Companies,
Goldman Sachs considered levered market capitalization (market value of
common equity plus debt less cash) as a multiple of latest twelve months
("LTM") sales, as a multiple of LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA") and as a multiple of LTM
earnings before interest and taxes ("EBIT"). Goldman Sachs' analyses of
the Specialty Staffing Selected Companies and the Traditional Staffing
Selected Companies, indicated levered multiples of LTM sales, which
ranged from 0.4x to 3.5x and 0.2x and 1.6x, respectively, LTM EBITDA,
which ranged from 8.6x to 31.6x and 5.7x to 22.0x, respectively, and LTM
EBIT, which ranged from 10.2x to 32.7x and 6.4x to 26.7x, respectively,
compared to levered multiples of sales, EBITDA and EBIT of 1.3x, 9.8x
and 10.7x, respectively, for Brandon and 0.7x, 11.7x, and 16.6x,
respectively, for Interim Services. Goldman Sachs also considered, for
the Specialty Staffing Selected Companies and the Traditional Staffing
Selected Companies, estimated calendar year 1995 and 1996 price/earnings
ratios, which ranged from 21.0x to 42.8x and 13.0x to 56.4x,
respectively, for estimated calendar year 1995 and 14.4x to 33.2x and
10.6x to 38.3x, respectively, for estimated calendar year 1996 compared
to estimated calendar year 1995 and 1996 price/earnings ratios of 18.8x
and 15.9x, respectively, for Brandon and 26.4x and 21.5x, respectively,
for Interim Services.
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(iii) DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a
discounted cash flow analysis: (a) using from 1 to 10 years of Brandon's
management projections (the "Management Case") and (b) using from 1 to
10 years of 20% annual growth of sales and static operating margins (the
"Second Case"). All future cash flows were discounted to present value
using discount rates from 11% to 13%.
At the end of each such 1 to 10 year period, a terminal value was
calculated using a 4.5% rate of growth of free cash flow in perpetuity.
These terminal values were then discounted to present value using
discount rates from 11% to 13%.
In the Management Case the implied per share values ranged from
$20.00, using one year of management projections and a discount rate of
13%, to $94.71 using 10 years of management projections and an 11%
discount rate. In the Second Case the implied per share values ranged
from $19.40, using one year of 20% annual sales growth and flat
operating margins and a 13% discount rate, to $55.23, using 10 years of
20% annual sales growth and flat operating margins and an 11% discount
rate.
(iv) SELECTED TRANSACTIONS ANALYSIS. Goldman Sachs analyzed
certain information relating to selected transactions in the temporary
employment and staffing service industry since 1993, (the "Selected
Transactions"). Such analysis indicated that for the Selected
Transactions (i) levered aggregate consideration as a multiple of LTM
revenues ranged from 0.4x to 1.6x for specialty staffing and 0.2x to
4.5x for traditional staffing, as compared to 1.8x for the levered
aggregate consideration to be received in the Merger, (ii) equity
consideration as a multiple of LTM net income ranged from 11.1x to 33.3x
for specialty staffing and 2.9x to 20.7x for traditional staffing, as
compared to 26.3x for the equity consideration to be paid in the Merger
and (iii) levered aggregate consideration as a multiple of LTM EBIT
ranged from 6.9x to 17.9x for specialty staffing and 2.3x to 11.2x for
traditional staffing, as compared to 15.5x for the levered aggregate
consideration to be paid in the Merger. Goldman Sachs noted in the
course of this analysis that publicly available information on
transactions in the temporary employment and staffing service industry
was limited.
(v) PRO FORMA MERGER ANALYSIS. Goldman Sachs prepared pro forma
analyses of the financial impact of the Merger. Using earnings estimates
for Brandon prepared by its management for the years 1996 and 1997, and
IBES median earnings estimates for Interim Services for 1996 and 1997,
Goldman Sachs compared the earnings per share ("EPS") of Brandon Common
Stock, on a standalone basis, to the EPS of the common stock of the
combined companies on a pro forma basis. Goldman Sachs performed this
analysis based on a price of $26.25 per Share (the per Share price of
Brandon on February 23, 1996) of Brandon Common Stock and $39.63 per
share (the per share price of Interim Services on February 23, 1996) of
Interim Common Stock under the following two scenarios: (a) assuming no
synergies resulting from the combination and (b) assuming $1 million in
pre-tax synergies resulting from the combination. Based on such
analyses, the proposed transaction would be accretive to Interim
Services' stockholders on an EPS basis in each of the above scenarios in
the years 1996 and 1997.
(vi) CONTRIBUTION AND GIVE-GET ANALYSIS. Goldman Sachs reviewed
certain historical and estimated future operating and financial
information (including revenues, EBIT, pretax income, net income and
book value) for Brandon, Interim Services, and the pro forma combined
entity resulting from the Merger based on, in the case of Brandon,
actual 1995 calendar year results and management estimates for calendar
year 1996 and, in the case of Interim Services, information contained in
the Equity Research Report dated December 19, 1995 of Robert W. Baird &
Co. Incorporated. Goldman Sachs performed this analysis based on a price
of $26.25 per share (the per share price of Brandon on February 23,
1996) of Brandon Common Stock and $39.63 per share (the per share price
of Interim Services on February 23, 1996) of Interim Common Stock. The
analysis indicated that the Brandon stockholders would receive 25.9% of
the outstanding common equity of the combined companies after the
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Merger. Goldman Sachs also analyzed the relative income statement
contribution of Brandon and Interim Services to the combined companies
on a pro forma basis before taking into account any of the possible
benefits that may be realized following the Merger. This analysis
indicated that in calendar year 1995 Brandon would have contributed 9.8%
to combined revenues, 19.3% to combined EBIT, 24.6% to combined pretax
income and 26.2% to combined net income and in calendar year 1996
Brandon would contribute 9.8% to combined revenues, 17.7% to combined
EBIT, 24.4% to combined pretax income and 25.9% to combined net income.
In addition, Goldman Sachs analyzed the amount of accretion
(dilution) on a per share basis from Brandon's perspective of each of
the foregoing measures on a pro forma basis before taking into account
any of the possible benefits that may be realized following the Merger.
This analysis showed that Brandon would experience, for calendar year
1995 and 1996, respectively, a 161.3% and 167.1% revenue accretion, a
32.8% and 47.8% EBIT accretion, a 4.3% and 6.8% pretax income accretion
and a 1.9% and 0.9% net income dilution.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is identical to Brandon
or Interim Services or the contemplated transaction. The analyses were prepared
solely for purposes of Goldman Sachs providing its opinion to the Brandon Board
as to the fairness of the Exchange Ratio to the holders of Brandon Common Stock
and do not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Because such analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control the parties or their respective
advisors, none of Brandon, Interim Services, Goldman Sachs or any other person
assumes responsibility if future results are materially different from those
forecast. As described above, Goldman Sachs' opinion to the Brandon Board was
one of many factors taken into consideration by the Brandon Board in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analysis performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs set forth
in Exhibit D hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Brandon selected
Goldman Sachs as its financial advisor because it is a nationally recognized
investment banking firm that has substantial experience in transactions similar
to the Merger.
Goldman Sachs has provided certain investment banking services to Interim
Services from time to time, including acting as managing underwriter of an
initial public offering of Interim Common Stock in January 1994, and Goldman
Sachs may provide investment banking services to Interim Services from time to
time in the future.
Pursuant to a letter agreement dated December 13, 1995 (the "Engagement
Letter"), Brandon engaged Goldman Sachs to act as its financial advisor to
assist in responding to any proposals relating to a strategic business
combination with another entity, or any attempts to acquire control of Brandon
by way of a merger, tender offer, purchase of all or a portion of the assets or
stock of Brandon or any contested solicitation of proxies or otherwise and, in
the event that Brandon determined to pursue a business combination transaction,
to assist Brandon in connection with such possible business combination
transaction. Brandon paid Goldman Sachs an initial fee of $50,000 at the time of
execution of
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the Engagement Letter. Pursuant to the terms of the Engagement Letter, Brandon
has agreed to pay Goldman Sachs upon consummation of a business combination a
transaction fee, against which the $50,000 initial fee shall be credited, equal
to 0.9% of the aggregate consideration of up to $140,000,000, plus 5% of any
aggregate consideration greater than $140,000,000 but not greater than
$160,000,000, plus 4% of any aggregate consideration greater than $160,000,000
but not greater than $180,000,000, plus 3% of any aggregate consideration
greater than $180,000,000. Brandon estimates that, as of the date of this Proxy
Statement/Prospectus, the transaction fee will be approximately $1.9 million.
Brandon has agreed to reimburse Goldman Sachs for its reasonable out-of-pocket
expenses, including attorney's fees, and to indemnify Goldman Sachs against
certain liabilities, including certain liabilities under the federal securities
laws.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discusses only certain federal income tax consequences of the
Merger to the United States citizens or residents who hold shares of Brandon
Common Stock. It does not discuss all the tax consequences that might be
relevant to stockholders entitled to special treatment under the Code (such as
insurance companies, financial institutions, dealers in securities, tax-exempt
organizations or non-U.S. persons) or to holders who acquired their shares of
Brandon Common Stock through the exercise of employee stock options or otherwise
as compensation. It also does not address the tax consequences of the Merger
under state, local or foreign tax laws.
Although no ruling will be requested from the IRS regarding the tax
consequences of the Merger, it is a condition precedent to the obligation of
each of Brandon and Interim Services to consummate the Merger that Brandon and
Interim Services each receive an opinion from Bryan Cave LLP that for federal
income tax purposes, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code. Such opinions are based upon customary
representations and assumptions made to such legal counsel by Brandon and
Interim Services with respect to certain factual matters required to qualify the
Merger as a reorganization under the Code. It should be noted that an opinion of
counsel is not binding upon the IRS. Thus, no assurance can be given that the
IRS will not successfully challenge the conclusions set forth therein.
Under the reorganization provisions of the Code, no gain or loss will be
recognized by stockholders of Brandon upon the conversion of their shares of
Brandon Common Stock into shares of Interim Common Stock pursuant to the terms
of the Merger (except to the extent cash is received in lieu of fractional
shares). The tax basis of the shares of Interim Common Stock into which shares
of Brandon Common Stock are converted pursuant to the Merger (including any
fractional shares of Interim Common Stock deemed received) will be the same as
the tax basis of such Brandon Common Stock exchanged therefor. The holding
period for shares of Interim Common Stock into which shares of Brandon Common
Stock are converted pursuant to the Merger will include the period that such
shares of Brandon Common Stock were held by the holder, provided such shares
were held as a capital asset by the holder as of the Effective Time of the
Merger.
A Brandon stockholder who receives cash in lieu of a fractional share of
Interim Common Stock will be treated for federal income tax purposes as if the
cash was received in payment for this fractional share, and such Brandon
stockholder will therefore recognize gain or loss equal to the difference
between the cash received and such stockholder's tax basis in the fractional
share.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. IT
DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER. THE
DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING AND
PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND
COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE
COULD AFFECT THE CONTINUING VALIDITY OF THE DISCUSSION. BECAUSE OF THE
COMPLEXITY OF THE TAX LAWS, AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR
STOCKHOLDER MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, IT IS
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RECOMMENDED THAT EACH STOCKHOLDER CONSULT HIS OR HER PERSONAL TAX ADVISOR
CONCERNING THE APPLICABLE FOREIGN AND UNITED STATES FEDERAL, STATE AND LOCAL
INCOME TAX CONSEQUENCES OF THE MERGER.
ACCOUNTING TREATMENT
The Merger is expected to be accounted for using the pooling-of-interests
method of accounting pursuant to Opinion No. 16 of the Accounting Principles
Board and interpretations thereof. In this connection, Interim Services expects
to receive an opinion from Deloitte & Touche LLP, independent accountants to
Interim Services, to the effect that the Merger will be accounted for as a
pooling of interests under the applicable accounting standards. Brandon expects
to receive from Coopers & Lybrand L.L.P., independent accountants to Brandon, a
letter to the effect that Coopers & Lybrand L.L.P. concurs with the conclusions
of Brandon's management that no conditions exist with respect to Brandon which
would preclude accounting for the Merger as a pooling of interests. Under the
Merger Agreement, it is a condition precedent to the obligation of each of
Interim Services and Brandon to consummate the Merger that each of them will
have received reports from Deloitte & Touche LLP and Coopers & Lybrand L.L.P.
regarding qualification of the Merger as a pooling of interests for accounting
purposes. The pooling-of-interests method of accounting is intended to present
as a single interest two or more common stockholder interests which were
previously independent. The pooling-of-interests method of accounting treats the
combining companies as having been merged from inception. Consequently, the
historical financial statements for periods prior to the consummation of the
Merger will be restated as though the companies had been combined from the
beginning of such periods. SEE "CERTAIN PROVISIONS OF THE MERGER AGREEMENT --
CONDITIONS TO CONSUMMATION OF THE MERGER" AND "UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION."
The Merger Agreement prohibits Interim Services and Brandon and their
respective subsidiaries from taking or failing to take any action which action
or failure such party knows would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes. SEE "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT -- POOLING-OF-INTERESTS ACCOUNTING TREATMENT."
REGULATORY APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "H-S-R
Act") and the rules promulgated thereunder by the Federal Trade Commission (the
"FTC"), the Merger may not be consummated until notifications have been given
and certain information has been furnished to the FTC and the Antitrust Division
of the Department of Justice (the "Antitrust Division") and specified waiting
period requirements have been satisfied. Interim Services and Brandon filed
notification and report forms under the H-S-R Act with the FTC and the Antitrust
Division in early April, 1996, and the required waiting periods for such filings
under the H-S-R Act were terminated on April 12, 1996. However, at any time
before or after the Effective Time of the Merger, and notwithstanding that the
H-S-R Act waiting periods have been terminated, the FTC, the Antitrust Division
or any state government could take such action under the antitrust laws as it
deems necessary or desirable in the public interest. Such action could include
seeking to enjoin the Merger or seeking divestiture of Brandon by Interim
Services, in whole or in part, or the divestiture of substantial assets of
Interim Services, Brandon or their respective subsidiaries.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Brandon's management and the Brandon Board may be deemed
to have interests in the Merger in addition to their interest as stockholders of
Brandon generally, including, among other things, the matters described below.
The Brandon Board was aware of these matters when it approved (with all
directors voting) the Merger Agreement.
INDEMNIFICATION; INSURANCE
In the Merger Agreement, Interim Services has agreed that from and after the
Effective Time, it will indemnify and advance costs and expenses (including
legal fees and expenses) to directors and officers of Brandon equivalent to the
indemnification provided or available under the Certificate of
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Incorporation and By-Laws of Brandon or to the fullest extent permitted under
Delaware law, with respect to acts or omissions occurring prior to the Effective
Time, including without limitation the authorization of the Merger Agreement and
the transactions contemplated thereby, for a period of six years from the
Effective Time, or in the case of claims made prior to the end of such six year
period, until such claims are finally resolved.
Interim Services has also agreed to provide continuing director and officer
liability insurance for the directors and officers of Brandon for a period of
six years after the Effective Time with terms and conditions similar to or
better than those in effect under Brandon's existing directors' and officers'
insurance policy. However, if coverage for six years cannot be obtained for
$150,000 or less, Interim Services must provide coverage for three years or for
the maximum period obtainable for $150,000, whichever is greater.
EMPLOYEE BENEFIT PLANS, PROGRAMS AND ARRANGEMENTS
The employee benefit plans, arrangements and related policies of Brandon
will initially be unaffected by the Merger. Following the Merger, Interim
Services has agreed to use reasonable efforts to retain Brandon's existing
officers and full-time employees (excluding Ira Brown, Brandon's Chief Executive
Officer, who will retire following the Merger (SEE "-- EMPLOYMENT AND CHANGE OF
CONTROL AGREEMENTS")) with levels of aggregate total compensation (salary plus
benefits) substantially equivalent in the aggregate to those provided to such
employees by Brandon, and with policies substantially equivalent in the
aggregate to the employees as those followed by Brandon. Following the Merger,
Interim Services will review Brandon's employee benefit plans, arrangements and
policies with a view towards consolidating the same with Interim Services'
plans, arrangements and policies to the extent feasible and subject to the
immediately preceding sentence. To the extent former employees of Brandon become
participants in a plan, arrangement or policy of Interim Services, they will be
given past service credit for all purposes, and no prior existing condition
limitation will be imposed with respect to any medical coverage plan of Interim
Services (except to the extent that such limitations have already been imposed).
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Brandon entered into employment agreements with Domenica Schulz-Scarpulla,
Patricia Kennedy and Robert Miano on January 25, 1996, and with Peter Lordi and
two other officers on January 31, 1996, (each such person, an "executive"). Each
agreement provides that the executive will continue in his or her current
position with Brandon through December 31, 1998, unless extended by mutual
agreement or terminated for good cause (as defined in the agreement). Each
agreement contains a non-compete provision which extends for three years beyond
the term of the agreement. The agreements require the continuation during the
contract period of the executive's salary and benefits set forth therein, with
bonuses in the discretion of the Compensation Committee of the Brandon Board.
These employment agreements are not terminated by virtue of either the Merger
Agreement or the Merger. The agreements provide for certain payment and benefits
to the executive in the event the executive's employment is terminated (or the
executive resigns under specified conditions following a change in control as
defined in the agreements (the "Change in Control Events")). The payments and
benefits provided are subject to reduction if they exceed levels specified under
the golden parachute provisions of the Code and for two of the four highest paid
executives other than Mr. Brown such reductions are expected to occur. The
Merger will constitute a Change in Control Event for the purposes of these
agreements. If, pursuant to the provisions described above, payments were
required to be made to Ms. Schulz-Scarpulla, Ms. Kennedy, Mr. Lordi and Mr.
Miano (the four most highly compensated executive officers of Brandon other than
Mr. Brown as named in Brandon's most recent annual meeting proxy statement), as
of July 1, 1996 the estimated amount of such payments and benefits, taking into
account the necessary reductions would be approximately $715,000, $522,000,
$516,000 and $508,000, respectively. The estimated amount of payments and
benefits to all the executive officers with change in control agreements as a
group would be approximately $2,873,000.
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Brandon has an employment agreement with Ira B. Brown, its Chairman and
Chief Executive Officer. On February 27, 1996, Brandon and Mr. Brown amended his
employment agreement, with such amendment to take effect only upon consummation
of the Merger. The amendment provides that Mr. Brown will retire as Chairman and
Chief Executive Officer of Brandon effective as of the Closing Date, and that he
will thereafter receive no compensation pursuant to his employment agreement,
although he will retain certain medical benefits. Mr. Brown will also retain
certain registration rights under his employment agreement, enabling him to
cause Interim Services to register for resale the shares of Interim Common Stock
which will be issued to him and certain persons affiliated with him (including
Myra Brown, his wife and a director and officer of Brandon). Because Mr. and
Mrs. Brown together own a substantial amount of Brandon Common Stock and may be
deemed "affiliates" of Brandon, their ability to sell any shares of Interim
Common Stock they receive in the Merger would be severely restricted by federal
securities laws in the absence of these registration rights. Even with these
registration rights, the Browns will be subject to certain restrictions on their
ability to sell their shares of Interim Common Stock they receive in the Merger.
SEE "-- RESALE CONSIDERATIONS WITH RESPECT TO THE INTERIM COMMON STOCK," below.
Mr. and Mrs. Brown have informed Brandon and Interim Services that they have no
present intention to sell the shares of Interim Common Stock that they will
receive in the Merger.
Interim Services expects to continue the employment of all Brandon officers
after the Merger under the terms and conditions of the employment arrangements
presently in effect between Brandon and its officers.
STOCK OPTIONS
Each Brandon director and executive officer holds Brandon Stock Options
which, upon the Effective Time of the Merger, will automatically vest, to the
extent not yet vested, and become exercisable for shares of Interim Common Stock
rather than shares of Brandon Common Stock at a ratio of 0.88 shares of Interim
Common Stock for each share of Brandon Common Stock covered by the Brandon Stock
Options, subject to certain anti-dilution adjustments. SEE "THE MERGER --
TREATMENT OF OPTIONS."
OPERATIONS AFTER THE MERGER
Upon consummation of the Merger, Brandon will operate as a wholly-owned
subsidiary of Interim Services. Following the Merger, the President and Chief
Operating Officer of Brandon will continue to manage the business of Brandon,
reporting to the Interim Services Executive Vice President, Operations. Except
for Ira B. Brown, Brandon's Chief Executive Officer who will retire following
the Merger, other officers and management of Brandon are expected to continue in
their prior roles.
Pursuant to the Merger Agreement, Brandon has the right to select, subject
to Interim Services' approval which will not be unreasonably withheld, a person
who will be appointed by the Interim Board to serve as a director of Interim
Services and who will, subject to the requirements of the Delaware General
Corporation Law, be included within a class of Interim Services directors whose
three-year term expires at the Annual Meeting of Interim Services stockholders
to be held in 1999. Such person will be one of the directors of Brandon at the
time of the Merger but will not be any of the persons who will be employees of
the Surviving Corporation following the Effective Time.
RESALE CONSIDERATIONS WITH RESPECT TO THE INTERIM COMMON STOCK
The shares of Interim Common Stock that will be issued if the Merger is
consummated have been registered under the Securities Act and will be freely
transferable, except for shares received by any persons, including directors and
executive officers of Brandon, who may be deemed to be "affiliates" of Brandon
under Rule 145 promulgated under the Securities Act. An "affiliate" of an issuer
is defined generally as a person who "controls" the issuer. Directors, executive
officers and 10% stockholders are presumed by the Commission to control the
issuer. Affiliates may not sell their shares of Interim Common Stock acquired
pursuant to the Merger, except pursuant to an effective registration statement
under the Securities Act covering the Interim Common Stock or in compliance with
Rule 145 or another applicable exemption from the registration requirements of
the Securities Act.
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Persons who may be deemed to be "affiliates" of Brandon have delivered
letters to Interim Services in which they have agreed to certain restrictions on
their ability to sell, transfer or otherwise dispose of ("transfer") any Brandon
Common Stock owned by them and any Interim Common Stock acquired by them in the
Merger. Pursuant to the accounting rules governing a pooling of interests, these
individuals have agreed not to transfer the shares commencing 30 days prior to
the Effective Time and ending when financial results covering at least 30 days
of post-merger combined operations of Interim Services and Brandon have been
published by Interim Services or filed by Interim Services on a Form 8-K or
10-Q. Also, in connection with the pooling-of-interests rules, these individuals
have agreed not to transfer their Brandon Common Stock in the period prior to 30
days before the Effective Time without giving Interim Services advance notice
and an opportunity to object if the transfer would interfere with
pooling-of-interests accounting for the Merger. Pursuant to Rule 145, these
individuals have also agreed to refrain from transferring Interim Common Stock
acquired by them in the Merger, except in compliance with certain restrictions
imposed by Rule 145.
Persons, who may be deemed "affiliates" of Interim Services have also
delivered letters in which they have agreed not to transfer Interim Common Stock
beneficially owned by them in violation of the pooling-of-interests restrictions
set forth above with respect to Brandon.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement not summarized elsewhere in this Proxy Statement/Prospectus. The
Merger Agreement is attached as Exhibit A to this Proxy Statement/Prospectus and
is incorporated herein by reference. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT.
EXCHANGE PROCEDURES
As soon as reasonably practicable after the Effective Time, Interim Services
will instruct Chemical Mellon Shareholder Services, L.L.C. (the "Exchange
Agent") to mail to each holder of record of certificates which immediately prior
to the Effective Time evidenced outstanding shares of Brandon Common Stock (the
"Certificates"): (i) a letter of transmittal (which will specify that delivery
shall be effected, and risk of loss and title to the Certificates will pass,
only upon proper delivery of the Certificates to and receipt by the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing shares of Interim Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such Certificate will be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Interim Common Stock
which such holder has the right to receive in respect of the shares of Brandon
Common Stock formerly evidenced by such Certificate, (B) cash in lieu of
fractional shares of Interim Common Stock to which such holder may be entitled
and (C) any dividends or other distributions to which such holder is entitled
(the "Merger Consideration"). The Certificates so surrendered will be cancelled.
In the event of a transfer of ownership of shares of Brandon Common Stock
which is not registered in the transfer records of Brandon, a certificate
evidencing the proper number of shares of Interim Common Stock may be issued to
a transferee if the Certificate evidencing such shares of Brandon Common Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. In the event any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact and, if
required by Interim Services or the Exchange Agent, the posting by such person
of a bond in such amount as the Exchange Agent may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen destroyed
Certificate the Merger Consideration deliverable in respect thereof pursuant to
the Merger Agreement. Until surrendered, each Certificate will be deemed at any
time after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration.
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CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Brandon, Interim Services and Merger Sub relating to, among other things, the
following matters (which representations and warranties are subject, in certain
cases, to specified exceptions and generally apply only to facts and
circumstances existing as of February 27, 1996, the date of the Merger
Agreement): (i) the due organization, power, authority and good standing of, and
similar corporate matters with respect to, each of Brandon, Interim Services and
their respective subsidiaries; (ii) each of Brandon's and Interim Services'
capital structure; (iii) the consents, approvals, filings, registrations or
other notices with respect to the execution and delivery of the Merger Agreement
by Brandon and Interim Services and the consummation of the transactions
contemplated thereby; (iv) the authorization, execution, delivery, performance
and enforceability of the Merger Agreement by each party thereto; (v) the
absence of any violation of any provisions of the Certificate of Incorporation
and By-Laws of Brandon and Interim Services or other applicable law; (vi)
absence of any conflict with, or breach, default, termination or acceleration
of, or creation of any security interest or other encumbrance of Brandon,
Interim Services or their respective subsidiaries under, any agreement,
instrument or other obligation; (vii) the preparation and presentation of the
financial statements of Brandon and Interim Services and the maintenance of
books and records of Brandon and Interim Services and their respective
subsidiaries; (viii) the absence of undisclosed liabilities with respect to
Brandon and Interim Services and their respective subsidiaries; (ix) the absence
of any broker's or finder's fees in connection with the transactions
contemplated by Merger Agreement, except, in the case of Brandon, to Goldman
Sachs and, except, in the case of Interim Services, to DLJ; (x) the absence of
certain material changes or events having a material adverse effect on the
business, results of operations or business of Brandon and its subsidiaries,
taken as a whole and Interim Services and its subsidiaries, taken as a whole;
(xi) the conduct of business by Brandon and Interim Services in the ordinary
course and consistent with past practice; (xii) the absence of pending or
threatened litigation with respect to Brandon, Interim Services and their
respective subsidiaries; (xiii) certain tax matters relating to Brandon, Interim
Services and their respective subsidiaries; (xiv) certain employee benefit
matters relating to Brandon, Interim Services and their respective subsidiaries;
(xv) delivery to Interim Services of certain Brandon documents and the delivery
to Brandon of certain Interim Services documents which have been filed with the
SEC and accuracy of such documents; (xvi) accuracy of information relating to
Brandon, Interim Services and their respective subsidiaries contained in this
Proxy Statement/Prospectus; (xvii) the possession of all licenses, franchises,
permits and authorizations necessary to carry on the business of Brandon and
Interim Services and their respective subsidiaries; (xviii) certain contracts to
which Brandon, Interim Services or any of their respective subsidiaries are a
party; (xix) properties and insurance with respect to Brandon, Interim Services
and their respective subsidiaries; (xx) "excess parachute payments" which could
be triggered by the Merger; (xxi) intellectual property of Brandon and Interim
Services; (xxii) information regarding the employees of Brandon and Interim
Services; (xxiii) immigration compliance; (xxiv) transactions with affiliates;
(xxv) the availability of pooling-of-interests accounting treatment for the
Merger; (xxvi) the fairness opinions of Goldman Sachs and DLJ; and (xxvii) the
absence of any untrue statement of material fact in the representations and
warranties contained in the Merger Agreement or omission to state a material
fact to make statements in such representations and warranties misleading.
CONDUCT OF BUSINESS PENDING THE MERGER
In the Merger Agreement, Brandon agreed that during the period from the date
of the Merger Agreement to the Effective Time, it will, and will cause each of
its subsidiaries to, conduct their respective businesses only in the ordinary
course and consistent with prudent and prior business practice, except for
transactions permitted by the Merger Agreement or with the prior written consent
of Interim Services, which consent will not be unreasonably withheld. Brandon
also agreed to use reasonable efforts to (i) preserve its business organization
and that of its subsidiaries intact, (ii) keep available the present services of
its employees and those of its subsidiaries and (iii) preserve the goodwill of
its customers and employees and those of its subsidiaries and others with whom
business relationships exist.
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<PAGE>
Brandon agreed that from the date of the Merger Agreement to the Effective
Time, except as otherwise approved by Interim Services in writing or as
permitted or required by the Merger Agreement, it will not, nor will it permit
any of its subsidiaries to: (i) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents; (ii) change the
number of shares of its authorized or issued capital stock or issue or grant any
option, warrant, call, commitment, subscription, right to purchase or agreement
of any character relating to the authorized or issued capital stock of Brandon
or any of its subsidiaries or any securities convertible into or exchangeable
for shares of such capital stock, or split, combine or reclassify any shares of
its capital stock, or declare, set aside or pay any dividend, or other
distribution in respect of its capital stock, other than regular cash dividends
in an amount not to exceed $0.085 per share per quarter; (iii) grant any
severance or termination pay (with certain exceptions) to, or enter into or
amend any employment or severance agreement with, any of its directors, officers
or employees or adopt or amend any employee benefit plan or arrangement of any
type, or award any increase in compensation or benefits to its directors,
officers or employees except with respect to employee increases in the ordinary
course of business and consistent with past practices and policies and
appropriately disclosed to Interim Services in writing; (iv) merge, consolidate
or liquidate Brandon or sell, lease, license, encumber, transfer, mortgage or
pledge or dispose of any assets or voluntarily incur any liabilities other than
in the ordinary course of business consistent with past practices and policies;
(v) make any capital expenditures outside the ordinary course of business; (vi)
acquire in any manner any business or entity; (vii) make any material change in
its accounting methods or practices, other than changes required by generally
accepted accounting principles or by regulatory authorities; (viii) enter into
or accelerate, terminate prior to expiration, cancel or adversely modify any
material agreement, contract, lease or license or pay any obligations outside
the ordinary course of business; (ix) make any capital investment in, any loan
(other than a loan permitted by clause (x) below) to, or any acquisition of the
securities or assets of, any other person; (x) make any loan to, enter into any
other transaction with, or make any other change in employment terms for any of
its directors, officers and employees except in accordance with existing
agreements, policies or employment benefit plans; (xi) take or fail to take any
action which action or failure Brandon knows would jeopardize the treatment of
the Merger as a pooling of interests for accounting purposes or as a tax-free
reorganization; (xii) take any action that would result in any of its
representations and warranties contained in the Merger Agreement not being true
and correct in any material respect at the Effective Time or that would cause
any of its conditions to Closing not to be satisfied; or (xiii) agree to do any
of the foregoing.
Interim Services agreed that from the date of the Merger Agreement to the
Effective Time, except as otherwise approved by Brandon in writing or as
permitted or required by the Merger Agreement, it will not, nor will it permit
any of its subsidiaries to: (i) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents; (ii) declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock; (iii) make
any material change in its accounting methods or practices, other than changes
required by generally accepted accounting principles or by regulatory
authorities; (iv) take any action that would result in any of its
representations and warranties contained in the Merger Agreement not being true
and correct in any material respect at the Effective Time or that would cause
any of its conditions to Closing not to be satisfied; (v) take or fail to take
any action which action or failure Interim Services knows would jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes or as
a tax-free reorganization; or (vi) agree to do any of the foregoing.
45
<PAGE>
NO SOLICITATION OF TRANSACTIONS
In the Merger Agreement Brandon has agreed that it and its affiliates,
employees, representatives, financial advisors and agents (collectively,
"Brandon Related Parties") will cease all existing discussions or negotiations,
if any, with any parties (other than Interim Services) conducted with respect to
any merger, acquisition or exchange of all or any material portion of the assets
of, or any equity interest in, Brandon or any of its subsidiaries or any
business combination with Brandon or any of its Subsidiaries or any similar
transaction. (Any such transaction with a party other than Interim Services or
any affiliate, associate or designee of Interim Services is referred to herein
as an "Acquisition Transaction" and any proposal relating to an Acquisition
Transaction is referred to herein as an "Acquisition Proposal.") Additionally,
Brandon has agreed that neither it nor any Brandon Related Parties will,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Interim
Services or any affiliate, associate or designee of Interim Services) concerning
any Acquisition Transaction or Acquisition Proposal.
However, Brandon may enter into discussions or negotiations with or provide
information to a third party in connection with an Acquisition Proposal provided
that the Brandon Board, upon advice of outside counsel, determines in good faith
that the exercise of its fiduciary duties requires that such discussions or
negotiations must be commenced or such information should be provided. In such
case, Brandon has agreed to communicate promptly to Interim Services the terms
of any Acquisition Proposal, whether written or oral, which it receives and what
response, if any, the Brandon Board has determined is necessary or appropriate.
Subject to any confidentiality agreement with any such third party (which
Brandon, based upon advice of outside counsel, determines in good faith is
required to be executed in order for its Board of Directors to comply with its
fiduciary duties, but which Brandon agrees will be on terms not substantially
different from the confidentiality agreement between Interim Services and
Brandon regarding the Merger), Brandon will keep Interim Services informed of
the status of any such discussions or negotiations.
POOLING-OF-INTERESTS ACCOUNTING TREATMENT
In the Merger Agreement, Interim Services and Brandon have agreed that, from
February 27, 1996, the date of the Merger Agreement, to the Effective Time,
neither Interim Services nor Brandon will take or fail to take any action which
action or failure they know would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to consummate the Merger are
subject to the satisfaction, or, where legally permissible, waiver at or prior
to the Effective Time of the following conditions: (a) the Merger Agreement and
the transactions contemplated by the Merger Agreement shall have been approved
by the requisite vote of the stockholders of Brandon; (b) the Registration
Statement shall have been declared effective by the Commission and shall not be
subject to a stop order or any threatened stop order, and the issuance of
Interim Common Stock shall have been qualified in every state where such
qualification is required under the applicable state securities laws; (c) all
necessary regulatory or governmental approvals and consents required to
consummate the transactions contemplated by the Merger Agreement (other than
immaterial government permits) shall have been obtained without any term or
condition which would materially impair the value of Brandon and its
subsidiaries, taken as a whole, or which would materially impair the value of
Interim Services and its subsidiaries, taken as a whole, and all conditions
required to be satisfied prior to the Effective Time by the terms of such
approvals and consents shall have been satisfied and all statutory waiting
periods in respect thereof shall have expired; (d) no order, judgment or decree
shall be outstanding against a party to the Merger Agreement or a third party
that would have the effect of preventing completion of the Merger; no suit,
action or other proceeding shall be pending or threatened by any governmental
body in which it is sought to restrain or prohibit the Merger and no suit,
action or other proceeding shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit the Merger or obtain other
substantial monetary or other relief against one or more parties to the
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<PAGE>
Merger Agreement in connection with the Merger Agreement and which Interim
Services or Brandon determines in good faith, based upon the advice of their
respective counsel, makes it inadvisable to proceed with the Merger because any
such suit, action or proceeding has a significant potential to be resolved in
such a way as to deprive the party electing not to proceed of any of the
material benefits to it of the Merger; (e) Interim Services and Brandon each
shall have received an opinion of Bryan Cave LLP, counsel to Interim Services,
that for federal and state income tax purposes, the Merger will qualify as a
tax-free reorganization under Section 368(a) of the Code, and except with regard
to cash received in exchange for fractional shares, that no gain or loss will be
recognized by the holders of Brandon Common Stock in exchanging their shares of
Brandon Common Stock for Interim Common Stock; and (f) Interim Services and
Brandon shall each have received reports of Deloitte & Touche LLP and Coopers &
Lybrand L.L.P., in form and substance reasonably acceptable to such party, based
on such procedures as were deemed relevant, regarding qualification of the
Merger as a pooling of interests under generally accepted accounting principles.
The obligations of Interim Services and Merger Sub are further subject to
the satisfaction or waiver, at or prior to the Effective Time, of the following
conditions: (a) generally, the representations and warranties of Brandon
contained in the Merger Agreement shall be true and correct in all material
respects on the Closing Date as though made on and as of the Closing Date and
Brandon shall have performed in all material respects the agreements, covenants
and obligations to be performed by it prior to the Closing Date; (b) Interim
Services shall have received an opinion of Pitney, Hardin, Kipp & Szuch, counsel
to Brandon, dated the Closing Date, in form and substance reasonably
satisfactory to Interim Services; (c) Brandon shall have furnished Interim
Services with such certificates of its officers or other documents to evidence
fulfillment of the closing conditions set forth in the Merger Agreement as
Interim Services may reasonably request; (d) the Merger Agreement and the
transactions contemplated thereby shall have been approved by the requisite vote
of the stockholders of Interim Services; and (e) Interim Services shall have
received a fairness opinion from DLJ, which shall not have been adversely
modified or withdrawn prior to the Closing.
The obligations of Brandon are further subject to the satisfaction or
waiver, at or prior to the Effective Time, of the following conditions: (a)
generally, the representations and warranties of Interim Services and Merger Sub
contained in the Merger Agreement shall be true and correct in all material
respects on the Closing Date as though made on and as of the Closing Date and
Interim Services shall have performed in all material respects, the agreements,
covenants and obligations to be performed by it prior to the Closing Date; (b)
Brandon shall have received an opinion of outside counsel to Interim Services,
dated the Closing Date, in form and substance reasonably satisfactory to
Brandon; (c) Brandon shall have received a fairness opinion from Goldman Sachs,
dated on or shortly prior to the date of the Proxy Statement/Prospectus, which
shall not have been adversely modified or withdrawn prior to Closing; (d)
Brandon shall select, subject to Interim Services' approval which shall not be
unreasonably withheld, a person who shall be duly appointed by the Interim Board
to serve as a director of Interim Services and who shall, subject to the
requirements of the Delaware General Corporation Law, be included within the
class of Interim Services directors whose three-year terms begin at the Interim
Special Meeting (and such person shall be one of the current directors of
Brandon but shall not be any of the persons who will be employees of the
Surviving Corporation following the Effective Time); (e) Brandon shall have
received evidence, reasonably satisfactory to it, that Interim Services shall
have obtained certain insurance covering directors and officers of Brandon with
respect to certain liabilities; and (f) Interim Services and Merger Sub shall
have furnished Brandon with such certificates of its officers or others and such
other documents to evidence fulfillment of the closing conditions set forth in
the Merger Agreement as Brandon may reasonably request.
TERMINATION; TERMINATION FEE
The Merger Agreement may be terminated prior to the Effective Time, whether
before or after approval of the Merger Agreement by the stockholders of Brandon
or by the stockholders of Interim Services, only as follows: (a) by mutual
written consent of Interim Services, Merger Sub and Brandon; (b) by either
Interim Services or Brandon if (i) the Effective Time shall not have occurred on
or prior
47
<PAGE>
to August 31, 1996 unless the failure is due to a failure of the party seeking
to terminate to perform or observe its agreements set forth in the Merger
Agreement, (ii) the stockholders of either Interim or Brandon vote upon and fail
to approve the Merger Agreement, (iii) upon written notice to the other, any
application for regulatory or governmental approval necessary to consummate the
Merger is denied or withdrawn or is approved with conditions which would
materially impair the value of the other with its subsidiaries, taken as a
whole, despite the reasonable efforts of the party seeking to terminate to avoid
such result, (iv) there was a material breach in any representation, warranty,
covenant, agreement or obligation of the other in the Merger Agreement and such
breach (provided it is curable and the other party promptly commences its effort
to cure) shall not have been remedied within 30 days after receipt by the other
of notice in writing specifying the nature of such breach and requesting that it
be remedied, (v) the Board of Directors of the other party has not recommended
the Merger to its stockholders in this Proxy Statement/Prospectus, or has
modified or rescinded its recommendation of the Merger to its stockholders as
being advisable and fair to and in the best interests of such other party and
its stockholders, or has modified or rescinded its approval of the Merger
Agreement, or has resolved to do any of the foregoing, or (vi) the conditions to
its obligations to close set forth in the Merger Agreement are not satisfied and
are not capable of being satisfied by August 31, 1996; (c) by Interim Services
if (i) there shall have occurred a material adverse change from that disclosed
in Brandon's Annual Report on Form 10-K for the year ended October 1, 1995, or
(ii) Brandon shall have entered into a definitive agreement contemplating,
announced or approved an Acquisition Transaction; (d) by Brandon, if (i) there
shall have occurred a material adverse change from that disclosed in Interim
Services' Quarterly Report on Form 10-Q for the nine months ended September 29,
1995, (ii) the Brandon Board has entered into a definitive agreement
contemplating, announced or approved an Acquisition Transaction after
determining, in good faith and upon advice of outside counsel, that such
approval was necessary in the exercise of its fiduciary duties under applicable
laws, or (iii) if the average of the ten closing prices of Interim Common Stock
during the first ten of the 13 consecutive trading days immediately preceding
the date of the Brandon Special Meeting is less than $33.00.
If: (x) Brandon terminates the Merger Agreement pursuant to (d)(ii) in the
immediately preceding paragraph, or (y) Interim Services terminates the Merger
Agreement pursuant to (b)(v) in the immediately preceding paragraph and Brandon
enters into a definitive agreement contemplating, announces or approves an
Acquisition Transaction within one year after the date of the Merger Agreement,
or (z) Interim Services terminates the Merger Agreement pursuant to (c)(ii) in
the immediately preceding paragraph, then Brandon has agreed to immediately (but
in any event within three business days) pay to Interim Services, in cash, a
termination fee equal to $1.5 million, which amount the parties agree and
acknowledge is sufficient to cover all reasonable out-of-pocket expenses which
Interim Services may incur in connection with the Merger Agreement and the
Merger. The obligation of Brandon to pay a $1.5 million fee to Interim Services
under such circumstances may be considered a deterrent to other potential
acquisitions of control of Brandon, as it is likely to increase the cost of such
an acquisition to any party other than Interim Services.
EXPENSES
Except as stated below, all costs and expenses incurred in connection with
the Merger Agreement and the transactions contemplated thereby (including legal,
accounting and investment banking fees and expenses) shall be borne by the party
incurring such costs and expenses. Interim Services and Brandon have each agreed
to pay 50% of all expenses and fees related to filing of the Registration
Statement (including this Proxy Statement/Prospectus) and related documents with
the Commission and filings pursuant to state "blue sky" laws and regulations in
connection with the Merger.
Notwithstanding anything else in the Merger Agreement, in the event that
either Interim Services or Brandon shall willfully default in its obligations
under the Merger Agreement, the non-defaulting party may pursue any remedy
available at law or in equity to enforce its rights and shall be paid by the
willfully defaulting party for all damages, costs and expenses, including
without limitation
48
<PAGE>
reasonable legal, reasonable accounting, reasonable investment banking and
reasonable printing expenses, incurred or suffered by the non-defaulting party
in connection with the Merger Agreement or in the enforcement of its rights
thereunder.
AMENDMENT AND WAIVER
The Merger Agreement may be amended by Interim Services, Merger Sub and
Brandon, at any time prior to or after approval and adoption of the Merger
Agreement by the stockholders of Brandon or approval by Interim Services
stockholders of the issuance of Interim Common Stock pursuant to the Merger.
However, after any such approval, no amendment shall be made which reduces the
amount or changes the form of the consideration to be delivered to the
stockholders of Brandon or adversely affects the stockholders of Interim
Services, without the approval of the affected stockholders.
The parties may, at any time prior to the Effective Time of the Merger, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties to the Merger Agreement; (ii) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained in the Merger Agreement; provided that such
extension or waiver is in writing signed on behalf of such party against which
the waiver is sought to be enforced.
49
<PAGE>
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained in this Proxy Statement/Prospectus which are
not statements of current fact may be "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1993, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Although Interim
Services and Brandon believe that their expectations are based on reasonable
assumptions, they can give no assurance that their goals will be achieved.
Important factors that could cause actual results to differ materially from
those in the forward looking statements herein include those factors listed
under "Risk Factors" included elsewhere herein.
50
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial information
of Interim Services and Brandon give effect to the Merger using the
pooling-of-interests method of accounting and reflect the Exchange Ratio and the
pro forma adjustments described in the accompanying notes. The accompanying pro
forma statements of income reflect the Merger as though consummated at the
beginning of the periods reported and the pro forma combined condensed balance
sheet reflects the Merger as though consummated on December 29, 1995.
The consolidated financial information of Interim Services set forth as of
December 29, 1995 and for each of the three years in the period ended December
29, 1995, are derived from, and are qualified by reference to, Interim Services'
audited consolidated financial statements and related notes thereto, which
together with the related report of Deloitte & Touche LLP, independent
accountants, are included in Interim Services' Annual Report on Form 10-K for
the fiscal year ended December 29, 1995 which is incorporated by reference in
this Proxy Statement/Prospectus.
Brandon's fiscal year ends on the Sunday nearest to the end of the month of
September. Accordingly, Brandon has prepared historical financial statements and
related notes thereto as of October 1, 1995 and for each of the three fiscal
years in the period ended October 1, 1995. These consolidated financial
statements of Brandon have been audited by Coopers & Lybrand L.L.P., independent
accountants. The historical consolidated statement of income data of Brandon for
the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994 is
unaudited and has been derived from the audited consolidated statements of
income of Brandon by subtracting the results of operations as reported in
Brandon's Quarterly Reports on Form 10-Q for the first quarter of each
respective fiscal year and adding the results of operations as reported in
Brandon's Quarterly Reports on Form 10-Q for the first quarter of the subsequent
respective fiscal year. The historical consolidated balance sheet data of
Brandon as of December 31, 1995 is unaudited and represents the financial
position of Brandon as reported in Brandon's Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 1995.
The following unaudited pro forma combined condensed financial information
should be read in conjunction with the audited financial statements, including
the notes thereto, of Interim Services that are in Interim Services' Annual
Report on Form 10-K incorporated herein by reference and of Brandon that are in
Brandon's Annual Report on Form 10-K incorporated herein by reference, and in
conjunction with the unaudited financial statements, including the notes
thereto, of Brandon that are contained in Brandon's Report on Form 10-Q for the
fiscal quarter ended December 31, 1995, which report is incorporated by
reference in this Proxy Statement/Prospectus.
During 1995, Interim Services made significant acquisitions (the
"Acquisitions") which were accounted for under the purchase method of
accounting. Accordingly, Interim Services' results for the year ended December
29, 1995 have been adjusted to reflect the Acquisitions as though they occurred
at the beginning of 1995, but are not necessarily indicative of future operating
results or financial position.
The following pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial
position that would have occurred if the Merger had been consummated, nor is it
necessarily indicative of future operating results or financial position. The
unaudited pro forma financial information does not include any expenses or
restructuring charges related to the Merger. Total Merger-related direct
expenses are expected to approximate $4.5 million. In addition, the unaudited
pro forma financial information excludes any potential benefits from synergies
that may result from the Merger. There were no material transactions between
Interim Services and Brandon during any of the periods presented.
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<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED 1995
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
INTERIM SERVICES BRANDON COMBINED
------------------------------------------------------- ---------------- -------------
DECEMBER PRO FORMA DECEMBER 31, PRO FORMA
29, 1995 HISTORICAL ADJUSTMENTS -- 1995 ADJUSTMENTS
HISTORICAL ACQUISITIONS (1) ACQUISITIONS PRO FORMA HISTORICAL -- MERGER
-------- ---------------- -------------- --------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues from services........ $780,886 $105,744 $ (339)(2) $ 886,291 $83,361
Cost of services.............. 549,323 66,355 (339)(2) 615,339 50,846
-------- ---------------- -------------- --------- -------- -------------
Gross profit.............. 231,563 39,389 270,952 32,515
-------- ---------------- -------------- --------- -------- -------------
Selling, general and
administrative expenses...... 154,169 31,967 186,136 22,936
Licensee commissions.......... 37,295 37,295 --
Amortization of intangibles... 6,884 1,803(3) 8,687 --
Interest expense, net......... 1,796 5,187(4) 6,983 (806)
-------- ---------------- -------------- --------- -------- -------------
200,144 31,967 6,990 239,101 22,130
-------- ---------------- -------------- --------- -------- -------------
Earnings before taxes..... 31,419 7,422 (6,990) 31,851 10,385
Taxes on earnings............. 13,892 269 (78)(5) 14,083 4,179
-------- ---------------- -------------- --------- -------- -------------
Net earnings.............. $17,527 $ 7,153 $ (6,912) $ 17,768 $ 6,206
-------- ---------------- -------------- --------- -------- -------------
-------- ---------------- -------------- --------- -------- -------------
Net earnings per common and
common equivalent shares..... $ 1.50 $ 0.61 $ (0.59) $ 1.52 $ 1.36
-------- ---------------- -------------- --------- -------- -------------
-------- ---------------- -------------- --------- -------- -------------
Weighted average shares
outstanding.................. 11,652 11,652 11,652 11,652 4,557 (547)(6)
-------- ---------------- -------------- --------- -------- -------------
-------- ---------------- -------------- --------- -------- -------------
<CAPTION>
PRO FORMA
COMBINED
-----------
<S> <C>
Revenues from services........ $969,652
Cost of services.............. 666,185
-----------
Gross profit.............. 303,467
-----------
Selling, general and
administrative expenses...... 209,072
Licensee commissions.......... 37,295
Amortization of intangibles... 8,687
Interest expense, net......... 6,177
-----------
261,231
-----------
Earnings before taxes..... 42,236
Taxes on earnings............. 18,262
-----------
Net earnings.............. $ 23,974
-----------
-----------
Net earnings per common and
common equivalent shares..... $ 1.53(7)
-----------
-----------
Weighted average shares
outstanding.................. 15,662(7)
-----------
-----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
52
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------
INTERIM
SERVICES PRO FORMA
DECEMBER 30, BRANDON ADJUSTMENTS -- PRO FORMA
1994 JANUARY 1, 1995 MERGER COMBINED
---------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues from services........................ $ 634,417 $ 70,279 $704,696
Cost of services.............................. 449,175 42,229 491,404
-------- ------- -------------- ------------
Gross profit.............................. 185,242 28,050 213,292
-------- ------- -------------- ------------
Selling, general and administrative
expenses..................................... 118, 390 19,469 137,859
Licensee commissions.......................... 33,796 -- 33,796
Amortization of intangibles................... 6,041 -- 6,041
Interest expense, net......................... 528 (416) 112
-------- ------- -------------- ------------
158,755 19,053 177,808
-------- ------- -------------- ------------
Earnings before taxes..................... 26,487 8,997 35,484
Taxes on earnings............................. 12,330 3,698 16,028
-------- ------- -------------- ------------
Net earnings.............................. $ 14,157 $ 5,299 $ 19,456
-------- ------- -------------- ------------
-------- ------- -------------- ------------
Net earnings per common and common equivalent
shares....................................... $ 1.24 $ 1.18 $ 1.26
-------- ------- -------------- ------------
-------- ------- -------------- ------------
Weighted average shares outstanding........... 11,427 4,505 (541)(6) 15,391(7)
-------- ------- -------------- ------------
-------- ------- -------------- ------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
53
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
INTERIM SERVICES BRANDON COMBINED
------------------------------------------ -------------- -----------------------------
DECEMBER 24, JANUARY 2, PRO FORMA
1993 AS 1994 ADJUSTMENTS -- PRO FORMA
HISTORICAL ADJUSTMENTS ADJUSTED HISTORICAL MERGER COMBINED
---------------- ------------ ---------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues from services............. $ 515,033 $ 515,033 $ 59,227 $ 574,260
Cost of services................... 366,045 366,045 35,994 402,039
-------- ------------ ---------- ------- ------- -------------
Gross profit................... 148,988 148,988 23,233 172,221
-------- ------------ ---------- ------- ------- -------------
Selling, general and administrative
expenses.......................... 101,980 101,980 17,783 119,763
Licensee commissions............... 20,586 20,586 -- 20,586
Amortization of intangibles........ 5,671 5,671 -- 5,671
Interest expense, net.............. 456 1,650(8) 2,106 (319) 1,787
-------- ------------ ---------- ------- ------- -------------
128,693 1,650 130,343 17,464 147,807
-------- ------------ ---------- ------- ------- -------------
Earnings before taxes............ 20,295 (1,650) 18,645 5,769 24,414
Taxes on earnings.................. 9,912 (677)(8) 9,235 2,329 11,564
-------- ------------ ---------- ------- ------- -------------
Net earnings..................... $ 10,383 $ (973) $ 9,410 $ 3,440 $ 12,850
-------- ------------ ---------- ------- ------- -------------
-------- ------------ ---------- ------- ------- -------------
Net earnings per common and common
equivalent shares................. $ 0.94 $ 0.78 $ 0.93(7)
---------- ------- ------- -------------
---------- ------- ------- -------------
Weighted average shares
outstanding....................... 10,000 4,401 (528)(6) 13,873(7)
---------- ------- ------- -------------
---------- ------- ------- -------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
54
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------
INTERIM
SERVICES
DECEMBER 29, BRANDON DECEMBER PRO FORMA PRO FORMA
1995 31, 1995 ADJUSTMENTS COMBINED
---------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................. $ 2,098 $ 1,927 $ 4,025
Marketable securities...................... -- 15,675 15,675
Receivables, less allowance for doubtful
accounts.................................. 129,861 13,348 143,209
Insurance deposits......................... 50,686 -- 50,686
Other current assets....................... 8,344 926 9,270
-------- -------- ---------------- ----------
Total current assets..................... 190,989 31,876 222,865
Intangible Assets, Net....................... 171,529 -- 171,529
Property and Equipment, Net.................. 24,173 2,955 27,128
Other Assets................................. 19,926 180 20,106
-------- -------- ---------------- ----------
$ 406,617 $ 35,011 $ 441,628
-------- -------- ---------------- ----------
-------- -------- ---------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks..................... $ 54,727 $ 54,727
Accounts payable and other accrued
expenses.................................. 25,021 $ 808 25,829
Accrued salaries, wages, and payroll
taxes..................................... 27,045 2,960 30,005
Accrued insurance.......................... 43,206 113 43,319
Dividend payable........................... -- 372 372
Accrued income taxes....................... 249 838 1,087
-------- -------- ---------------- ----------
Total current liabilities.............. 150,248 5,091 155,339
Long-term Obligations........................ 60,000 -- 60,000
Stockholders' Equity:
Preferred stock............................ -- --
Common stock............................... 115 448 $ (409)(9)(10) 154
Additional paid-in capital................. 79,950 6,567 $(1,396)(9)(10) 85,121
Unrealized gain on marketable securities... 26 26
Retained earnings.......................... 116,304 24,684 140,988
Less: Treasury shares(10).................. -- (1,805) 1,805 --
-------- -------- ---------------- ----------
Total stockholders' equity............. 196,369 29,920 -- 226,289
-------- -------- ---------------- ----------
$ 406,617 $ 35,011 $ -- $ 441,628
-------- -------- ---------------- ----------
-------- -------- ---------------- ----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
55
<PAGE>
INTERIM SERVICES INC. AND BRANDON SYSTEMS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(AMOUNT IN THOUSANDS, EXCEPT SHARE DATA)
(1) Represents the adjustment to reflect the results of the Acquisitions made
by Interim Services in the fiscal year ended December 29, 1995, as if the
Acquisitions occurred as of the beginning of the year.
(2) Reclassification of royalties as a result of repurchase of Interim
Services franchises.
(3) Adjustment to reflect additional amortization of goodwill on a straight
line basis over an average of 36 years for the Acquisitions described in
Note 1.
(4) Pro forma effect of interest charges on additional borrowings used to fund
the Acquisitions on Interim Services' lines of credit. Interest on these
facilities is computed, at Interim Services' option at either a bank's
base rate or LIBOR, plus the applicable margin. Based on these borrowings
a 0.125% increase in LIBOR would increase annual interest expense
approximately $125.
(5) To record aggregate tax effect of the pro forma adjustments.
(6) The weighted average shares outstanding have been adjusted to reflect the
conversion of Brandon Common Stock into 0.88 shares of Interim Common
Stock.
(7) Pro forma per share amounts are based on historical per share amounts
after giving effect to the pro forma adjustments described herein, and
converting each share of Brandon Common Stock into 0.88 shares of Interim
Common Stock.
(8) Prior to its January 27, 1994 IPO, Interim Services' working capital and
acquisition financing were provided by its former parent, H&R Block, Inc.
("Block"). Effective September 25, 1993, Block formalized its financing
arrangement by (i) providing a revolving credit facility in the amount of
$20,000 to fund operating requirements of Interim Services; (ii)
converting $30,000 of intercompany indebtedness on such date to a term
loan, and (iii) contributing $51,289 to the capital of Interim Services.
The consolidated statement of income data for the year ended December 24,
1993 gives effect to this arrangement as if it occurred at the beginning
of the period. Interest expense has been computed at 6% and income taxes
at the statutory rate.
(9) The Unaudited Pro Forma Combined Condensed Balance Sheet reflects the
conversion of Brandon Common Stock into Interim Common Stock at the
Exchange Ratio as provided by the Merger Agreement.
(10) On October 26, 1995, Brandon repurchased 100,000 shares of Brandon Common
Stock for $1,805. These shares will be cancelled as of the Effective Time
of the Merger per the Merger Agreement.
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<PAGE>
COMPARATIVE RIGHTS OF STOCKHOLDERS
As a result of the Merger, the stockholders of Brandon will become
stockholders of Interim Services. Both Brandon and Interim Services are
corporations incorporated under the laws of the State of Delaware. The Delaware
General Corporation Law ("DGCL") is the statute which governs Delaware
corporations. The following discussion is intended only to highlight certain
differences between the rights of corporate stockholders of Brandon and
corporate stockholders of Interim Services. These differences arise primarily
from differences between the Brandon Certificate of Incorporation, as restated
and amended (the "Brandon Certificate"), and the Brandon By-laws and Interim
Services' Certificate of Incorporation, as restated and amended (the "Interim
Certificate"), and the Interim Services By-laws, the governing instruments of
the two companies. This discussion is not and does not purport to be complete or
to identify all differences that may, under given fact situations, be material
to stockholders. For a definitive treatment of the subject matter, stockholders
of Brandon are referred to the Certificate of Incorporations and By-laws of
Brandon and Interim Services which are on file with the Commission. SEE
"AVAILABLE INFORMATION."
SIZE AND CLASSIFICATION OF DIRECTORS
The Brandon Certificate and Brandon By-laws provide that the Brandon Board
shall be comprised of not less than three nor more than twelve members, as
determined by the Brandon Board. As is permitted by the DGCL, the Brandon Board
is classified into three classes which are to be as nearly equal in number as is
possible. The number of directors assigned to each class is determined by the
Brandon Board prior to the election of a particular class. Directors in each
class serve for a term of three years. Elections are staggered such that one
class is elected each year.
The Interim Certificate and Interim Services By-laws provide that the number
of directors to constitute the Interim Board shall be the number as fixed by a
resolution adopted by the holders of a majority of the outstanding shares
entitled to vote thereon or by a majority of the whole Interim Board, but is
fixed at nine until otherwise determined. Like the Brandon Board, the Interim
Board is classified into three classes, and the directors are elected in
staggered terms.
REMOVAL OF DIRECTORS
The Brandon Certificate and By-laws provide that any director may be removed
with or without cause, but in the latter case only upon the affirmative vote of
the holders of two-thirds of all classes of stock then entitled to vote in
elections of directors. Likewise, the Interim Certificate provides that any
director may be removed at any time, but only by the affirmative vote of the
holders of two-thirds or more of the outstanding shares of each class of stock
entitled to elect one or more directors at a meeting of the stockholders called
for such purpose.
STOCKHOLDER MEETINGS
Under the Brandon By-laws, annual meetings of stockholders will be held on
such date, time and place as may be designated by the Brandon Board, or on the
second Tuesday in January of each year if no designation is made. A stockholder
who wants to present a proposal or nominate a person for election as director at
any meeting must give notice thereof to the Secretary at Brandon's principal
executive office not less than 60 nor more than 90 days prior to the date of the
meeting, unless the date of the meeting is first announced or disclosed less
than 70 days prior to the date of the meeting, in which case notice must be
given not more than ten days after the date the meeting is so announced or
disclosed. Such stockholder notice regarding a proposal must be accompanied by
the text of the proposal, a brief written statement of the reasons why such
stockholder favors the proposal and setting forth the name and address, the
number and class of all shares of each class of stock of Brandon beneficially
owned by such stockholder and any material interest of such stockholder in the
proposal. Any stockholder notice regarding a nomination of any person as a
director must be accompanied by 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 Brandon 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
57
<PAGE>
the Commission, such person's signed consent to serve as a director of Brandon
if elected, such stockholder's name and address and the number and class of all
shares of each class of stock beneficially owned by such stockholder.
The Interim Services By-laws provide that the annual meeting of the
stockholders will be held on the second Thursday of May of each year at Interim
Services' office in Fort Lauderdale, Florida, or at such other time and place as
may be designated by the Interim Board. The stockholder notice necessary to
present a proposal or nominate a person for election as director differs from
that required by the Brandon By-laws in that the stockholder must give notice to
the Secretary not less than 50 days nor more than 75 days prior to the meeting,
unless fewer than 65 days' notice or prior public disclosure of the date of the
meeting is given or made to the stockholders, in which case notice by the
stockholder must be given not later than the close of business on the 15th day
following the day on which such notice or public disclosure of the meeting was
made. The information required to be presented in a stockholder notice regarding
a proposal is essentially the same as that required of a stockholder of Brandon.
However, the Interim Services By-laws do not specifically state the requirements
for the contents of a stockholder notice regarding the nomination of a person as
a director.
ACTION BY CONSENT OF STOCKHOLDERS
Pursuant to the Brandon Certificate, any action required or permitted to be
taken at an annual or special meeting of the stockholders must be taken only at
such meeting and may not be taken by the written consent of the stockholders in
lieu of a meeting.
Since Interim Common Stock is registered under the Exchange Act, as amended,
like Brandon, any action taken at such annual or special meeting of stockholders
must be taken at such meeting and a written consent of stockholders is not
allowed. However, if for any reason, Interim Services no longer has a class of
stock registered under the Exchange Act, unlike Brandon, any action required to
be taken at any annual or special meeting of the stockholders would be allowed
to be taken without a meeting, without prior notice, and without a vote, if
consent in writing setting forth the action taken is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
PREEMPTIVE RIGHTS
Delaware law does not provide for preemptive rights to acquire a
corporation's unissued stock. However, such right may be expressly granted to
the stockholders in the corporation's certificate of incorporation. Neither the
Brandon Certificate nor the Interim Certificate provides for preemptive rights.
AMENDMENTS TO CERTIFICATE AND BY-LAWS
The Brandon Certificate and By-laws may be amended, altered or repealed from
time to time by a stockholder vote; provided, however, that the vote of the
holders of two-thirds of all classes of stock entitled to vote in elections of
directors is required to amend, alter, change or repeal the following: (1) the
provision in the Brandon Certificate addressing the procedures for removal of
directors; (2) the provision in the Brandon Certificate precluding action by
written consent of the stockholders in lieu of a meeting, and addressing who may
call a stockholder meeting; (3) the provision in the Brandon Certificate stating
the requisite votes necessary in order to authorize various business
combinations and transfers of assets and capital stock and dissolution of the
corporation; (4) the provision in the Brandon Certificate addressing the number
and election of directors and classes of directors; and (5) the provision in the
Brandon Certificate addressing the rights and preferences of the Brandon
Preferred Stock.
Like Brandon, Interim Services requires a two-thirds vote to amend, alter or
repeal the provision addressing the number and election of directors and the
procedures for removal of directors. However, unlike Brandon, Interim Services
also requires such two-thirds vote to amend alter or repeal the following
provisions in the Interim Certificate and By-laws: (1) any provision in the
Interim Services
58
<PAGE>
By-laws; (2) the provision in the Interim Certificate addressing the
corporation's authorized capital stock including the respective rights of the
holders thereof; and (3) the provision describing the procedures for calling and
conducting special meetings of the stockholders.
BUSINESS COMBINATIONS
Except as described below, to effectuate a "Business Combination," the
Brandon Certificate requires the affirmative vote of both (i) at least 80% of
the votes entitled to be cast, and (ii) at least two-thirds of the votes
entitled to be cast, excluding shares owned by an "Interested Stockholder." The
Brandon Certificate defines "Interested Stockholder" as any person who (i) is
the beneficial owner of at least 10% of the votes entitled to be cast, or (ii)
is an affiliate or associate of Brandon and at any time within the two-year
period immediately prior to the date in question, was the beneficial owner of at
least 10% of the votes entitled to be cast. "Business Combination" is generally
defined in the Brandon Certificate as follows: (1) any merger or consolidation
of Brandon with an Interested Stockholder; (2) any disposition of securities or
assets of Brandon with or for the benefit of an Interested Stockholder having an
aggregate value of more than 5% of the book value of the total consolidated
assets of Brandon or more than 5% of the stockholders equity of the entity in
question; (3) the adoption of a plan or proposal for the liquidation or
dissolution of Brandon which is consented to by any Interested Stockholder; (4)
any transaction that has the effect of increasing the proportionate share of any
class or series of capital stock that is beneficially owned by an Interested
Stockholder; or (5) the receipt by any Interested Stockholder of the benefit of
any financial benefits provided by Brandon.
The supermajority stockholder vote is not required, however, if either of
the following two conditions is met: (1) the Business Combination is approved by
a majority of those directors who are not affiliates, associates or
representatives of the Interested Stockholder and were not directors prior to
the time that the Interested Stockholder became an Interested Stockholder; or
(2) the aggregate amount of cash and the "Fair Market Value" of the
consideration other than cash to be received per share by the holders of Brandon
Common Stock meets or exceeds the highest of the following four figures, as
adjusted for any stock splits, stock dividends, subdivision, or reclassification
of the Brandon Common Stock: (i) the highest price paid by the Interested
Stockholder for a share of Brandon's stock in the two-year period preceding the
announcement of the proposed Business Combination (the "Announcement Date") or
the per share price paid by the Interested Stockholder in the transaction in
which it attained 10% ownership, if higher; (ii) the higher of the Fair Market
Value of Brandon's stock on the Announcement Date or on the date on which the
Interested Stockholder attained 10% ownership (the "Determination Date"); (iii)
the Fair Market Value determined under (ii) multiplied by the ratio of (x) the
highest price paid by the Interested Stockholder for a share of Brandon Common
Stock within the two-year period preceding the Announcement Date over (y) the
price paid by the Interested Stockholder for its first share of Brandon stock
during that same two-year period; or (iv) Brandon's net income per share for the
four fiscal quarters preceding the Announcement Date multiplied by the higher of
(x) the Interested Stockholder's price/earnings multiple on the Announcement
Date or (y) Brandon's highest price/earnings multiple in the two-year period
preceding the Announcement Date. "Fair Market Value" of stock is defined as the
highest closing sale price of the stock during the 30 day period immediately
preceding the date in question. Similar minimum price requirements apply to the
consideration to be received by holder of any other class of Brandon stock. In
addition to the minimum price requirements set forth above, condition (2) is not
satisfied unless certain conditions are met relating to the form of
consideration, the declaration and payment of dividends, the receipt of
financial assistance by the Interested Stockholder from Brandon, and the
circulation of information relating to the proposed Business Combination to
Brandon stockholders.
Unlike Brandon, Interim Services defers to the DGCL with respect to business
combinations between Interim Services and interested stockholders of Interim
Services as opposed to stating particular provisions in its Certificate of
Incorporation. The DGCL defines "Interested Stockholder" as those persons owning
at least 15% (as opposed to 10% as provided for in the Brandon Certificate) of
the outstanding voting stock. The DGCL also excludes from the definition of
"Interested Stockholder": (1) any person who owned shares in excess of 15% as
of, or acquired such shares pursuant to a
59
<PAGE>
tender offer commenced prior to, December 23, 1987, or pursuant to an exchange
offer announced prior to December 23, 1987, and commenced within 90 days
thereafter and continued to own shares in excess of 15% or would have but for
action by Interim Services; or (2) any person whose ownership of shares in
excess of 15% is the result of action taken solely by Interim Services, unless
the person acquires additional shares of voting stock thereafter. The definition
of "Business Combination" in the DGCL is substantially similar to the definition
in the Brandon Certificate, with the exception of the following main
differences: (1) the DGCL includes within the definition of "Business
Combination" the disposition of assets to an Interested Stockholder which have
an aggregate value of at least 10% of the market value of the Interim Services'
total assets, as opposed to 5% of the book value of total assets as provided for
in the Brandon Certificate; and (2) the DGCL does not have a comparable
provision to that of Brandon which includes the adoption of a plan or proposal
for the liquidation or dissolution of the corporation which is consented to by
any Interested Stockholder within the definition of "Business Combination."
Unlike the Brandon Certificate, the DGCL places limitations on Business
Combinations only for the three-year period following the date that a
stockholder became an Interested Stockholder. During this three-year period,
Interim Services may not engage in any Business Combination with any Interested
Stockholder unless one of the following three conditions is satisfied: (1) prior
to the date that such Interim Services stockholder became an Interested
Stockholder, the Interim Board approved either the Business Combination or the
transaction which resulted in the Interim Services stockholder becoming an
Interested Stockholder; (2) upon consummation of the transaction which resulted
in the Interim Services stockholder becoming an Interested stockholder, the
Interested Stockholder owned at least 85% of the voting stock of Interim
Services, excluding shares owned (i) by persons who are directors and also
officers and (ii) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (3) the Business
Combination is approved by the Interim Board and authorized at an annual or
special meeting, and not by written consent, by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by the Interested
Stockholder.
SHAREHOLDER RIGHTS PLAN
Interim Services has in place a stockholder rights plan designed to deter
coercive or unfair takeover tactics and to prevent a potential acquirer from
gaining control of Interim Services without offering a fair price. SEE
"INFORMATION ABOUT INTERIM SERVICES -- DESCRIPTION OF INTERIM SERVICES CAPITAL
STOCK."
Brandon has no comparable stockholder rights plan in place.
DIVIDEND POLICY
Brandon has traditionally distributed quarterly dividends with respect to
shares of Brandon Common Stock issued and outstanding.
No dividend or other distribution with respect to Interim Common Stock has
ever been paid by Interim Services. Interim Services currently intends to retain
any earnings for use in its business and does not anticipate paying any cash
dividends in the foreseeable future.
AUTHORIZED CAPITAL STOCK
The Brandon Certificate provides that the corporation has the authority to
issue 11,000,000 shares of stock, consisting of 10,000,000 shares of Brandon
Common Stock and 1,000,000 shares of Brandon Preferred Stock. The Brandon
Certificate expressly provides that the corporation has the authority to issue
fractional shares. The Interim Certificate provides that the corporation has the
authority to issue 27,500,000 shares of stock, consisting of 25,000,000 shares
of Interim Common Stock and 2,500,000 shares of Interim Preferred Stock. In each
case, the Preferred Stock is "blank-check" preferred stock, in which the Brandon
Board and Interim Board can authorize issuance of shares without further
stockholder consent, and set the terms, conditions, preferences and rights of
such preferred stock.
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LEGAL MATTERS
On the Closing Date, Bryan Cave LLP will render the opinion referred to
under "THE MERGER -- CERTAIN FEDERAL INCOME TAX MATTERS." Bryan Cave LLP
represents Interim Services with respect to the Merger. Bryan Cave LLP does not
represent the individual stockholders of Interim Services in connection with the
Merger and the transactions contemplated thereby, and such persons are advised
to seek the advice of their own counsel. Additionally, Bryan Cave LLP has
rendered an opinion that the shares of Interim Common Stock to be issued in the
Merger, when issued pursuant to the terms of the Merger Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
EXPERTS
The consolidated financial statements and related financial statement
schedule included in Interim Services' Annual Report on Form 10-K for the year
ended December 29, 1995 incorporated in this Proxy Statement/Prospectus by
reference have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and related financial statement
schedule included in Brandon's Annual Report on Form 10-K for the year ended
October 1, 1995, incorporated by reference in this Proxy Statement/Prospectus,
have been incorporated herein by reference in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
Interim Services and Brandon are each subject to the informational
requirements of the Exchange Act and, in accordance therewith, file reports,
proxy statements and other information with the Commission. The reports, proxy
statements and other information filed by Interim Services and Brandon with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and should be available at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Interim Common Stock is listed
on The Nasdaq Stock Market under the symbol "INTM." Copies of the reports, proxy
statements and other information filed by Interim Services with the Commission
can also be inspected and copied at the offices of The Nasdaq Stock Market at
1735 K Street, N.W., Washington, D.C. 20006-1500. Brandon Common Stock is listed
on American Stock Exchange under the symbol "BRA." Copies of the reports, proxy
statements and other information filed by Brandon with the Commission can also
be inspected and copied at the offices of the American Stock Exchange at 86
Trinity Place, New York, New York 10006-1881.
Interim Services has filed with the Commission the Registration Statement
under the Securities Act, with respect to the securities of Interim Services to
be issued pursuant to the Merger. This Proxy Statement/Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto, certain parts of which were omitted as permitted by the rules
and regulations of the Commission. Such additional information may be obtained
from the Commission's principal office in Washington, D.C. Statements contained
in this Proxy Statement/Prospectus or in any document incorporated in this Proxy
Statement/Prospectus by reference as to the content of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Interim Services (File
No. 0-23198) are incorporated by reference in this Proxy Statement/Prospectus:
1. Interim Services' Annual Report on Form 10-K for the fiscal year
ended December 29, 1995 ("Interim Services' 10-K").
2. Those portions of Interim Services' annual report to security
holders for the twelve months ended December 29, 1995 which are incorporated
by reference into Interim Services' 10-K.
3. Those portions of the Interim Services' definitive proxy statement
filed in connection with Interim Services' 1996 Annual Meeting of
Stockholders.
4. Interim Services' Current Report on Form 8-K/A filed on February 2,
1996; and
5. The descriptions of Interim Common Stock set forth in the Interim
Registration Statement pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such description.
The following documents filed with the Commission by Brandon (File No.
0-15312) are incorporated by reference in this Proxy Statement/Prospectus:
1. Brandon's Annual Report on Form 10-K for the fiscal year ended
October 1, 1995 ("Brandon's 10-K").
2. Those specified portions of Brandon's annual report to security
holders for the twelve months ended October 1, 1995 which are incorporated
by reference into Brandon's 10-K.
3. Brandon's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1995.
4. Brandon's Current Report on Form 8-K filed on December 28, 1995.
5. The descriptions of Brandon Common Stock set forth in Brandon's
Registration Statement pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such description.
All documents filed by Interim Services or Brandon with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Proxy Statement/ Prospectus and prior to the earlier of (i) the
date of the last to be held of the Special Meetings, or (ii) the termination of
the Merger Agreement, are hereby deemed to be incorporated by reference into
this Proxy Statement/Prospectus and to be part hereof from the date of filing of
such documents. SEE "AVAILABLE INFORMATION." Any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
herein by reference, which statement is also incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS
(EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE INTO THE INFORMATION INCORPORATED HEREIN) WILL BE PROVIDED BY FIRST
CLASS MAIL WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS
IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, WITH RESPECT TO INTERIM SERVICES
DOCUMENTS, TO JOHN B. SMITH, ESQ., SENIOR VICE PRESIDENT, SECRETARY AND GENERAL
COUNSEL, INTERIM SERVICES INC., 2050 SPECTRUM BOULEVARD, FORT LAUDERDALE,
FLORIDA 33309, OR WITH RESPECT TO BRANDON DOCUMENTS, TO PATRICIA G. BYRNES,
ESQ., GENERAL COUNSEL, BRANDON SYSTEMS CORPORATION, 9 POLITO AVENUE, LYNDHURST,
NEW JERSEY 07071. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO
THE SPECIAL MEETINGS ANY REQUEST SHOULD BE MADE BY MAY 15, 1996.
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND
PLAN OF MERGER
BY
AND
AMONG
INTERIM SERVICES INC.
BRANDON SYSTEMS CORPORATION
AND
DELCO MERGER CORP.
DATED: FEBRUARY 27, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated February 27, 1996 (this
"Agreement"), is by and among INTERIM SERVICES INC. ("Interim"), a Delaware
corporation, BRANDON SYSTEMS CORPORATION ("Brandon"), a Delaware corporation,
and DELCO MERGER CORP. ("Merger Sub"), a Delaware corporation and the
wholly-owned subsidiary of Interim.
WHEREAS, Interim and Brandon desire to combine their respective businesses
and Interim's and Brandon's Board of Directors each has determined, based upon
the terms and conditions hereinafter set forth, that the combination is in the
best interests of their respective companies and their respective stockholders;
and
WHEREAS, the combination will be accomplished by merging Merger Sub with and
into Brandon with Brandon surviving and Brandon stockholders receiving the
consideration hereinafter set forth; and
WHEREAS, the Boards of Directors of Brandon, Interim and Merger Sub have
duly adopted and approved this Agreement and the Boards of Directors of Brandon
and Interim have directed that it be submitted to their respective stockholders
for approval, the approval of Merger Sub's sole stockholder having been
obtained;
WHEREAS, to induce Interim to enter into this Agreement and incur the
obligations set forth herein, concurrently with the execution and delivery of
this Agreement, the principal stockholder of Brandon has granted an irrevocable
proxy (the "Stockholder's Proxy") to designees of Interim, pursuant to which,
among other things, such designees have the right to vote the principal
stockholder's shares in favor of the Merger;
NOW, THEREFORE, intending to be legally bound, the parties hereto hereby
agree as follows:
ARTICLE I -- THE MERGER
1.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as hereafter defined), Merger Sub shall be merged with and
into Brandon (the "Merger") in accordance with the Delaware General Corporation
Law (the "GCL") and Brandon shall be the surviving corporation (the "Surviving
Corporation"). The name of the Surviving Corporation shall be BRANDON SYSTEMS
CORPORATION.
1.2. EFFECT OF THE MERGER. At the Effective Time, the Surviving
Corporation shall be considered the same business and corporate entity as each
of Brandon and Merger Sub and thereupon and thereafter, all the property,
rights, privileges, powers and franchises of each of Brandon and Merger Sub
shall vest in the Surviving Corporation and the Surviving Corporation shall be
subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of Brandon and Merger Sub and shall have
succeeded to all of each of their relationships, as fully and to the same extent
as if such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Corporation. In addition, any reference to either of Brandon or
Merger Sub in any contract or document, whether executed or taking effect before
or after the Effective Time, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract or
document; and any pending action or other judicial proceeding to which either of
Brandon or Merger Sub is a party, shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to final judgment,
order or decree in the same manner as if the Merger had not been made; or the
Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of Brandon or Merger Sub if
the Merger had not occurred.
1.3. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation.
<PAGE>
1.4. BY-LAWS. The By-Laws of Merger Sub as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation.
1.5. DIRECTORS AND OFFICERS. As of the Effective Time, the officers of
Brandon shall become officers of the Surviving Corporation, subject to such
changes or additions as Brandon and Interim shall mutually agree upon prior to
the Effective Time. As of the Effective Time, the directors of Merger Sub shall
become directors of the Surviving Corporation. One current director of Brandon
shall be appointed to the Board of Directors of Interim, as set forth in Section
6.3(d).
1.6. EFFECTIVE TIME AND CLOSING. A closing (the "Closing") shall take
place as soon as practicable after satisfaction or waiver of the conditions set
forth in Article VI (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), but in no event later
than five (5) business days thereafter (the "Closing Date") at such place as
Interim and Brandon shall mutually agree. At the Closing, Interim and Brandon
shall cause the Merger to be consummated by filing with the Secretary of State
of the State of Delaware a certificate of merger (the "Certificate of Merger")
in such form as is required by, and executed in accordance with, this Agreement
and the relevant provisions of the GCL (the date and time of such filing being
referred to herein as the "Effective Time"). As promptly as practicable
following the Effective Time, a copy of the Certificate of Merger shall be
recorded in the office of the recorder of deeds of the county of the State of
Delaware in which the registered office of the Surviving Corporation is located.
ARTICLE II -- CONVERSION OF BRANDON SHARES
2.1. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders thereof:
(a) CANCELLED SHARES. Each share of common stock, par value $0.10 per
share, of Brandon ("Brandon Common Stock") which are held by Brandon as
treasury shares, and any shares of Brandon common Stock held by Interim,
Merger Sub or any other direct or indirect subsidiary of Interim, shall be
cancelled.
(b) SHARES TO BE EXCHANGED; EXCHANGE RATIO. Each remaining outstanding
share of Brandon Common Stock shall be converted into the right to receive
0.88 shares (as the same may be adjusted as provided herein, the "Exchange
Ratio") of common stock, par value $.01 per share, of Interim ("Interim
Common Stock"). No fractional shares of Interim Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.2(e).
(c) SHARES OF MERGER SUB. Each issued and outstanding share of capital
stock of Merger Sub shall be converted into one validly issued, fully paid
and non-assessable share of capital stock of the Surviving Corporation.
2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Interim shall deposit, or
shall cause to be deposited, with a bank or trust company designated by Interim
and reasonably acceptable to Brandon (the "Exchange Agent"), for the benefit of
the holders of shares of Brandon Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, certificates evidencing shares of
Interim Common Stock and cash in such amount that the Exchange Agent possesses
such number of shares of Interim Common Stock and such amount of cash as are
required to provide all of the consideration required to be exchanged by Interim
pursuant to the provisions of this Article II (such certificates for shares of
Interim Common Stock, together with any dividends or distributions with respect
thereto, and cash being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Interim
Common Stock and cash out of the Exchange Fund in accordance with Section 2.1.
Except as contemplated by Section 2.2(f) hereof, the Exchange Fund shall not be
used for any other purpose.
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(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Interim will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Brandon Common Stock (the
"Certificates"): (i) a letter of transmittal (which is reasonably agreed to by
Interim and Brandon and shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to and receipt by the Exchange Agent and shall be in such form
and have such other provisions as Interim may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing shares of Interim Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole shares of Interim Common Stock which such holder has the right to
receive in respect of the shares of Brandon Common Stock formerly evidenced by
such Certificate in accordance with Section 2.1, (B) cash in lieu of fractional
shares of Interim Common Stock to which such holder may be entitled pursuant to
Section 2.2(e) and (C) any dividends or other distributions to which such holder
is entitled pursuant to Section 2.2(c), (the shares of Interim Common Stock,
dividends, distributions and cash described in clauses (A), (B) and (C) being
collectively, the "Merger Consideration") and the Certificates so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
of Brandon Common Stock which is not registered in the transfer records of
Brandon, a certificate evidencing the proper number of shares of Interim Common
Stock may be issued in accordance with this Article II to a transferee if the
Certificate evidencing such shares of Brandon Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Interim or the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF INTERIM COMMON
STOCK. No dividends or other distributions declared or made after the Effective
Time with respect to Interim Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Interim Common Stock evidenced thereby, and no other part of
the Merger Consideration shall be paid to any such holder, until the holder of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates evidencing shares of Interim Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional share of Interim Common Stock to which
such holder may have been entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such shares of Interim Common Stock and (ii) at
the appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to surrender and a payment
date occurring after surrender, payable with respect to such shares of Interim
Common Stock. No interest shall be paid on the Merger Consideration.
(d) NO FURTHER RIGHTS IN BRANDON COMMON STOCK. All shares of Interim
Common Stock (and other Merger Consideration) issued upon conversion of the
shares of Brandon Common Stock in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Brandon Common Stock.
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<PAGE>
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing fractional
shares of Interim Common Stock shall be issued upon the surrender for exchange
of Certificates and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Interim. Cash shall be paid
in lieu of fractional shares of Interim Common Stock, based upon the Median Pre-
Closing Price per whole share of Interim Common Stock. The "Median Pre-Closing
Price" shall mean the Median Price of Interim Common Stock calculated based upon
the Closing Price of Interim Common Stock during the first 20 of the 25
consecutive trading days immediately preceding the date of the Closing. The
"Closing Price" shall mean the last reported sale price of Interim Common Stock
on The Nasdaq Stock Market (formerly known as the Nasdaq National Market System)
and published in The Wall Street Journal. The "Median Price" shall be determined
by taking the average of the Closing Prices left after discarding the seven
lowest and seven highest Closing Prices in the 20-day period. A "trading day"
shall mean a day for which a Closing Price is so published.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of Brandon Common Stock for six months
after the Effective Time shall be delivered to Interim, upon demand, and,
subject to Section 2.2(g), any holders of Brandon Common Stock who have not
theretofore complied with this Article II shall thereafter look only to Interim
for the Merger Consideration to which they are entitled.
(g) NO LIABILITY. Interim shall not be liable to any holder of shares of
Brandon Common Stock for any such shares of Interim Common Stock (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. Interim shall be entitled to deduct and withhold,
or cause the Exchange Agent to deduct and withhold, from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Brandon
Common Stock the minimum amounts (if any) that Interim is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Interim, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Brandon Common Stock in respect of
which such deduction and withholding was made by Interim.
2.3. ADJUSTMENTS TO EXCHANGE RATIO AND MEDIAN PRE-CLOSING PRICE
ADJUSTMENTS. If between the date of this Agreement and the Effective Time the
outstanding shares of Interim Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, stock split, reclassification, recapitalization, combination or
exchange of shares, the Exchange Ratio and the Median Pre-Closing Price each
shall be correspondingly adjusted to reflect such stock dividend, stock split,
reclassification, recapitalization, combination or exchange of shares. The
parties shall mutually agree upon such adjustment in writing or, if unable to
agree, shall arbitrate the dispute, using a mutually agreed upon arbitrator
whose decision shall be final and non-appealable.
2.4. CLOSING OF BRANDON'S TRANSFER BOOKS. Upon the Effective Time, the
stock transfer books of Brandon shall be closed and no transfer of shares of
Brandon Common Stock (other than shares into which the capital stock of Merger
Sub is to be converted pursuant to the Merger) shall thereafter be made. After
the Effective Time, any Certificates presented to the Exchange Agent or Interim
for any reason shall be converted into the Merger Consideration.
2.5. BRANDON STOCK OPTIONS. Interim agrees to honor each Brandon Stock
Option (as defined in Section 3.2) to purchase shares of Brandon Common Stock,
in accordance with the terms set forth in Section 3.2 of the Brandon Disclosure
Schedule with respect to the optionee, number of shares subject to option and
exercise price. At the Effective Time, each option shall be converted into an
option to purchase Interim Common Stock, wherein (x) the right to purchase
shares of Brandon Common Stock pursuant to the Brandon Stock Option shall be
converted into the right to purchase that same number of shares of Interim
Common Stock multiplied by the Exchange Ratio, (y) the option exercise price per
share of Interim Common Stock shall be the previous option exercise price per
share of the Brandon Common Stock divided by the Exchange Ratio and (z) in all
other material
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respects the option shall be subject to the same terms and conditions as
governed the Brandon Stock Option on which it was based, including the length of
time within which the option may be exercised and for any options which are
"incentive stock options" (as defined in Section 422 of the Code), the
adjustments shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
2.6. MERGER SUB COMMON STOCK. The shares of Merger Sub Common Stock
outstanding or held in treasury immediately prior to the Effective Time shall
not be affected by the Merger but shall be converted into the same number of
shares of the Surviving Corporation without further action.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF BRANDON
References herein to the "Brandon Disclosure Schedule" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and subsections of Article III of this
Agreement, which have been delivered on the date hereof by Brandon to Interim.
Brandon hereby represents and warrants to Interim as follows:
3.1. CORPORATE ORGANIZATION.
(a) Brandon is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Brandon has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of Brandon and its Subsidiaries taken
as a whole. The Brandon Disclosure Schedule lists each state in which Brandon is
qualified to do business as a foreign corporation. When used with reference to
Brandon, the term "Subsidiary" means any corporation, partnership, joint venture
or other legal entity in which Brandon, directly or indirectly, owns at least a
50% stock or other equity interest or for which Brandon, directly or indirectly,
acts as a general partner.
(b) All Subsidiaries of Brandon and the percentage of voting securities of
each subsidiary held by Brandon are listed on the Brandon Disclosure Schedule.
Each Brandon Subsidiary is duly organized and validly existing and in good
standing under the laws of its state of incorporation. Each Brandon Subsidiary
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of Brandon and its
Subsidiaries, taken as a whole. The Brandon Disclosure Schedule sets forth true
and complete copies of the Certificate of Incorporation and By-laws, as in
effect on the date hereof, of Brandon and each of its Subsidiaries. Except as
set forth in the Brandon Disclosure Schedule, Brandon does not own or control,
directly or indirectly, any equity interest in any corporation, company,
association, partnership, joint venture or other entity.
3.2. CAPITALIZATION. The authorized capital stock of Brandon consists of
10,000,000 shares of Brandon Common Stock and 1,000,000 shares of preferred
stock, par value $1.00 per share ("Brandon Preferred Stock"). As of the date
hereof, there are 4,395,631 shares of Brandon Common Stock issued and
outstanding and 100,000 shares of Brandon Common Stock held in treasury. No
shares of Brandon Preferred Stock are issued and outstanding. As of the date
hereof, there are 236,400 shares of Brandon Common Stock issuable upon exercise
of outstanding stock options. Brandon Disclosure Schedule 3.2 sets forth all
options which may be exercised for issuance of Brandon Common Stock and the
terms upon which the options may be exercised ("Brandon Stock Options"). The
Brandon Disclosure Schedule sets forth true and complete copies of the option
plans and grant agreements
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pursuant to which the Brandon Stock Options were granted and a true and complete
list of each outstanding Brandon Stock Option. All issued and outstanding shares
of Brandon Common Stock, and all issued and outstanding shares of capital stock
of each of its Subsidiaries, have been duly authorized and validly issued, are
fully paid, and nonassessable. All of the outstanding shares of capital stock of
each Brandon Subsidiary are owned by Brandon and are free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except as
disclosed in the Brandon Disclosure Schedule, neither Brandon nor any of its
Subsidiaries has granted nor is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase, subscription or issuance of any shares of capital stock of
Brandon or any of its Subsidiaries or any securities representing the right to
purchase, subscribe or otherwise receive any shares of such capital stock or any
securities convertible into any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
3.3. AUTHORITY; NO VIOLATION.
(a) Except for: (i) the requisite approval of the stockholders of Brandon
and the applicable requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act") in connection with obtaining such approval; (ii) the
pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); and (iii) filing and
recordation of the Certificate of Merger as required by the GCL (collectively,
the "Brandon Approvals"), no consents or approvals of or filings or
registrations with or notices to any third party or any public body or authority
are necessary on behalf of Brandon in connection with (x) the execution and
delivery by Brandon of this Agreement and (y) the consummation by Brandon of the
Merger and the other transactions contemplated hereby. Subject to receipt of the
Brandon Approvals, Brandon has the full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby in accordance with the terms hereof. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Brandon in accordance
with the Certificate of Incorporation of Brandon and applicable laws and
regulations. Except for the Brandon Approvals, no other corporate proceedings on
the part of Brandon are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Brandon and constitutes valid and binding obligations of Brandon enforceable
against Brandon in accordance with its terms. The Board of Directors of Brandon
also has approved the transactions contemplated by this Agreement and the
Stockholder's Proxy so as to render inapplicable thereto the provisions of
Section 203 of the GCL or any other "business combination," "moratorium,"
"control share" or other antitakeover statute or regulation or provision of
Brandon's Certificate of Incorporation or By-laws.
(b) Neither the execution and delivery of this Agreement by Brandon, nor the
consummation by Brandon of the transactions contemplated hereby in accordance
with the terms hereof, nor compliance by Brandon with any of the terms or
provisions hereof, will (i) assuming the Brandon Approvals are duly obtained,
violate any provision of Brandon's Certificate of Incorporation or By-laws, (ii)
assuming that the Brandon Approvals are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Brandon, any of its Subsidiaries, or any of their respective
properties or assets, or (iii) except as set forth in the Brandon Disclosure
Schedule, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of Brandon or its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Brandon or any of
its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not
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have a material adverse effect on the business, operations, assets, financial
condition or prospects of Brandon and its Subsidiaries, taken as a whole, and
which will not prevent or delay the consummation of the transactions
contemplated hereby.
3.4. FINANCIAL STATEMENTS.
(a) The Brandon Disclosure Schedule sets forth copies of: (i) the
consolidated balance sheets of Brandon as of October 1, 1995 and October 2,
1994, and the consolidated statements of income, shareholders' equity and cash
flows for the periods ended October 1, 1995, October 2, 1994 and October 3,
1993, in each case accompanied by the audit report of Coopers & Lybrand L.L.P.
("Coopers"), independent public accountants with respect to Brandon, and (ii)
the unaudited consolidated balance sheets of Brandon as of December 31, 1995 and
December 31, 1994 and the unaudited consolidated statements of income,
shareholders' equity and cash flows for the three months ended December 31, 1995
and December 31, 1994, as reported in Brandon's Quarterly Report on Form 10-Q,
filed with the SEC under the 1934 Act (collectively, the "Brandon Financial
Statements"). The Brandon Financial Statements (including the related notes)
have been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved (except as may be
indicated therein or in the notes thereto), and present fairly the consolidated
financial position of Brandon and its Subsidiaries as of the respective dates
set forth therein, and the consolidated results of Brandon's and its
Subsidiaries' operations and their cash flows for the respective periods set
forth therein in accordance with GAAP.
(b) The books and records of Brandon and its Subsidiaries are being
maintained in material compliance with applicable legal and accounting
requirements.
(c) Except as and to the extent reflected, disclosed or reserved against in
the Brandon Financial Statements (including the notes thereto), as of October 1,
1995, neither Brandon nor any of its Subsidiaries had any liabilities, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets, financial condition or prospects of Brandon and its
Subsidiaries taken as a whole, which were required by GAAP (consistently
applied) to be disclosed in Brandon's consolidated financial statements as of
October 1, 1995 or the notes thereto as filed with Brandon's Form 10-K. Since
October 1, 1995, Brandon and its Subsidiaries have not incurred any liabilities
except in the ordinary course of business and consistent with past practice,
except as related to the transactions contemplated by this Agreement.
3.5. BROKER'S AND OTHER FEES. Except for Goldman, Sachs & Co. ("Goldman
Sachs"), neither Brandon nor any of its Subsidiaries nor any of their directors
or officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement. Brandon's agreement with Goldman
Sachs is set forth in the Brandon Disclosure Schedule. There are no fees (other
than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by Brandon or any of its
Subsidiaries.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Section 3.6 of the Brandon Disclosure Schedule,
there has not been any material adverse change in the business, operations,
assets or financial condition of Brandon and its Subsidiaries, taken as a whole,
since October 1, 1995 and to the best of Brandon's knowledge, no facts or
condition exists which Brandon believes will cause such a material adverse
change in the future.
(b) Except as set forth in the Brandon Disclosure Schedule, neither Brandon
nor any of its Subsidiaries has taken or permitted any of the actions set forth
in Section 5.2(a) hereof between October 1, 1995 and the date hereof and, except
for execution of this Agreement, Brandon has conducted its business only in the
ordinary course, consistent with past practice.
3.7. LEGAL PROCEEDINGS. Except as disclosed in the Brandon Disclosure
Schedule, and except for ordinary routine litigation incidental to the business
of Brandon and its Subsidiaries, neither
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Brandon nor any of its Subsidiaries is a party to any, and there are no pending
or, to the best of Brandon's knowledge, threatened legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations of
any nature against Brandon or any of its Subsidiaries or any officer or director
of Brandon or any of its Subsidiaries in his or her capacity as such. Except as
disclosed in the Brandon Disclosure Schedule, neither Brandon nor any of its
Subsidiaries is a party to any order, judgment or decree entered in any lawsuit
or proceeding.
3.8. TAXES AND TAX RETURNS. Except as disclosed in Section 3.8 of the
Brandon Disclosure Schedule:
(a) Brandon and each of its Subsidiaries has duly filed on a timely
basis (and until the Effective Time will so file) all returns, declarations,
reports, information returns and statements ("Returns") relating to any Tax
(as defined below) required to be filed by or on behalf of Brandon or any of
its Subsidiaries on or before the Effective Time under the statutes, rules
or regulations of any jurisdiction and each such Return is accurate and
complete in all material respects. Brandon and each of its Subsidiaries has
duly paid (and until the Effective Time will so pay) all Taxes due and
payable, other than Taxes or other charges which are being contested in good
faith (and disclosed to Interim in the Brandon Disclosure Schedule). Brandon
and each of its Subsidiaries have established (and until the Effective Time
will establish) on their books and records reserves that are adequate for
the payment of all Taxes not yet due and payable, but are incurred in
respect of Brandon or any of its Subsidiaries through such date. None of the
federal or state income tax returns of Brandon or any of its Subsidiaries
have been examined by the Internal Revenue Service (the "IRS") or the any
state taxation authority within the past six years. There are no audits or
other administrative or court proceedings presently pending nor any other
disputes pending with respect to, or claims asserted for, taxes or
assessments upon Brandon or any of its Subsidiaries and Brandon has no
knowledge of any threatened Tax claims or assessments against Brandon or any
of its Subsidiaries that have been asserted for any open period. Neither
Brandon nor any of its Subsidiaries have any currently outstanding waivers
or comparable consents extending the statute of limitations with respect to
any Taxes or Returns.
(b) Neither Brandon nor any of its Subsidiaries (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement, whether or not written,
providing for (A) the payment of Tax liabilities or entitlements to refunds
and related matters with any party or (B) the method by which the federal,
state or local income tax liability of an affiliated group of which Brandon
is the common parent should be allocated or the manner in which such
allocated liability shall be paid, (iii) is required to include in income
any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by Brandon or any of its
Subsidiaries (nor does Brandon have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) or (iv) has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
(c) For purposes of this Agreement, the terms "Tax" and "Taxes" means
all taxes, charges, fees, levies or other assessments including any interest
or penalties that may become payable in respect thereof, imposed by any
federal, state, local, or foreign government or any agency or political
subdivision of any such government, which taxes include, without limiting
the generality of the foregoing, all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security, sales and use
taxes, service and service use taxes, leasing and leasing use taxes, excise
taxes, franchise taxes, gross receipts taxes, value added taxes, occupation
taxes, real and personal property taxes, stamp taxes, transfer taxes,
workers' compensation, and other obligations of the same or of a similar
nature.
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3.9. EMPLOYEE BENEFIT PLANS. Except as disclosed in Section 3.9 of the
Brandon Disclosure Schedule:
(a) Neither Brandon nor any of its Subsidiaries maintains or contributes
to any "employee pension benefit plan" (the "Brandon Pension Plans"), as
such term is defined in Section 3 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), "employee welfare benefit plan" (the
"Brandon Welfare Plans"), as such term is defined in Section 3 of ERISA,
stock option plan, stock purchase plan, deferred compensation plan,
cafeteria plan, severance plan, bonus plan, employment agreement or other
similar plan, program or arrangement. Neither Brandon nor any of its
Subsidiaries has, since September 2, 1974, contributed to, or been required
to contribute to, any "Multiemployer Plan", as such term is defined in
Section 3(37) of ERISA.
(b) Each of the Brandon Pension Plans is a qualified plan within the
meaning of Section 401(a) of the Code and has been determined by the IRS to
be so qualified, and Brandon is not aware of any fact or circumstance which
would adversely affect the qualified status of any such plan. None of the
Brandon Pension Plans is subject to the provisions of Title IV of ERISA.
(c) Each of the Brandon Pension Plans and each of the Brandon Welfare
Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder, and all other applicable governmental laws
and regulations.
(d) Neither Brandon nor any of its Subsidiaries, nor, to the best
knowledge of Brandon, any trustee, fiduciary or administrator of any Brandon
Pension Plan or Brandon Welfare Plan or any trust created thereunder, has
engaged in a prohibited transaction, as such term is defined in Section 4975
of the Code, which could subject Brandon or any of its Subsidiaries, or, to
the best knowledge of Brandon, any trustee, fiduciary or administrator
thereof, to the tax or penalty on prohibited transactions imposed by said
Section 4975.
(e) No Brandon Pension Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" for which the 30 day
notice has not been waived with respect to any Brandon Pension Plan, as that
term is defined in Section 4043(b) of ERISA.
(f) There are no pending, or, to the best knowledge of Brandon,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the Brandon Pension Plans or the Brandon
Welfare Plans or any trusts related thereto.
(g) Section 3.9 of the Brandon Disclosure Schedule includes true and
complete copies of: each employee welfare benefit plan, each employee
pension benefit plan, related trust agreements, annuity contracts and other
funding instruments, each other plan, program or arrangement referred to in
subsection (a) of this Section, favorable determination letters, annual
reports (Form 5500 series) required to be filed with any governmental agency
for each employee welfare benefit plan, employee pension benefit plan, and
fringe benefit plan for the three most recent plan years, including without
limitation, all schedules thereto and all financial statements with attached
opinions of independent accountants, current summary plan descriptions and
summaries of material modifications.
3.10. SEC FILINGS. Brandon has previously delivered to Interim a complete
copy of each filing by Brandon with the SEC since December 31, 1994 pursuant to
the Securities Act of 1933, as amended (the "1933 Act"), or the 1934 Act. Since
January 1, 1992, Brandon and each of its Subsidiaries have filed all reports,
registration statements and filings that each of them was required to file with
the SEC under the 1933 Act and the 1934 Act, all of which complied in all
material respects with all applicable requirements of the 1933 Act or the 1934
Act, as the case may be, and the rules and regulations adopted thereunder,
including Regulation S-X. As of their respective dates, each such report,
registration statement, form or other document, including without limitation,
any financial
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statements or schedules included therein, did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
3.11. BRANDON AND SUBSIDIARY INFORMATION. The information relating to
Brandon and each of its Subsidiaries to be contained in the Proxy
Statement/Prospectus (as defined in Section 5.6(a) hereof) to be delivered to
stockholders of Brandon and Interim in connection with the solicitation of their
approval of the Merger, as of the date the Proxy Statement/Prospectus is mailed
to stockholders of Brandon and Interim, and up to and including the date of the
meetings of stockholders to which such Proxy Statement/Prospectus relates, will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
3.12. COMPLIANCE WITH APPLICABLE LAW. Except as set forth in the Brandon
Disclosure Schedule, Brandon and each of its Subsidiaries holds all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its respective business and has complied with and is not in default
in any material respect under any applicable law, statute, order, rule,
regulation, policy and/or guideline of any federal, state or local governmental
authority relating to Brandon or such Subsidiary (other than where such default
or noncompliance will not result in a material adverse effect on the business,
operations, assets, financial condition or prospects of Brandon and its
Subsidiaries taken as a whole) and Brandon has not received notice of violation
of, and does not know of any violations of, any of the above.
3.13. CERTAIN CONTRACTS.
(a) Except for plans referenced in Section 3.9 and as disclosed in the
Brandon Disclosure Schedule, (i) neither Brandon nor any of its Subsidiaries is
a party to or bound by any contract or understanding (whether written or oral)
with respect to the employment of any officers, employees, directors or
consultants, and (ii) the consummation of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from Brandon or any of its Subsidiaries to any officer, employee,
director or consultant thereof. The Brandon Disclosure Schedule sets forth true
and correct copies of all severance or employment agreements with officers,
directors, employees, agents or consultants to which Brandon or any of its
Subsidiaries is a party.
(b) Except as disclosed in the Brandon Disclosure Schedule, (i) as of the
date of this Agreement, neither Brandon nor any of its Subsidiaries is a party
to or bound by any commitment, agreement or other instrument which is material
to the business, operations, assets, financial condition or prospects of Brandon
and its Subsidiaries taken as a whole, (ii) no commitment, agreement or other
instrument to which Brandon or any of its Subsidiaries is a party or by which
any of them is bound limits the freedom of Brandon or any of its Subsidiaries to
compete in any line of business or with any person, and (iii) neither Brandon
nor any of its Subsidiaries is a party to any collective bargaining agreement.
(c) Except as disclosed in the Brandon Disclosure Schedule, neither Brandon
nor any of its Subsidiaries nor, to the best knowledge of Brandon, any other
party thereto, is in default in any material respect under any material lease,
contract, mortgage, promissory note, or other commitment or arrangement, except
for defaults which individually or in the aggregate would not have a material
adverse effect on the business, operations, assets, financial condition or
prospects of Brandon and its Subsidiaries taken as a whole.
3.14. PROPERTIES AND INSURANCE.
(a) Brandon and its Subsidiaries have good and, as to owned real property,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in Brandon's consolidated balance
sheet as of October 1, 1995, or owned and acquired subsequent thereto (except to
the extent that such assets and properties have been disposed of for fair value
in the ordinary course of business since October 1, 1995), subject to no
encumbrances, liens, mortgages, security interests or
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pledges, except (i) those items that secure liabilities that are reflected in
said balance sheet or the notes thereto or that secure liabilities incurred in
the ordinary course of business after the date of such balance sheet, (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith and (iii) such encumbrances, liens, mortgages, security interests,
pledges and title imperfections that are not in the aggregate material to the
business, operations, assets, financial condition or prospects of Brandon and
its Subsidiaries taken as a whole. Except as affected by the transactions
contemplated hereby, Brandon and its Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all real
property leased by Brandon and its Subsidiaries in all material respects as
presently occupied, used, possessed and controlled by Brandon and its
Subsidiaries.
(b) The business operations and all insurable properties and assets of
Brandon and its Subsidiaries are insured for their benefit against all risks
which, in the reasonable judgment of the management of Brandon, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of Brandon
adequate for the business engaged in by Brandon and its Subsidiaries. As of the
date hereof, neither Brandon nor any of its Subsidiaries has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion, and a list of all pending claims and coverage disputes is set forth in
the Brandon Disclosure Schedule. Except as set forth in the Brandon Disclosure
Schedule, Brandon and its Subsidiaries have received no "reservation of rights"
letters with respect to pending claims or coverage disputes.
3.15. NO PARACHUTE PAYMENTS. Except as disclosed in the Brandon Disclosure
Schedule, no officer, director, employee or agent (or former officer, director,
employee or agent) of Brandon or any of its Subsidiaries is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from Brandon or any of its Subsidiaries, or from Interim
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
3.16. INTELLECTUAL PROPERTY.
(a) Brandon owns, or has the right to use pursuant to valid license,
sublicense, agreement, or permission, all intellectual property rights used in
or necessary for the operation of Brandon's business as presently conducted and
as currently proposed to be conducted. Except as set forth in the Brandon
Disclosure Schedule, (i) such intellectual property rights are owned free and
clear of royalty obligations, liens and encumbrances, (ii) the execution and
delivery of this Agreement and the closing of the transaction contemplated
hereby will not alter or impair any such rights, (iii) the use of all such
intellectual property by Brandon does not infringe or violate the intellectual
property rights of any person or entity, and (iv) Brandon has not granted any
person or entity any rights, pursuant to written license agreement or otherwise,
to use such intellectual property. Brandon has taken, and shall continue to take
through the Closing Date, all necessary action to maintain and protect each item
of intellectual property that it owns or uses.
(b) The Brandon Disclosure Schedule identifies (i) each patent, trademark,
trade name, service name or copyright with respect to any of Brandon's
intellectual property, all applications and registration statements therefor and
renewals thereof (and sets forth correct and complete copies of all such
patents, registrations and applications (as amended to date)); and (ii) all
intellectual property that Brandon uses pursuant to license, sublicense,
agreement, or permission, all of which are valid and in full force and effect,
and the execution and delivery of this Agreement and the closing of the
transaction contemplated hereby will not alter or impair any such rights.
(c) Brandon has at all times used and will continue to use reasonable
efforts to protect all trade secrets related to its intellectual property.
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(d) Brandon has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any intellectual property rights of third
parties, nor to the knowledge of Brandon does any of the intellectual property
of Brandon interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any intellectual property rights of third parties. Brandon has
not received any complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Brandon must license or refrain from using any intellectual property rights
of any third party), nor to Brandon's knowledge is there any reasonable basis
therefor. To the knowledge of Brandon, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict in any material
respect with any intellectual property rights of Brandon.
3.17. EMPLOYEES. Except as set forth in the Brandon Disclosure Schedule,
to the knowledge of Brandon's Chief Executive Officer or Chief Operating Officer
(without undertaking to solicit this information from any person), no executive,
key employee, independent contractor, or group of employees has any plans to
terminate employment or association with Brandon. Brandon is not subject to any
strike, grievance, claim of unfair labor practices, or other collective
bargaining dispute, and Brandon has no knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Brandon.
3.18 IMMIGRATION COMPLIANCE. Except as set forth on the Brandon Disclosure
Schedule:
(a) Brandon is in compliance with all applicable foreign, federal, state and
local laws, rules, directives and regulations relating to the employment
authorization of its employees (including, without limitation, the Immigration
Reform and Control Act of 1986, as amended and supplemented, and Sections 212(n)
and 274A of the Immigration and Nationality Act, as amended and supplemented,
and all implementing regulations relating thereto), and Brandon has not employed
nor is it currently employing any unauthorized aliens (as such term is defined
under 8 CFR 274a.1(a)).
(b) Brandon has not engaged in, and is not now engaging in, unfair
immigration-related employment practices as such term is used in Section 274B of
the Immigration and Nationality Act, as amended and supplemented.
(c) Brandon has not received any notice from the Immigration and
Naturalization Service (the "INS") or the U.S. Department of Labor (the "DOL")
of the disapproval or denial of any visa petition, visa application or labor
certification submitted by Brandon on behalf of any of its employees or
prospective employees.
(d) The Brandon Disclosure Schedule contains a true, complete and accurate
list of all non-immigrant or immigrant visa petitions and entry permits pending
before the INS or labor certifications pending before the DOL on behalf of any
of the employees or prospective employees of Brandon.
(e) Since the approval of each of their respective visa petitions, there has
been no material change in the terms and conditions of employment by any
employees of Brandon, provided that it is acknowledged that a certain number of
employees from time to time unilaterally breach their employment contracts with
Brandon.
(f) Brandon shall have delivered to Interim by the Closing Date true,
accurate and complete copies of all visa petitions, entry permits and visa
applications (and all supporting documents) submitted to the INS for all foreign
employees and prospective foreign employees of Brandon.
3.19. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the Brandon
Disclosure Schedule, no affiliate, as such term is defined in Rule 405
promulgated under the 1933 Act, of Brandon (i) has any material direct or
indirect interest in any entity which transacts business with Brandon, (ii) has
any direct or indirect interest in any property, asset or right which is used by
Brandon in the conduct of its business, (iii) has any other contractual
relationship with Brandon in respect of its business, or (iv) owns any asset
used by Brandon in connection with its business.
3.20. POOLING OF INTERESTS. To the knowledge of Brandon after due
investigation, neither Brandon nor any of its Subsidiaries has taken any action
or failed to take any action which action or failure
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Brandon knows would jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes. Actions and failures to take action
specifically disclosed or specifically permitted herein or in the Brandon
Disclosure Schedules shall not be deemed in violation of this provision,
regardless of any possible effect on pooling of interest accounting.
3.21. FAIRNESS OPINION. Brandon has received the opinion of Goldman Sachs,
dated on or shortly prior to the date hereof, to the effect that the Exchange
Ratio pursuant to the Agreement is fair to the holders of Brandon Common Stock.
3.22. DISCLOSURE. No representation or warranty contained in Article III
of this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF INTERIM AND MERGER SUB
References herein to the "Interim Disclosure Schedule" shall mean all of the
disclosure schedules required by this Article IV, dated as of the date hereof
and referenced to the specific sections and subsections of Article IV of this
Agreement, which have been delivered on the date hereof by Interim to Brandon.
Interim hereby represents and warrants to Brandon as follows (and as to Sections
4.1(c) and 4.3(C) hereof, Interim and Merger Sub jointly and severally represent
and warrant to Brandon as Follows):
4.1. CORPORATE ORGANIZATION.
(a) Interim is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Interim has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of Interim and its Subsidiaries taken
as a whole. When used with reference to Interim, the term "Subsidiary" means any
corporation, partnership, joint venture or other legal entity in which Interim,
directly or indirectly, owns at least a 50% stock or other equity interest or
for which Interim, directly or indirectly, acts as a general partner.
(b) All Subsidiaries of Interim and the percentage of voting securities of
each Subsidiary held by Interim are listed on the Interim Disclosure Schedule.
Each Interim Subsidiary is duly organized and validly existing and in good
standing under the laws of its state of incorporation. Each Interim Subsidiary
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of Interim and its
Subsidiaries, taken as a whole. The Interim Disclosure Schedule sets forth true
and complete copies of the Certificate of Incorporation and By-laws, as in
effect on the date hereof, of Interim and each of its Subsidiaries. Except as
set forth in the Interim Disclosure Schedule, Interim does not own or control,
directly or indirectly, any equity interest in any corporation, company,
association, partnership, joint venture or other entity.
(c) Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
4.2. CAPITALIZATION. The authorized capital stock of Interim consists of
25,000,000 shares of Interim Common Stock and 2,500,000 shares of preferred
stock, par value $.01 per share ("Interim
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Preferred Stock"). As of the date hereof, there are 11,526,295 shares of Interim
Common Stock issued and outstanding and no shares of Interim Preferred Stock
issued and outstanding. As of the date hereof, there are 1,216,266 shares of
Interim Common Stock issuable upon exercise of outstanding stock options.
Interim Disclosure Schedule 4.2 sets forth all options which may be exercised
for issuance of Interim Common Stock and the terms upon which the options may be
exercised ("Interim Stock Options"). The Interim Disclosure Schedule sets forth
true and complete copies of the option plans and grant agreements pursuant to
which the Interim Stock Options were granted and a true and complete list of
each outstanding Interim Stock Option. All issued and outstanding shares of
Interim Common Stock, and all issued and outstanding shares of capital stock of
each of its Subsidiaries, have been duly authorized and validly issued, are
fully paid, and nonassessable. All of the outstanding shares of capital stock of
each Interim Subsidiary are owned by Interim and are free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties. Except
for the Interim Stock Options disclosed in the Interim Disclosure Schedule,
neither Interim nor any of its Subsidiaries has granted nor is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of Interim or any of its Subsidiaries or any
securities representing the right to purchase, subscribe or otherwise receive
any shares of such capital stock or any securities convertible into any such
shares, and there are no agreements or understandings with respect to voting of
any such shares.
4.3. AUTHORITY; NO VIOLATION.
(a) Except for: (i) the requisite approval of the stockholders of Interim
and the applicable requirements of the 1934 Act in connection with obtaining
such approval; (ii) the pre-merger notification requirements of the HSR Act;
(iii) filing and recordation of the Certificate of Merger as required by the
GCL; and (iv) applicable requirements of the 1933 Act, state securities or "blue
sky" laws and state takeover laws (collectively, the "Interim Approvals"), no
consents or approvals of or filings or registrations with or notices to any
third party or any public body or authority are necessary on behalf of Interim
in connection with (x) the execution and delivery by Interim of this Agreement
and (y) the consummation by Interim of the Merger and the other transactions
contemplated hereby. Subject to receipt of the Interim Approvals, Interim has
the full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Interim in accordance with the Certificate of
Incorporation of Interim and applicable laws and regulations. Except for the
Interim Approvals, no other corporate proceedings on the part of Interim are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Interim and constitutes valid
and binding obligations of Interim enforceable against Interim in accordance
with its terms. The Board of Directors of Interim also has approved the
transactions contemplated by this Agreement and the Stockholder's Proxy so as to
render inapplicable thereto the provisions of Section 203 of the GCL or any
other "business combination," "moratorium," "control share" or other
antitakeover statute or regulation or provision of Interim's Certificate of
Incorporation or Bylaws.
(b) Neither the execution and delivery of this Agreement by Interim, nor the
consummation by Interim of the transactions contemplated hereby in accordance
with the terms hereof, or compliance by Interim with any of the terms or
provisions hereof, will (i) assuming the Interim Approvals are duly obtained,
violate any provision of Interim's Certificate of Incorporation or By-laws, (ii)
assuming that the Interim Approvals are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Interim, any of its Subsidiaries, or any of their respective
properties or assets, or (iii) except as set forth in the Interim Disclosure
Schedule, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge
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or other encumbrance upon any of the respective properties or assets of Interim
or its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Interim or any of its Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets, financial condition or prospects of Interim and
its Subsidiaries, taken as a whole, and which will not prevent or delay the
consummation of the transactions contemplated hereby.
(c) Subject to receipt of the Interim Approvals, Merger Sub has the full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors and the sole stockholder of Merger Sub in accordance with the
Certificate of Incorporation of Merger Sub and applicable laws and regulations.
No other corporate proceedings on the part of Merger Sub are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Merger Sub and constitutes valid and binding
obligations of Merger Sub enforceable against Merger Sub in accordance with its
terms.
4.4. FINANCIAL STATEMENTS.
(a) The Interim Disclosure Schedule sets forth copies of the consolidated
balance sheet of Interim as of December 30, 1994 and December 29, 1995, the
related consolidated statements of income, changes in stockholders' equity and
of cash flows for the periods ended on the last Friday in December, in each of
the three fiscal years 1993 through 1995, in each case accompanied by the audit
report of Deloitte & Touche LLP ("Deloitte"), independent public accountants
with respect to Interim (collectively, the "Interim Financial Statements"). The
Interim Financial Statements (including the related notes) have been prepared in
accordance with GAAP consistently applied during the periods involved (except as
may be indicated therein or in the notes thereto), and fairly present the
consolidated financial position of Interim as of the respective dates set forth
therein, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows (including the related notes, where
applicable).
(b) The books and records of Interim and its Subsidiaries are being
maintained in material compliance with applicable legal and accounting
requirements.
(c) Except as and to the extent reflected, disclosed or reserved against in
the Interim Financial Statements (including the notes thereto), as of December
29, 1995, neither Interim nor any of its Subsidiaries had any liabilities,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets, financial condition or prospects of Interim and its
Subsidiaries taken as a whole, which were required by GAAP (consistently
applied) to be disclosed in Interim's consolidated financial statements as of
December 29, 1995 or the notes thereto, as contained in the Interim Disclosure
Schedule. Since December 29, 1995, Interim and its Subsidiaries have not
incurred any liabilities except in the ordinary course of business and
consistent with past practice, except as related to the transactions
contemplated by this Agreement.
4.5. BROKER'S AND OTHER FEES. Except for Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), neither Interim nor any of its Subsidiaries nor
any of their directors or officers has employed any broker or finder or incurred
any liability for any broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement. Interim's agreement
with DLJ is set forth in the Interim Disclosure Schedule. There are no fees
(other than time charges billed at usual and customary rates) payable to any
consultants, including lawyers and accountants, in connection with this
transaction or which would be triggered by consummation of this transaction or
the termination of the services of such consultants by Interim or any of its
Subsidiaries.
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4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in the Interim Financial Statements or in Section
4.6 of the Interim Disclosure Schedule (which section includes copies of all
reports on Form 8-K filed by Interim since September 29, 1995 and a draft of
Interim's Management Discussion and Analysis with respect to fiscal 1995, which
draft is complete and correct in all material respects), there has not been any
material adverse change in the business, operations, assets or financial
condition of Interim and its Subsidiaries, taken as a whole, since September 29,
1995 and to the best of Interim's knowledge, no facts or condition exists which
Interim believes will cause such a material adverse change in the future.
(b) Except as set forth in the Interim Disclosure Schedule, neither Interim
nor any of its Subsidiaries has taken or permitted any of the actions set forth
in Section 5.2(b) hereof between September 30, 1995 and the date hereof and,
except for execution of this Agreement, Interim has conducted its business only
in the ordinary course, consistent with past practice.
4.7. LEGAL PROCEEDINGS. Except as disclosed in the Interim Disclosure
Schedule, and except for ordinary routine litigation incidental to the business
of Interim and its Subsidiaries, neither Interim nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Interim's knowledge,
threatened legal, administrative, arbitral or other proceedings, claims, actions
or governmental investigations of any nature against Interim or any of its
Subsidiaries or any officer or director of Interim or any of its Subsidiaries in
his or her capacity as such. Except as disclosed in the Interim Disclosure
Schedule, neither Interim nor any of its Subsidiaries is a party to any order,
judgment or decree entered in any lawsuit or proceeding.
4.8. TAXES AND TAX RETURNS. Except as disclosed in Section 4.8 of the
Interim Disclosure Schedule:
(a) Interim and each of its Subsidiaries has duly filed on a timely basis
(and until the Effective Time will so file) all Returns, relating to any Tax
required to be filed by or on behalf of Interim or any of its Subsidiaries on or
before the Effective Time under the statutes, rules or regulations of any
jurisdiction and each such Return is accurate and complete in all material
respects. Interim and each of its Subsidiaries has duly paid (and until the
Effective Time will so pay) all Taxes due and payable, other than Taxes or other
charges which are being contested in good faith (and disclosed to Interim in the
Interim Disclosure Schedule). Interim and each of its Subsidiaries have
established (and until the Effective Time will establish) on their books and
records reserves that are adequate for the payment of all Taxes not yet due and
payable, but are incurred in respect of Interim or any of its Subsidiaries
through such date. None of the federal or state income tax returns of Interim or
any of its Subsidiaries have been examined by the IRS or the any state taxation
authority within the past six years. There are no audits or other administrative
or court proceedings presently pending nor any other disputes pending with
respect to, or claims asserted for, taxes or assessments upon Interim or any of
its Subsidiaries and Interim has no knowledge of any threatened Tax claims or
assessments against Interim or any of its Subsidiaries that have been asserted
for any open period. Neither Interim nor any of its Subsidiaries have any
currently outstanding waivers or comparable consents extending the statute of
limitations with respect to any Taxes or Returns.
(b) Neither Interim nor any of its Subsidiaries (i) has requested any
extension of time within which to file any Return which Return has not since
been filed, (ii) is a party to any agreement, whether or not written, providing
for (A) the payment of Tax liabilities or entitlements to refunds and related
matters with any party or (B) the method by which the federal, state or local
income tax liability of an affiliated group of which Interim is the common
parent should be allocated or the manner in which such allocated liability shall
be paid, (iii) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by Interim or any of its Subsidiaries (nor does Interim have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method) or (iv) has filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
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4.9. EMPLOYEE BENEFIT PLANS. Except as disclosed in Section 4.9 of the
Interim Disclosure Schedule:
(a) Neither Interim nor any of its Subsidiaries maintains or contributes to
any "employee pension benefit plan" (the "Interim Pension Plans"), as such term
is defined in Section 3 of ERISA, "employee welfare benefit plan" (the "Interim
Welfare Plans"), as such term is defined in Section 3 of ERISA, stock option
plan, stock purchase plan, deferred compensation plan, cafeteria plan, severance
plan, bonus plan, employment agreement or other similar plan, program or
arrangement. Neither Interim nor any of its Subsidiaries has, since September 2,
1974, contributed to, or been required to contribute to, any "Multiemployer
Plan", as such term is defined in Section 3(37) of ERISA.
(b) Each of the Interim Pension Plans is a qualified plan within the meaning
of Section 401(a) of the Code and has been determined by the IRS to be so
qualified, and Interim is not aware of any fact or circumstance which would
adversely affect the qualified status of any such plan. None of the Interim
Pension Plans are subject to the provisions of the Title IV of ERISA.
(c) Each of the Interim Pension Plans and each of the Interim Welfare Plans
has been operated in compliance in all material respects with the provisions of
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder, and all other applicable governmental laws and regulations.
(d) Neither Interim nor any of its Subsidiaries, nor, to the best knowledge
of Interim, any trustee, fiduciary or administrator of any Interim Pension Plan
or Interim Welfare Plan or any trust created thereunder, has engaged in a
prohibited transaction, as such term is defined in Section 4975 of the Code,
which could subject Interim or any of its Subsidiaries, or, to the best
knowledge of Interim, any trustee, fiduciary or administrator thereof, to the
tax or penalty on prohibited transactions imposed by said Section 4975.
(e) No Interim Pension Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" for which the 30 day
notice has not been waived with respect to any Interim Pension Plan, as that
term is defined in Section 4043(b) of ERISA.
(f) There are no pending, or, to the best knowledge of Interim, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Interim Pension Plans or the Interim Welfare Plans or any
trusts related thereto.
(g) Section 4.9 of the Interim Disclosure Schedule includes true and
complete copies of: each employee welfare benefit plan, each employee pension
benefit plan, related trust agreements, annuity contracts and other funding
instruments, each other plan, program or arrangement referred to in subsection
(a) of this Section, favorable determination letters, annual reports (Form 5500
series) required to be filed with any governmental agency for each employee
welfare benefit plan, employee pension benefit plan, and fringe benefit plan for
the three most recent plan years, including without limitation, all schedules
thereto and all financial statements with attached opinions of independent
accountants, current summary plan descriptions and summaries of material
modifications.
4.10. SEC FILINGS. Interim has previously delivered to Brandon a complete
copy of each filing by Interim with the SEC since December 31, 1994 pursuant to
the 1933 Act or the 1934 Act. Since January 1, 1993, Interim and its
Subsidiaries have filed all reports, registration statements and filings that
each of them was required to file with the SEC under the 1933 Act and the 1934
Act, all of which complied in all material respects with all applicable
requirements of the 1933 Act or the 1934 Act, as the case may be, and the rules
and regulations adopted thereunder, including Regulation S-X. As of their
respective dates, each such report, registration statement, form or other
document, including without limitation, any financial statements or schedules
included therein, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
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4.11. INTERIM AND SUBSIDIARY INFORMATION. The information relating to
Interim and its Subsidiaries, this Agreement and the transactions contemplated
hereby in the Registration Statement and Proxy Statement/Prospectus as of the
date of the mailing of the Proxy Statement/Prospectus to stockholders of Brandon
and Interim, and up to and including the date of the meetings of stockholders of
Brandon and Interim to which such Proxy Statement/Prospectus relates, will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement shall comply as to form in all material
respects with the provisions of the 1933 Act and the rules and regulations
promulgated thereunder.
4.12. COMPLIANCE WITH APPLICABLE LAW. Except as set forth in the Interim
Disclosure Schedule, Interim and each of its Subsidiaries holds all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its respective business, and has complied with and is not in default
in any material respect under any applicable law, statute, order, rule,
regulation, policy and/or guideline of any federal, state or local governmental
authority relating to Interim or such Subsidiary (other than where such default
or noncompliance will not result in a material adverse effect on the business,
operations, assets, financial condition or prospects of Interim and its
Subsidiaries taken as a whole) and Interim has not received notice of violation
of, and does not know of any violations of, any of the above.
4.13. CERTAIN CONTRACTS.
(a) Except for plans referenced in Section 4.9 and as disclosed in the
Interim Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement will not (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Interim or any of its Subsidiaries to any officer,
employee, director or consultant thereof. The Interim Disclosure Schedule sets
forth true and correct copies of all severance or employment agreements with
officers, directors, employees, agents or consultants to which Interim or any of
its Subsidiaries is a party.
(b) Except as disclosed in the Interim Disclosure Schedule, (i) as of the
date of this Agreement, neither Interim nor any of its Subsidiaries is a party
to or bound by any commitment, agreement or other instrument which is material
to the business, operations, assets, financial condition or prospects of Interim
and its Subsidiaries taken as a whole, (ii) no commitment, agreement or other
instrument to which Interim or any of its Subsidiaries is a party or by which
any of them is bound limits the freedom of Interim or any of its Subsidiaries to
compete in any line of business or with any person, and (iii) neither Interim
nor any of its Subsidiaries is a party to any collective bargaining agreement.
(c) Except as disclosed in the Interim Disclosure Schedule, neither Interim
nor any of its Subsidiaries nor, to the best knowledge of Interim, any other
party thereto, is in default in any material respect under any material lease,
contract, mortgage, promissory note, or other commitment or arrangement, except
for defaults which individually or in the aggregate would not have a material
adverse effect on the business, operations, assets, financial condition or
prospects of Interim and its Subsidiaries taken as a whole.
4.14. PROPERTIES AND INSURANCE.
(a) Interim and its Subsidiaries have good and, as to owned real property,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in Interim's consolidated balance
sheet as of December 29, 1995, or owned and acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for fair
value in the ordinary course of business since December 29, 1995), subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said balance sheet or the
notes thereto or that secure liabilities incurred in the ordinary course of
business after the date of such balance sheet, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith and (iii) such
encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets,
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financial condition or prospects of Interim and its Subsidiaries taken as a
whole. Except as affected by the transactions contemplated hereby, Interim and
its Subsidiaries as lessees have the right under valid and subsisting leases to
occupy, use, possess and control all real property leased by Interim and its
Subsidiaries in all material respects as presently occupied, used, possessed and
controlled by Interim and its Subsidiaries.
(b) The business operations and all insurable properties and assets of
Interim and its Subsidiaries are insured for their benefit against all risks
which, in the reasonable judgment of the management of Interim, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the management of Interim
adequate for the business engaged in by Interim and its Subsidiaries. As of the
date hereof, neither Interim nor any of its Subsidiaries has received any notice
of cancellation or notice of a material amendment of any such insurance policy
or bond or is in default under any such policy or bond, no coverage thereunder
is being disputed and all material claims thereunder have been filed in a timely
fashion, and a list of all pending claims and coverage disputes is set forth in
the Interim Disclosure Schedule. Except as set forth in the Interim Disclosure
Schedule, Interim and its Subsidiaries have received no "reservation of rights"
letters with respect to pending claims or coverage disputes.
4.15. NO PARACHUTE PAYMENTS. Except as disclosed in the Interim Disclosure
Schedule, no officer, director, employee or agent (or former officer, director,
employee or agent) of Interim or any of its Subsidiaries is entitled now, or
will or may be entitled to as a consequence of this Agreement or the Merger, to
any payment or benefit from Interim or any of its Subsidiaries, or from Interim
which if paid or provided would constitute an "excess parachute payment", as
defined in Section 280G of the Code or regulations promulgated thereunder.
4.16. INTELLECTUAL PROPERTY.
(a) Interim owns, or has the right to use pursuant to valid license,
sublicense, agreement, or permission, all intellectual property rights used in
or necessary for the operation of Interim's business as presently conducted and
as currently proposed to be conducted. Except as set forth in the Interim
Disclosure Schedule, (i) such intellectual property rights are owned free and
clear of royalty obligations, liens and encumbrances, (ii) the execution and
delivery of this Agreement and the closing of the transaction contemplated
hereby will not alter or impair any such rights, (iii) the use of all such
intellectual property by Interim does not infringe or violate the intellectual
property rights of any person or entity, and (iv) Interim has not granted any
person or entity any rights, pursuant to written license agreement or otherwise,
to use such intellectual property. Interim has taken, and shall continue to take
through the Closing Date, all necessary action to maintain and protect each item
of intellectual property that it owns or uses.
(b) The Interim Disclosure Schedule identifies each patent, trademark, trade
name, service name or copyright with respect to any of Interim's intellectual
property, and the execution and delivery of this Agreement and the closing of
the transaction contemplated hereby will not materially adversely alter or
impair Interim's right with respect thereto.
(c) Interim has at all times used and will continue to use reasonable
efforts to protect all trade secrets related to its intellectual property.
(d) Interim has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any intellectual property rights of third
parties, nor to the knowledge of Interim does any of the intellectual property
of Interim interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any intellectual property rights of third parties. Interim has
not received any complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Interim must license or refrain from using any intellectual property rights
of any third party), nor to Interim's knowledge is there any reasonable basis
therefor. To the knowledge of Interim, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict in any material
respect with any intellectual property rights of Interim.
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4.17. EMPLOYEES. Except as set forth in the Interim Disclosure Schedule,
to the knowledge of Interim's Chief Executive Officer or Chief Operating Officer
(without undertaking to solicit this information from any person), no executive,
key employee, independent contractor, or group of employees has any plans to
terminate employment or association with Interim. Interim is not subject to any
strike, grievance, claim of unfair labor practices, or other collective
bargaining dispute, and Interim has no knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Interim.
4.18 IMMIGRATION COMPLIANCE. Except as set forth on the Interim Disclosure
Schedule:
(a) Interim is in compliance with all applicable foreign, federal, state
and local laws, rules, directives and regulations relating to the employment
authorization of its employees (including, without limitation, the
Immigration Reform and Control Act of 1986, as amended and supplemented, and
Sections 212(n) and 274A of the Immigration and Nationality Act, as amended
and supplemented, and all implementing regulations relating thereto), and
Interim has not employed nor is it currently employing any unauthorized
aliens (as such term is defined under 8 CFR Section 274a.1(a)).
(b) Interim has not engaged in, and is not now engaging in, unfair
immigration-related employment practices as such term is used in Section
274B of the Immigration and Nationality Act, as amended and supplemented.
(c) Interim has not received any notice from the INS or the DOL of the
disapproval or denial of any visa petition, visa application or labor
certification submitted by Interim on behalf of any of its employees or
prospective employees.
(d) Since the approval of each of their respective visa petitions, there
has been no material change in the terms and conditions of employment by any
employees of Interim, provided that it is acknowledged that a certain number
of employees from time to time unilaterally breach their employment
contracts with Interim.
4.19. OWNERSHIP OF BRANDON COMMON STOCK. Neither Interim nor any of its
Subsidiaries, directly or indirectly, beneficially owns, or has any agreement,
arrangement or understanding for the purposes of acquiring, holding, voting or
disposing of, any shares of Brandon Common Stock.
4.20. INTERIM COMMON STOCK. At the Effective Time, the Interim Common
Stock to be issued pursuant to the Merger will be duly authorized and validly
issued, fully paid, nonassessable, free of preemptive rights and free and clear
of all liens, encumbrances or restrictions created by or through Interim, with
no personal liability attaching to the ownership thereof. The Interim Common
Stock to be issued pursuant to the Merger will be registered under the 1933 Act
and issued without any legend thereon, except as may be required pursuant to
Rule 145 promulgated under the 1933 Act (regardless of whether the Brandon
Common Stock exchanged therefor was legended), in accordance with all applicable
state and federal laws, rules and regulations and will be included in the Nasdaq
Stock Market.
4.21. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the Interim
Disclosure Schedule, no affiliate, as such term is defined in Rule 405
promulgated under the 1933 Act, of Interim (i) has any material direct or
indirect interest in any entity which transacts business with Interim, (ii) has
any direct or indirect interest in any property, asset or right which is used by
Interim in the conduct of its business, (iii) has any other contractual
relationship with Interim in respect of its business, or (iv) owns any asset
used by Interim in connection with its business.
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4.22. POOLING OF INTERESTS. To the knowledge of Interim after due
investigation, neither Interim nor its subsidiaries has taken any action or
failed to take any action which action or failure would jeopardize the treatment
of the Merger as a pooling of interests for accounting purposes.
4.23. FAIRNESS OPINION. Interim has received the opinion of DLJ, dated on
or shortly prior to the date hereof, to the effect that the Exchange Ratio
provided for in this Agreement is fair to the holders of Interim Common Stock
from a financial point of view.
4.24. DISCLOSURES. No representation or warranty contained in Article IV
of this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading.
ARTICLE V -- COVENANTS OF THE PARTIES
5.1. CONDUCT OF BUSINESS. During the period from the date of this
Agreement to the Effective Time, Brandon shall, and shall cause each of its
Subsidiaries to, conduct their respective businesses only in the ordinary course
and consistent with prudent and prior business practice, except for transactions
permitted hereunder or with the prior written consent of Interim, which consent
will not be unreasonably withheld. Brandon also shall use reasonable efforts to
(i) preserve its business organization and that of its Subsidiaries intact, (ii)
keep available the present services of its employees and those of its
Subsidiaries and (iii) preserve the goodwill of its customers and employees and
those of its Subsidiaries and others with whom business relationships exist.
5.2. NEGATIVE COVENANTS.
(a) Brandon agrees that from the date hereof to the Effective Time, except
as otherwise approved by Interim in writing or as permitted or required by this
Agreement, it will not, nor will it permit any of its Subsidiaries to:
(i) change any provision of its Certificate of Incorporation or By-laws
or any similar governing documents;
(ii) change the number of shares of its authorized or issued capital
stock or issue or grant any option, warrant, call, commitment, subscription,
right to purchase or agreement of any character relating to the authorized
or issued capital stock of Brandon or any of its Subsidiaries or any
securities convertible into or exchangeable for shares of such stock, or
split, combine or reclassify any shares of its capital stock, or declare,
set aside or pay any dividend, or other distribution (whether in cash, stock
or property or any combination thereof) in respect of its capital stock,
other than regular cash dividends in an amount not to exceed $0.085 per
share per quarter;
(iii) grant any severance or termination pay (other than pursuant to
policies or contracts of Brandon in effect on the date hereof and disclosed
to Interim in the Brandon Disclosure Schedule pursuant hereto) to, or enter
into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new or amend any existing
employee benefit plan or arrangement of any type; or award any increase in
compensation or benefits to its directors, officers or employees except with
respect to employee increases in the ordinary course of business and
consistent with past practices and policies, and except as specified in
Section 5.2(a)(iii) of the Brandon Disclosure Schedule;
(iv) merge, consolidate or liquidate Brandon or sell, lease, license,
encumber, transfer, mortgage or pledge or dispose of any assets or
voluntarily incur any liabilities other than in the ordinary course of
business consistent with past practices and policies;
(v) make any capital expenditures outside the ordinary course of
business (it being understood that the opening of new branches in accordance
with current plans described in the Brandon Disclosure Schedule is permitted
hereunder);
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(vi) acquire in any manner whatsoever any business or entity;
(vii) make any material change in its accounting methods or practices,
other than changes required by GAAP or by regulatory authorities;
(viii) enter into or accelerate, terminate prior to expiration, cancel or
adversely modify any material agreement, contract, lease or license (or
series of material related agreements, contracts, leases and licenses) or
pay any obligations outside the ordinary course of business;
(ix) make any capital investment in, any loan (other than a loan
permitted by clause (x) below) to, or any acquisition of the securities or
assets of, any other person (or series of related capital investments, loans
and acquisitions);
(x) any loan to, enter into any other transaction with, or make any
other change in employment terms for any of its directors, officers and
employees except in accordance with existing agreements, policies or
employment benefit plans;
(xi) or fail to take any action which action or failure Brandon knows
would jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes or as a tax-free reorganization;
(xii) any action that would result in any of its representations and
warranties contained in Article III of this Agreement not being true and
correct in any material respect at the Effective Time or that would cause
any of its conditions to Closing not to be satisfied; or
(xiii) to do any of the foregoing.
(b) Interim agrees that from the date hereof to the Effective Time, except
as otherwise approved by Brandon in writing or as permitted or required by this
Agreement, it will not, nor will it permit any of its Subsidiaries to:
(i) change any provision of its Certificate of Incorporation or By-laws
or any similar governing documents;
(ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock;
(iii) make any material change in its accounting methods or practices,
other than changes required by GAAP or by regulatory authorities;
(iv) take any action that would result in any of its representations and
warranties contained in Article IV of this Agreement not being true and
correct in any material respect at the Effective Time or that would cause
any of its conditions to Closing not to be satisfied;
(v) take or fail to take any action which action or failure Interim
knows would jeopardize the treatment of the Merger as a pooling of interests
for accounting purposes or as a tax-free reorganization; or
(vi) agree to do any of the foregoing.
5.3. NO SOLICITATION. (a) Brandon and its affiliates, employees,
representatives, financial advisors and agents shall cease immediately all
existing discussions or negotiations, if any, with any parties (other than
Interim) conducted heretofore with respect to any merger, acquisition or
exchange of all or any material portion of the assets of, or any equity interest
in, Brandon or any of its Subsidiaries or any business combination with Brandon
or any of its Subsidiaries or any similar transaction. (Any such transaction
with a party other than Interim or any affiliate, associate or designee of
Interim is referred to herein as an "Acquisition Transaction" and any proposal
relating to an Acquisition Transaction is referred to herein as an "Acquisition
Proposal".)
(b) Brandon shall not release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which Brandon is a party,
unless the Board of Directors of Brandon
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makes a determination, in good faith and after consultation with outside
counsel, that to do so is required in the exercise of its fiduciary duties.
Brandon will use reasonable efforts to have all copies of all non-public
information it or its agents or financial advisors have distributed to other
potential purchasers returned to Brandon as soon as possible after the date
hereof.
(c) Neither Brandon nor any of its affiliates, employees, representatives,
financial advisors or agents shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Interim or any affiliate, associate or designee of Interim)
concerning any Acquisition Transaction or Acquisition Proposal.
(d) Notwithstanding the foregoing, Brandon may enter into discussions or
negotiations with or provide information to a third party in connection with an
Acquisition Proposal provided that the Board of Directors of Brandon, upon
advice of outside counsel, determines in good faith that the exercise of its
fiduciary duties requires that such discussions or negotiations must be
commenced or such information should be provided. Brandon will communicate
promptly to Interim the terms of any Acquisition Proposal, whether written or
oral, which it receives and what response, if any, the Board of Directors of
Brandon has determined is necessary or appropriate, in accordance with this
Section 5.3(d). Subject to any confidentiality agreement with any such third
party (which Brandon, based upon advice of outside counsel, determines in good
faith is required to be executed in order for its Board of Directors to comply
with its fiduciary duties, but which shall be on terms not substantially
different from the confidentiality agreement between Interim and Brandon
regarding the Merger), Brandon shall keep Interim informed of the status of any
such discussions or negotiations.
5.4. CURRENT INFORMATION. During the period from the date of this
Agreement to the Effective Time, each of Brandon and Interim will cause one or
more of its designated representatives to confer with representatives of the
other party on a monthly or more frequent basis regarding its business,
operations, properties, assets and financial condition and matters relating to
the completion of the transactions contemplated herein. On a monthly basis,
Brandon agrees to provide Interim, and Interim agrees to provide Brandon, with
internally prepared profit and loss statements no later than 20 business days
after the close of each fiscal month. As soon as reasonably available, but in no
event more than 45 days after the end of each fiscal quarter (other than the
last fiscal quarter of each fiscal year) ending on or after December 31, 1995,
Brandon will deliver to Interim and Interim will deliver to Brandon their
respective quarterly reports on Form 10-Q, as filed with the SEC under the 1934
Act. As soon as reasonably available, but in no event more than 90 days after
the end of each fiscal year, Brandon will deliver to Interim and Interim will
deliver to Brandon their respective Annual Reports on Form 10-K as filed with
the SEC under the 1934 Act.
5.5. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) Brandon shall permit Interim and its representatives, and Interim shall
permit Brandon and its representatives, reasonable access to their respective
properties, and shall disclose and make available to (and allow copies to be
made of) Interim and its representatives, or Brandon and its representatives as
the case may be, all books, papers and records relating to its assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings, organizational
documents, by-laws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Interim and its representatives or Brandon and its representatives may have a
reasonable interest. Neither party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any customer, would contravene any law, rule, regulation, order or
judgment or would waive any privilege. The parties will use reasonable efforts
to obtain waivers of any such restriction (other than waivers of the
attorney-client privilege) and in any event make appropriate substitute
disclosure arrangements
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under circumstances in which the restrictions of the preceding sentence apply.
Notwithstanding the foregoing, Interim shall not be required to disclose to
Brandon material non-public information concerning potential acquisitions.
(b) All information furnished by the parties hereto previously in connection
with transactions contemplated by this Agreement or pursuant hereto shall be
used solely for the purpose of evaluating the Merger contemplated hereby and
shall be treated as the sole property of the party delivering the information
until consummation of the Merger contemplated hereby and, if such Merger shall
not occur, each party and each party's advisors shall return to the other party
or destroy all documents or other materials containing, reflecting or referring
to such information, will not retain any copies of such information, shall use
reasonable efforts to keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. In the event that the Merger contemplated hereby does not
occur, all documents, notes and other writings prepared by a party hereto or its
advisors based on information furnished by the other party shall be promptly
destroyed. The obligation to keep such information confidential shall continue
for three years from the date the proposed Merger is abandoned but shall not
apply to (i) any information which (A) the party receiving the information can
establish by convincing evidence was already in its possession prior to the
disclosure thereof to it by the other party; (B) was then generally known to the
public; (C) became known to the public through no fault of the party receiving
such information; or (D) was disclosed to the party receiving such information
by a third party not bound by an obligation of confidentiality; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction.
5.6. REGULATORY MATTERS.
(a) For the purposes of holding the Stockholders Meetings referred to in
Section 5.7 and 5.8 hereof and qualifying under applicable federal and state
securities laws the Interim Common Stock to be issued to Brandon stockholders in
connection with the Merger, the parties hereto shall cooperate in the
preparation and filing by Interim of a Registration Statement with the SEC which
shall include an appropriate joint proxy statement and prospectus satisfying all
applicable requirements of applicable state and federal laws, including the 1933
Act, the 1934 Act and applicable state securities laws and the rules and
regulations thereunder (such joint proxy statement and prospectus in the form
mailed by Brandon to the Brandon stockholders and by Interim to the Interim
stockholders, together with any and all amendments or supplements thereto, being
herein referred to as the "Proxy Statement/ Prospectus" and the various
documents to be filed by Interim under the 1933 Act with the SEC to register the
Interim Common Stock for sale, including the Proxy Statement/Prospectus, are
referred to herein as the "Registration Statement").
(b) Interim shall furnish Brandon with such information concerning Interim
and its Subsidiaries as is necessary in order to cause the Proxy
Statement/Prospectus, insofar as it relates to such entities, to comply with
Section 5.6(a) hereof. Interim agrees promptly to advise Brandon if at any time
prior to the Stockholders Meetings referred to in Section 5.7 and 5.8 hereof,
any information provided by Interim in the Proxy Statement/Prospectus becomes
incorrect or incomplete in any material respect and to provide Brandon with the
information needed to correct such inaccuracy or omission. Interim shall furnish
Brandon with such supplemental information as may be necessary in order to cause
the Proxy Statement/Prospectus, insofar as it relates to Interim and its
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to Brandon
and Interim stockholders.
(c) Brandon shall furnish Interim with such information concerning Brandon
and its Subsidiaries to cause the Proxy Statement/Prospectus, insofar as it
relates to such entities, to comply with Section 5.6(a) hereof. Brandon agrees
promptly to advise Interim if at any time prior to the Stockholders Meetings
referred to in Section 5.7 and 5.8 hereof, any information provided by Brandon
in the Proxy Statement/Prospectus becomes incorrect or incomplete in any
material respect and to provide Interim with the information needed to correct
such inaccuracy or omission. Brandon shall furnish
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Interim with such supplemental information as may be necessary in order to cause
the Proxy Statement/Prospectus, insofar as it relates to Brandon and its
Subsidiaries, to comply with Section 5.6(a) after the mailing thereof to Brandon
and Interim stockholders.
(d) Interim shall as promptly as practicable make such filings as are
necessary in connection with the offering of the Interim Common Stock with
applicable state securities agencies and shall use all reasonable efforts to
qualify the offering of such stock under applicable state securities laws at the
earliest practicable date. Brandon shall promptly furnish Interim with such
information regarding the Brandon stockholders as Interim requires to enable it
to determine what filings are required hereunder. Brandon authorizes Interim to
utilize in such filings the information concerning Brandon and its Subsidiaries
provided to Interim in connection with, or contained in, the Proxy Statement/
Prospectus. Interim shall furnish Brandon's counsel with copies of all such
filings and keep Brandon advised of the status thereof. Interim and Brandon
shall as promptly as practicable file the Registration Statement containing the
Proxy Statement/Prospectus with the SEC, and each of Interim and Brandon shall
promptly notify the other of all communications, oral or written, with the SEC
concerning the Registration Statement and the Proxy Statement/Prospectus.
(e) Interim shall cause the Interim Common Stock issuable pursuant to the
Merger to be included in the Nasdaq Stock Market at the Effective Time.
(f) The parties hereto will cooperate with each other and use all reasonable
efforts to prepare, file and diligently pursue all necessary documentation, to
effect all necessary filings and to obtain all necessary permits, consents,
approvals and authorizations of all third parties and governmental bodies
necessary to consummate the transactions contemplated by this Agreement as soon
as possible, including, without limitation, those required by the HSR Act. The
parties shall each have the right to review in advance all filings with,
including all information relating to the other, as the case may be, and any of
their respective Subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body in connection with
the transactions contemplated by this Agreement.
(g) Each of the parties will promptly furnish each other with copies of
written communications received by them or any of their respective Subsidiaries
from, or delivered by any of the foregoing to, any stockholder or any
governmental body in respect of the transactions contemplated hereby with
respect to the Merger.
(h) Brandon acknowledges that Interim is in or may be in the process of
acquiring other entities and that in connection with such acquisitions,
information concerning Brandon may be required to be included in the
registration statements, if any, for the sale of securities of Interim or in SEC
reports in connection with such acquisitions. Brandon agrees to provide Interim
with any information, certificates, documents or other materials about Brandon
as are reasonably necessary to be included in such other SEC reports or
registration statements, including registration statements which may be filed by
Interim prior to the Effective Time. Brandon shall use its reasonable efforts to
cause its attorneys and accountants to provide Interim and any underwriters for
Interim with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications or any such acquisition or issuance of securities. Interim shall
reimburse Brandon for reasonable expenses thus incurred by Brandon should this
transaction be terminated for any reason other than Brandon breach. Interim
shall not file with the SEC any registration statement or amendment thereto or
supplement thereof containing information regarding Brandon unless Brandon shall
have consented to such filing (and by such consent Brandon shall not be deemed
to pass upon any information not supplied by Brandon for inclusion in such
document). Brandon shall not unreasonably delay or withhold any such consent.
Brandon acknowledges that Interim stockholder approval is required for the
Merger whether or not another acquisition is announced prior to the Closing
Date.
5.7. BRANDON STOCKHOLDERS MEETING. Brandon will (a) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of Brandon (the "Brandon Stockholders
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Meeting") for the purpose of securing the approval of Brandon stockholders of
this Agreement, (b) subject to the qualification set forth in Section 5.3 hereof
and the right of its directors' not to make a recommendation or to withdraw a
recommendation in the exercise of the directors' fiduciary duties in good faith
and based upon the advice of outside counsel, recommend to the stockholders of
Brandon the approval of this Agreement and the transactions contemplated hereby
and use reasonable efforts to obtain, as promptly as practicable, such
approvals, and (c) cooperate and consult with Interim with respect to each of
the foregoing matters.
5.8. INTERIM STOCKHOLDERS MEETING. Interim will (a) take all steps
necessary duly to call, give notice of, convene and hold a meeting of the
stockholders of Interim (the "Interim Stockholders Meeting" and, together with
the Brandon Stockholders Meeting, the "Stockholders Meetings") for the purpose
of securing the approval of Interim stockholders of this Agreement, (b) subject
to the right of its directors' not to make a recommendation or to withdraw a
recommendation in the exercise of the directors' fiduciary duties in good faith
and based upon the advice of outside counsel, recommend to the stockholders of
Interim the approval of this Agreement and the transactions contemplated hereby
and use reasonable efforts to obtain, as promptly as practicable, such
approvals, and (c) cooperate and consult with Brandon with respect to each of
the foregoing matters.
5.9. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to satisfy
the conditions to Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement and using reasonable efforts to prevent the
breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
Nothing in this section shall be construed to require any party to participate
in any threatened or actual legal, administrative or other proceedings (other
than proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto.
5.10. PUBLIC ANNOUNCEMENTS. Interim and Brandon shall cooperate with each
other in the development and distribution of all news releases and other public
filings and disclosures with respect to this Agreement or the Merger
contemplated hereby, and Interim and Brandon agree that unless approved mutually
by them in advance, they will not issue any press release or written statement
for general circulation relating primarily to the transaction contemplated
hereby, except as may be otherwise required by law or regulation in the opinion
of counsel.
5.11. FAILURE TO FULFILL CONDITIONS. In the event that Interim or Brandon
determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to August 31,
1996 (the "Deadline Date") and that it will not waive that condition, it will
promptly notify the other party. Except for any acquisition or merger
discussions Interim may enter into with other parties, Brandon and Interim will
promptly inform the other of any facts applicable to Brandon or Interim,
respectively, or their respective directors or officers, that would be likely to
prevent or materially delay approval of the Merger by any governmental authority
or which would otherwise prevent or materially delay completion of the Merger.
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5.12. RETENTION OF EMPLOYEES, OFFICERS; BENEFITS.
(a) Following consummation of the Merger, Interim will use reasonable
efforts to retain Brandon's existing officers and full-time employees
("employees") with levels of aggregate total compensation (salary plus benefits)
substantially equivalent in the aggregate to those currently provided to the
employees by Brandon, and with policies substantially equivalent in the
aggregate to the employees as those currently followed by Brandon.
(b) The employee benefit plans, arrangements and related policies of Brandon
shall initially be unaffected by the Merger. Following the Merger, Interim may
review such plans, arrangements and policies with a view towards consolidating
them with Interim's plans, arrangements and policies to the extent feasible and
consistent with paragraph (a) above. To the extent current employees of Brandon
become participants in or subject to a plan, arrangement or policy of Interim
(including without limitation those pertaining to medical, vacation, sick leave,
disability, and pension matters), they will receive credit for prior employment
by Brandon for all purposes in connection with such plan, arrangement or policy,
and no prior existing condition limitation shall be imposed with respect to any
medical coverage plan of Interim (except to the extent that such limitations
have already been imposed). If any employees of Brandon immediately prior to the
Effective Time are involuntarily terminated by Brandon or Interim within one
year thereafter, they will receive severance benefits at least as favorable as
those provided in the informal severance plan of Brandon contained in the
Brandon Disclosure Schedule.
(c) Following consummation of the Merger, Interim shall honor those written
employment, change in control and termination agreements by and between Brandon
and/or its Subsidiaries and certain employees set forth in Section 5.12(c) of
the Brandon Disclosure Schedule and shall honor all calculations as to payments
thereunder and interpretations thereof set forth in Section 5.12(c) of the
Brandon Disclosure Schedule.
5.13. DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
Time, each party hereto will promptly supplement or amend (by written notice to
the other) its respective Disclosure Schedules delivered pursuant hereto with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in such Schedules or which is necessary to correct any information in
such Schedules which has been rendered materially inaccurate thereby. For the
purpose of determining satisfaction of the conditions set forth in Article VI
and subject to Sections 6.2(a) and 6.3(a), no supplement or amendment to such
Schedules shall correct or cure any representation, warranty or covenant which
was untrue when made, but shall enable the disclosure of subsequent facts or
events to maintain the truthfulness of any warranty.
5.14. AFFILIATES. Simultaneous with the execution and delivery of this
Agreement, Brandon shall deliver to Interim a letter agreement, substantially in
the form of Exhibit 5.14, executed by Ira Brown. Promptly, but in any event
within two weeks, after the execution and delivery of this Agreement, Brandon
shall deliver to Interim (a) a letter identifying all persons who, to the
knowledge of Brandon, may be deemed to be affiliates of Brandon, as such term is
defined in Rule 405 promulgated under the 1933 Act, including, without
limitation, all directors and executive officers of Brandon and (b) copies of
letter agreements, each substantially in the form of Exhibit 5.14, executed by
each such person so identified as an affiliate of Brandon, for whom a signed
"affiliate's letter" has not previously been delivered to Interim. In addition,
Interim shall cause each director and executive officer of Interim to, and
Interim shall use its best efforts to cause each other person who may be deemed
an affiliate of Interim (as that term is used for purposes of qualifying for
pooling of interests) to, execute and deliver to Interim within two weeks after
the execution and delivery of this Agreement, a letter in which such persons
agree to be bound by the rules which permit the Merger to be treated as a
pooling of interests for accounting treatment.
5.15. INDEMNIFICATION; INSURANCE. Interim agrees that it will, after the
Effective Time, and to the fullest extent permitted by applicable law and its
corporate documents, provide to the directors
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and officers of Brandon indemnification equivalent to that provided by or
available under the Certificate of Incorporation and By-laws of Brandon or
permissible to the fullest extent permitted under Delaware law with respect to
acts or omissions occurring prior to the Effective Time, including without
limitation the authorization of this Agreement and the transactions contemplated
hereby, for a period of six years from the Effective Time, or in the case of
claims made prior to the end of such six year period, until such claims are
finally resolved. To the extent permitted by applicable law, Interim shall
advance expenses as incurred for legal counsel and otherwise in connection with
the foregoing indemnification. Interim will also procure continuing director and
officer liability coverage for directors and officers of Brandon for a period of
six years after the Effective Time from a reputable insurance company issuing
such policies, with terms and conditions (other than the amount of premiums)
substantially similar to or better than those in effect under Brandon's existing
directors' and officers' insurance policy; provided, that if coverage for six
years can not be obtained for $150,000 or less, Interim shall supply coverage
for three years or for the maximum period obtainable for $150,000, whichever is
greater.
5.16. LETTER OF BRANDON'S ACCOUNTANTS. Brandon shall use all reasonable
efforts to cause to be delivered to Interim a "comfort" letter of Coopers, dated
a date within two business days before the date on which the Registration
Statement shall become effective and as of the date of Closing and addressed to
Interim, in form and substance reasonably satisfactory to Interim and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement.
5.17. LETTER OF INTERIM'S ACCOUNTANTS. Interim shall use all reasonable
efforts to cause to be delivered to Brandon a "comfort" letter of Deloitte,
dated a date within two business days before the date on which the Registration
Statement shall become effective and as of the date of Closing and addressed to
Brandon, in form and substance reasonably satisfactory to Brandon and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement.
ARTICLE VI -- CLOSING CONDITIONS
6.1. CONDITIONS OF EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT. The
respective obligations of each party under this Agreement to consummate the
Merger shall be subject to the satisfaction, or, where permissible under
applicable law, waiver at or prior to the Effective Time of the following
conditions:
(a) APPROVAL OF BRANDON STOCKHOLDERS; SEC REGISTRATION. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the stockholders of Brandon. The Interim Registration
Statement shall have been declared effective by the SEC and shall not be
subject to a stop order or any threatened stop order, and the issuance of
the Interim Common Stock shall have been qualified in every state where such
qualification is required under the applicable state securities laws.
(b) REGULATORY FILINGS. All necessary regulatory or governmental
approvals and consents required to consummate the transactions contemplated
hereby (other than immaterial government permits) shall have been obtained
without any term or condition which would materially impair the value of
Brandon and its Subsidiaries, taken as a whole, or which would materially
impair the value of Interim and its Subsidiaries, taken as a whole. All
conditions required to be satisfied prior to the Effective Time by the terms
of such approvals and consents shall have been satisfied; and all statutory
waiting periods in respect thereof (including the HSR Act waiting period)
shall have expired.
(c) SUITS AND PROCEEDINGS. No order, judgment or decree shall be
outstanding against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action or other
proceeding shall be pending or threatened by any governmental body in which
it is sought to restrain or prohibit the Merger; and no suit, action or
other proceeding shall
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be pending before any court or governmental agency in which it is sought to
restrain or prohibit the Merger or obtain other substantial monetary or
other relief against one or more parties hereto in connection with this
Agreement and which Interim or Brandon determines in good faith, based upon
the advice of their respective counsel, makes it inadvisable to proceed with
the Merger because any such suit, action or proceeding has a significant
potential to be resolved in such a way as to deprive the party electing not
to proceed of any of the material benefits to it of the Merger.
(d) TAX OPINION. Interim and Brandon each shall have received an
opinion of Bryan Cave LLP, counsel to Interim, dated as of the Closing Date,
in form and substance reasonably satisfactory to Interim and to Brandon and
its counsel, that for federal and state income tax purposes, the Merger will
qualify as a tax-free reorganization under Section 368(a) of the Code, and
except with regard to cash received in exchange for fractional shares, that
no gain or loss will be recognized by the holders of Brandon Common Stock in
exchange for their shares of Interim Common Stock.
(e) POOLING. Each of the parties shall have received an opinion of
Deloitte and Coopers, respectively, in form and substance reasonably to such
party, based on such procedures as were deemed relevant, to the effect that
the Merger will qualify as a pooling of interests under GAAP.
6.2. CONDITIONS TO THE OBLIGATIONS OF INTERIM AND MERGER SUB UNDER THIS
AGREEMENT. The obligations of Interim and Merger Sub under this Agreement shall
be further subject to the satisfaction or waiver, at or prior to the Effective
Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS OF
BRANDON AND ITS SUBSIDIARIES. Except for those representations which are
made as of a particular date, the representations and warranties of Brandon
contained in this Agreement shall be true and correct in all material
respects on the Closing Date as though made on and as of the Closing Date.
Brandon shall have performed in all material respects the agreements,
covenants and obligations to be performed by it prior to the Closing Date.
With respect to any representation or warranty which as of the Closing Date
has required a supplement or amendment to the Brandon Disclosure Schedule to
render such representation or warranty true and correct in all material
respects as of the Closing Date, the representation and warranty shall be
deemed true and correct as of the Closing Date only if (i) the information
contained in the supplement or amendment to the Disclosure Schedule related
to events occurring following the execution of this Agreement and (ii)
either (x) the facts disclosed in such supplement or amendment would not
either alone, or together with any other supplements or amendments to the
Brandon Disclosure Schedule, materially adversely effect the representation
as to which the supplement or amendment relates or (y) such supplement or
amendment remedied any material breach in accordance with Section
7.1(d)(ii).
(b) OPINION OF COUNSEL. Interim shall have received an opinion of
Pitney, Hardin, Kipp & Szuch, counsel to Brandon, dated the Closing Date, in
form and substance reasonably satisfactory to Interim, covering the matters
set forth on Exhibit 6.2 hereto.
(c) CERTIFICATES. Brandon shall have furnished Interim with such
certificates of its officers or other documents to evidence fulfillment of
the conditions set forth in this Section 6.2 as Interim may reasonably
request.
(d) [INTENTIONALLY OMITTED].
(e) APPROVAL OF INTERIM STOCKHOLDERS. This Agreement and the
transactions contemplated hereby shall have been approved by the requisite
vote of the stockholders of Interim.
(f) INTERIM FAIRNESS OPINION. Interim shall have received an opinion
from DLJ (its "Fairness Opinion"), dated on or shortly prior to the date the
Proxy Statement/Prospectus is mailed to Interim's stockholders, to the
effect that the Exchange Ratio provided for in this Agreement is fair to the
holders of Interim Common Stock from a financial point of view, and DLJ
shall not have adversely modified or withdrawn its fairness opinion prior to
the Closing.
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6.3. CONDITIONS TO THE OBLIGATIONS OF BRANDON UNDER THIS AGREEMENT. The
obligations of Brandon under this Agreement shall be further subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS OF
INTERIM. Except for those representations which are made as of a particular
date, the representations and warranties of Interim and Merger Sub contained
in this Agreement shall be true and correct in all material respects on the
Closing Date as though made on and as of the Closing Date. Interim shall
have performed in all material respects, the agreements, covenants and
obligations to be performed by it prior to the Closing Date. With respect to
any representation or warranty which as of the Closing Date has required a
supplement or amendment to the Interim Disclosure Schedule to render such
representation or warranty true and correct in all material respects as of
the Closing Date, the representation and warranty shall be deemed true and
correct as of the Closing Date only if (i) the information contained in the
supplement or amendment to the Disclosure Schedule related to events
occurring following the execution of this Agreement and (ii) either (x) the
facts disclosed in such supplement or amendment would not either alone, or
together with any other supplements or amendments to the Interim Disclosure
Schedule, materially adversely effect the representation as to which the
supplement or amendment relates or (y) such supplement or amendment remedied
any material breach in accordance with Section 7.1(e)(ii).
(b) OPINION OF COUNSEL TO INTERIM. Brandon shall have received an
opinion of outside counsel to Interim, dated the Closing Date, in form and
substance reasonably satisfactory to Brandon, covering the matters set forth
on Exhibit 6.3 hereto.
(c) BRANDON FAIRNESS OPINION. Brandon shall have received an opinion
from Goldman Sachs (its "Fairness Opinion"), dated on or shortly prior to
the date the Proxy Statement/ Prospectus is mailed to Brandon's
stockholders, to the effect that the Exchange Ratio pursuant to the
Agreement is fair to the holders of Brandon Common Stock, and Goldman Sachs
shall not have withdrawn or adversely modified its Fairness Opinion prior to
the Closing.
(d) DIRECTORS/OFFICERS. Brandon shall select, subject to Interim's
approval which shall not be unreasonably withheld, a person who shall be
duly appointed by the Board of Directors of Interim to serve as a director
of Interim and who shall, subject to the requirements of the GCL, be
included within the class of Interim directors whose three-year terms begin
at the Interim Stockholders Meeting. Such person shall be one of the current
directors of Brandon but shall not be any of the persons who will be
employees of the Surviving Corporation following the Effective Time. The
Board of Directors of Interim may also appoint other current officers or
directors of Brandon as officers and/or directors of Interim, in Interim's
discretion.
(e) D&O INSURANCE. Brandon shall have received evidence, reasonably
satisfactory to it, that Interim shall have obtained the insurance referred
to in Section 5.15.
(f) CERTIFICATES. Interim and Merger Sub shall have furnished Brandon
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Section 6.3 as
Brandon may reasonably request.
ARTICLE VII -- TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated prior to the Effective
Time, whether before or after approval of this Agreement by the stockholders of
Brandon or approval of this Agreement by the stockholders of Interim:
(a) by mutual written consent of the parties hereto;
(b) by Interim or Brandon (i) if the Effective Time shall not have
occurred on or prior to the Deadline Date unless the failure of such
occurrence shall be due to the failure of the party seeking
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to terminate this Agreement to perform or observe its agreements set forth
herein to be performed or observed by such party at or before the Effective
Time, (ii) if a vote of the stockholders of Brandon is taken and such
stockholders fail to approve this Agreement at the meeting (or any
adjournment thereof) held for such purpose, or (iii) if a vote of the
stockholders of Interim is taken and such stockholders fail to approve this
Agreement at the meeting (or any adjournment thereof) held for such purpose.
(c) (i) by Interim or Brandon upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate
the Merger and the other transactions contemplated hereby shall have been
denied or withdrawn at the request or recommendation of the applicable
regulatory agency or governmental authority despite the reasonable efforts
of the party seeking to terminate this Agreement to avoid such result, or
(ii) by Interim upon written notice to Brandon if any such application is
approved with conditions which would materially impair the value of Brandon
and its Subsidiaries, taken as a whole, to Interim, despite the reasonable
efforts of Interim to avoid such result, or (iii) by Brandon upon written
notice to Interim if any such application is approved with conditions which
materially impair the post-Merger value of Interim and its Subsidiaries,
taken as a whole, despite the reasonable efforts of Brandon to avoid such
result.
(d) by Interim if (i) there shall have occurred a material adverse
change in the business, operations, assets, or financial condition of
Brandon and its Subsidiaries, taken as a whole, from that disclosed by
Brandon in Brandon's Annual Report on Form 10-K for the year ended October
1, 1995; or (ii) there was a material breach in any representation,
warranty, covenant, agreement or obligation of Brandon hereunder and such
breach (provided it is curable and Brandon promptly commences its effort to
cure) shall not have been remedied within 30 days after receipt by Brandon
of notice in writing from Interim to Brandon specifying the nature of such
breach and requesting that it be remedied; or (iii) the Board of Directors
of Brandon shall not have recommended the Merger to Brandon's stockholders
in the Proxy Statement/Prospectus, or shall have modified or rescinded its
recommendation of the Merger to the Brandon stockholders as being advisable
and fair to and in the best interests of Brandon and its stockholders, or
shall have modified or rescinded its approval of this Agreement, or shall
have resolved to do any of the foregoing.
(e) by Brandon, if (i) there shall have occurred a material adverse
change in the business, operations, assets or financial condition of Interim
and its Subsidiaries taken as a whole from that disclosed by Interim in
Interim's Quarterly Report on Form 10-Q for the nine months ended September
29, 1995; or (ii) there was a material breach in any representation,
warranty, covenant, agreement or obligation of Interim hereunder and such
breach (provided it is curable and Interim promptly commences its effort to
cure) shall not have been remedied within 30 days after receipt by Interim
of notice in writing from Brandon specifying the nature of such breach and
requesting that it be remedied; or (iii) the Board of Directors of Interim
shall not have recommended the Merger to Interim's stockholders in the Proxy
Statement/Prospectus, or shall have modified or rescinded its recommendation
of the Merger to Interim stockholders as being advisable and fair to and in
the best interests of Interim and its stockholders, or shall have modified
or rescinded its approval of this Agreement, or shall have resolved to do
any of the foregoing.
(f) by Interim if the conditions set forth in Section 6.2 are not
satisfied and are not capable of being satisfied by the Deadline Date.
(g) by Brandon if the conditions set forth in Section 6.3 are not
satisfied and are not capable of being satisfied by the Deadline Date.
(h) by Brandon, if Brandon's Board of Directors shall have entered into
a definitive agreement contemplating, announced or approved an Acquisition
Transaction after determining, in good faith and upon advice of outside
counsel, that such approval was necessary in the exercise of its fiduciary
duties under applicable laws.
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(i) by Interim, if Brandon shall have entered into a definitive
agreement contemplating, announced or approved an Acquisition Transaction.
(j) by Brandon, if the average of the ten Closing Prices of Interim
Common Stock during the first ten of the 13 consecutive trading days
immediately preceding the date of the Brandon Stockholders Meeting is less
than $33.00.
7.2 TERMINATION FEE. If (i) Brandon terminates this Agreement pursuant to
Section 7.1(h), or (ii) (x) Interim terminates this Agreement pursuant to
Section 7.1(d)(iii) and Brandon enters into a definitive agreement
contemplating, announces or approves an Acquisition Transaction within one year
after the date hereof, or (y) Interim terminates this Agreement pursuant to
Section 7.1(i), then Brandon will immediately (but in any event within three
business days) pay to Interim, in cash, a termination fee equal to One Million
Five Hundred Thousand Dollars ($1,500,000.00), which amount the parties agree
and acknowledge is sufficient to cover all reasonable out-of-pocket expenses
which Interim may incur in connection with this Agreement and the Merger and the
transactions contemplated hereby.
7.3. EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement by either Interim or Brandon pursuant to Section
7.1, this Agreement (other than Sections 5.5(b), 7.2 and Section 8.1, each of
which shall survive termination) shall forthwith become void and have no effect,
without any liability on the part of any party or its officers, directors or
stockholders. Nothing contained herein, however, shall relieve any party from
any liability for any breach of this Agreement.
7.4. AMENDMENT. This Agreement may be amended by action taken by the
parties hereto at any time before or after adoption of this Agreement by the
stockholders of Brandon but, after any such adoption, no amendment shall be made
which reduces the amount or changes the form of the consideration to be
delivered to the stockholders of Brandon or adversely affects the stockholders
of Interim, without the approval of the affected stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties hereto.
7.5. EXTENSION; WAIVER. The parties may, at any time prior to the
Effective Time of the Merger, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party against which the waiver is
sought to be enforced.
ARTICLE VIII -- MISCELLANEOUS
8.1. EXPENSES.
(a) Except as otherwise expressly stated herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including legal, accounting and investment banking fees and expenses)
shall be borne by the party incurring such costs and expenses. Interim and
Brandon shall each pay 50% of all expenses and fees related to filing of the
Registration Statement (including the Proxy Statement/Prospectus included
therein) and related documents with the SEC and filings pursuant to state "blue
sky" laws and regulations in connection with the Merger.
(b) Notwithstanding any provision in this Agreement to the contrary, in the
event that either of the parties shall willfully default in its obligations
hereunder, the non-defaulting party may pursue any remedy available at law or in
equity to enforce its rights and shall be paid by the willfully defaulting party
for all damages, costs and expenses, including without limitation reasonable
legal, reasonable accounting, reasonable investment banking and reasonable
printing expenses, incurred or suffered by the non-defaulting party in
connection herewith or in the enforcement of its rights hereunder.
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<PAGE>
8.2. SURVIVAL. The respective representations, warranties, covenants and
agreements of the parties to this Agreement shall not survive the Effective
Time, but shall terminate as of the Effective Time, except for this Section 8.2
and the provisions of Sections 5.12 and 5.15.
8.3. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or by reputable overnight courier or sent by registered or certified mail,
postage prepaid, as follows:
(a) If to Interim or Merger Sub, to:
INTERIM SERVICES INC.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attn: Mr. Raymond Marcy
President and Chief Executive Officer
Copy to:
Bryan Cave LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105-2100
Attn: Kendrick T. Wallace, Esq.
(b) If to Brandon, to:
BRANDON SYSTEMS CORPORATION
Cooper Ridge Center
9 Polito Avenue, Ninth Floor
Lyndhurst, New Jersey 07071
Attn: Mr. Ira B. Brown
Chairman and Chief Executive Officer
Copy to:
Pitney, Hardin, Kipp & Szuch
(Delivery) 200 Campus Drive
Florham Park, New Jersey
(Mail) P.O. Box 1945
Morristown, New Jersey 07962-1945
Attn: Michael W. Zelenty, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
actually received.
8.4. PARTIES IN INTEREST. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement, except for the present and former directors and officers of
Brandon referred to in either Section 5.12(c) or Section 5.15 hereof, who shall
be entitled to the benefits of such Section 5.12(c) and/or Section 5.15, as the
case may be.
8.5. ENTIRE AGREEMENT. This Agreement, which includes the Disclosure
Schedules hereto and the other documents, agreements and instruments executed
and delivered pursuant to or in connection with this Agreement, contains the
entire Agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior negotiations,
arrangements or understandings, written or oral, with respect thereto.
8.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
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<PAGE>
8.7. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof.
8.8. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, Interim and Brandon have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
<TABLE>
<S> <C>
ATTEST: INTERIM SERVICES INC.
By: /s/ JOHN B. SMITH By: /s/ RAYMOND MARCY
---------------------------------------- ----------------------------------------
John B. Smith, Raymond Marcy,
SENIOR VICE PRESIDENT AND GENERAL COUNSEL PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST: BRANDON SYSTEMS CORPORATION
By: /s/ PATRICIA G. BYRNES By: /s/ DOMENICA L. SCHULZ-SCARPULLA
------------------------------------ ----------------------------------------
Patricia G. Byrnes, Domenica L. Schulz-Scarpulla,
GENERAL COUNSEL AND ASSISTANT SECRETARY PRESIDENT AND CHIEF OPERATING OFFICER
ATTEST: DELCO MERGER CORP.
By: /s/ JOHN B. SMITH By: /s/ RAYMOND MARCY
------------------------------------ ----------------------------------------
John B. Smith, Raymond Marcy,
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
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<PAGE>
The Exhibits to the Merger Agreement are not presented herein or delivered
herewith. Copies of the Exhibits will be provided by first class mail without
charge to each person to whom this Proxy Statement/Prospectus is delivered, upon
written or oral request to John B. Smith, Esq., Senior Vice President, Secretary
and General Counsel, Interim Services Inc., 2050 Spectrum Boulevard, Fort
Lauderdale, Florida 33309, or to Patricia G. Byrnes, Esq., General Counsel,
Brandon Systems Corporation, 9 Polito Avenue, Lyndhurst, New Jersey 07071.
A-35
<PAGE>
EXHIBIT B
IRREVOCABLE PROXY
<PAGE>
IRREVOCABLE PROXY
FEBRUARY 27, 1996
The undersigned do hereby irrevocably grant to Raymond Marcy, Roy Krause and
John B. Smith, and each of them, any of whom may act without the joinder of the
other, as their respective true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for them and in their respective
names, place and stead, in any and all capacities to vote all of the shares (the
"Subject Shares") of common stock, par value $.10 per share (the "Brandon Common
Stock"), of Brandon Systems Corporation, a Delaware corporation ("Brandon"),
owned of record by the undersigned, at any meeting of the stockholders of
Brandon called for the purpose of voting on the Merger (as defined below) (and
any adjournment or postponement thereof), solely for the following purposes, and
no other: (a) in favor of the Merger (as defined below) and the approval and
adoption of the Merger Agreement (as defined below). As used herein, the term
"Merger Agreement" shall mean that certain Agreement and Plan of Merger dated as
of even date herewith by and among Brandon, Interim Services Inc., a Delaware
corporation ("Parent"), and Merger Sub (as defined therein); the term "Merger"
shall have the meaning ascribed thereto in the Merger Agreement; and certain
other capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Merger Agreement.
The undersigned acknowledge and agree that this Irrevocable Proxy is coupled
with an interest, constitutes, among other things, an inducement for Parent and
Merger Sub to enter into the Merger Agreement, is irrevocable and shall not be
terminated except as set forth herein and any prior proxies are hereby revoked
and no subsequent proxies will be given (and, if given, will not be effective)
prior to the termination of this proxy and that this Irrevocable Proxy is for
the purpose of voting with respect to the items set forth in subparagraph (a)
above and no other, and that voting or granting a proxy to vote on other matters
is not limited by this Irrevocable Proxy.
This Irrevocable Proxy shall terminate, with no further action on the part
of any person or entity, (i) on and as of the earliest of (a) August 27, 1996,
or (b) the termination of the Merger Agreement in accordance with its terms,
(ii) if the Board of Directors of Brandon shall not have recommended the Merger
to Brandon's stockholders in the Proxy Statement/Prospectus, or shall have
modified or rescinded its recommendation of the Merger to the Brandon
stockholders as being advisable and fair to and in the best interests of Brandon
and its stockholders, or shall have modified or rescinded its approval of the
Merger Agreement, or shall have resolved to do any of the foregoing, or (iii) if
Brandon's Board of Directors shall have entered into a definitive agreement
contemplating, announced or approved an Acquisition Transaction after
determining, in good faith and upon advice of outside counsel, that such
approval was necessary in the exercise of its fiduciary duties under applicable
laws.
IN WITNESS WHEREOF, the undersigned have set their respective hands on the
27th day of February, 1996.
/s/ IRA B. BROWN /s/ MYRA BROWN
- -------------------------------------------
- -------------------------------------------
Ira B. Brown Myra Brown
<PAGE>
EXHIBIT C
FAIRNESS OPINION
OF
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
EXHIBIT C
DONALDSON, LUFKIN & JENRETTE
APRIL 23, 1996
Board of Directors
Interim Services Inc.
2050 Spectrum Blvd.
Ft. Lauderdale, FL 33309
Dear Madame and Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of Interim Services Inc. (the "Company") of the
consideration to be paid by the Company in connection with the merger (the
"Merger") of Delco Merger Corp., a wholly owned subsidiary of the Company, with
and into Brandon Systems Corporation ("Brandon") pursuant to an Agreement and
Plan of Merger (the "Agreement") dated as of February 27, 1996, between the
Company, Delco Merger Corp. and Brandon.
Pursuant to the Agreement, each share of Brandon common stock, $0.10 par
value per share, will be converted into the right to receive 0.88 shares of
common stock, $0.01 par value per share of the Company.
In arriving at our opinion, we have reviewed the Agreement and the Proxy
Statement draft of April 23, 1996 as proposed to be filed with the Securities
and Exchange Commission. We also have reviewed financial and other information
that was publicly available or furnished to us by the Company and Brandon,
including information provided during discussions with their respective
managements. Included in the information provided during discussions with the
respective managements were certain financial projections of Brandon for the
period beginning October 2, 1995 and ending October 1, 1998 prepared by the
management of Brandon and certain financial projections of the Company for the
period beginning January 1, 1996 and ending December 31, 1999 prepared by the
management of the Company. In addition, we have compared certain financial and
securities data of the Company and Brandon with various other companies whose
securities are traded in public markets, reviewed prices and premiums paid in
other business combinations and conducted such other financial studies, analyses
and investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company,
Brandon or their respective representatives, or that was otherwise reviewed by
us. With respect to the financial projections supplied to us, we have assumed
that they have been reasonably prepared on the basis reflecting the best
currently available estimates and judgments of the management of the Company and
Brandon as to the future operating and financial performance of the Company and
Brandon. We have not assumed any responsibility for making any independent
evaluation of Brandon's assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have relied as to all
legal matters on advice of counsel to the Company. We have also assumed that the
Merger will qualify as a pooling of interest for financial reporting purposes
pursuant to APB 16.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
Merger.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers,
<PAGE>
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. DLJ has performed investment banking services for the Company in the
past and has been compensated for such services. In the ordinary course of their
businesses, affiliates of the undersigned may actively trade the debt and equity
securities of the Company or Brandon, for their own accounts, or for the
accounts of customers, and, accordingly, may at any time hold a long or short
position in such securities.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be paid by the Company in the Merger is
fair to the shareholders of the Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:/s/ Vanessa Burgess
-----------------------------------
Vanessa Burgess
Managing Director
<PAGE>
EXHIBIT D
FAIRNESS OPINION
OF
GOLDMAN, SACHS & CO.
<PAGE>
EXHIBIT D
PERSONAL AND CONFIDENTIAL
April 23, 1996
Board of Directors
Brandon Systems Corporation
9 Polito Avenue
Lyndhurst, NJ 07071
Gentlemen and Mesdames:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $0.10 per share (the "Shares"), of
Brandon Systems Corporation (the "Company") of the exchange ratio of 0.88 shares
of Common Stock, par value $0.01 per share (the "Interim Services Shares"), of
Interim Services Inc. ("Interim Services") to be received for each Share (the
"Exchange Ratio") pursuant to the Agreement and Plan of Merger dated as of
February 27, 1996 by and among Interim Services, Delco Merger Corp., a
wholly-owned subsidiary of Interim Services, and the Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We have also provided certain investment banking services to Interim
Services from time to time, including acting as managing underwriter of an
initial public offering of common stock of Interim Services in January 1994, and
we may provide investment banking services to Interim Services from time to time
in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Proxy Statement/Prospectus dated April 23, 1996 of the Company
and Interim Services; Annual Reports to Stockholders and Annual Reports on Form
10-K of the Company for the five fiscal years ended October 1, 1995; Annual
Reports to Stockholders and Annual Reports on Form 10-K of Interim Services for
the fiscal year ended March 25, 1994 and the fiscal years ended December 30,
1994 and December 29, 1995; the Prospectus of Interim Services dated January 27,
1994, which includes audited financial statements of Interim Services for the
three fiscal years ended March 26, 1993, and for the 26 weeks ended September
24, 1993; certain interim reports to stockholders and Quarterly Reports on Form
10-Q for each of the Company and Interim Services; certain other communciations
from the Company and Interim Services to their respective stockholders; and
certain internal financial analyses and forecasts for each of the Company and
Interim Services prepared by their respective managements. We have also held
discussions with members of the senior managements of the Company and Interim
Services regarding the past and current business operations, financial
conditions and future prospects of their respective companies. In addition, we
have reviewed the reported price and trading activity for the Shares and the
Interim Services Shares, compared certain financial and stock market information
for the Company and Interim Services with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the temporary staffing industry
specifically and other industries generally and performed such other studies and
analyses as we considered appropriate.
<PAGE>
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. We have not made an independent evaluation or
appraisal of the assets and liabilities of the Company or Interim Services or
any of their subsidiaries and we have not been furnished with any such
evaluation or appraisal. We have also assumed with your consent that the Merger
will be accounted for as a pooling of interests under generally accepted
accounting principles.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair to the holders of Shares.
Very truly yours,
GOLDMAN, SACHS & CO.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INTERIM SERVICES' AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
SIXTH: (A) Interim shall indemnify to the fullest extent authorized or
permitted by law (as now or hereafter in effect) any person made, or threatened
to be made a party or witness to any action, suit or proceeding (whether civil
or criminal or by or in the right of Interim) by reason of the fact that he, his
testator or intestate, is or was a director or officer of Interim or by reason
of the fact that such director or officer, at the request of Interim, is or was
serving any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in any capacity. Nothing contained herein
shall affect any rights to indemnification to which employees other than
directors and officers may be entitled by law. No amendment to or repeal of this
paragraph (A) of Article Sixth shall apply to or have any effect on any right to
indemnification provided hereunder with respect to any acts or omissions
occurring prior to such amendment or repeal.
(B) No director or stockholder of Interim shall be personally liable to
Interim or its stockholders for monetary damages for any breach of fiduciary
duty as a director. Notwithstanding the foregoing sentence, a director shall be
liable to the extent provided by applicable law (i) for any breach of the
director's duty of loyalty to Interim or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which such director
derived an improper personal benefit. No amendment to or repeal of this
paragraph (B) of Article Sixth shall adversely affect any right or protection of
any director of Interim existing at the time of such amendment to repeal for or
with respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
INTERIM SERVICES' BYLAWS
24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY
OR IN THE RIGHT OF INTERIM. The corporation shall indemnify to the fullest
extent authorized or permitted by law (as now or hereafter in effect) any person
made, or threatened to be made, a party or witness to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she (or his or her testator or intestate) is or
was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if he or she 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, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT
OF THE CORPORATION. The corporation shall indemnify to the fullest extent
authorized or permitted by law (as now or hereafter in effect) any person made,
or threatened to be made a party or witness to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she (or his or her
testator or intestate) is or was a director or
II-1
<PAGE>
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
and, if and to the extent permitted by applicable law, judgments, penalties, and
amounts paid in settlement, incurred by him or her in connection with defending,
investigating, preparing to defend, or being prepared to be a witness in, such
action, suit, proceeding or claim if 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, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless (and only to the extent that)
the Court of Chancery or the court in which such action, suit, proceeding or
claim was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses and
amounts which the Court of Chancery or such other court shall deem proper.
(c) AUTHORIZATION OF INDEMNIFICATION.
(1) Any indemnification under Section 24 (unless ordered by a court)
shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director or officer is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 24(a) or (b), as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders; provided,
however, that if a Change in Control (as defined in Section 24(c)(3)) has
occurred and the person seeking indemnification so requests, such
determination shall be made in a written opinion rendered by independent
legal counsel chosen by the person seeking indemnification and not
reasonably objected to by the Board of Directors (whose fees and expenses
shall be paid by the corporation). To the extent, however, that a director
or officer of the corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding described above, or in defense
of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) incurred by him or her in
connection therewith, without the necessity of authorization in the specific
case.
(2) For purposes of the proviso to the second sentence of Section
24(c)(1), "independent legal counsel" shall mean legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been
retained by or who has performed services for the corporation or the person
seeking indemnification within the previous three years.
(3) A "Change in Control" shall mean a change in control of the
corporation of a nature that would be required to be reported in response to
Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act, whether or not the corporation is then subject to such reporting
requirement; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used
in Section 13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
corporation or a corporation owned directly or indirectly by the
stockholders of the corporation in substantially the same proportions as
their ownership of stock of the corporation, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the corporation representing thirty percent
(30%) or more of the total voting power represented by the corporation's
then outstanding shares of capital stock entitled to vote (the "Voting
Securities"), or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the corporation and any new director whose election by the
Board of Directors or nomination for election by the corporation's
stockholders who approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii)
the stockholders of the corporation approve a merger or consolidation of the
II-2
<PAGE>
corporation with any other corporation, other than a merger or consolidation
which would result in any Voting Securities of the corporation outstanding
or by being converted into any voting securities of the surviving entity) at
least eighty percent (80%) of the total voting power represented by all
Voting Securities of the corporation or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
corporation approve a plan of complete liquidation of the corporation or an
agreement for the sale or disposition by the corporation of (in one
transaction or a series of transactions) all or substantially all of the
corporation's assets.
(d) GOOD FAITH DEFINED. For purposes of any determination under Section
24(c), a person shall be deemed to have acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interest of the
corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his or her conduct was unlawful, if his or her
action is based on the records or on information supplied to him or her by the
officers of the corporation or another enterprise in the course of their duties,
or on the advice of legal counsel for the corporation or another enterprise or
on information or records given or reports made to the corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the corporation or another
enterprise. The term "another enterprise" as used in this Section 24(d) shall
mean any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
corporation as a director or officer. The provisions of this Section 24(d) shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Section 24(a) or (b), as the case may be.
(e) RIGHT TO INDEMNIFICATION UPON APPLICATION; PROCEDURE UPON APPLICATION,
ETC. Except as otherwise provided in the proviso to Section 24(b):
(1) Any indemnification under Section 24(a) or (b) shall be made no
later than 30 days after receipt by the corporation of the written request
of the director or officer or former director or officer unless a
determination is made within said 30-day period in accordance with Section
24(c) that such person has not met the applicable standard of conduct set
forth in Sections 24(a) and (b).
(2) The right to indemnification under Section 24(a) or (b) or advances
under Section 24(f) shall be enforceable by the director or officer or
former director or officer in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
corporation. Neither the absence of any prior determination that
indemnification is proper in the circumstances, nor a prior determination
that indemnification is not proper in the circumstances shall be a defense
to the action or create a presumption that the director or officer or former
director or officer has not met the applicable standard of conduct. The
expenses (including attorneys' fees and expenses) incurred by the director
or officer or former director or officer in connection with successfully
establishing his or her right to indemnification, in whole or in part, in
any such action (or in any action or claim brought by him to recover under
any insurance policy or policies referred to in Section 24(i)) shall also be
indemnified by the corporation.
(3) If any person is entitled under any provision of this Section 24 to
indemnification by the corporation for some or a portion of expenses,
judgments, fines, penalties or amounts paid in settlement incurred by him or
her, but not, however, for the total amount thereof, the corporation shall
nevertheless indemnify such person for the portion of such expenses,
judgments, fines, penalties and amounts to which he is entitled.
(f) EXPENSES PAYABLE IN ADVANCE. Expenses incurred in defending or
investigating a threatened or pending action, suit or proceeding may be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the corporation as authorized in this
Section 24; provided, however, that
II-3
<PAGE>
if he or she seeks to enforce his or her rights in a court of competent
jurisdiction pursuant to Section 24(e)(2), said undertaking to repay shall not
be applicable or enforceable unless and until there is a final court
determination that he or she is entitled to indemnification as to which all
rights of approval have been exhausted or have expired.
(g) NON-EXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this Section 24 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, contract, vote of stockholders or disinterested directors or
pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, it being the policy
of the corporation that indemnification of the persons specified in Sections
24(a) and (b) shall or may, as the case may be, be made to the fullest extent
permitted by law. The provisions of this Section 24 shall not be deemed to
preclude the indemnification of any person who is not specified in Sections
24(a) and (b) but whom the corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise. The Corporation may enter into written agreements, approved by a
majority of the Directors, which include all or any of the indemnity provisions
required or permitted by this Section 24.
(h) INSURANCE. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power or the obligation to indemnify him or her
against such liability under the provisions of this Section 24.
(i) MEANING OF "CORPORATION" FOR PURPOSES OF SECTION 24. For purposes of
this Section 24, references to "the corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors or officers so that any person who is or was a director
or officer of such constituent corporation, or is or was serving at the request
of such constituent corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section 24 with respect to the resulting
or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
(j) SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
STATUTORY
Generally, Section 145 of the General Corporation Law of the State of
Delaware authorizes Delaware corporations, under certain circumstances, to
indemnify their officers and directors against all expenses and liabilities
(including attorneys' fees) incurred by them as a result of any suit brought
against them in their capacity as a director or an officer, if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A director or officer may also be indemnified against expenses
incurred in connection with a suit by or in the right of the corporation if such
director or officer acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
II-4
<PAGE>
ITEM 21.(A) EXHIBITS.
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
2.1 Agreement and Plan of Merger (attached as Exhibit A to the Proxy Statement/Prospectus)...... *
3.1 Restated Articles of Incorporation of Registrant............................................ (1)
3.2 By-Laws of Registrant....................................................................... (1)
4.1 Rights Agreement dated as of April 1, 1994, between Interim Services and Boatmen's Trust (2)
Company....................................................................................
4.2 Form of Certificate of Designations, Preferences and Rights of Participating Preferred Stock (2)
of Interim Services........................................................................
4.3 Form of Stock Certificate................................................................... (3)
5.1 Opinion of Bryan Cave LLP as to the legality of securities being registered................. *
8.1 Form of Opinion of Bryan Cave LLP as to certain federal income tax consequences............. *
9.1 Irrevocable Proxy of Ira B. Brown and Myra Brown (attached as Exhibit B to the Proxy *
Statement/Prospectus)......................................................................
10.1 Interim Services' 1993 Long-Term Executive Compensation Plan, as amended.................... (5)
10.2 Interim Services' 1993 Stock Option Plan for Outside Directors, as amended.................. (5)
10.3 Revolving Credit Agreement of Interim Services dated as of April 6, 1994, as replaced by the (6)
Amended and Restated Revolving Credit Agreement of Interim Services, dated as of June 2,
1995.......................................................................................
10.4 Tax Sharing Agreement dated October, 1993, by and between H&R Block, Inc. and Interim (1)
Services...................................................................................
10.5 Amendment No. 2 to Amended and Restated Credit Agreement of Interim Services................ (4)
10.6 Indemnification Agreement dated January 1, 1994, by and between Interim Services and H&R (1)
Block, Inc. ...............................................................................
10.7 Franchise/License Agreement dated July 12, 1993, by and between Interim Services and Keco (1)
Health Care, Inc. .........................................................................
10.8 Interim Services' 1994 Stock Option Plan for Franchisees, Licensees and Agents, as (7)
amended....................................................................................
10.9 Employment Agreement dated as of May 1, 1994, by and between Interim Services and Ray (6)
Marcy......................................................................................
10.10 Employment, Confidentiality, and Noncompetition Agreement by and between Interim Services (6)
and Allan Sorensen.........................................................................
11 Statement re: Computation of Per Share Earnings............................................. (9)
13 Annual Report to Stockholders of Interim Services for the twelve months ended December 29, (8)
1995.......................................................................................
21 Subsidiaries of Interim Services............................................................ (9)
23.1 Consent of Bryan Cave LLP (included in Exhibit 5.1)......................................... *
23.2 Consent of Bryan Cave LLP................................................................... *
23.3 Consent of Deloitte & Touche LLP ........................................................... *
23.4 Consent of Coopers & Lybrand L.L.P. ........................................................ *
23.5 Consent of Donaldson, Lufkin & Jenrette Securities Corporation.............................. *
23.6 Consent of Goldman, Sachs & Co. ............................................................ *
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
24.1 Power of Attorney (included in signature page).............................................. *
<C> <S> <C>
99.1 Form of Proxy for special meeting to be mailed to Interim Services stockholders............. *
99.2 Form of Proxy for special meeting to be mailed to Brandon stockholders...................... *
99.3 Opinion of Donaldson, Lufkin & Jenrette Securities Corporation as to fairness of Merger *
consideration (attached as Exhibit C to the Proxy Statement/ Prospectus)...................
99.4 Opinion of Goldman, Sachs & Co. as to fairness of Exchange Ratio (attached as Exhibit D to *
the Proxy Statement/Prospectus)............................................................
</TABLE>
Pursuant to Item 601(b)(2), Interim Services hereby agrees to furnish
supplementally to the Commission, a copy of any omitted schedule upon the
Commission's request.
- ------------------------
(1) These Exhibits are filed as Exhibits to Interim Services' Form S-1,
Amendment No. 2, dated January 12, 1994, SEC Registration No. 33-71338, and
are incorporated herein by reference.
(2) These Exhibits are filed as Exhibits to Interim Services' Form 8-A, dated
April 11, 1994, SEC Registration No. 0-23198, and are incorporated herein by
reference.
(3) These Exhibits are filed as Exhibits to Interim Services' Form 10-K for the
fiscal year ended March 25, 1994, and are incorporated herein by reference.
(4) Certain of these Exhibits are filed as Exhibits to Interim Services' Form
8-K dated December 15, 1995, and are incorporated herein by reference.
(5) These Exhibits are filed as Exhibits to Interim Services' definitive proxy
statement filed in connection with Interim Services' 1995 Annual Meeting,
and are incorporated herein by reference.
(6) These Exhibits are filed as Exhibits to Interim Services' Form 10-K for the
twelve month period ended December 30, 1994, and are incorporated herein by
reference.
(7) This Exhibit is filed as an Exhibit to Interim Services' Form S-8, as filed
with the SEC in July 1995, and is incorporated herein by reference.
(8) This Exhibit is filed in connection with Interim Services' 1996 annual
meeting, and is incorporated herein by reference.
(9) These Exhibits are filed as Exhibits to Interim Services' Form 10-K for the
twelve month period ended December 29, 1995, and are incorporated herein by
reference.
* Included herewith.
ITEM 21.(B) FINANCIAL STATEMENT SCHEDULES.
All financial statement schedules of Interim Services which are required to
be included herein are included in the Annual Report of Interim Services on Form
10-K for the fiscal year ended December 29, 1995. All financial statement
schedules of Brandon which are required to be included herein are included in
the Annual Report of Brandon on Form 10-K for the fiscal year ended October 1,
1995.
ITEM 21.(C) REPORTS, OPINIONS OR APPRAISALS.
The reports, opinions or appraisals which are required to be included herein
are included as Exhibits to Item 21(a).
II-6
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8, or Form F-3, and the
information required to be included in the post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The undersigned registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of
II-7
<PAGE>
1933, each such post-effective amendment 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.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
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 registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of
Florida, on April 24, 1996.
INTERIM SERVICES INC.
By: /s/ RAYMOND MARCY
--------------------------------------
Raymond Marcy
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
Each person whose signature appears below hereby severally constitutes and
appoints Raymond Marcy, John B. Smith and P. Mitchell Woolery, and each of them
singly, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-4, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
<C> <S> <C>
/s/ WILLIAM EVANS
------------------------------------------- Director April 24, 1996
William Evans
/s/ JEROME GROSSMAN
------------------------------------------- Director April 24, 1996
Jerome Grossman
/s/ CINDA A. HALLMAN
------------------------------------------- Director April 24, 1996
Cinda A. Hallman
/s/ J. IAN MORRISON
------------------------------------------- Director April 24, 1996
J. Ian Morrison
/s/ ALLAN C. SORENSEN
------------------------------------------- Director April 24, 1996
Allan C. Sorensen
/s/ HAROLD TOPPEL
------------------------------------------- Director April 24, 1996
Harold Toppel
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
<C> <S> <C>
/s/ A. MICHAEL VICTORY
------------------------------------------- Director April 24, 1996
A. Michael Victory
/s/ RAYMOND MARCY President, Chief Executive
------------------------------------------- Officer and Director (principal April 24, 1996
Raymond Marcy executive officer)
/s/ ROY KRAUSE Executive Vice President and
------------------------------------------- Chief Financial Officer April 24, 1996
Roy Krause (principal financial officer)
/s/ PAUL HAGGARD Financial Vice President and
------------------------------------------- Treasurer (principal accounting April 24, 1996
Paul Haggard officer)
</TABLE>
II-10
<PAGE>
EXHIBIT 5.1
BRYAN CAVE LLP
April 23, 1996
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Ladies and Gentlemen:
We refer to the Registration Statement (the "Registration Statement") of
Interim Services Inc., a Delaware corporation (the "Company"), filed on Form S-4
with the Securities and Exchange Commission (the "SEC") to register under the
Securities Act of 1933, as amended (the "Act"), the offer to sell 4,897,546
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"). The Common Stock is being offered to holders of common stock of Brandon
Systems Corporation, a Delaware corporation ("Brandon"), pursuant to the
proposed merger (the "Merger") of Delco Merger Corp., a Delaware corporation and
a wholly-owned subsidiary of the Company, with and into Brandon.
In this connection, we have examined originals or copies certified or
otherwise identified to our satisfaction of such corporate records and
agreements of the Company, and such instruments and documents, including officer
certificates and certificates of public officials, as we have deemed necessary
as a basis for the opinions hereinafter expressed.
Based on the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth below, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. The shares of Common Stock registered pursuant to the Registration
Statement will have been, at the time of their issuance in accordance with
the Merger, duly authorized, validly issued, fully paid and non-assessable.
The opinions expressed herein are limited by, subject to and based on the
following assumptions, exceptions, qualifications and limitations:
a. The opinions stated herein are as of the date hereof, and we assume
no obligation to update or supplement this legal opinion to reflect any
facts or circumstances that may hereafter come to our attention or any
changes in laws that may hereafter occur.
b. This legal opinion is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated.
<PAGE>
We consent to the filing of this legal opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the proxy statement/prospectus filed as a part thereof. We also
consent to your filing copies of this legal opinion as an exhibit to the
Registration Statement with agencies of such states as you deem necessary in the
course of complying with the laws of such states regarding the Merger. In giving
this consent, we do not hereby admit that we are in the category of persons
whose consent is required under section 7 of the Act or the rules and
regulations of the SEC.
Very truly yours,
/s/ BRYAN CAVE LLP
<PAGE>
EXHIBIT 8.1
FORM OF BRYAN CAVE OPINION
DRAFT
, 1996
Board of Directors
Interim Services Inc.
2050 Spectrum Boulevard
Ft. Lauderdale, Florida 33309
Board of Directors
Brandon Systems Corporation
9 Polito Avenue, Ninth Floor
Lyndhurst, New Jersey 07071
Dear Board of Directors:
This opinion is delivered in our capacity as counsel to Interim Services
Inc., a Delaware corporation ("Interim Services"), pursuant to Section 6.1(d) of
the Agreement and Plan of Merger dated February 27, 1996 (the "Merger
Agreement") by and among Interim Services, Brandon Systems Corporation, a
Delaware corporation ("Brandon"), and Delco Merger Corp., a Delaware corporation
and a wholly-owned subsidiary of Interim Services ("Merger Sub"), and in
connection with the filing of the Registration Statement on Form S-4 (the
"Registration Statement") filed as Joint Proxy Statement/Prospectus with the
Securities and Exchange Commission on April , 1996 (No. ). Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Merger Agreement.
In rendering this opinion, we have reviewed copies of the Merger Agreement,
the Registration Statement, and such other documents as we have deemed necessary
or relevant for purposes of this opinion. In addition to these documents, we
have relied on the written representations of Interim Services and Brandon as to
certain factual matters.
In rendering the opinion set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
authority and capacity of the individual or individuals who executed any such
documents on behalf of any person, (v) the accuracy and completeness of all
documents made available to us and (vi) the accuracy as to the facts of all
representations, warranties and written statements. We have also assumed,
without investigation, that all documents, warranties and covenants relating to
the Merger on which we have relied in rendering the opinions set forth below and
that were given or dated earlier than the date of this letter continue to remain
accurate, insofar as relevant to the opinion set forth herein, from such earlier
date through and including the date of this letter.
OPINION
Based upon the foregoing, and assuming the Merger is consummated in
accordance with the Merger Agreement, and subject to the conditions and
limitations contained herein, we are of the opinion that: (1) the Merger, when
consummated in accordance with the terms of the Merger Agreement and as
described in the Registration Statement, will constitute a reorganization within
the
<PAGE>
meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code
of 1986, as amended (the "Code")(1); and (2) the federal income tax consequences
to the parties, as set forth in the Registration Statement and as set forth more
fully below, are true and complete in all material respects.
A reorganization qualifying under Sections 368(a)(1)(A) and 368(a)(2)(E)
will result in the following federal income tax consequences:
1. No gain or loss will be recognized by Brandon or Merger Sub as a result
of the Merger.
2. No gain or loss will be recognized by Interim Services upon the exchange
of Interim Common Stock for Brandon Common Stock pursuant to the Merger.
3. No gain or loss will be recognized by a Brandon stockholder upon
exchange of Brandon Common Stock for Interim Common Stock pursuant to the
Merger.
4. The basis of the Interim Common Stock received by a Brandon stockholder
pursuant to the Merger (including any fractional share) will be the same as the
basis of the Brandon Common Stock surrendered in exchange therefor; and,
provided that such Brandon Common Stock is held as a capital asset at the
Effective Time, the holding period of such Interim Common Stock (including any
fractional share) will include the period during which such Brandon Common Stock
was held.
5. A Brandon stockholder who receives cash in lieu of a fractional share
will recognize gain or loss as if he had received such fractional share and sold
it for cash at the Effective Time.
* * * * *
The foregoing opinions reflect our best professional judgment as to the
correct federal income tax treatment, under current law, of those aspects of the
proposed transactions to which the opinions relate. We note that our opinion is
based upon our review of the documents described above, the statements and
representations referred to above, the provisions of the Code, the regulations,
published rulings and announcements thereunder, and the judicial interpretations
thereof, currently in effect. Any change in applicable law or any of the facts
and circumstances described in the Registration Statement, or inaccuracy of any
statements or representations on which we have relied, may effect the continuing
validity of our opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the proxy statement/prospectus filed as a part thereof. We also
consent to your filing copies of this opinion as an exhibit to the Registration
Statement with agencies of such states as you deem necessary in the course of
complying with the laws of such states regarding the Merger. In giving this
consent, we do not hereby admit that we are in the category of persons whose
consent is required under section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission.
- ------------------------
(1) All section references are to the Internal Revenue Code of 1986, as
amended, unless otherwise indicated.
<PAGE>
EXHIBIT 23.2
CONSENT
We anticipate delivering our legal opinion, in substantially the form
attached hereto as Exhibit 8.1, as to the federal income tax consequences of the
merger of a wholly-owned subsidiary of Interim Services Inc. with and into
Brandon Systems Corporation, at the closing thereof. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
use of our name under the caption "Legal Matters" in the proxy
statement/prospectus filed as a part thereof. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission.
/s/ BRYAN CAVE LLP
April 23, 1996
Kansas City, MO
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Interim Services Inc. on Form S-4 of our report dated February 8, 1996
(except for note 14, as to which the date is February 27, 1996) appearing in the
Annual Report on Form 10-K of Interim Services Inc. for the year ended December
29, 1995 and to the reference to us under the headings "Selected and
Supplementary Historical and Pro Forma Financial Data" and "Experts" in such
Prospectus.
Deloitte & Touche LLP
Fort Lauderdale, Florida
April 23, 1996
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Interim Services Inc. on Form S-4 of our reports dated November 14, 1995 on
our audits of the consolidated financial statements and financial statement
schedule of Brandon Systems Corporation as of October 1, 1995 and October 2,
1994 and for each of the three years in the period ended October 1, 1995, which
reports are included in Brandon's Annual Report on Form 10-K, incorporated by
reference in this registration statement. We also consent to the reference to
our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
New York, New York
April 23, 1996
<PAGE>
DONALDSON, LUFKIN & JENRETTE
EXHIBIT 23.5
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated April
23, 1996, to the Board of Directors of Interim Services Inc. (the "Company") as
Exhibit C to the Definitive Joint Proxy Statement/Prospectus (the "Proxy")
relating to the merger of Delco Merger Corp., a wholly owned subsidiary of
Interim Services Inc., with and into Brandon Systems Corporation and (ii) all
references to DLJ in the sections captioned "Summary--The Special
Meetings--Opinions of Financial Advisors" and "The Merger--Opinion of Financial
Advisor to Interim Services" of the Proxy Statement/Prospectus included in the
registration statement on Form S-4 filed by Interim Services Inc. In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under, and we do not admit and we disclaim that we are
"experts" for purposes of, the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ VANESSA BURGESS
- --------------------------------------------------------------------------------
Vanessa Burgess
New York, New York
April 23, 1996
<PAGE>
GOLDMAN, SACHS & CO.
EXHIBIT 23.6
April 23, 1996
Board of Directors
Brandon Systems Corporation
9 Polito Avenue
Lyndhurst, NJ 07071
Re:Registration Statement on Form S-4 of Interim Services, Inc. dated April 24,
1996
and the Proxy Statement/Prospectus included therein
Gentlemen and Mesdames:
Attached is our opinion letter dated April 23, 1996, with respect to the
fairness to the holders of the outstanding shares of Common Stock, par value
$0.10 per share (the "Shares"), of Brandon Systems Corporation (the "Company")
of the exchange ratio of 0.88 shares of Common Stock, par value $0.01 per share,
of Interim Services Inc. ("Interim Services") to be received for each Share
pursuant to the Agreement and Plan of Merger dated as of February 27, 1996 by
and among Interim Services, Delco Merger Corp., a wholly-owned subsidiary of
Interim Services, and the Company.
The foregoing opinion letter is for the information and assistance of the Board
of Directors of the Company in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it be filed with, included
in or referred to in whole or in part in any registration statement, proxy
statement or any other document, except in accordance with our prior written
consent.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the caption ("The Merger--Opinions of Financial Advisors--Brandon") and to
the inclusion of the foregoing opinion in the Registration Statement on Form S-4
of Interim Services dated April 24, 1996 and the Proxy Statement/Prospectus
included therein. In giving such consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
<PAGE>
Exhibit 99.1
PROXY
INTERIM SERVICES INC.
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FL 33309
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Stockholders, May 23, 1996
The undersigned hereby appoints Raymond Marcy, John B. Smith and P. Mitchell
Woolery, and each of them, with full power of substitution, the true and lawful
attorneys in fact, agents and proxies of the undersigned to vote at the Special
Meeting of Stockholders of Interim Services Inc. (the "Company"), to be held on
Thursday, May 23, 1996, commencing at 10:00 a.m. local time, at the offices of
Bryan Cave LLP, 245 Park Avenue, New York, New York 10167-0034, and any and all
adjournments or postponements thereof, according to the number of votes which
the undersigned would possess if personally present, for the purposes of
considering and taking action upon the following, as more fully set forth in the
Proxy Statement/Prospectus of the Company and Brandon Systems Corporation dated
April 24, 1996.
1. APPROVAL OF THE ISSUANCE OF THE COMPANY'S COMMON STOCK PURSUANT TO THE
MERGER AGREEMENT DATED AS OF FEBRUARY 27, 1996 BY AND AMONG THE COMPANY,
DELCO MERGER CORP., A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY, AND BRANDON
SYSTEMS CORPORATION (THE "MERGER AGREEMENT"):
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion with respect to such other business as properly may come
before the meeting or any adjournments or postponements thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ISSUANCE OF THE COMPANY'S COMMON STOCK PURSUANT TO THE MERGER
AGREEMENT. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE COMPANY'S MANAGEMENT.
DATED: ____________________, 1996.
__________________________________
Signature
__________________________________
Signature if held jointly
Please sign exactly as name(s)
appear on this proxy card. When
shares are held by joint tenants,
both should sign. When signing as
attorney-in-fact, executor,
administrator, personal
representative, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE
<PAGE>
Exhibit 99.2
PROXY
BRANDON SYSTEMS CORPORATION
9 POLITO AVENUE
LYNDHURST, NJ 07071
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting of Stockholders, May 23, 1996
The undersigned hereby appoints Carolyn Cox and Raymond Bolan, and each of
them, with full power of substitution, the true and lawful attorneys in fact,
agents and proxies of the undersigned to vote at the Special Meeting of
Stockholders of Brandon Systems Corporation (the "Company"), to be held on
Thursday, May 23, 1996, commencing at 1:00 p.m. local time, at the American
Stock Exchange, Board of Governors Room, 13th Floor, 86 Trinity Place, New York,
New York, and any and all adjournments or postponements thereof, according to
the number of votes which the undersigned would possess if personally present,
for the purposes of considering and taking action upon the following, as more
fully set forth in the Proxy Statement/Prospectus of the Company and Brandon
Systems Corporation dated April 24, 1996.
1. APPROVAL OF THE AGREEMENT AND PLAN OF MERGER DATED AS OF FEBRUARY 27, 1996
BY AND AMONG THE COMPANY, INTERIM SERVICES INC. ("INTERIM"), AND DELCO
MERGER CORP., A WHOLLY-OWNED SUBSIDIARY OF INTERIM (THE "MERGER AGREEMENT")
AND THE MERGER DESCRIBED THEREIN:
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion with respect to such other business as properly may come
before the meeting or any adjournments or postponements thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER. IF ANY OTHER
BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF BRANDON'S MANAGEMENT.
DATED: ____________________, 1996.
__________________________________
Signature
__________________________________
Signature if held jointly
Please sign exactly as name(s)
appear on this proxy card. When
shares are held by joint tenants,
both should sign. When signing as
attorney-in-fact, executor,
administrator, personal
representative, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE
