-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OPdkb2kByV+b0jXE0floFQW2f3FymkkKeJdbVAmWnKWquuZaCCORmX4MHhrLGETJ uCiq5d5VdcT+KZQqyLtdxw== 0000950144-97-006554.txt : 19970605 0000950144-97-006554.hdr.sgml : 19970605 ACCESSION NUMBER: 0000950144-97-006554 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 19970604 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMALIE ASSOCIATES INC CENTRAL INDEX KEY: 0001038315 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-26027 FILM NUMBER: 97618817 BUSINESS ADDRESS: STREET 1: 200 PARK AVE STREET 2: SUITE 3100 CITY: NEW YORK STATE: NY ZIP: 10166-0136 BUSINESS PHONE: 8139617494 MAIL ADDRESS: STREET 1: 3903 NORTHDALE BLVD CITY: TAMPA STATE: FL ZIP: 33624 S-1/A 1 AMENDMENT #1 TO FORM S-1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1997 REGISTRATION STATEMENT NO. 333-26027 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- LAMALIE ASSOCIATES, INC. (Exact name of Registrant as specified in its charter) --------------------- FLORIDA 8742 59-2776441 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or Classification Code Number) Identification Number) organization)
--------------------- 200 PARK AVENUE, SUITE 3100 NEW YORK, NEW YORK 10166-0136 (212) 953-7900 (Address, including zip code, and telephone number including area code, of Registrant's principal executive offices) --------------------- JACK P. WISSMAN, EXECUTIVE VICE PRESIDENT LAMALIE ASSOCIATES, INC. 3903 NORTHDALE BOULEVARD TAMPA, FLORIDA 33624 (813) 961-7494 (Name, address, including zip code, and telephone number including area code, of agent for service) COPIES OF COMMUNICATIONS TO: RICHARD M. LEISNER, ESQUIRE WILLIAM M. HOLZMAN, ESQUIRE TRENAM, KEMKER, SCHARF, BARKIN NEAL, GERBER & EISENBERG FRYE, O'NEILL & MULLIS TWO NORTH LASALLE STREET P.O. BOX 1102 SUITE 2200 TAMPA, FLORIDA 33601-1102 CHICAGO, ILLINOIS 60602
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. --------------------- If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ____________________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ____________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JUNE 4, 1997 PROSPECTUS 2,000,000 SHARES LOGO LAMALIE ASSOCIATES, INC. COMMON STOCK --------------------------- All 2,000,000 shares of Common Stock offered hereby are being sold by Lamalie Associates, Inc. ("LAI" or the "Company"). Prior to the Offering, there has been no public market for the Common Stock. It is currently estimated that the initial public offering price will be between $10.00 and $12.00 per share. See "Underwriting" for information relating to the determination of the initial public offering price. Application has been made for approval upon completion of the Offering for listing of the Common Stock on the Nasdaq National Market under the symbol "LAIX." PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED UNDER THE CAPTION "RISK FACTORS" AT PAGE 6. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
============================================================================================================= PRICE TO UNDERWRITING PROCEEDS TO PUBLIC DISCOUNT(1) COMPANY(2) - ------------------------------------------------------------------------------------------------------------- Per Share......................... $ $ $ - ------------------------------------------------------------------------------------------------------------- Total(3)(4)....................... $ $ $ =============================================================================================================
(1) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting estimated expenses of $700,000 payable by the Company. (3) The Company has granted to the Underwriters a 30-day option to purchase up to 300,000 additional shares of Common Stock, on the same terms and conditions as set forth above, to cover over-allotments, if any. If this option is exercised in full, the total Price to Public, Underwriting Discount and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting." (4) Includes up to 200,000 shares of Common Stock which, at the request of the Company, are being offered for sale at the Price to Public to the trustees of the Company's profit sharing plan at the election and for the accounts of participants in such plan. See "Underwriting." --------------------------- The shares of Common Stock are offered by the Underwriters, subject to prior sale, when, as and if delivered to and accepted by the Underwriters and subject to their right to reject orders in whole or in part. It is expected that delivery of the certificates representing shares of Common Stock will be made on or about , 1997 through The Depository Trust Company or at the offices of Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin. ROBERT W. BAIRD & CO. WILLIAM BLAIR & COMPANY INCORPORATED THE DATE OF THIS PROSPECTUS IS , 1997. 3 [A collage of six photographs, consisting of a photograph of a board of directors meeting surrounded by five photographs representative of the Company's target practice groups, described as, clockwise beginning with the top photograph, an automotive assembly plant, labeled "Industrial," a close-up of a pharmaceutical capsule, labeled "Health Care," a close-up of currency, labeled "Financial Services," a shopping mall, labeled "Consumer," and a close-up of an electronic circuit board, labeled "Technology." The following text will appear printed to the upper left of the collage of photographs:] LAI IS A KNOWLEDGE-BASED FIRM committed to providing comprehensive consulting services aimed specifically at fulfilling our clients' leadership needs. Our firm has been built on the collective experience of our consultants and their ability to understand the dynamic changes taking place in industry today. [The following text will appear printed over the center of the collage of photographs:] WE ARE A KNOWLEDGE-BASED FIRM. [LAI LOGO] 2 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and Financial Statements and Notes thereto appearing elsewhere in this Prospectus. Unless otherwise indicated, all information presented in this Prospectus reflects the reincorporation of the Company on June 3, 1997 from a Delaware corporation to a Florida corporation and a 1,000 for one stock split of the Common Stock effected in connection with the reincorporation and assumes that the Underwriters' over-allotment option will not be exercised. All references in this Prospectus to fiscal years are to LAI's fiscal years ended on the last day of February each year (e.g., fiscal 1997 refers to LAI's fiscal year ended February 28, 1997). THE COMPANY LAI is one of the fastest growing executive search firms and is the fifth largest search firm in the United States, principally serving Fortune 500 and large private companies. LAI, which conducts business under the name "Lamalie Amrop International," fulfills its clients' leadership needs by identifying, evaluating, assessing and recommending qualified candidates for senior level positions. The Company provides executive search services exclusively on a retained basis, and charges a fee typically equal to one-third of the first year cash compensation for the position being filled. The average first year cash compensation of positions for which LAI conducted searches in fiscal 1997 was approximately $226,000. LAI provides its clients with global search fulfillment capabilities as a member of Amrop International, an alliance of 34 independently owned executive search firms with 82 offices in 48 countries. LAI's fee revenue has grown from $16.4 million in fiscal 1993 to $46.4 million in fiscal 1997, representing a compound annual growth rate of approximately 30%. This growth rate compares favorably with the 21% average compound annual growth rate experienced by the Company's ten largest U.S. based competitors during the same period. North American executive search industry revenue has grown at an 11% compound annual growth rate from approximately $1.6 billion in 1985 to approximately $4.4 billion in 1995. The industry is expected to continue to grow at an 11% annual rate with revenue projected to reach $7.4 billion by the year 2000. LAI believes that a number of favorable trends have caused and will continue to cause the executive search industry to experience significant growth, including: (i) a greater demand for managers with broad leadership capabilities, (ii) the rapid growth in outsourcing non-core activities, (iii) an increase in executive turnover and (iv) an increase in executive compensation levels. The executive search industry is highly fragmented, consisting of approximately 3,470 U.S. based firms, of which approximately 1,320 are retained and approximately 2,150 are contingency search firms. Retained search firms generally are compensated for an assignment whether or not they are successful in placing a recommended candidate, while contingency search firms are not compensated for an assignment unless they place a recommended candidate. LAI's objective is to be an internationally recognized leader in providing comprehensive consulting services aimed specifically at solving its clients' senior leadership needs. LAI has developed a knowledge-based practice primarily organized around five business sectors: consumer, financial services, health care, industrial and technology. LAI's clients are among the most prominent companies in each of these sectors and include PepsiCo, Grand Metropolitan, Lehman Brothers, Banc One, Bristol-Myers Squibb, Cooper Industries, General Electric, Compaq and Lucent Technologies. LAI focuses on developing long-term relationships with clients and has represented the foregoing clients for an average of 13 years. In fiscal 1997, approximately 60% of LAI's fee revenue was derived from clients to which LAI had provided services in fiscal 1995 or fiscal 1996. LAI's knowledge-based practice involves extensive use of research and technology. Search consultants must understand a client's business practices, industry, competitors and strategies and be able to readily identify the universe of available executive candidates. LAI's 62 associates, researchers and information technology ("IT") professionals support the Company's consultants by, among other things, gathering and analyzing information obtained from numerous electronic databases, trade journals and directories, the Internet and other sources. LAI also maintains a proprietary relational database containing professional information on more than 69,000 executive candidates. LAI's support functions are coordinated from its Tampa, Florida office, which the Company believes was the first U.S. based executive search office to achieve ISO 9002 certification. LAI believes that its 3 5 industry specialization and technological capabilities enable it to consistently provide superior research and, ultimately, deliver higher quality search results to its clients. LAI's rapid growth is primarily the result of its ability to attract and retain some of the most productive executive search consultants in the industry. The Company attributes its success to its premium reputation and its performance-based consultant compensation, which the Company believes is among the highest in the industry as a percentage of fee revenue generated. The Company has increased its staff from 36 consultants in seven regional offices at the end of fiscal 1993 to 63 consultants in nine regional offices as of May 15, 1997. LAI believes its status as a public company will provide a further competitive advantage in attracting and retaining highly qualified consultants. The Company believes that equity ownership by its consultants fosters a team-oriented working environment. Common Stock is broadly held among LAI's consultants and, following the Offering, LAI's current stockholders will own an aggregate of approximately 60% of the shares outstanding with no consultant owning more than 4%. The Company also believes that ownership of Common Stock and its recently adopted stock and incentive plan will align the interests of its consultants with the purchasers of Common Stock in the Offering. Most of LAI's consultants had experience in the executive search business prior to joining LAI, and many previously held senior level positions with the Company's four larger competitors. LAI's Practice Leaders and Managing Partners have an average of 15 years experience in the executive search business. LAI was incorporated as a Delaware corporation in 1987 in connection with a management buyout of, and as successor to, a business originally founded in 1967. On June 3, 1997, the Company was reincorporated as a Florida corporation. LAI's headquarters are located at 200 Park Avenue, Suite 3100, New York, NY 10166-0136, and its telephone number is (212) 953-7900. THE OFFERING Common Stock offered by the Company... 2,000,000 shares Common Stock to be outstanding after the Offering.......................... 5,025,000 shares(1) Use of Proceeds....................... Repay certain bank debt, make additional capital expenditures for technology upgrades and enhancements, and for working capital and general corporate purposes, including the possible opening of additional offices and selective acquisitions. See "Use of Proceeds." Proposed Nasdaq National Market symbol................................ LAIX - --------------- (1) Excludes 430,500 and 67,500 shares of Common Stock issuable on the exercise of stock options to be granted immediately after completion of the Offering at an exercise price equal to the initial public offering price per share and $7.50 per share, assuming an initial public offering price of $11.00 per share, respectively. See "Management -- Director Compensation," "Management -- Incentive and Benefit Plans" and "Description of Capital Stock." 4 6 SUMMARY FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
YEAR ENDED FEBRUARY 28 OR 29, ------------------------------------------------------------------ ACTUAL PRO FORMA 1993 1994 1995 1996 1997 1997(1) -------- -------- -------- -------- -------- ----------- STATEMENT OF OPERATIONS DATA: Fee revenue, net.......................... $16,403.. $ 21,144 $ 28,262 $ 35,088 $ 46,437 $ 46,437 Compensation and benefits................. 14,031 17,725 23,991 30,693 39,928 35,353 General and administrative expenses....... 1,879 2,080 2,333 4,467 6,685 6,685 -------- -------- -------- -------- -------- -------- Operating income (loss)................. 493 1,339 1,938 (72) (176) 4,399 Net interest income (expense)............. 38 14 (6) (40) (376) (376) -------- -------- -------- -------- -------- -------- Income (loss) before provision for income taxes.......................... 531 1,353 1,932 (112) (552) 4,023 Provision for income taxes................ 53 97 671 90 15 1,690 -------- -------- -------- -------- -------- -------- Net income (loss)....................... $ 478 $ 1,256 $ 1,261 $ (202) $ (567) $ 2,333 ======== ======== ======== ======== ======== ======== Net income (loss) per share............... $ (0.18) ======== Pro forma net income (loss)(2)............ $ 308 $ 785 $ 1,121 $ (202) $ (567) $ 2,333 ======== ======== ======== ======== ======== ======== Pro forma net income (loss) per share..... $ 0.73 ======== Weighted average common shares outstanding(3).......................... 3,199 3,199 OTHER DATA: Number of consultants employed as of fiscal year end......................... 36 38 46 54 62 62 Average fee revenue per consultant employed during entire fiscal year...... $505,000 $602,000 $689,000 $706,000 $740,000 $740,000 Average cash compensation of positions filled(4)............................... $165,000 $172,000 $180,000 $196,000 $226,000 $226,000
AS OF FEBRUARY 28, 1997 ---------------------- AS ACTUAL ADJUSTED(5) -------- ----------- BALANCE SHEET DATA: Working capital............................................. $ 617 $ 18,930 Total assets................................................ 25,561 43,588 Total long-term debt........................................ 1,650 203 Total stockholders' equity.................................. 2,627 22,387
- --------------- (1) The Pro Forma Statement of Operations Data for the year ended February 28, 1997 has been computed by eliminating from compensation and benefits that portion of consultant compensation that exceeds the amount which would have been paid had the Company's revised compensation plan for consultants, adopted March 1, 1997, been in effect for all of fiscal 1997. A pro forma adjustment also was made to reflect the increased income tax liability resulting from the corresponding increase in income before provision for income taxes, using an estimated effective tax rate of 42%. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (2) For periods prior to November 1, 1994, the Company had elected to be taxed as an S corporation for federal and certain state income tax purposes. The pro forma net income (loss) for each period shown reflects a provision for income taxes as if the Company were a C corporation for all income tax purposes during such periods, at an assumed effective tax rate of 42%. See Note 1 to Financial Statements. (3) Weighted average common shares outstanding include 3,065,000 weighted average shares that were outstanding during fiscal 1997 and 134,000 shares assumed to be outstanding during fiscal 1997 as a result of the application of SAB No. 83. See Note 1 to Financial Statements. Prior to the Offering, LAI had 3,025,000 shares of Common Stock outstanding. (4) Represents the average first year cash compensation of positions for which LAI conducted searches during the fiscal year. (5) Adjusted to give effect to the sale of 2,000,000 shares of Common Stock offered by the Company hereby and the application of the estimated net proceeds therefrom. See "Use of Proceeds." 5 7 RISK FACTORS An investment in the shares of Common Stock offered hereby involves a high degree of risk. Prospective investors should carefully consider the following risk factors, as well as the other information in this Prospectus, before investing in shares of the Common Stock offered hereby. This Prospectus contains certain forward-looking statements that involve risks and uncertainties. Future events and the Company's actual results could differ materially from the results reflected in these forward-looking statements. DEPENDENCE ON ATTRACTING AND RETAINING QUALIFIED EXECUTIVE SEARCH CONSULTANTS LAI's success depends upon its ability to attract and retain qualified executive search consultants who possess the skills and experience necessary to fulfill its clients' executive search needs. Competition for qualified consultants is intense. LAI does not require its consultants to sign employment or noncompetition agreements, and many firms have experienced high consultant turnover rates. LAI believes it has been able to attract and retain highly qualified, productive executive search consultants as a result of its premium reputation and its performance-based consultant compensation, which is among the highest in the industry as a percentage of fee revenue generated. Consultants are paid relatively low base salaries but have the potential to earn substantial performance-based bonuses as a result of generating fee revenue. The substantial majority of LAI's fee revenue has been and will continue to be utilized to pay consultant compensation. In contemplation of the Offering and with the approval of its current stockholders, the Company revised its compensation plan for consultants effective March 1, 1997 to provide for a reduction in the cash component and the addition of equity-based incentives in the form of stock options; however, consultant compensation continues to be primarily cash-based. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Pro Forma Results." Any reduction in LAI's cash compensation levels or in the perceived value of the non-cash component of compensation, or any restructuring of LAI's compensation system, whether as a result of insufficient fee revenue, a decline in the market price of the Common Stock after the Offering or for any other reason, could impair LAI's ability to retain existing or attract additional qualified consultants. Any such occurrence could have a material adverse effect on LAI's business, financial condition and results of operations. See "-- Portability of Client Relationships" and "Business -- Professional Staff and Employees." In addition, there can be no assurance that LAI will be successful in identifying and hiring consultants with substantial experience and established client relationships. See "Business -- Business Strategy" and "Business -- Growth Strategy." PORTABILITY OF CLIENT RELATIONSHIPS LAI's success depends upon the ability of its executive search consultants to develop and maintain strong, long-term relationships with its clients. Usually, one or two consultants have primary responsibility for a client relationship. When a consultant leaves one search firm and joins another, clients that have established relationships with the departing consultant may move their business to the consultant's new employer. The loss of one or more clients is more likely to occur if the departing consultant enjoys widespread name recognition or has developed a reputation as a specialist in executing searches in a particular industry. Although client portability historically has not caused significant problems for LAI, the failure to retain its most productive consultants or maintain the quality of service to which its clients are accustomed, and the ability of a departing consultant to move business to his or her new employer, could have a material adverse effect on LAI's business, financial condition and results of operations. See "-- Dependence on Attracting and Retaining Qualified Executive Search Consultants," "Business -- Services" and "Business -- Marketing and Clients." RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS Either by agreement with clients or for marketing or client relations purposes, executive search firms frequently refrain, for a specified period of time, from recruiting employees of a client, and possibly other entities affiliated with such client, when conducting searches on behalf of other clients (a "blocking" arrangement). Blocking arrangements generally remain in effect for one or two years following completion of an assignment. However, the duration and scope of the blocking or "off limits" period, including whether it covers all operations of the client and its affiliates or only certain divisions of a client, generally are subject to negotiation and may depend on such factors as the length of the client relationship, the frequency with which the executive search firm 6 8 has been engaged to perform executive searches for the client and the amount of revenue the executive search firm has generated or expects to generate from the client. Some of LAI's clients are recognized as industry leaders and/or employ a significant number of qualified executives who are potential recruitment candidates for other companies in that client's industry. LAI's inability to recruit employees of such a client may make it difficult for LAI to obtain search assignments from, or to fulfill search assignments for, other companies in the client's industry while employees of that client are off limits. As LAI's client base grows, particularly in its targeted business sectors, blocking arrangements increasingly may impede LAI's growth or its ability to attract and serve new clients, which could have a material adverse effect on LAI's business, results of operations and financial condition. See "Business -- Marketing and Clients." COMPETITION The executive search industry is extremely competitive and highly fragmented. Some of LAI's competitors possess greater resources and greater name recognition than LAI. There are limited barriers to entry into the executive search industry and new executive search firms continue to enter the market. Many executive search firms have a smaller client base than LAI and therefore may be subject to fewer blocking restraints than LAI. See "-- Restrictions Imposed by Blocking Arrangements." In addition, a client will sometimes request a discounted search fee, particularly when the client offers the prospect of multiple search engagements or in exchange for designating a search firm as the client's "preferred provider" of search services. Such pricing pressure may constitute an additional competitive factor and require LAI to execute more searches, or execute searches more efficiently, in order to remain competitive. The Company competes for search assignments with the human resources and recruiting personnel employed by some of its clients and prospective clients. There can be no assurance that LAI will be able to continue to compete effectively with existing or potential competitors or that significant clients or prospective clients of LAI will not decide to perform search services using in-house personnel. See "Business -- Competition." RELATIONSHIP WITH INTERNATIONAL ALLIANCE LAI provides global search services through its membership in Amrop International, an alliance of independently owned executive search firms with offices located throughout the world. LAI executes domestic search assignments referred to LAI by other Amrop members, and refers to other Amrop members international search assignments for LAI's U.S. based clients. LAI believes its global search fulfillment capabilities are important in attracting multinational clients. If LAI's membership in Amrop were to terminate for any reason, LAI's ability to execute searches outside the United States would be hindered, at least for the short-term, and LAI's multinational clients and potential clients could conclude that LAI no longer has the ability to execute searches outside the United States, either of which could have a material adverse effect on LAI's business, financial condition and results of operations. Although each Amrop member has agreed not to recruit employees of certain significant clients of other Amrop members that are identified on a worldwide blocking list, failure of an Amrop member for any reason to abide by this blocking agreement with respect to an LAI client could damage LAI's relationship with that client, which could have a material adverse effect on LAI's business, results of operations and financial condition. In addition, all expenses incurred and other obligations of Amrop are allocated among its members. If member fees are not sufficient, Amrop may require its members to pay such expenses and obligations by making a capital call. See "Business -- Services." IMPLEMENTATION OF ACQUISITION STRATEGY LAI's ability to grow and remain competitive may depend on its ability to consummate strategic acquisitions of other executive search firms. Although LAI frequently evaluates possible acquisitions, there can be no assurance that LAI will be successful in identifying, competing for, financing and completing such acquisitions. An acquired business may not achieve desired levels of revenue, profitability or productivity or otherwise perform as expected. In addition, growth through acquisition of existing firms involves risks such as diversion of management's attention, difficulties in the integration of acquired operations, difficulties in retaining personnel, increased blocking conflicts or liabilities not known at the time of acquisition, and tax and accounting issues, 7 9 some or all of which could have a material adverse effect on LAI's business, results of operations and financial condition. See "Business -- Growth Strategy." RELIANCE ON INFORMATION PROCESSING SYSTEMS LAI's success depends in large part upon its ability to store, retrieve, process and manage substantial amounts of information. To achieve its operational goals and to remain competitive, LAI believes that it must further computerize its operations, which will require the purchase of equipment and software and also the development, either internally or through engagement of third parties, of new proprietary software and systems. See "Use of Proceeds." LAI's inability to design, develop, implement and utilize, in a cost-effective manner, improved information processing systems that provide the capabilities necessary for LAI to compete effectively, or any interruption or loss of LAI's data or information processing capabilities, for any reason, could have a material adverse effect on LAI's business, results of operations and financial condition. See "Business -- Research and Technology." EMPLOYMENT LIABILITY RISK Executive search firms are exposed to potential claims with respect to the executive search process. A client could assert a claim for such matters as breach of a blocking arrangement or recommending a candidate who subsequently proves to be unsuitable for the position filled. In addition, a candidate could assert an action against LAI for failure to maintain the confidentiality of the candidate's employment search or for alleged discrimination or other violations of employment law by a client of LAI. The Company maintains professional liability insurance in such amounts and with such coverages and deductibles as management believes are adequate. There can be no assurance, however, that the Company's insurance will cover all such claims or that its insurance coverage will continue to be available at economically feasible rates. See "Business -- Insurance." VOTING CONTROL BY CURRENT STOCKHOLDERS Immediately following completion of the Offering, the current stockholders of LAI will be the beneficial owners of 3,025,000 shares of Common Stock, not including any shares that the current stockholders may purchase in the Offering, representing approximately 60% of the then issued and outstanding shares of Common Stock. Immediately after the Offering, such stockholders will continue to have sufficient voting power to elect the entire Board of Directors of LAI and, in general, to determine (without the consent of LAI's other stockholders) the outcome of any corporate transaction or other matter submitted to the stockholders for approval, including mergers, consolidations and the sale of all or substantially all of LAI's assets, and also the power to prevent or cause a change in control of LAI. See "Management" and "Principal Stockholders." MANAGEMENT DISCRETION CONCERNING USE OF PROCEEDS Most of the net proceeds of the Offering have not been designated for specific uses, and management will have substantial discretion in using the proceeds of the Offering. See "Use of Proceeds." ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCE OF PREFERRED STOCK LAI's Articles of Incorporation and Bylaws and applicable law contain provisions that could have the effect of inhibiting a non-negotiated merger or other business combination. In particular, LAI's Articles of Incorporation provides for a staggered Board of Directors and permits the removal of directors for cause only. In addition, LAI's Articles of Incorporation authorizes its Board of Directors to issue shares of preferred stock, and fix the rights and preferences thereof, without a vote of its stockholders. Although no shares of preferred stock currently are outstanding, and the Company has no present plans to issue any shares of preferred stock, the rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. Certain of these provisions may have anti-takeover effects and may delay, deter or prevent a change in control of LAI that stockholders might otherwise consider in their best interests. Moreover, the existence of these provisions may depress the market price of the Common Stock. See "Description of Capital Stock." 8 10 NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE Prior to the Offering, there has been no public market for the Common Stock, and there can be no assurance that an active market will develop or be sustained after the completion of the Offering. Consequently, the initial public offering price of the Common Stock will be determined by negotiations among LAI and the Underwriters. See "Underwriting" for a description of the factors to be considered in determining the initial public offering price. The market price of the Common Stock may be significantly affected by, and could be subject to significant fluctuations in response to, such factors as LAI's operating results, changes in any earnings estimates publicly announced by LAI or by securities analysts, announcements of significant business developments by LAI or its competitors, other developments affecting LAI, its clients, or its competitors, and various factors affecting the executive search industry, the financial markets or the economy in general, some of which may be unrelated to LAI's performance. In addition, the stock market has experienced a high level of price and volume volatility, and market prices for the stock of many companies, especially companies that have recently completed initial public offerings, have experienced wide price fluctuations not necessarily related to the operating performance of such companies. Because the number of shares of Common Stock being offered hereby is small relative to the number of publicly traded shares of many other companies, and because all existing LAI stockholders have agreed not to sell, contract to sell or otherwise dispose of any shares of Common Stock currently owned by them for two years after the Offering, the market price of Common Stock may be more susceptible to fluctuation. ABSENCE OF DIVIDENDS LAI does not anticipate paying cash dividends on its Common Stock at any time in the foreseeable future. See "Dividend Policy." DILUTION Investors in the Offering will experience immediate and substantial dilution in net tangible book value per share of Common Stock. In addition, any future issuance of shares of Common Stock or preferred stock or the grant of stock options to purchase Common Stock could cause further dilution. See "Dilution." SHARES ELIGIBLE FOR FUTURE SALE A substantial number of shares of Common Stock already outstanding, or issuable on exercise of stock options to be granted under LAI's 1997 Omnibus Stock and Incentive Plan (the "Omnibus Plan") and Non-Employee Directors' Stock Plan (the "Directors' Stock Plan"), are or will be eligible for future sale in the public market at prescribed times pursuant to Rule 144 or Rule 701 under the Securities Act of 1933, as amended (the "Securities Act"). Sales of such shares in the public market, or the perception that such sales may occur, could adversely affect the market price of the Common Stock or impair LAI's ability to raise additional capital in the future through the sale of equity securities. Upon completion of the Offering, there will be outstanding 5,025,000 shares of Common Stock and stock options to purchase an additional 498,000 shares. Of these shares, the 2,000,000 shares of Common Stock sold in the Offering (2,300,000 shares if the Underwriters' over-allotment option is exercised in full) will be freely tradeable by persons other than "affiliates" of LAI, without restriction under the Securities Act. The remaining 3,025,000 shares of Common Stock will be "restricted" securities within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. All current stockholders of LAI, however, have agreed not to sell, contract to sell or otherwise dispose of any shares of the Common Stock currently owned by them for a period of two years after the date of this Prospectus without the prior written consent of Robert W. Baird & Co. Incorporated. Additionally, the Company has agreed, for a period of 180 days after the date of this Prospectus, not to sell, contract to sell or otherwise dispose of any shares of Common Stock without the prior written consent of Robert W. Baird & Co. Incorporated, other than shares of Common Stock issued in the Offering, under its 1997 Employee Stock Purchase Plan, or upon exercise of stock options granted pursuant to the Omnibus Plan or the Directors' Stock Plan. See "Management -- Incentive and Benefit Plans," "Shares Eligible for Future Sale" and "Underwriting." 9 11 USE OF PROCEEDS The net proceeds to LAI from the sale of the 2,000,000 shares of Common Stock offered hereby (at an assumed offering price of $11.00 per share), after deducting the estimated underwriting discount and offering expenses, are estimated to be approximately $19.8 million ($22.8 million if the Underwriters' over-allotment option is exercised in full). LAI intends to use approximately $5.6 million of the net proceeds to repay indebtedness of the Company that will be outstanding as of the completion of the Offering, and approximately $3.0 million for computer hardware and software purchases, upgrades and enhancements. The balance of the estimated net proceeds of the Offering will be used for working capital and general corporate purposes, including establishing new or expanding existing offices and, if suitable candidates for acquisition are identified, making selective acquisitions. Pending such uses, LAI intends to invest the net proceeds from the Offering in short-term, investment grade securities, certificates of deposit, or direct guaranteed obligations of the United States government. The indebtedness to be repaid with proceeds of the Offering includes the amounts to be outstanding under the Company's term loan and its line of credit. The term loan bears interest at the lender's prime rate plus 0.25%, or presently 8.75% per annum, and is due March 1999. The unpaid balance under the term loan was approximately $1.7 million as of May 30, 1997 and is expected to be approximately $1.6 million upon completion of the Offering. The proceeds of the term loan were used to fund leasehold improvements. The line of credit bears interest at the lender's prime rate, or presently 8.5% per annum, and is due on demand. The unpaid balance under the line of credit was approximately $4.5 million as of May 30, 1997 and is expected to be approximately $4.0 million upon completion of the Offering. Proceeds from the line of credit are anticipated to be used for short-term working capital needs. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." DIVIDEND POLICY LAI does not intend to pay any cash dividends for the foreseeable future but instead intends to retain earnings, if any, for the future operation and expansion of LAI's business. Any determination to pay dividends in the future will be at the discretion of the Company's Board of Directors and will be dependent upon LAI's results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors deemed relevant by the Board of Directors. 10 12 CAPITALIZATION The following table sets forth the capitalization of LAI as of February 28, 1997 and as adjusted to reflect the application of the estimated net proceeds from the issuance and sale by the Company of the 2,000,000 shares of Common Stock offered hereby (at an assumed offering price of $11.00 per share) as described in "Use of Proceeds." The table should be read in conjunction with the Financial Statements and Notes thereto included elsewhere in this Prospectus.
AS OF FEBRUARY 28, 1997 ---------------------- ACTUAL AS ADJUSTED ------- ----------- (IN THOUSANDS) Current maturities of long-term debt........................ $ 387 $ 101(2) ======= ======= Long-term debt, less current maturities..................... $ 1,650 $ 203(2) ------- ------- Stockholders' equity(1): Preferred stock, $0.01 par value, 3,000,000 shares authorized; no shares issued and outstanding........... -- -- Common stock, $0.01 par value, 35,000,000 shares authorized; 3,075,000 shares issued and outstanding; 5,075,000 shares as adjusted(3)........................ 31 51 Additional paid-in capital................................ 4,086 23,826 Subscriptions receivable.................................. (152) (152) Accumulated deficit....................................... (1,338) (1,338) ------- ------- Total stockholders' equity........................ 2,627 22,387 ------- ------- Total capitalization............................ $ 4,277 $22,590 ======= =======
- --------------- (1) Excludes 430,500 and 67,500 shares of Common Stock issuable on the exercise of stock options to be granted immediately after completion of the Offering at an exercise price equal to the initial public offering price per share and $7.50 per share, assuming an initial public offering price of $11.00 per share, respectively. See "Management -- Director Compensation," "Management -- Incentive and Benefit Plans" and "Description of Capital Stock." (2) Represents non-interest bearing stockholder notes payable in connection with prior redemptions of Common Stock. (3) Represents Common Stock as of February 28, 1997. As of the date of this Prospectus and as adjusted for the Offering, Common Stock outstanding is 3,025,000 and 5,025,000, respectively. 11 13 DILUTION The Company's net tangible book value was $2.6 million, or $0.85 per share, based on 3,075,000 shares of Common Stock outstanding as of February 28, 1997. Net tangible book value per share represents the amount of the Company's total tangible assets less its total liabilities, divided by the total number of shares of Common Stock outstanding. After giving effect to the sale of the 2,000,000 shares of Common Stock being offered hereby and the application of the estimated net proceeds therefrom, the pro forma net tangible book value of the Company as of February 28, 1997 would have been $22.4 million or $4.41 per share of Common Stock. This represents an immediate increase in net tangible book value of $3.56 per share to existing stockholders and an immediate dilution of $6.59 per share to new investors purchasing shares of Common Stock in the Offering. The following table illustrates the per share dilution: Assumed initial public offering price per share............. $11.00 Net tangible book value per share before the Offering..... $0.85 Increase per share attributable to new investors.......... 3.56 ----- Pro forma net tangible book value per share after the Offering.................................................. 4.41 ------ Dilution of net tangible book value per share to new investors(1).............................................. $ 6.59 ======
- --------------- (1) Dilution is determined by subtracting pro forma net tangible book value per share after the Offering from the assumed initial public offering price per share. The following table sets forth the number of shares of Common Stock purchased from the Company, the total consideration paid and the average price per share of Common Stock paid by the Company's existing stockholders and to be paid by new investors in the Offering and before deduction of the underwriting discount:
SHARES PURCHASED CONSIDERATION PAID AVERAGE ------------------- --------------------- PRICE PER NUMBER PERCENT AMOUNT PERCENT SHARE --------- ------- ----------- ------- --------- Existing stockholders(1)................... 3,025,000 60.2% $ 4,125,975 15.8% $ 1.36 New investors.............................. 2,000,000 39.8 22,000,000 84.2 11.00 --------- ----- ----------- ----- Total............................ 5,025,000 100.0% $26,125,975 100.0% ========= ===== =========== =====
- --------------- (1) Represents Common Stock outstanding as of the date of this Prospectus. The foregoing tables exclude 430,500 and 67,500 shares of Common Stock issuable on the exercise of stock options to be granted immediately after completion of the Offering at an exercise price equal to the initial public offering price per share and $7.50 per share, assuming an initial public offering price of $11.00 per share, respectively. See "Management -- Director Compensation," "Management -- Incentive and Benefit Plans" and "Description of Capital Stock." To the extent such options are exercised, there may be further dilution to new investors purchasing shares of Common Stock in the Offering. 12 14 SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA) The following table sets forth selected financial and other data of LAI for fiscal years ended February 1993 through 1997 and as of the last day of each of those fiscal years. The Statement of Operations Data for fiscal 1995, 1996 and 1997, and Balance Sheet Data as of the end of fiscal 1996 and 1997, are derived from Financial Statements and Notes thereto audited by Arthur Andersen LLP, independent certified public accountants. Such firm's report on LAI's Financial Statements and Notes thereto as of such dates and for such periods is included elsewhere in this Prospectus. The Statement of Operations and Other Data for, and Balance Sheet Data as of the end of, each of fiscal 1993 and 1994 are derived from the unaudited financial statements of the Company and, in the opinion of management, include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly the results of operations and financial position of the Company for such periods and as of such dates. The financial data shown below should be read in conjunction with the Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus.
YEAR ENDED FEBRUARY 28 OR 29, ------------------------------------------------------------------ ACTUAL PRO FORMA 1993 1994 1995 1996 1997 1997(1) -------- -------- -------- -------- -------- ----------- STATEMENT OF OPERATIONS DATA: Fee revenue, net....................................... $ 16,403 $ 21,144 $ 28,262 $ 35,088 $ 46,437 $ 46,437 Compensation and benefits.............................. 14,031 17,725 23,991 30,693 39,928 35,353 General and administrative expenses.................... 1,879 2,080 2,333 4,467 6,685 6,685 -------- -------- -------- -------- -------- -------- Operating income (loss).............................. 493 1,339 1,938 (72) (176) 4,399 Net interest income (expense).......................... 38 14 (6) (40) (376) (376) -------- -------- -------- -------- -------- -------- Income (loss) before provision for income taxes...... 531 1,353 1,932 (112) (552) 4,023 Provision for income taxes............................. 53 97 671 90 15 1,690 -------- -------- -------- -------- -------- -------- Net income (loss).................................... $ 478 $ 1,256 $ 1,261 $ (202) $ (567) $ 2,333 ======== ======== ======== ======== ======== ======== Net income (loss) per share............................ $ (0.18) ======== Pro forma net income (loss)(2)......................... $ 308 $ 785 $ 1,121 $ (202) $ (567) $ 2,333 ======== ======== ======== ======== ======== ======== Pro forma net income (loss) per share.................. $ 0.73 ======== Weighted average common shares outstanding(3).......... 3,199 3,199 OTHER DATA: Number of consultants employed as of fiscal year end... 36 38 46 54 62 62 Average fee revenue per consultant employed during entire fiscal year................................... $505,000 $602,000 $689,000 $706,000 $740,000 $740,000 Average cash compensation of positions filled(4)....... $165,000 $172,000 $180,000 $196,000 $226,000 $226,000
AS OF FEBRUARY 28 OR 29, ------------------------------------------------------- 1993 1994 1995 1996 1997 -------- -------- -------- -------- ----------- BALANCE SHEET DATA: Working capital (deficit)........................................ $ 1,569 $ 1,723 $ 1,439 $ (485) $ 617 Total assets..................................................... 6,749 9,885 12,193 18,300 25,561 Total long-term debt............................................. 72 144 63 -- 1,650 Total stockholders' equity....................................... 2,384 2,121 2,325 2,509 2,627
- --------------- (1) The Pro Forma Statement of Operations Data for the year ended February 28, 1997 has been computed by eliminating from compensation and benefits that portion of consultant compensation that exceeds the amount which would have been paid had the Company's revised compensation plan for consultants, adopted March 1, 1997, been in effect for all of fiscal 1997. A pro forma adjustment also was made to reflect the increased income tax liability resulting from the corresponding increase in income before provision for income taxes, using an estimated effective tax rate of 42%. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (2) For periods prior to November 1, 1994, the Company had elected to be taxed as an S corporation for federal and certain state income tax purposes. The pro forma net income (loss) for each period shown reflects a provision for income taxes as if the Company were a C corporation for all income tax purposes during such periods, at an assumed effective tax rate of 42%. See Note 1 to Financial Statements. (3) Weighted average common shares outstanding include 3,065,000 weighted average shares that were outstanding during fiscal 1997 and 134,000 shares assumed to be outstanding during fiscal 1997 as a result of the application of SAB No. 83. See Note 1 to Financial Statements. Prior to the Offering, LAI had 3,025,000 shares of Common Stock outstanding. (4) Represents the average first year cash compensation of positions for which LAI conducted searches during the fiscal year. 13 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Prospectus contains certain forward-looking statements that are based on the beliefs of the Company's management, as well as assumptions made by, and information currently available to, the Company's management. Such statements include those regarding successfully implementing and continuing growth strategies and business strategies, attracting, motivating and retaining executive search consultants, and maintaining favorable long-term client relationships. Because such statements involve risks and uncertainties, actual actions and strategies and the timing and expected results thereof may differ materially from those expressed or implied by such forward-looking statements, and the Company's future results, performance or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include, but are not limited to, those discussed under "Risk Factors." The following presentation of management's discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's Financial Statements, the Notes thereto and other financial information included herein. OVERVIEW LAI is one of the fastest growing and the fifth largest executive search firm in the United States. The Company derives substantially all of its revenue from fees for professional services, which are billed exclusively on a retained basis. Fees are typically equal to one-third of the anticipated first year cash compensation for the positions being filled. If the actual compensation package for a successfully placed candidate varies from the amount anticipated at the time of the engagement, an appropriate adjustment may be made to LAI's search fee. The Company recognizes fee revenue as clients are billed, generally over a 60 to 90 day period following the acceptance of a search assignment. In addition, clients usually are required to reimburse LAI for out-of-pocket expenses incurred in the search process. LAI's fee revenue has grown from $16.4 million in fiscal 1993 to $46.4 million in fiscal 1997, representing a compound annual growth rate of approximately 30%. This growth has been achieved by increasing the number of consultants at existing offices and improving revenue per consultant. Additionally, the Company opened new offices in Boston, Massachusetts and Stamford, Connecticut in fiscal 1997. During the three-year period ended February 28, 1997, the Company added a net total of 24 consultants, representing a 63% increase to its consulting staff. Fee revenue per consultant employed for an entire fiscal year was approximately $689,000, $706,000 and $740,000 for fiscal 1995, 1996 and 1997, respectively. This improvement was due primarily to an increased mix of more senior level executive searches and to a rise in overall executive compensation. The average first year cash compensation of positions for which LAI conducted searches in fiscal 1997 was approximately $226,000. The largest component of the Company's operating expenses consists of compensation and benefits paid to its executive search consultants, executive officers and administrative and support personnel. LAI has been able to attract and retain some of the most productive executive search consultants in the industry as a result of its premium reputation and its performance-based consultant compensation, which the Company believes is among the highest in the industry as a percentage of fee revenue generated. In contemplation of the Offering and with the approval of its existing stockholders, the Company revised its compensation plan for consultants effective March 1, 1997, the first day of the Company's current fiscal year. Compensation and benefits expense represented approximately 86% of fee revenue in fiscal 1997, but would have represented approximately 76% of fee revenue on a pro forma basis under the revised plan. See "-- Pro Forma Results." The Company believes the compensation and benefits it pays its consultants under the revised plan remain among the highest in the industry. In addition, the Company believes that its status as a public company will provide a further competitive advantage in attracting and retaining highly qualified consultants in the future. General and administrative expenses consist of occupancy expense associated with the Company's leased premises, costs associated with the Company's investments in information technology and marketing and other general office expenses. LAI benefits from the reduced costs associated with locating its administrative operations and a majority of its research staff in Tampa, Florida. 14 16 PRO FORMA RESULTS The Pro Forma Statement of Operations Data for fiscal 1997 reflects an adjustment to compensation and benefits expense assuming implementation of the Company's revised compensation plan for consultants at the beginning of fiscal 1997. The estimated expense payable on a pro forma basis was calculated by applying the adjusted compensation formula to the fee revenue generated by each consultant in fiscal 1997. The effect of the pro forma adjustment was to decrease compensation and benefits expense and increase operating income in fiscal 1997 by approximately $4.6 million. An adjustment was also made to reflect an additional income tax liability of approximately $1.7 million resulting from the corresponding increase in income (loss) before provision for income taxes. The net effect of these changes was to increase net income in fiscal 1997 by $2.9 million to $2.3 million. For periods prior to November 1, 1994, the Company elected to be taxed as an S corporation for federal and certain state income tax purposes. Accordingly, a pro forma income tax provision is reflected for fiscal periods prior to fiscal 1996 using a tax rate of approximately 42%. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, selected Statement of Operations Data as a percentage of fee revenue:
PERCENTAGE OF FEE REVENUE -------------------------------------- YEAR ENDED FEBRUARY 28 OR 29, -------------------------------------- ACTUAL PRO FORMA 1995 1996 1997 1997 ----- ----- ------ ---------- Fee revenue, net.................................... 100.0% 100.0% 100.0% 100.0% Compensation and benefits........................... 84.9 87.5 86.0 76.1 General and administrative expenses................. 8.3 12.7 14.4 14.4 ----- ----- ----- ----- Operating income (loss)............................. 6.8 (0.2) (0.4) 9.5 Net interest expense................................ -- 0.1 0.8 0.8 ----- ----- ----- ----- Income (loss) before provision for income taxes..... 6.8 (0.3) (1.2) 8.7 Provision for income taxes.......................... 2.4 0.3 -- 3.6 ----- ----- ----- ----- Net income (loss)................................... 4.4% (0.6)% (1.2)% 5.1% ===== ===== ===== ===== Pro forma net income (loss)......................... 4.0% (0.6)% (1.2)% 5.1% ===== ===== ===== =====
FISCAL 1997 COMPARED WITH FISCAL 1996 Fee revenue. Fee revenue increased $11.3 million, or 32.3%, to $46.4 million for fiscal 1997 from $35.1 million for fiscal 1996. The increase in fee revenue was primarily a result of an increase in the number of consultants employed for an entire fiscal year and an increase of 4.8% in the average fee revenue per consultant employed for a full year to $740,000 for fiscal 1997 from $706,000 for fiscal 1996. Also, the Company added a net total of eight new consultants during the year, raising the total number of consultants employed by LAI at the end of the fiscal year to 62 for fiscal 1997 from 54 for fiscal 1996. The average first year cash compensation of positions for which LAI conducted searches increased by 15.3% to $226,000 in fiscal 1997 from $196,000 in fiscal 1996. During fiscal 1997, LAI opened two new offices, which generated approximately $1.7 million of fee revenue. Compensation and benefits. Compensation and benefits increased $9.2 million, or 30.1%, to $39.9 million for fiscal 1997 from $30.7 million for fiscal 1996. The increase was primarily due to compensation and benefits associated with the growth in the number of consultants and the increase in fee revenue per consultant. As a percentage of fee revenue, compensation and benefits decreased to 86.0% for fiscal 1997 from 87.5% for fiscal 1996 primarily due to spreading compensation and benefits for LAI's administrative and support staff, which are primarily fixed, over a greater fee revenue base. 15 17 General and administrative expenses. General and administrative expenses increased $2.2 million, or 49.7%, to $6.7 million for fiscal 1997 from $4.5 million for fiscal 1996. As a percentage of fee revenue, general and administrative expenses increased to 14.4% for fiscal 1997 from 12.7% for fiscal 1996. These increases were primarily due to increases in occupancy costs associated with lease renewals at three of LAI's offices and the opening of two new offices in Stamford, Connecticut and Boston, Massachusetts, as well as an increase in marketing expenses to implement a program to enhance LAI's name recognition. Operating income (loss). Operating loss increased $104,000 to $176,000 for fiscal 1997 from $72,000 for fiscal 1996, and as a percentage of fee revenue to 0.4% for fiscal 1997 from 0.2% for fiscal 1996. These increases were primarily due to the increase in general and administrative expenses, partially offset by lower compensation and benefits as a percentage of fee revenue. Net interest income (expense). Net interest expense increased $336,000 to $376,000 for fiscal 1997 from $40,000 for fiscal 1996. The increase constitutes interest expense on indebtedness incurred to fund leasehold improvements at two of LAI's offices, as well as interest on compensation deferred pursuant to the Company's deferred compensation plan. See "Management -- Incentive and Benefit Plans." Provision for income taxes. The effective tax rate for fiscal 1997 of (2.8)% varied from the statutory rate of 35.0% due to state and local income taxes and because certain expenses, including a portion of meals, entertainment and dues expense and premiums on keyman life insurance policies, were non-deductible for income tax purposes. FISCAL 1996 COMPARED WITH FISCAL 1995 Fee Revenue. Fee revenue increased $6.8 million, or 24.2%, to $35.1 million for fiscal 1996 from $28.3 million for fiscal 1995. The increase in fee revenue was primarily a result of an increase in the number of consultants employed for an entire fiscal year and an increase of 2.5% in the average fee revenue per consultant employed for a full year to $706,000 for fiscal 1996 from $689,000 for fiscal 1995. Also, the Company added a net total of eight new consultants during the year, raising the total number of consultants employed by LAI at the end of the fiscal year to 54 for fiscal 1996 from 46 for fiscal 1995. The average first year cash compensation of positions for which LAI conducted searches increased by 8.9% to $196,000 in fiscal 1996 from $180,000 in fiscal 1995. Compensation and benefits. Compensation and benefits increased $6.7 million, or 27.9%, to $30.7 million for fiscal 1996 from $24.0 million for fiscal 1995. The increase was primarily due to compensation and benefits associated with the growth in the number of consultants and the Company's support staff, including associates, IT and research personnel, and the increase in fee revenue per consultant. As a percentage of fee revenue, compensation and benefits increased to 87.5% for fiscal 1996 from 84.9% for fiscal 1995. This increase is primarily the result of changes implemented in fiscal 1996 to LAI's compensation system for consultants to significantly increase the performance-based component, which changes remained in effect until the revisions to the compensation plan for consultants were implemented on March 1, 1997. General and administrative expenses. General and administrative expenses increased $2.2 million, or 91.5%, to $4.5 million for fiscal 1996 from $2.3 million for fiscal 1995. As a percentage of fee revenue, general and administrative expenses increased to 12.7% for fiscal 1996 from 8.3% for fiscal 1995. These increases were primarily due to increases in costs associated with the Company's investment in information technology. During 1996, the Company developed and implemented both wide and local area networking capabilities and began development of its proprietary relational database for use in executive search execution. Operating income (loss). The Company incurred an operating loss of $72,000 for fiscal 1996 compared with operating income of $1.9 million for fiscal 1995. This change was primarily the result of the increases in both compensation and benefits and general and administrative expenses discussed above. Net interest income (expense). Net interest expense increased to $40,000 for fiscal 1996 from $6,000 for fiscal 1995 primarily due to interest on compensation deferred pursuant to the Company's deferred compensation plan. See "Management -- Incentive and Benefit Plans." 16 18 Provision for income taxes. The effective tax rate in fiscal 1996 of (79.9)% varied from the statutory rate of 35.0% due to state and local income taxes and because certain expenses, including a portion of meals, entertainment and dues expense and premiums on keyman life insurance policies, were non-deductible for income tax purposes. Prior to November 1, 1994, the Company operated as an S corporation for federal income tax purposes. Accordingly, no provision for federal income taxes was recorded prior to that date. UNAUDITED QUARTERLY RESULTS The following table sets forth certain unaudited quarterly operating information of the Company for fiscal 1996 and fiscal 1997. This information has been prepared on the same basis as the audited financial statements contained elsewhere in this Prospectus and, in the opinion of management, include all adjustments, consisting solely of normal and recurring adjustments, necessary for the fair presentation of the information for the periods presented. The financial data shown below should be read in conjunction with the Financial Statements and Notes thereto. Results for any previous fiscal quarter are not necessarily indicative of results for the full year or for any future quarter.
QUARTER ENDED ----------------------------------------------------------------------------- MAY 31, AUG 31, NOV 30, FEB 29, MAY 31, AUG 31, NOV 30, FEB 28, 1995 1995 1995 1996 1996 1996 1996 1997 ------- ------- ------- ------- ------- ------- ------- ------- (IN THOUSANDS) Fee revenue, net................ $8,252 $8,662 $8,869 $9,305 $11,107 $11,506 $11,706 $12,118 Operating income (loss)......... 95 85 (73) (179) 131 216 (200) (323) Net income (loss)............... 25 6 (79) (154) (5) 8 (244) (326)
LIQUIDITY AND CAPITAL RESOURCES The Company relies primarily upon cash flows from operations and available borrowings under its credit facilities to finance its operations. During fiscal 1995, 1996 and 1997, cash flows from operations were $2.9 million, $1.6 million and $(653,000), respectively. To provide additional liquidity, the Company has obtained a commitment letter from a bank to provide credit facilities of approximately $10.0 million. Outstanding borrowings under these facilities will bear interest at various rates based on the bank's prime lending rate. See Note 9 to Financial Statements. Capital expenditures totaled approximately $555,000, $2.5 million and $1.8 million for fiscal 1995, 1996 and 1997, respectively. These expenditures consisted primarily of purchases of office equipment, upgrades to information systems and leasehold improvements. The Company intends to use approximately $3.0 million of the Offering proceeds over the next 12 to 24 months for computer hardware and software purchases, upgrades and enhancements. Additionally, investments in whole life insurance policies intended to fund the Company's deferred compensation plans were $429,000, $778,000 and $1.0 million in fiscal 1995, 1996 and 1997, respectively. Cash provided by financing activities was approximately $2.7 million during 1997, which included borrowings under a term loan and proceeds from sales of Common Stock to newly hired and promoted consultants as part of LAI's strategy to increase the breadth of stock ownership among its consultants. The Company intends to retire the balance of the term loan, expected to be approximately $1.6 million as of the completion of the Offering, with proceeds from the Offering. During fiscal 1996, cash provided by financing activities was approximately $416,000, consisting primarily of proceeds from sales of Common Stock. During fiscal 1995, the Company used approximately $1.5 million to fund financing activities which consisted primarily of distributions to stockholders. A significant portion of the Company's compensation expense is accrued and paid shortly after the end of the Company's fiscal year. Accordingly, amounts outstanding under the Company's line of credit are highest during the first quarter of the Company's fiscal year, with such amounts historically being repaid by cash flows from operations during the remainder of such fiscal year. The Company's outstanding indebtedness under its current line of credit is expected to be approximately $4.0 million as of the completion of the Offering. These borrowings will be repaid with a portion of the Offering proceeds. The Company believes that funds from 17 19 operations, its expanded credit facilities and the net proceeds from the Offering will be sufficient to meet its anticipated working capital, capital expenditure and general corporate requirements on both a short-term basis (i.e., during the 12 months following the Offering) and a long-term basis (i.e., after such 12-month period). RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 establishes new standards for computing and presenting earnings per share ("EPS"). Specifically, SFAS 128 replaces the currently required presentation of primary EPS with a presentation of basic EPS, requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997; earlier application is not permitted. Pro forma EPS computed under SFAS 128 would have been the same as reported in the Financial Statements included in this Prospectus and management believes the application of SFAS 128 will not have a material effect on LAI's future financial statements. 18 20 BUSINESS GENERAL LAI is one of the fastest growing executive search firms and is the fifth largest search firm in the United States, principally serving Fortune 500 and large private companies. LAI fulfills its clients' leadership needs by identifying, evaluating, assessing and recommending qualified candidates for senior level positions. The Company provides executive search services exclusively on a retained basis, and charges a fee typically equal to one-third of the first year cash compensation for the position being filled. The average first year cash compensation of positions for which LAI conducted searches in fiscal 1997 was approximately $226,000. LAI has developed a knowledge-based practice primarily organized around five business sectors: consumer, financial services, health care, industrial and technology. LAI's clients are among the most prominent companies in each of these sectors, and include PepsiCo, Grand Metropolitan, Lehman Brothers, Banc One, Bristol-Myers Squibb, Cooper Industries, General Electric, Compaq and Lucent Technologies. LAI also provides its clients with global search fulfillment capabilities as a member of Amrop International, an alliance of 34 independently owned executive search firms with 82 offices in 48 countries. LAI's fee revenue has grown from $16.4 million in fiscal 1993 to $46.4 million in fiscal 1997, representing a compound annual growth rate of approximately 30%. This growth rate compares favorably with the 21% average compound annual growth rate experienced by LAI's ten largest U.S. based competitors during the same period. EXECUTIVE SEARCH INDUSTRY OVERVIEW Executive search firms are generally separated into two broad fee-based categories: retained search firms and contingency search firms. Retained search firms fulfill their clients' senior leadership needs by identifying, evaluating, assessing and recommending qualified candidates for senior level positions, typically with cash compensation of $100,000 and above. Contingency search firms, on the other hand, focus primarily on mid-level positions with cash compensation of less than $150,000. Both types of firms normally are paid a fee for their services equal to approximately one-third of the guaranteed first year cash compensation for the position being filled. Retained search firms currently serve the majority of the Fortune 500 as well as numerous other organizations, including government agencies, professional organizations and fast-growing entrepreneurial companies. Retained firms generally are compensated for an assignment whether or not they are successful in placing a recommended candidate. Contingency search firms also serve large corporations; however, their primary focus is on small and medium sized companies. Unlike retained search firms, contingency search firms are not compensated for an assignment unless they successfully complete a search and place a recommended candidate. According to Kennedy Information, a leading industry publication, revenue in the executive search industry historically has been divided almost evenly between retained and contingency search firms; however, retained search firms are estimated to employ only one-third of the consultants in the industry. Thus, the average fee revenue per consultant for retained firms is substantially higher than for contingency firms. Moreover, the predictable revenue stream associated with a retained search enables a retained firm, such as LAI, to devote more personnel and greater resources to an assignment than a contingency search firm whose revenue is not assured. LAI believes this difference in payment structure enables retained search firms to provide clients with more value-added consulting services than contingency search firms. 19 21 The executive search industry has experienced consistent growth over the past 20 years. Revenue for the North American executive search industry has grown at an 11% compound annual growth rate from approximately $1.6 billion in 1985 to approximately $4.4 billion in 1995. Kennedy Information expects industry growth to continue at an 11% annual rate, with revenue projected to reach $7.4 billion by the year 2000. Chart The executive search industry is highly fragmented, consisting of approximately 3,470 U.S. based firms, of which approximately 1,320 are retained and approximately 2,150 are contingency search firms. In 1995, approximately 90% of these firms employed fewer than ten consultants and generated average revenue of approximately $1 million each. The top ten U.S. based search firms, all of which operate on a retained basis, accounted for approximately 11% of total industry revenue in 1995. However, Kennedy Information predicts that these top ten firms will increase their market share at an accelerating rate as they continue to offer clients increased geographic reach, broader industry coverage, greater industry expertise and more sophisticated technology and research support. LAI believes that a number of favorable trends have caused and will continue to cause the executive search industry to experience significant growth. These trends include: Greater Demand for Managers with Broad Leadership Capabilities. Many companies are facing a rapidly changing business environment due to an increase in domestic and international competition, an increase in deregulation and a more widespread use of technology. The need to respond to this dynamic environment and remain competitive has caused many companies to set higher standards for their senior level executives. As these standards become more stringent, more companies are looking outside their organizations to fill positions traditionally reserved for internal candidates. The process of identifying and evaluating executives is becoming increasingly difficult and, as a result, a growing number of companies are relying on executive search firms to solve their senior management and leadership needs. Rapid Growth in Outsourcing. Many companies are outsourcing non-core activities to reduce costs and increase efficiencies. These organizations often engage independent, third party specialists to provide many non-revenue generating functions that were previously performed in-house. Among the functions most commonly 20 22 outsourced are those traditionally performed by in-house human resource departments, including executive recruitment and hiring. Increase in Executive Turnover. In the past, it was common for executives to spend an entire career with one or two organizations. However, in today's rapidly changing business environment, executives often spend their career with a number of different organizations in various geographic locations. Executive turnover has been particularly high in such growth industries as health care and technology. This increase in executive turnover has intensified the competition for highly qualified executives and forced many companies to recruit executives on a more frequent basis. Increase in Executive Compensation. Compensation levels for executives have increased considerably over the past several decades. According to a study published in 1997 by William M. Mercer, Incorporated, the average annual cash compensation for chief financial, chief executive and chief operating officers grew at compound annual growth rates of 5.7%, 4.2% and 3.1%, respectively, between 1992 and 1996. This increase in executive compensation, among other factors, has caused many companies to be more rigorous in their hiring practices, often retaining an executive search firm to assist in the identification and evaluation of qualified candidates. In addition, because fees for executive search firms are based on the compensation levels for positions they help fill, higher executive compensation has translated into higher executive search fees. BUSINESS STRATEGY LAI's objective is to be an internationally recognized leader in providing comprehensive consulting services aimed specifically at solving its clients' leadership needs. The key elements of LAI's business strategy include: Attract, Motivate and Retain High Quality Search Consultants. LAI has been successful in attracting, motivating and retaining highly productive executive search consultants as a result of its premium reputation and its performance-based consultant compensation, which the Company believes is among the highest in the industry as a percentage of fee revenue generated. LAI has attracted and continues to employ a number of consultants who previously held senior level positions with the Company's four larger competitors. LAI believes its status as a public company will provide a further competitive advantage in attracting and retaining highly qualified consultants in the future. The Company also believes that broadly held equity ownership by its consultants fosters a team-oriented working environment. Additionally, the Company believes that, following the Offering, ownership of Common Stock and its recently adopted stock and incentive plan will align the interests of its consultants with those of the purchasers of Common Stock in the Offering. Build on Knowledge-Based Practice Groups. LAI believes that knowledge of its clients and the industries in which they operate are among the most significant competitive factors in obtaining and completing search assignments. Accordingly, LAI has developed knowledge-based practice groups primarily organized around five business sectors: consumer, financial services, health care, industrial and technology. Each practice group is coordinated under the direction of a Practice Leader who establishes the marketing and search strategies for that practice group. LAI intends to continue to build its practice groups by hiring consultants with substantial experience and significant client relationships in targeted business sectors and by strengthening the Company's presence in other select practice groups, such as board of directors and energy. Capitalize on Research and Technology. LAI augments its knowledge-based practice groups by investing in and capitalizing on its expertise in research and technology. LAI's 62 associates, researchers and IT professionals provide timely industry, company and compensation information to consultants using numerous information sources. LAI also maintains a proprietary relational database of more than 69,000 executive candidates. As an integral part of the executive search process, consultants query this database on a variety of attributes, including demographic information, work experience, compensation and personal interview results. Support functions are coordinated from LAI's Tampa, Florida office, which the Company believes was the first U.S. based executive search office to achieve ISO 9002 certification. LAI believes that its technological capabilities and knowledge-based practice groups enable it to provide a superior research product and, ultimately, deliver higher quality search results to its clients. 21 23 Reduce Cycle Times. LAI believes that the ability to reduce the time required to perform a search ("cycle time") will be a key differentiating factor among executive search firms in the future. In an effort to reduce its average cycle time, LAI is investing substantial resources in research support and to upgrade its technology and is refining its knowledge-based practice groups and individual client approach. Reduced cycle times would enable LAI's consultants to complete more assignments in a given period of time, resulting in the opportunity to both increase fee revenue per consultant and enhance the profitability of the Company. Leverage Global Capabilities. LAI provides its clients with global search fulfillment capabilities through its membership in Amrop International. Amrop International is an international alliance of 34 independently owned executive search firms with 82 offices in 48 countries. LAI executes domestic search assignments referred to it by other Amrop members and refers to other Amrop members international search assignments for its U.S. based clients. LAI believes that its ability to provide international search services is an important factor in attracting multinational clients, and intends to strengthen these capabilities in the future. LAI conducts business under the name "Lamalie Amrop International." GROWTH STRATEGY LAI has competed successfully in the executive search industry and has capitalized on the growing demand for executive search services. LAI's fee revenue has increased at a compound annual growth rate of approximately 30% since fiscal 1993 and 32% over the latest fiscal year. These growth rates have been achieved by increasing the number of consultants at existing offices, improving fee revenue per consultant and opening new offices. In the future, LAI intends to augment its growth through strategic acquisitions. LAI intends to extend the reach, breadth and penetration of its services both domestically and internationally. The key elements of LAI's growth strategy include: Strengthen Existing and Develop New Client Relationships. LAI intends to increase fee revenue by obtaining additional search engagements from existing clients and by developing relationships with new clients. LAI focuses on accounts from which it obtains, or believes it can obtain, a significant number of search assignments ("focused accounts"). LAI invests significant resources in its focused accounts to better understand their business strategies and culture and eventually position the Company as a consulting partner to those clients. Accordingly, LAI emphasizes long-term relationships with its clients, rather than one-time projects or assignments. In fiscal 1997, approximately 60% of LAI's fee revenue was generated from clients to which LAI had provided services in fiscal 1995 or fiscal 1996. To further the development of existing accounts, consultants spend substantial time marketing LAI's services to carefully selected prospective clients within their practice groups. Increasingly, search assignments are awarded after a small number of search firms are invited to make presentations to a prospective client's senior management or Board of Directors. In fiscal 1997, LAI obtained search engagements from a majority of the presentations in which it participated. The Company attributes its success to its knowledge-based practice groups as well as the name recognition LAI has developed in recent years. Expand Existing and Selectively Open New Offices. LAI has and intends to continue adding experienced, highly qualified executive search consultants to its practice. The Managing Partner of each office is responsible for recruiting new consultants to LAI, and a significant component of the Managing Partner's compensation is based on the success of these efforts. Over the past fiscal year, LAI added a net total of eight consultants to new and existing offices and, as of May 15, 1997, employed a total of 63 consultants. LAI also continually evaluates the desirability of opening new offices. In fiscal 1997, the Company opened offices in Boston, Massachusetts and Stamford, Connecticut, and the Company presently is evaluating the desirability of opening an office on the West Coast to further strengthen its technology practice. Pursue Strategic Acquisitions. Although strategic acquisitions historically have not been an important element of LAI's growth strategy, the Company intends to expand its client base, industry coverage and geographic reach through selective acquisitions. The executive search industry is highly fragmented, consisting of approximately 3,470 U.S. based firms, of which approximately 1,320 are retained search firms. LAI believes that many smaller search firms lack the financial and managerial resources to compete effectively against the largest executive search firms, thereby creating a significant opportunity for potential acquisitions. Following completion 22 24 of the Offering, LAI expects to be in a strong position to consider future acquisitions. LAI is not currently engaged in substantive discussions regarding any potential acquisitions. SERVICES LAI provides executive search services exclusively on a retained search basis for Fortune 500 and large private companies. The Company typically performs executive search services for its clients' senior leadership positions ranging from brand manager or director of finance to chief operating officer or chief executive officer. The average first year cash compensation of positions for which LAI conducted searches in fiscal 1997 was approximately $226,000. LAI serves its clients in a consultative capacity, developing a thorough understanding of the client's organizational structure, history, culture and strategic objectives. In fulfilling each search assignment, LAI (i) assesses the client's existing management capabilities, corporate culture and business strategies, (ii) evaluates the client's industry position and major competition, (iii) develops and refines the relevant business experience, skill set and personal characteristics that a qualified candidate should possess, (iv) identifies, contacts and interviews candidates, (v) submits detailed personnel reports and recommendations to the client regarding the candidates most qualified for the position to be filled, (vi) advises the client regarding the appropriate compensation package to be offered to its chosen candidate and (vii) monitors the quality of its search procedures with client surveys and other client feedback mechanisms. The Company uses a team-oriented approach in providing high quality executive search services on a consistent basis, rather than relying on the reputation of a few key consultants. Upon commencement of an assignment, LAI works with its client to develop both detailed candidate and job specifications and a specific search strategy focusing on the industries and companies expected to produce the most appropriate candidates. Consultants and certain support staff assigned to the search then contact and conduct extensive telephone interviews of potential candidates, distribute job specifications and client promotional materials, and conduct personal interviews with and perform preliminary reference checks of those candidates who appear to have the desired qualifications for and level of interest in the position. Most candidates are already successfully employed and not currently looking to change jobs, so the initial contact must be conducted discreetly. Following this process, the search team submits to the client a confidential personnel report on each candidate that LAI believes merits serious consideration by the client. Each report contains a detailed business history of the candidate, results of LAI's preliminary reference checks, and LAI's evaluation of the business experience, qualifications, personal characteristics and suitability of the candidate. LAI then assists in the introduction of selected candidates to the client and the administration of the interview process. When the final selection is made, LAI facilitates the negotiation of employment terms and the transition by the candidate to the employ of the client. In recognition of the quality of its search process, LAI's Tampa, Florida office achieved ISO 9002 certification. LAI provides its clients with global search fulfillment capabilities as a member of Amrop International, an alliance of 34 independently owned executive search firms with 82 offices in 48 countries. LAI joined Amrop in 1990 and believes that the ability to provide international search services is an important factor in attracting multinational clients. LAI executes domestic search assignments referred to LAI by other Amrop members, and refers to other Amrop members international search assignments for its U.S. based clients. In each case, the referring member receives a portion of the search fee as compensation for the referral. In conducting search assignments, all Amrop members are required to adhere to certain general practices and procedures which are generally consistent with LAI's methods of conducting business. Amrop's membership agreement provides that only one executive search firm in any one country may be an Amrop member, and LAI is the sole Amrop member from the United States. In calendar year 1996, LAI was the largest member of Amrop in terms of fee revenue. MARKETING AND CLIENTS General. The Company's marketing strategy includes three primary components: capitalize on its knowledge-based practice groups and long-term client relationships; penetrate its markets through its regional office structure; and promote the LAI brand. In its marketing efforts, the Company emphasizes its knowledge- 23 25 based practice groups and industry expertise, which enable LAI to provide a superior research product and, ultimately, deliver higher quality search results to its clients. Knowledge-Based Practice Groups. LAI has developed knowledge-based practice groups primarily organized around five business sectors. Each practice group is coordinated by a group Practice Leader who is responsible for developing new business and maintaining a high standard of service in their area of expertise. To achieve these objectives, a Practice Leader (i) establishes the marketing and search strategies for the particular practice group, (ii) identifies focused accounts and targets clients within the practice group's business sector and (iii) facilitates and assists the marketing activities of other consultants in the practice group. Each Practice Leader has substantial industry expertise, frequently having held one or more executive positions in the group's business sector prior to becoming a search consultant. Additionally, LAI's Practice Leaders have an average of 15 years of experience in the executive search industry. The following table sets forth certain information regarding LAI's practice groups:
% OF FISCAL 1997 FEE PRACTICE GROUP REVENUE PRACTICE SUB-GROUPS SELECTED CLIENTS Financial Services 24.9% Commercial Banking, Investment Banc One, Lehman Brothers, Banking, Investment Management and Prudential Real Estate Technology 18.6% Communications, Hardware/Software, Compaq, GTE, Lucent Information Systems and Professional Technologies Services Health Care 16.5% Managed Care, Medical Baystate Health Systems, Devices/Diagnostics, Medical Bristol-Myers Squibb, Information, Pharmaceutical/Life Mallinckrodt Group Sciences and Physicians Industrial 15.4% Automotive, Capital Equipment, BF Goodrich, Cooper Chemical and Process Industries, Industries, Forest Products and Oil and Gas General Electric Consumer 12.3% Durables, Food Service, Hospitality, Grand Metropolitan, Kohler, Packaged Goods and Retail PepsiCo Other 12.3% Board of Directors and Energy Enron, Entergy
The Company's practice groups enable its consultants to better understand their clients' business strategies and industries and eventually position LAI as a consulting partner to those clients. LAI emphasizes long-term relationships with clients, rather than one-time projects or assignments. In fiscal 1997, approximately 60% of LAI's fee revenue was generated from clients to which search services had been provided in fiscal 1995 or 1996. Each of LAI's 30 largest clients, based on LAI's fiscal 1997 fee revenue, had been a client for an average of eight years as of February 28, 1997. Regional Offices. To complement its knowledge-based practice groups, the Company has established its nine regional offices in cities that are key business centers for its targeted business sectors. Each office is run by a Managing Partner who has complete fiscal responsibility for that office. The Managing Partner's principal responsibilities include overseeing day-to-day operational and administrative matters at the regional office level, providing assistance to consultants in that office, assuring quality control in business development and search execution, hiring and supervising office personnel, and serving on an internal operations committee. While compensation for other consultants is based primarily on individual performance, compensation for Managing Partners is based largely on the profitability of their respective regional offices, as well as on their ability to successfully recruit highly qualified consultants to LAI. Since consultants have greater opportunities to develop relationships with clients and prospective clients in close geographic proximity, they normally focus on, but do 24 26 not limit their efforts to, clients in the region served by their particular office. Over time, consultants seek to establish deep roots in the community and develop strong links with local business, government and cultural leaders. LAI's regional offices are located in Atlanta, Boston, Chicago, Cleveland, Dallas, Houston, New York, Stamford and Tampa. LAI Brand. A major part of LAI's recent marketing efforts has been to develop an enhanced awareness of the LAI name. As a result of its efforts, LAI is more frequently being invited to make presentations to prospective clients, often competing for search engagements with major competitors in the industry. In fiscal 1997, LAI succeeded in obtaining search engagements from a majority of the presentations in which it participated. LAI believes that the Offering will further enhance the name recognition of the Company. Blocking Arrangements. Either by agreement with clients or for marketing or client relations purposes, executive search firms frequently refrain from recruiting employees of a client, and possibly other entities affiliated with that client, for a specified period of time (a "blocking" arrangement). See "Risk Factors -- Restrictions Imposed by Blocking Arrangements." As LAI's client base grows, particularly in its targeted business sectors, blocking arrangements may increasingly impede LAI's growth or its ability to attract and serve new clients. However, LAI actively manages its blocking arrangements and seeks to mitigate any adverse effects of blocking by strengthening its long-term relationships with focused accounts and by resisting requests for blocking arrangements with clients who do not engage LAI for multiple assignments. Additionally, in recent years market conditions and industry practices have resulted in blocking arrangements that are becoming narrower in scope and shorter in duration. RESEARCH AND TECHNOLOGY LAI's knowledge-based practice requires extensive use of research and technology. Search consultants must understand a client's industry, competitors and business strategies and be able to readily identify the universe of available executive candidates. LAI's 62 associates, researchers and IT professionals support the Company's consultants by, among other things, gathering and analyzing information obtained from numerous electronic databases, trade journals and directories, the Internet and other sources. LAI also maintains a proprietary relational database of more than 69,000 executive candidates. As an integral part of the executive search process, consultants query this database on a variety of attributes, including demographic information, work experience, compensation and personal interview results. LAI believes that its technological capabilities and practice group specialization have created an expertise which enable it to deliver a superior research product and, ultimately, higher quality search results. LAI has initiated a program to upgrade its proprietary database and other information sources, which should enable LAI to retrieve relevant information more efficiently. The Company's support functions, including its research department, are coordinated from its Tampa, Florida office. In the search process, the principal function of LAI's research department is to support the Company's consultants by developing and providing information on the industries and companies expected to produce the most qualified candidates. LAI's research professionals also support the Company's business development activities by providing target lists, data on past LAI searches and information on companies and executives in target industries. LAI's researchers typically have had professional research or library training and experience prior to joining LAI, and many have undergraduate and graduate degrees in such fields as library science. Unlike many of its competitors, LAI researchers do not work exclusively for particular executive search consultants. LAI believes this approach facilitates the development of broad expertise by research personnel, promotes a consistent culture across the firm, and standardizes communication, cooperation and training. PROFESSIONAL STAFF AND EMPLOYEES At May 15, 1997, LAI had 225 full time employees, of which 63 were executive search consultants, 62 were associates, researchers or IT professionals and 100 were administrative and support staff. LAI has never been a party to any collective bargaining agreement and considers relations with its employees to be good. LAI's search professionals are categorized either as consultants, consisting of partners and principals, or as associates. Associates are junior search professionals who generally do not handle search consulting assignments, but assist partners and principals by performing research and other functions. After several years of experience 25 27 and satisfactory performance, an associate will be considered for promotion to the position of principal. If a principal continues to develop and generate revenue, the principal will be offered the opportunity to advance to the position of partner. Promotions depend on a variety of factors, including productivity and business development. As a matter of corporate philosophy, LAI strives to hire as associates only those individuals it believes have the potential to become productive consultants. LAI's consultants have been employed by the Company for an average of approximately five years. Over the past five years, LAI has experienced annual turnover among its consultants of approximately 6.6%. At May 15, 1997, there were 54 partners, 9 principals and 21 associates. Most of LAI's consultants had experience in the executive search business prior to joining LAI, and many previously held senior level positions with the Company's four larger competitors. LAI's consultants have, on average, approximately 12 years of experience in the executive search industry. LAI has been able to attract and retain some of the most productive executive search consultants in the industry as a result of its premium reputation and its performance-based consultant compensation. The Company believes the salaries, commissions, bonuses and profit sharing it pays to its consultants are among the industry's highest as a percentage of fee revenue generated. Cash compensation arrangements for LAI's consultants are primarily performance-based, providing relatively low base salaries but the potential to earn substantial bonuses based on generating fee revenue. In contemplation of the Offering and with the approval of its existing stockholders, the Company revised its compensation plan for consultants effective March 1, 1997, the first day of the Company's current fiscal year, to reduce the cash component and add equity-based incentives; however, consultant compensation continues to be primarily cash-based. The Company's associate compensation plan, which was not revised, provides for the payment to associates of an annual salary and a discretionary cash bonus. The Company believes that equity ownership by its consultants fosters a team-oriented working environment and that its status as a public company will provide a further competitive advantage in attracting and retaining highly qualified consultants. The Company also believes that ownership of Common Stock and its recently adopted stock and incentive plan will align the interests of its consultants with the purchasers of Common Stock in the Offering. See "Risk Factors -- Dependence on Attracting and Retaining Qualified Executive Search Consultants" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Overview." COMPETITION The executive search industry is highly competitive. It is estimated that there are approximately 3,470 executive search firms in the United States. There are relatively few barriers to entry and new competitors frequently enter the market. While LAI faces competition to some degree from all firms in the industry, the Company believes its most direct competition comes from other retained search firms. In particular, LAI competes with the largest U.S. based firms in the industry: Heidrick and Struggles, Inc., Korn/Ferry International, Russell Reynolds Associates, Inc. and SpencerStuart & Associates. To a lesser extent, LAI also faces competition from smaller boutique or specialty firms that may compete in certain regional or functional markets and from in-house human resource departments of clients and prospective clients. Some of LAI's competitors possess greater resources and name recognition than LAI. Each firm with which LAI competes is also a competitor in seeking to attract the most effective search consultants. In the Company's experience, the executive search business is more quality-sensitive than price-sensitive. As a result, LAI competes on the level of service it offers, reflected by its knowledge-based practice groups and individual client focus, and, ultimately, on the quality of its search results. FACILITIES The Company leases all of its office locations. The aggregate square footage of office space under such leases is approximately 94,000. The leases for these offices call for future minimum lease payments of approximately $18 million and have terms which will expire between one and ten years (exclusive of renewal options exercisable by LAI). LAI believes that its facilities are adequate for its current needs and that it will not have difficulty leasing additional office space to satisfy anticipated future needs. 26 28 INSURANCE LAI maintains insurance in such amounts and with such coverages and deductibles as management believes are adequate. The principal risks that LAI insures against are professional liability, workers' compensation, personal injury, bodily injury, property damage and fidelity losses. There can be no assurance that the Company's insurance will adequately protect it from potential losses and liabilities. See "Risk Factors -- Employment Liability Risk." LEGAL PROCEEDINGS From time to time the Company has been involved in litigation incidental to its business. LAI currently is not a party to any litigation the adverse resolution of which, in management's opinion, would be likely to have a material adverse effect on the Company's business, financial condition or results of operations. 27 29 MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY PERSONNEL The following table sets forth certain information regarding LAI's executive officers, the persons who will serve as Directors following completion of the Offering, and certain key personnel.
NAME AGE POSITION - ---- --- -------- Robert L. Pearson(1)... 58 President and Chief Executive Officer, Director Jack P. Wissman........ 45 Executive Vice President and Chief Administrative and Financial Officer John F. Johnson(1)..... 55 Chairman of the Board of Directors Joe D. Goodwin(2)...... 51 Director, Managing Partner -- Atlanta, Tampa Roderick C. Gow(3)..... 49 Director, Managing Partner -- New York, Boston, Stamford John S. Rothschild(3).. 44 Director, Managing Partner -- Chicago Ray J. Groves(1)....... 61 Director Richard W. Pogue(3).... 68 Director John C. Pope(2)........ 48 Director Mark P. Elliott........ 51 Managing Partner -- Cleveland Robert L. Golding...... 42 Managing Partner -- Houston Thomas M. Watkins III.. 48 Managing Partner -- Dallas
- --------------- (1) Term expires in fiscal 2000 (2) Term expires in fiscal 1998 (3) Term expires in fiscal 1999 Robert L. Pearson joined the Company in 1984 and has served as President and Chief Executive Officer and a Director since 1995. Mr. Pearson served as Executive Director with Russell Reynolds Associates, Inc. from 1982 until 1984. He owned and was President of Pearson, Inc., an equipment manufacturing company, from 1971 until 1982; was Vice President, Corporate Finance, of R. J. Financial Corporation, a financial services holding company, from 1968 until 1970; and was most recently an engagement manager with McKinsey & Company, Inc. from 1964 until 1968. Mr. Pearson holds an M.S. in Industrial Management from Massachusetts Institute of Technology and a B.S.E.E. from Michigan State University. Jack P. Wissman joined the Company in 1981 and became Executive Vice President and Chief Administrative and Financial Officer in 1997. He previously served as Vice President and Chief Financial Officer of the Company. Mr. Wissman has served as a Director since 1987, and his current term will expire upon completion of the Offering. Prior to joining LAI, Mr. Wissman was a certified public accountant with Arthur Andersen & Co. from 1974 until 1981. He holds a B.S.B.A. in Accounting from Bowling Green State University. John F. Johnson joined the Company in 1976 and has served as Chairman of the Board of Directors since 1995. Mr. Johnson previously served as Executive Vice President and President and Chief Executive Officer of LAI, as well as Chairman of Amrop International. Mr. Johnson held various positions, including Manager of Organization and Manpower, with General Electric Company from 1967 until 1976; and Industrial Relations Analyst with Ford Motor Company from 1964 until 1967. Mr. Johnson holds an M.B.A. from Columbia University and a B.A. in Economics from Tufts University. Joe D. Goodwin joined the Company in 1991, has been Managing Partner of LAI's Atlanta and Tampa offices since 1992 and will become a Director upon completion of the Offering. Mr. Goodwin held various positions, including Partner and Managing Director, with SpencerStuart & Associates from 1982 until 1991. Mr. Goodwin also held various executive positions with McKinnis & Goodwin, an executive search firm, from 1979 until 1982; with Burger King Corporation from 1978 until 1979; and with Xerox Corporation from 1969 until 1978. Mr. Goodwin holds a B.S. in Commerce and Business Administration from the University of Alabama. 28 30 Roderick C. Gow joined the Company and has served as Managing Partner of LAI's New York office since 1995 and will become a Director upon completion of the Offering. Mr. Gow also has operational responsibility for LAI's Boston and Stamford offices. Mr. Gow held various positions, including Managing Director, with Russell Reynolds Associates, Inc., an executive search firm, from 1983 until 1991 and then again from 1994 until 1995. Mr. Gow was Chief Executive Officer of GKR Group, an executive search firm based in the United Kingdom, from 1991 until 1994; was Vice President with Barclays Bank Plc from 1978 until 1983; and prior to that time served with the British Army. Mr. Gow holds an M.A. and a B.A. from Trinity College, Cambridge University. John S. Rothschild joined the Company and has served as Managing Partner of LAI's Chicago office since 1996 and will become a Director upon completion of the Offering. Mr. Rothschild held various positions, including Partner and Director, with Heidrick and Struggles, Inc., an executive search firm, from 1989 until 1996. Mr. Rothschild held positions, including National Director, Human Resources and Director, Human Resources Consulting Practice, with Grant Thornton from 1981 until 1989. He served in various executive positions with American Hospital Supply Corporation from 1978 until 1981; and with GATX Corporation from 1975 until 1978. Mr. Rothschild holds an M.S. in Industrial Relations from Loyola University and a B.A. in Political Science from Lake Forest College. Ray J. Groves will become a Director upon completion of the Offering. Mr. Groves served as Chairman and Chief Executive Officer of Ernst & Young, an international accounting and financial consulting firm, for 17 years prior to his retirement in 1994. Mr. Groves also serves as Chairman of Legg Mason Merchant Banking, Inc., and as a Director of Consolidated Natural Gas Company, Electronic Data Systems Corporation, Marsh & McLennan Companies, Inc. and RJR Nabisco, Inc. Richard W. Pogue has served as an advisor to LAI's Board of Directors since 1995 and will become a Director upon completion of the Offering. Mr. Pogue has served as Senior Advisor to Dix & Eaton, a public relations firm, since 1994. Mr. Pogue held various positions with the law firm of Jones, Day, Reavis & Pogue, from 1957 until retiring from his position as Senior Partner in 1994. Mr. Pogue also serves as a Director of Derlan Industries Ltd., Continental Airlines, Inc., OHM Corporation, M.A. Hanna Company, Redland PLC, Rotek Incorporated, KeyCorp and TRW Inc. Mr. Pogue holds a bachelor's degree from Cornell University and a law degree from the University of Michigan. John C. Pope has served as an advisor to LAI's Board of Directors since 1995 and will become a Director upon completion of the Offering. Mr. Pope held various positions, including President and Chief Operating Officer, of UAL Corporation, owner of United Airlines, from 1988 until his retirement in 1994. Prior to that time Mr. Pope spent 11 years with AMR Corporation in various financial capacities, including Chief Financial Officer. Mr. Pope also serves as Chairman of the Board of Directors of Motive Power Industries, Incorporated and as a Director of Federal Mogul Corporation, Medaphis Corporation and Wallace Computer Services, Inc. He holds a bachelor's degree from Yale University and an M.B.A. from Harvard Business School. CERTAIN KEY PERSONNEL Mark P. Elliott joined the Company in 1993, has served as a Director since 1996 and recently became Managing Partner of the Company's Cleveland office. He also was a consultant with the Company from 1988 until 1992. Mr. Elliott was a Partner with Heidrick & Struggles, Inc., an executive search firm, from 1992 until 1993; Vice President of Executive Network Consultants, Inc. from 1985 until 1988; President of Performance Resources, Inc., a subsidiary of DDI, Inc., from 1983 until 1985; Vice President of Productivity Consulting for Maritz, Inc. from 1977 until 1983; and an executive with General Electric Company from 1969 until 1977. Mr. Elliott pursued graduate studies in Industrial Psychology at the University of Massachusetts and holds a B.S. in Business from The Ohio State University. Robert L. Golding joined the Company and has served as Managing Partner of LAI's Houston office since 1995. Mr. Golding was Vice President of R. W. Hebel Associates, an executive search firm, from 1989 until 1995. He was a Principal Consultant with McGill Investments from 1987 until 1989; President and Chief Executive Officer of Heritage National Bank, N.A. from 1986 until 1987; and held various asset management, investment and lending related executive positions with First Chicago Corporation and Texas Commerce 29 31 Bancshares, Inc. (and Chemical Bank as its successor) from 1976 until 1985. Mr. Golding holds an M.B.A. from Lake Forest School of Management and a B.S. in Finance from the University of Illinois. Thomas M. Watkins III joined the Company in 1987 and became Managing Partner of LAI's Dallas office in 1996. Mr. Watkins was with Heidrick and Struggles, Inc. from 1985 until 1987. He was Senior Vice President and Director of Human Resources of BancTexas Dallas and BancTexas Services, Inc. from 1982 until 1985; Director, Employment and Employee Relations, of Blue Cross/Blue Shield of Florida from 1980 until 1982; Senior Personnel Officer, Manager of Employment Section, of First Union Corporation from 1979 until 1980; Personnel Manager of Mallinckrodt Chemical Company from 1977 until 1979; Personnel Representative of Texas Instruments, Inc. from 1976 until 1977; and Personnel Manager of Gulf States Paper Corporation from 1973 until 1976. Mr. Watkins holds a B.B.A. from the University of Kentucky. CURRENT DIRECTORS Messrs. Wissman and Elliott and the following individuals currently serve on LAI's Board of Directors with terms expiring upon completion of the Offering. Michael E. Brenner joined the Company in 1991 and has served as a Director since 1993. Mr. Brenner held various positions, including Partner and Chief Operating Officer, with Canny Bowen from 1986 until 1991; served as Senior Vice President for PA International from 1983 until 1986; owned and was President of Michael Brenner Associates, Inc., from 1973 until 1975 and from 1980 until 1983; held various positions with Ernst & Young, including Manager and Principal, from 1975 until 1980; served as Executive Vice President with Anthony Kane, Inc. from 1972 until 1973; was an Associate Professor of Management at New York University from 1969 until 1972; and held various positions with Bell Telephone Laboratories from 1962 until 1969. Mr. Brenner holds a Doctorate of Engineering from Johns Hopkins University and a B.S. in Industrial Management from Massachusetts Institute of Technology. Arthur J. Davidson joined the Company in 1993 and has served as a Director since 1995. Mr. Davidson held various positions, including Senior Director and Partner, with SpencerStuart & Associates, an executive search firm, from 1986 until 1993. He served in various capacities, including Vice President and Director of Human Resources, with Tenneco Automotive from 1979 until 1986; Director of Personnel for Seatrain Lines Inc. from 1977 until 1979; Director of Human Resources at White Motor Corporation from 1972 until 1977; Corporate Manager of Labor Relations at Midland Ross Corporation from 1970 until 1972; Supervisor of Salaried Employment, Terex Division, General Motors Corporation from 1966 until 1969; and Corporate Recruiter with Equitable Life Assurance Society from 1963 until 1966. Mr. Davidson holds a B.A. in Economics from Ohio Wesleyan University. David W. Gallagher joined the Company in 1993 and has served as a Director since 1995. Mr. Gallagher was a Managing Director of GKR Americas from 1990 until 1993; Vice President, National Chains, with Coca-Cola U.S.A. from 1986 until 1990; an executive with Pepsi-Cola Company from 1975 until 1986; Merchandising Manager with Glenbrook Laboratories from 1973 until 1975; and an Account Executive with Westvaco Corporation from 1970 until 1973. Mr. Gallagher served in the U.S. Army from 1967 until 1970. He holds a B.S. in Business Administration from the University of Charleston. Harold E. Johnson joined the Company in 1996 and became a Director in 1997. Mr. Johnson was a Managing Director with Norman Broadbent International, an executive search firm, from 1992 until 1996; a Senior Officer with Korn/Ferry International, an executive search firm, from 1988 until 1992; and Senior Vice President, Human Resources and Corporate Administration with The Travelers Companies from 1985 until 1988. Prior to 1985 Mr. Johnson held various executive positions with American Can Company, Kennecott Copper Corporation, INA Corporation (now CIGNA) and Federated Department Stores. Mr. Johnson holds a B.S. in Business Administration from the University of Nebraska. 30 32 BOARD OF DIRECTORS Upon completion of the Offering, LAI will have eight Directors and will seek to appoint a ninth Director. LAI's Board of Directors is divided into three classes serving staggered terms of three years each, with one-third of LAI's Board of Directors being elected each year. COMMITTEES OF THE BOARD OF DIRECTORS LAI's Board of Directors has established the following standing committees effective upon completion of the Offering: Audit Committee. The Audit Committee is responsible for reviewing with management the financial controls, accounting and audit and reporting activities of the Company. The Audit Committee reviews the qualifications of the Company's independent auditors, makes recommendations to the Board of Directors regarding the selection and engagement of independent auditors, reviews the scope, fees and results of any audit, reviews non-audit services provided by and related fees of the independent auditors, and reviews LAI's general policies and procedures with respect to audits and accounting and financial controls. The Audit Committee will consist of at least two Directors who are not employees of LAI ("Non-Employee Directors"). Upon completion of the Offering, the members of the Audit Committee will be Messrs. Groves, Pogue and Pope. Compensation Committee. The Compensation Committee is responsible for establishing compensation policies and administering all salary, bonus and incentive compensation plans for LAI's officers and key employees. The Compensation Committee also administers LAI's Omnibus Plan. The Compensation Committee will consist of at least two Non-Employee Directors. Upon completion of the Offering, the members of the Compensation Committee will be Messrs. Groves, Pogue and Pope. Nominating and Corporate Governance Committee. This Committee is responsible for, among other things, recommending to the Board of Directors management's nominees for election to the Board of Directors. It is presently intended that this Committee always include at least two Directors who also are employees of LAI. Upon completion of the Offering, the members of the Nominating and Corporate Governance Committee will be Messrs. John F. Johnson, Pearson, Pogue and Pope. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors has established a Compensation Committee effective upon completion of the Offering. The Board of Directors has not previously had a Compensation Committee and the functions of the Compensation Committee historically have been performed by the Board of Directors. See "-- Committees of the Board of Directors -- Compensation Committee." DIRECTOR COMPENSATION Non-Employee Directors will receive $1,000 for each meeting of the Board of Directors attended and $1,000 for each meeting of a committee of the Board of Directors attended. Non-Employee Directors who serve as Chairman of a committee of the Board of Directors will receive an additional $500 for each meeting chaired. In addition, Non-Employee Directors will receive an annual retainer fee of $12,000, to be paid quarterly. Non-Employee Directors will have the option to make an annual election to receive the retainer and meeting fees in stock appreciation rights in accordance with LAI's Directors' Deferral Plan (the "Directors' Deferral Plan"), instead of cash. Directors who opt for the stock appreciation right alternative will receive a 25% premium in stock appreciation rights versus the cash option. In addition, Non-Employee Directors will receive stock options to purchase 5,000 shares of Common Stock annually pursuant to LAI's Non-Employee Directors' Stock Plan (the "Directors' Stock Plan"). Immediately after completion of the Offering, Messrs. Groves, Pogue and Pope will become members of the Board of Directors and will be granted stock options to acquire an aggregate of 15,000 shares of Common Stock under the Director's Stock Plan at an exercise price equal to the initial public offering price. Directors are also reimbursed for reasonable travel expenses to and from meetings of the Board and committees. Directors who are employees or officers of the Company will not receive compensation for serving as Directors. 31 33 An aggregate of 80,000 shares of Common Stock are reserved for issuance under the Directors' Stock Plan. The exercise price of each option will be equal to the market price of Common Stock on the date of the annual meeting on which the option is granted. Options will vest fully on the first anniversary of the date of grant and will expire after five years. EXECUTIVE COMPENSATION The following table sets forth certain information concerning compensation earned by the Company's two executive officers for services rendered to LAI during fiscal 1997. There were no stock options granted, exercised or outstanding at any time during fiscal 1997. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ---------------------------------------------------- OTHER ANNUAL ALL OTHER NAME AND PRINCIPAL POSITION SALARY BONUS(1) COMPENSATION COMPENSATION(2) - --------------------------- -------- -------- ------------ --------------- Robert L. Pearson,........................ $250,000 $902,238 $8,465 $22,500 President and Chief Executive Officer Jack P. Wissman,.......................... 130,000 279,102 4,419 22,500 Executive Vice President and Chief Administrative and Financial Officer
- --------------- (1) Consists of performance-based bonuses based upon individual achievement and LAI's financial performance for fiscal 1997. (2) Consists of contributions made by LAI to its Profit Sharing Plan. See "-- Incentive and Benefit Plans." INCENTIVE AND BENEFIT PLANS 1997 Omnibus Stock and Incentive Plan. LAI has adopted the 1997 Omnibus Stock and Incentive Plan (the "Omnibus Plan") that will become effective upon the completion of the Offering. Under the Omnibus Plan, incentive stock options, nonqualified stock options, stock appreciation rights, performance units, performance shares, restricted stock, restricted stock units and stock not subject to restrictions may be granted to employees of LAI. The exercise price of stock options granted will be determined by the Committee administering the Omnibus Plan, which price may be less than the fair market value of the shares of Common Stock on the dates the stock options are granted. Generally, incentive stock options, nonqualified stock options, restricted stock and restricted stock units will vest each year beginning on the first anniversary of the date of grant at 25% per year and will expire after 10 years. The Committee may condition awards upon satisfaction of performance targets. An aggregate of 950,000 shares of Common Stock are reserved for issuance under the Omnibus Plan. The Compensation Committee will administer the Omnibus Plan and make the determination as to the grant of awards thereunder. Immediately after completion of the Offering, the Board of Directors intends to grant under the Omnibus Plan stock options to acquire 415,500 shares of Common Stock at an exercise price equal to the initial public offering price per share and 67,500 shares of Common Stock at an exercise price equal to $7.50 per share (assuming an $11.00 initial public offering price). The stock options with an exercise price below the initial public offering price will be granted to certain consultants recently hired as or promoted to partners who, if the Offering had not then been under contemplation, would have received shares of Common Stock at the time they were hired or promoted. The Board of Directors intends to grant such options at a lower exercise price in recognition of the delayed grants resulting from the Offering. Profit Sharing Plan. LAI maintains a profit sharing plan (the "Profit Sharing Plan"), a defined contribution plan established pursuant to and under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Each year, the Board of Directors determines the amount that LAI will contribute to the Profit Sharing Plan for that plan year; contributions by participants (other than amounts transferred by participants from other retirement plans) are not permitted. Contributions are allocated to participants' accounts in proportion to the 32 34 participants' total compensation, subject to limitations thereon imposed by the Code. Participants may elect among several investment vehicles selected by the plan administrator as to how their accounts under the Profit Sharing Plan will be invested. Participants vest in their accounts at the rate of 25% per year after completion of one year of service. In connection with the Offering and from time to time thereafter, participants will be entitled to direct the trustees of the Profit Sharing Plan to invest a portion of their Profit Sharing Plan account balances in Common Stock. See "Underwriting." Deferred Compensation Plan. LAI maintains a deferred compensation plan (the "Deferred Compensation Plan") for its executive employees. The Board of Directors or a Committee appointed by the Board is authorized to determine who shall be eligible to participate in the Deferred Compensation Plan, although historically all consultants have been eligible to participate. Each year, eligible participants may elect to defer under the Deferred Compensation Plan a specified amount or percentage of their compensation for payment at a specified future date or upon termination of employment with or retirement from LAI, as directed by each participant. The Company pays interest on amounts deferred under the Deferred Compensation Plan at a rate, currently 9% per annum, established each year by the Board of Directors in its discretion. Participants are fully vested in their accounts. LAI does not match employee contributions to the Deferred Compensation Plan. See Note 7 to the Financial Statements. 1997 Employee Stock Purchase Plan. The Company has adopted its 1997 Employee Stock Purchase Plan (the "ESPP") that will become effective upon the completion of the Offering. Under the ESPP, which is intended to qualify under the provisions of Section 423 of the Code, eligible employees will be given the right to purchase shares of Common Stock two times a year. The per share purchase price under the ESPP will be 85% of the market price of the Common Stock immediately prior to the first day of each exercise period or, during the first exercise period, 85% of the lesser of the initial public offering price or the market price at the close of the exercise period. During each exercise period, an eligible employee will be entitled to purchase up to that number of shares of Common Stock the aggregate purchase price of which under the ESPP does not exceed 3% of the employee's annual compensation. An aggregate of 200,000 shares of Common Stock have been reserved for issuance under the ESPP. Shares issued under the ESPP may be newly issued shares or shares purchased by the Company in the open market. 33 35 PRINCIPAL STOCKHOLDERS The following table sets forth certain information concerning the beneficial ownership of the Common Stock as of the date of this Prospectus and as adjusted to reflect the sale of shares offered hereby by (i) each person known by LAI to own beneficially more than 5% of the outstanding Common Stock, (ii) each person who will be a Director of LAI upon completion of the Offering, (iii) each named executive officer and (iv) all officers and such persons who will become Directors as a group. Each person named below has an address in care of LAI's headquarters in New York, NY.
BENEFICIAL OWNERSHIP(1)(2) ---------------------------------- PERCENTAGE ------------------------ PRIOR TO THE AFTER THE NAME SHARES OFFERING OFFERING - ---- ------- ------------ --------- Robert L. Pearson(3)....................................... 200,000 6.6% 4.0% Jack P. Wissman(3)......................................... 115,000 3.8 2.3 John F. Johnson(3)......................................... 200,000 6.6 4.0 Joe D. Goodwin(3).......................................... 120,000 4.0 2.4 Roderick C. Gow(3)......................................... 100,000 3.3 2.0 John S. Rothschild......................................... 100,000 3.3 2.0 Ray J. Groves(4)........................................... -- -- -- Richard W. Pogue(4)........................................ -- -- -- John C. Pope(4)............................................ -- -- -- David W. Palmlund III(3)................................... 180,000 6.0 3.6 All executive officers and persons to be Directors as a group (9 persons)........................................ 835,000 27.6 16.7
- --------------- (1) Beneficial ownership of shares, as determined in accordance with applicable Securities and Exchange Commission rules, includes shares as to which a person has or shares sole voting power and/or investment power. Except as otherwise indicated, all shares are held of record with sole voting and investment power. (2) Excludes shares that may be purchased in the Offering. See "Underwriting." (3) Excludes 15,000, 5,000, 15,000, 10,000, 10,000 and 5,000 shares of Common Stock issuable to Messrs. Pearson, Wissman, Johnson, Goodwin, Gow and Palmlund, respectively, on the exercise of stock options, which will be granted immediately after completion of the Offering under the Omnibus Plan, at an exercise price equal to the initial public offering price. (4) Excludes 5,000 shares of Common Stock issuable to each of Messrs. Groves, Pogue and Pope on the exercise of stock options which will be granted immediately after completion of the Offering under the Directors' Stock Plan, at an exercise price equal to the initial public offering price. 34 36 CERTAIN TRANSACTIONS The Company issues and sells Common Stock from time to time to newly hired or promoted partners, who sign subscription agreements evidencing the consideration therefor. Consideration for such shares must be paid to the Company within one year and may be paid with the proceeds of installment loans partners may obtain under a bank credit facility maintained by the Company (the "Facility"). Each loan under the Facility is secured by a pledge of a portion of the Common Stock purchased and is guaranteed by the Company. Arthur J. Davidson, Roderick C. Gow, Joe D. Goodwin and Harold E. Johnson have obtained loans under the Facility in aggregate principal amounts of approximately $90,000, $146,000, $148,000 and $76,000, respectively. As of February 28, 1997, amounts outstanding under such loans were approximately $75,000, $125,000, $80,000 and $67,000, respectively. Messrs. Davidson and Johnson are current Directors whose terms will expire upon completion of the Offering and Messrs. Gow and Goodwin will become Directors upon completion of the Offering. The Company expects to obtain a release of its guarantee under the Facility effective upon completion of the Offering. During fiscal 1997, the Company issued and sold 100,000 and 50,000 shares of Common Stock to John S. Rothschild and Harold E. Johnson, respectively, for aggregate consideration of approximately $154,000 and $76,000, respectively. Mr. Rothschild will become a Director upon completion of the Offering. Mr. Johnson executed a subscription agreement for his shares and in fiscal 1997 paid the amount due thereunder with the proceeds of a loan he obtained under the Facility. See "Description of Capital Stock -- Indemnification and Limitation of Liability for Directors and Officers" for information regarding indemnification agreements which LAI intends to enter into with its directors and certain officers. DESCRIPTION OF CAPITAL STOCK GENERAL LAI reincorporated from Delaware to Florida on June 3, 1997 and, upon completion of the Offering, intends to amend and restate its Articles of Incorporation and Bylaws. References in this Prospectus to LAI's Articles of Incorporation or Bylaws are references to such documents as they will be amended and restated in connection with the Offering. LAI has authority under its Articles of Incorporation to issue up to 35,000,000 shares of Common Stock and up to 3,000,000 shares of Preferred Stock (the "Preferred Stock"). COMMON STOCK Subject to any preferential rights of any Preferred Stock created by the Board of Directors, each outstanding share of Common Stock is entitled to such dividends, if any, as may be declared from time to time by the Board. See "Dividend Policy." Each outstanding share is entitled to one vote on all matters submitted to a vote of stockholders. Holders of Common Stock do not have any preemptive right to subscribe to any securities of LAI of any kind or class. In the event of liquidation, dissolution or winding up of LAI, holders of Common Stock are entitled to receive on a pro rata basis any assets remaining after provision for payment of creditors and after payment of any liquidation preferences to holders of Preferred Stock. PREFERRED STOCK Preferred Stock is available for issuance from time to time in one or more series at the discretion of the Board of Directors without stockholder approval. The Board of Directors has the authority to prescribe for each series of Preferred Stock it establishes the number of shares, the voting rights (if any) to which such shares are entitled, and the designations, powers, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions of such shares. Depending upon the rights of such Preferred Stock, the issuance of Preferred Stock could have an adverse effect on holders of Common Stock by delaying or preventing a change in control of LAI, making removal of the present management of LAI more difficult or resulting in restrictions upon the payment of dividends and other distributions to the holders of Common Stock. FLORIDA BUSINESS CORPORATION ACT The Company will be subject to several anti-takeover provisions under Florida law that apply to a public corporation organized under Florida law unless the corporation has elected to opt out of such provisions in its Articles of Incorporation or (depending on the provision in question) its Bylaws. LAI has not elected to opt out of these provisions. The Florida Business Corporation Act (the "Florida Act") contains a provision that prohibits 35 37 the voting of shares in a publicly held Florida corporation which are acquired in a "control share acquisition" unless the holders of a majority of the corporation's voting shares (exclusive of shares held by officers of the corporation, inside directors or the acquiring party) approve the granting of voting rights as to the shares acquired in the control share acquisition. A "control share acquisition" means an acquisition that immediately thereafter entitles the acquiring party to vote in the election of directors within any of the following ranges of voting power: (i) one-fifth or more but less than one third of such voting power, (ii) one third or more but less than a majority of such voting power and (iii) more than a majority of such voting power. The Florida Act also contains an "affiliated transaction" provision that prohibits a publicly-held Florida corporation from engaging in a broad range of business combinations or other extraordinary corporate transactions with an "interested stockholder" unless (i) the transaction is approved by a majority of disinterested directors before the person becomes an interested stockholder, (ii) the interested stockholder has owned at least 80% of the corporation's outstanding voting shares for at least five years, or (iii) the interested stockholder is the beneficial owner of at least 90% of the corporation's outstanding voting shares, exclusive of those shares acquired by the interested stockholder directly from the corporation in a transaction approved by a majority of the disinterested directors. An interested stockholder is defined as a person who together with affiliates and associates beneficially owns more than 10% of the corporation's outstanding voting shares. PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS AFFECTING CHANGES IN CONTROL Certain provisions of the Company's Articles of Incorporation and Bylaws may delay or make more difficult unsolicited acquisitions or changes of control of LAI. Such provisions may enable LAI to develop its business in a manner that will foster its long-term growth without disruption caused by the threat of a takeover not deemed by its Board of Directors to be in the best interests of LAI and its stockholders. Such provisions could have the effect of discouraging third parties from making proposals involving an unsolicited acquisition or change of control of LAI, although such proposals, if made, might be considered desirable by a majority of LAI's stockholders. Such provisions may also have the effect of making it more difficult for third parties to cause the replacement of the current Board of Directors of LAI. These provisions include (i) the availability of capital stock for issuance from time to time at the discretion of the Board of Directors, (ii) a classified Board of Directors, (iii) prohibition against stockholders acting by written consent in lieu of a meeting, (iv) limitations on calling meetings of stockholders, (v) requirements for advance notice for raising business or making nominations at stockholders' meetings and (vi) the ability of the Board of Directors to increase the size of the Board of Directors and to appoint directors to newly created directorships. These provisions are present in the Articles of Incorporation or Bylaws of LAI. INDEMNIFICATION AND LIMITATION OF LIABILITY FOR DIRECTORS AND OFFICERS The LAI Bylaws provide that LAI shall have the power, but generally not the obligation, to indemnify directors and officers to the fullest extent permitted by the laws of the State of Florida. LAI intends to enter into indemnification agreements with all of its executive officers and directors creating certain indemnification obligations on LAI's part in favor of the directors and executive officers. These indemnification agreements clarify and expand the circumstances under which a director or executive officer will be indemnified. The indemnification rights conferred by the Bylaws and indemnification agreements are not exclusive of any other right, under the Florida Act or otherwise, to which a person seeking indemnification may otherwise be entitled. LAI also intends to provide liability insurance for the directors and officers for certain losses arising from claims or charges made against them while acting in their capacities as directors or officers. The effect of such indemnification arrangements may be to exempt or limit the liability of such executive officers and directors to LAI or its stockholders for monetary damages for breach of fiduciary duty to LAI, except to the extent such exemption or limitation is not permitted under the Florida Act as the same exists or may hereafter be amended. TRANSFER AGENT The transfer agent and registrar of the Company's Common Stock is ChaseMellon Shareholder Services, L.L.C. 36 38 SHARES ELIGIBLE FOR FUTURE SALE A substantial number of shares of Common Stock already outstanding, or issuable on exercise of options under the Omnibus Plan and the Directors' Stock Plan, are or will be eligible for future sale in the public market at prescribed times pursuant to Rule 144 or Rule 701 under the Securities Act. Upon completion of the Offering, LAI will have 5,025,000 shares of Common Stock outstanding and will have granted options to purchase another 498,000 shares of Common Stock. Of these shares, the 2,000,000 shares of Common Stock sold in the Offering (2,300,000 shares if the Underwriters' over-allotment option is exercised in full) will be freely tradeable by persons other than "affiliates" of LAI, without restriction under the Securities Act. The remaining 3,025,000 shares of Common Stock will be "restricted" securities within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. Of this amount, commencing 90 days after the date of this Prospectus, 3,000,000 shares will be eligible for public sale pursuant to Rule 144, of which 1,655,000 shares will be eligible for sale without regard to the volume restrictions discussed below. All current stockholders of LAI, however, have agreed not to sell, contract to sell or otherwise dispose of any shares of Common Stock currently owned by them for a period of two years after the date of this Prospectus without the prior written consent of Robert W. Baird & Co. Incorporated. In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned his or her shares of Common Stock for at least one year (including the prior holding period of any prior owner other than an affiliate of LAI) is entitled to sell within any three-month period that number of shares which does not exceed the greater of 1% of the outstanding shares of Common Stock or the average weekly trading volume during the four calendar weeks preceding each such sale. Sales under Rule 144 also are subject to certain manner of sale provisions, notice requirements and the availability of current public information about LAI. A person (or persons whose shares are aggregated) who is not or has not been deemed an affiliate of LAI for at least three months and who has beneficially owned shares for at least two years (including the holding period of any prior owner other than an affiliate) would be entitled to sell such shares under Rule 144 without regard to the limitations discussed above. Rule 144 defines "affiliate" of a company as a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such company. Affiliates of a company generally include its directors, executive officers and principal stockholders. Sales of such shares in the public market, or the perception that such sales may occur, could adversely affect the market price of the Common Stock or impair LAI's ability to raise additional capital in the future through the sale of equity securities. 37 39 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, LAI has agreed to sell to each of the Underwriters named below, and each of the Underwriters for whom Robert W. Baird & Co. Incorporated and William Blair & Company, L.L.C. are acting as representatives has severally agreed to purchase from LAI, the respective number of shares of Common Stock set forth opposite its name below:
NUMBER OF UNDERWRITERS SHARES - ------------ --------- Robert W. Baird & Co. Incorporated.......................... William Blair & Company, L.L.C.............................. --------- Total............................................. 2,000,000 =========
In the Underwriting Agreement, the Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all 2,000,000 shares of Common Stock offered hereby, other than those shares of Common Stock covered by the over-allotment option granted to the Underwriters, if any such Common Stock are purchased. LAI has been advised that the Underwriters propose to offer Common Stock to the public at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such price, less a concession not in excess of $ per share. The Underwriters may allow and dealers may re-allow a concession not in excess of $ per share to other dealers. After the shares of Common Stock are released for sale to the public, the offering price and other selling terms may be changed by the Underwriters. All of LAI's current stockholders have agreed not to sell, contract to sell or otherwise dispose of any shares of Common Stock currently owned by them for a period of two years after the date of this Prospectus without the prior written consent of Robert W. Baird & Co. Incorporated. See "Shares Eligible for Future Sale." Additionally, the Company has agreed, for a period of 180 days after the date of this Prospectus, not to sell, contract to sell or otherwise dispose of any shares of Common Stock without the prior written consent of Robert W. Baird & Co. Incorporated, other than shares of Common Stock issued in the Offering, under the ESPP, or upon exercise of stock options granted pursuant to the Omnibus Plan or the Directors' Stock Plan. See "Management -- Incentive and Benefit Plans." Prior to the Offering, there has been no public market for the Common Stock. The initial public offering price for the Common Stock will be determined by negotiation among LAI and the Underwriters. The factors considered in determining the initial public offering price include the history of and prospects for the business in which LAI operates, past and present revenue and earnings of LAI and the trends of and prospects for such earnings, the general condition of the securities markets at the time of the Offering and the demand for similar securities of reasonably comparable companies, and an assessment of LAI's management and the consideration of the above factors in relation to market valuation of companies in related businesses. There can be no assurance, however, that the prices at which the Common Stock will sell in the public market after the Offering will not be lower than the initial public offering price. The Underwriting Agreement provides that each of LAI and the Underwriters will indemnify the other against certain liabilities under the Securities Act or contribute to payments the other may be required to make in respect thereof. Application has been made for approval for quotation and trading of the Common Stock on the Nasdaq National Market under the symbol "LAIX". 38 40 LAI has granted to the Underwriters an option, exercisable within 30 days after the date of the Offering, to purchase up to an additional 300,000 shares of Common Stock to cover over-allotments, at the same price per share to be paid by the Underwriters for the other shares offered hereby. If the Underwriters purchase any such additional shares pursuant to this option, each of the Underwriters will be committed to purchase such additional shares in approximately the same proportion as set forth in the above table. The Underwriters may purchase such shares only to cover over-allotments, if any, in connection with the Offering. In connection with the Offering, the Underwriters may purchase and sell the Common Stock in the open market, which transactions may include over-allotment and stabilizing transactions and purchases to cover syndicate short positions created by the Underwriters in connection with the Offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the Common Stock, and syndicate short positions involve the sale by the Underwriters of a greater number of shares of Common Stock than they are required to purchase from the Company in the Offering. The Underwriters also may impose a penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers in respect of the securities sold in the Offering for their account may be reclaimed by the syndicate if such securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the Common Stock, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise. At the request of the Company, the Underwriters have reserved up to 200,000 shares of the Common Stock offered hereby for sale at the initial public offering price to the trustees of the Company's Profit Sharing Plan pursuant to the directions and for the accounts of participants in the Profit Sharing Plan ("Participants"). The Profit Sharing Plan was recently amended in contemplation of the Offering to enable Participants to direct the investment of up to 10% of their account balances in Common Stock. Prior to the Offering, such investment would not have been permitted. Participants will be given a copy of this Prospectus and a supplement explaining the procedures for directing the Profit Sharing Plan trustees to invest a portion of their account balances in the Common Stock and describing certain other matters regarding the Profit Sharing Plan. To participate in the Offering, Participants will be required to advise the trustees of the Profit Sharing Plan of the amount of their account balances that they wish to be used to purchase Common Stock and which current investments should be liquidated to fund such purchase. The Underwriters also have reserved up to 100,000 shares for sale at the initial public offering price to certain consultants, employees, clients and other persons associated with LAI. The number of shares of Common Stock available for sale to the general public will be reduced to the extent the trustee of the Profit Sharing Plan or any of such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the Underwriters to the general public on the same basis as the other shares of Common Stock offered hereby. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for LAI by Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, Professional Association, Tampa, Florida. Certain legal matters in connection with the Offering will be passed upon for the Underwriters by Neal, Gerber & Eisenberg, Chicago, Illinois. EXPERTS The Financial Statements and Notes thereto included in this Prospectus and the Registration Statement have been audited by Arthur Andersen LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 39 41 ADDITIONAL INFORMATION LAI has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-1 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and in each such instance reference is made to the copy of such contract or document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. As a result of the Offering, LAI will become subject to the informational requirements of the Exchange Act, and in accordance therewith will file reports, proxy statements and other information with the Commission. The Registration Statement, as well as all periodic reports and other information filed by LAI pursuant to the Exchange Act, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street NW, Washington, D.C. 20549, and at the regional offices of the Commission located at 7 World Trade Center, 7th Floor, New York, New York 10048 and Citicorp Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained from the World Wide Web site that the Commission maintains at http://www.sec.gov and from the Public Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates. 40 42 INDEX TO FINANCIAL STATEMENTS Report of Independent Certified Public Accountants.......... F-2 Financial Statements Balance Sheets............................................ F-3 Statements of Operations.................................. F-4 Statements of Stockholders' Equity........................ F-5 Statements of Cash Flows.................................. F-6 Notes to Financial Statements............................. F-7
F-1 43 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Lamalie Associates, Inc.: We have audited the accompanying balance sheets of Lamalie Associates, Inc. (a Florida corporation) as of February 29, 1996 and February 28, 1997, and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended February 28, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lamalie Associates, Inc. as of February 29, 1996 and February 28, 1997, and the results of its operations and its cash flows for each of the three years in the period ended February 28, 1997, in conformity with generally accepted accounting principles. Tampa, Florida April 11, 1997 (except with respect to the matters discussed in Note 9, as to which the date is June 3, 1997) F-2 44 LAMALIE ASSOCIATES, INC. BALANCE SHEETS
FEBRUARY 29, FEBRUARY 28, 1996 1997 ------------ ------------ ASSETS: Current assets: Cash and cash equivalents.............................. $ 2,529,000 $ 1,662,310 Accounts receivable, less allowance of $625,000 and $890,000 for doubtful accounts, respectively......... 9,878,334 14,392,406 Prepaid expenses....................................... 321,623 653,152 Employee receivables................................... 59,962 49,872 Income taxes receivable................................ -- 57,964 Other current assets................................... -- 175,000 ----------- ----------- Total current assets................................. 12,788,919 16,990,704 ----------- ----------- Property and equipment, net............................... 3,126,559 4,184,295 Deferred tax assets....................................... 1,038,906 1,957,963 Other assets.............................................. 1,345,196 2,428,243 ----------- ----------- Total assets.............................................. $18,299,580 $25,561,205 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable....................................... $ 2,048,263 $ 1,914,078 Accrued compensation................................... 9,878,760 13,254,785 Income taxes payable................................... 1,088,079 -- Deferred tax liabilities............................... -- 643,278 Current maturities of long-term debt................... 63,186 386,801 Other current liabilities.............................. 195,808 175,148 ----------- ----------- Total current liabilities............................ 13,274,096 16,374,090 ----------- ----------- Accrued rent.............................................. 506,845 1,038,009 Long-term debt, less current maturities................... -- 1,649,828 Deferred compensation..................................... 2,009,628 3,871,939 ----------- ----------- Commitments and contingencies............................. Stockholders' equity: Preferred stock, $0.01 par value; 3,000,000 shares authorized; no shares issued and outstanding......... -- -- Common stock, $0.01 par value; 35,000,000 shares authorized; 2,790,000 and 3,075,000 shares issued and outstanding, respectively............................ 27,900 30,750 Additional paid-in capital............................. 3,651,086 4,086,832 Subscriptions receivable............................... (399,109) (152,331) Accumulated deficit.................................... (770,866) (1,337,912) ----------- ----------- Total stockholders' equity........................... 2,509,011 2,627,339 ----------- ----------- Total liabilities and stockholders' equity................ $18,299,580 $25,561,205 =========== ===========
The accompanying notes are an integral part of these statements. F-3 45 LAMALIE ASSOCIATES, INC. STATEMENTS OF OPERATIONS
YEAR ENDED ------------------------------------------ FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, 1995 1996 1997 ------------ ------------ ------------ Fee revenue, net.................................. $28,261,892 $35,088,207 $46,437,009 Operating expenses: Compensation and benefits....................... 23,991,044 30,693,159 39,928,392 General and administrative expenses............. 2,332,570 4,467,430 6,684,502 ----------- ----------- ----------- Total operating expenses..................... 26,323,614 35,160,589 46,612,894 ----------- ----------- ----------- Operating income (loss)........................... 1,938,278 (72,382) (175,885) ----------- ----------- ----------- Interest income................................... 121,834 116,539 124,708 Interest expense.................................. (127,710) (156,649) (500,519) ----------- ----------- ----------- Net interest income (expense)................ (5,876) (40,110) (375,811) ----------- ----------- ----------- Income (loss) before provision for income taxes... 1,932,402 (112,492) (551,696) Provision for income taxes........................ 671,000 89,925 15,350 ----------- ----------- ----------- Net income (loss)................................. $ 1,261,402 $ (202,417) $ (567,046) =========== =========== =========== Net income (loss) per share....................... $ 0.51 $ (0.07) $ (0.18) =========== =========== =========== Weighted average shares outstanding............... 2,497,000 2,921,000 3,199,000 =========== =========== =========== Pro forma income data (unaudited): Pro forma provision for income taxes............ 140,000 ----------- Pro forma net income (loss)..................... $ 1,121,402 ===========
The accompanying notes are an integral part of these statements. F-4 46 LAMALIE ASSOCIATES, INC. STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK ADDITIONAL TOTAL -------------------- PAID-IN SUBSCRIPTIONS ACCUMULATED STOCKHOLDERS' SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT EQUITY ---------- ------- ---------- ------------- ----------- ------------- BALANCE AS OF FEBRUARY 28, 1994........................ 1,906,000 $19,060 $2,330,057 $ (28,026) $ (200,012) $ 2,121,079 Issuance of common stock...... 372,000 3,720 505,869 (506,096) -- 3,493 Reduction of subscriptions receivable from stockholders................ -- -- -- 461,856 -- 461,856 Distributions to stockholders................ -- -- -- -- (1,523,100) (1,523,100) Contribution of undistributed S corporation earnings to additional paid-in capital..................... -- -- 106,739 -- (106,739) -- Net income.................... -- -- -- -- 1,261,402 1,261,402 ---------- ------- ---------- ---------- ----------- ----------- BALANCE AS OF FEBRUARY 28, 1995........................ 2,278,000 22,780 2,942,665 (72,266) (568,449) 2,324,730 Redemption of common stock.... (100,000) (1,000) (135,977) -- -- (136,977) Issuance of common stock...... 612,000 6,120 844,398 (850,518) -- -- Reduction of subscriptions receivable from stockholders................ -- -- -- 523,675 -- 523,675 Net loss...................... -- -- -- -- (202,417) (202,417) ---------- ------- ---------- ---------- ----------- ----------- BALANCE AS OF FEBRUARY 29, 1996........................ 2,790,000 27,900 3,651,086 (399,109) (770,866) 2,509,011 Redemption of common stock.... (345,000) (3,450) (508,181) -- -- (511,631) Issuance of common stock...... 630,000 6,300 943,927 (950,227) -- -- Reduction of subscriptions receivable from stockholders................ -- -- -- 1,197,005 -- 1,197,005 Net loss...................... -- -- -- -- (567,046) (567,046) ---------- ------- ---------- ---------- ----------- ----------- BALANCE AS OF FEBRUARY 28, 1997........................ 3,075,000 $30,750 $4,086,832 $ (152,331) $(1,337,912) $ 2,627,339 ========== ======= ========== ========== =========== ===========
The accompanying notes are an integral part of these statements. F-5 47 LAMALIE ASSOCIATES, INC. STATEMENTS OF CASH FLOWS
YEAR ENDED ------------------------------------------ FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, 1995 1996 1997 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)............................... $ 1,261,402 $ (202,417) $ (567,046) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization................ 272,547 449,102 767,620 Deferred income taxes........................ (357,053) (737,853) (275,779) Changes in assets and liabilities: Accounts receivable, net................... (704,750) (3,735,588) (4,514,072) Prepaid expenses........................... (756) (218,486) (331,529) Employee receivables....................... 19,207 (59,962) 10,090 Income taxes receivable.................... -- -- (57,964) Other current assets....................... -- -- (175,000) Other assets............................... (40,577) (34,755) (35,567) Accounts payable........................... 198,067 1,559,735 (134,185) Accrued compensation....................... 1,028,249 2,361,419 3,376,025 Income taxes payable....................... 601,623 465,394 (1,088,079) Other current liabilities.................. (86,953) 282,761 (20,660) Accrued rent............................... 27,664 122,432 531,164 Deferred compensation...................... 695,551 1,314,077 1,862,311 ----------- ----------- ----------- Net cash provided by (used in) operating activities............................ 2,914,221 1,565,859 (652,671) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in whole life insurance.............. (428,728) (778,321) (1,047,480) Purchases of property and equipment............. (555,287) (2,483,334) (1,825,356) ----------- ----------- ----------- Net cash used in investing activities... (984,015) (3,261,655) (2,872,836) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under line of credit................. 1,000,000 -- 2,000,000 Repayment of line of credit..................... (1,000,000) -- (2,000,000) Borrowings under term loan...................... -- -- 1,994,772 Payments on term loan........................... -- -- (262,156) Redemption of certificate of deposit............ -- 109,630 -- Distributions to stockholders................... (1,809,000) -- -- Proceeds from issuance of common stock.......... 465,349 523,675 1,197,005 Payments to redeem common stock................. (120,844) (217,193) (270,804) ----------- ----------- ----------- Net cash provided by (used in) financing activities............................ (1,464,495) 416,112 2,658,817 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents........................... 465,711 (1,279,684) (866,690) Cash and cash equivalents at beginning of period.......................................... 3,342,973 3,808,684 2,529,000 ----------- ----------- ----------- Cash and cash equivalents at end of period........ $ 3,808,684 $ 2,529,000 $ 1,662,310 =========== =========== =========== Supplemental disclosures of cash flow information -- Cash paid for interest.......................... $ 17,375 $ 7,961 $ 204,269 Cash paid for income taxes...................... 405,064 362,384 1,437,172
The accompanying notes are an integral part of these statements. F-6 48 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997 (1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Lamalie Associates, Inc. (the "Company") provides executive search services to clients on a retained basis. The Company provides its clients with global search fulfillment capabilities as a member of Amrop International, an alliance of independently owned executive search firms with offices located around the world. Operations are concentrated in the United States, with global assignments conducted in conjunction with Amrop International. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly-liquid investment instruments with original maturities of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT Office furniture and equipment are stated at cost less accumulated depreciation. Effective March 1, 1996, the Company adopted the straight-line method of depreciation for all newly acquired assets. All assets acquired prior to March 1, 1996 are depreciated using an accelerated method. The effect of the change in depreciation methods on newly acquired assets is not material to the Company's financial statements. Depreciation is provided over the assets estimated useful lives of 7 years for office furniture and equipment and 5 years for software. Leasehold improvements are stated at cost less accumulated amortization using the straight-line method over the related lease terms which range from 2 to 7 years. Repair and maintenance costs which do not extend the useful lives of the assets are expensed as incurred. REVENUE RECOGNITION The Company derives substantially all of its revenues from fees for professional services, which are recognized as fee revenue as clients are billed, generally over a 60 to 90 day period commencing with the initial acceptance of a search. Fee revenue is presented net of adjustments to original billings. INCOME TAXES The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which the related deferred tax assets or liabilities are expected to be settled or realized. Income tax expense consists of the taxes payable for the current period and the change during the period in deferred tax assets and liabilities. Prior to November 1994, the Company was taxed under the provisions of Subchapter S of the Internal Revenue Code (IRC). Pursuant to Subchapter S, all income was reported through the stockholders' individual tax returns and the resulting tax liability was the responsibility of the individual stockholders. Accordingly, no provision for federal taxes was recorded prior to that date. F-7 49 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) PRO FORMA INCOME DATA (UNAUDITED) The pro forma adjustment for the year ended February 28, 1995, reflects the additional federal and state income tax expense totaling approximately $140,000 that would have been recognized had the Company made the C corporation election effective March 1, 1994. NET INCOME (LOSS) PER SHARE Net income (loss) per share is determined by dividing the net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. There were no common equivalent shares outstanding during the three years ended February 28, 1997. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 83, shares of Common Stock issued by the Company during the 12 months preceding the initial filing date have been included in the calculation of weighted average shares of Common Stock outstanding, using the treasury stock method, as if the shares were outstanding for all periods presented. All share and per share information in the financial statements has been adjusted to give effect to the 1,000 to one common stock split and par value restatement which became effective June 3, 1997 in connection with the reincorporation of the Company to Florida. (See Note 9). CONCENTRATION OF CREDIT RISK Financial instruments which potentially expose the Company to concentration of credit risk consist primarily of accounts receivable. Credit risk arising from receivables is minimal due to the large number of clients comprising the Company's customer base. The customers are concentrated primarily in the Company's U.S. market area. Credit losses in the past have not been material. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the Company's financial assets and liabilities, including cash and cash equivalents, accounts receivable, prepaid expenses, employee receivables, other current assets, accounts payable, accrued compensation, and other current liabilities at February 29, 1996 and February 28, 1997, approximate fair value because of the short maturity of these instruments. The carrying amount of the Company's long-term debt approximates fair value at February 29, 1996 and February 28, 1997, based on current market rates of interest and maturities. NEWLY ISSUED ACCOUNTING STANDARDS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 establishes new standards for computing and presenting earnings per share ("EPS"). Specifically, SFAS 128 replaces the currently required presentation of primary EPS with a presentation of basic EPS, requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997; earlier application is not permitted. Pro forma EPS computed under SFAS 128 would have been the same as reflected on the accompanying statement of operations. RECLASSIFICATIONS Certain prior year balances have been reclassified in order to conform to the current year financial statement presentation. F-8 50 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (2) EMPLOYEE RECEIVABLES Included in employee receivables as of February 29, 1996 is a promissory note in the amount of $40,000 from one of the Company's stockholders. The principal amount of the note and accrued interest were repaid during fiscal 1997. (3) PROPERTY AND EQUIPMENT Property and equipment consists of the following:
FEBRUARY 29, FEBRUARY 28, 1996 1997 ------------ ------------ Office furniture and equipment........................... $2,270,415 $2,884,162 Leasehold improvements................................... 1,814,523 2,304,797 Software................................................. -- 721,335 ---------- ---------- 4,084,938 5,910,294 Less accumulated depreciation and amortization........... (958,379) (1,725,999) ---------- ---------- $3,126,559 $4,184,295 ========== ==========
(4) LONG-TERM DEBT Long-term debt consists of the following:
FEBRUARY 29, FEBRUARY 28, 1996 1997 ------------ ------------ Term loan dated March 1996, payable in monthly principal installments of $23,810 plus accrued interest, final principal and interest payment totaling $1,174,380 due March 1999, bearing interest at the bank's prime rate (8.25% at February 28, 1997) plus 0.25%, secured by accounts receivable, borrowings are limited to 75% of qualifying receivables................................. $ -- $1,732,616 Stockholder notes payable due in connection with the Stock Restriction and Retirement Agreement, non-interest bearing (interest imputed at 6.5%), payable in three equal annual installments............. 63,186 304,013 -------- ---------- 63,186 2,036,629 Less current maturities of long-term debt................ (63,186) (386,801) -------- ---------- $ -- $1,649,828 ======== ==========
The Company maintains a line of credit which provides for maximum borrowings of $3,000,000, bearing interest at the bank's prime rate (8.25% at February 28, 1997). Interest is payable monthly and the principal balance is due upon demand. The line of credit and the term loan are with the same financial institution and are cross-collateralized by accounts receivable with borrowings limited to 75% of qualifying receivables. Additionally, the Company is required to comply with certain working capital and liquidity covenants. No amounts were outstanding under the line of credit as of February 29, 1996 or February 28, 1997. The total borrowing capacity under the line of credit was available as of February 28, 1997. F-9 51 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (5) STOCKHOLDERS' EQUITY (SEE NOTE 9) All Common Stock is held by employees and is subject to the terms of the Stock Restriction and Retirement Agreement (the "Stock Restriction Agreement"). The Stock Restriction Agreement provides for certain restrictions on the transfer of shares. Upon termination of a stockholder's employment, the stock is subject to mandatory redemption at Adjusted Book Value, as defined in the Stock Restriction Agreement. Under the terms of the Stock Restriction Agreement, the Company may issue installment notes payable in satisfaction of redemption requirements. The Company maintains a stockholder financing agreement with a bank under which employees can finance purchases of Common Stock with an installment loan collateralized by the stock and guaranteed by the Company. As of February 28, 1997, approximately $863,000 outstanding principal amount of such loans were guaranteed by the Company. During fiscal 1997, the Company issued 630,000 shares of Common Stock in exchange for $950,227 of subscriptions receivable. These notes are non-interest bearing and payable within one year. Pursuant to SAB No. 1, undistributed earnings on the date an S corporation election is terminated should be reflected as additional paid-in capital. This assumes a constructive distribution to the owners followed by a contribution to the capital of the Company. Accordingly, a capital contribution totaling $106,739 was recorded during fiscal 1995 representing the undistributed retained earnings as of the date of change from an S corporation to a C corporation. (6) INCOME TAXES Significant components of the provision for income taxes are summarized as follows:
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, 1995 1996 1997 ------------ ------------ ------------ Current: Federal................................... $ 721,805 $ 661,636 $ 234,946 State..................................... 306,248 166,142 56,183 ---------- --------- --------- 1,028,053 827,778 291,129 ---------- --------- --------- Deferred: Federal................................... (247,973) (590,744) (219,589) State..................................... (109,080) (147,109) (56,190) ---------- --------- --------- (357,053) (737,853) (275,779) ---------- --------- --------- $ 671,000 $ 89,925 $ 15,350 ========== ========= =========
The provision for income taxes differs from the amount computed by applying the U.S. Federal corporate tax rate of 35% to income before provision for income taxes as follows:
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, 1995 1996 1997 ------------ ------------ ------------ Statutory U.S. federal income tax rate............... 35.0% 35.0% 35.0% Deferred taxes recorded in connection with change in tax status from S corporation to C corporation..................................... 28.3 -- -- Portion of year taxed as an S corporation.......... (34.7) -- -- Meals, entertainment and dues...................... 1.8 (101.0) (31.2) Keyman life insurance premiums..................... -- (6.6) (3.8) State taxes, net of federal benefit................ 4.3 (7.3) (2.8) ----- ------ ----- Effective tax rate......................... 34.7% (79.9)% (2.8)% ===== ====== =====
F-10 52 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes. The Company is a cash basis taxpayer. Significant components of the Company's deferred tax assets and liabilities as of February 29, 1996 and February 28, 1997, are as follows:
FEBRUARY 29, FEBRUARY 28, 1996 1997 ------------ ------------ Deferred tax assets: Accounts payable....................................... $ 819,305 $ 765,631 Accrued compensation................................... 3,220,688 4,539,242 Accrued rent........................................... 202,738 415,204 Deferred compensation.................................. 803,851 1,548,776 Other.................................................. 78,323 70,071 ----------- ----------- Total deferred tax assets...................... 5,124,905 7,338,924 ----------- ----------- Deferred tax liabilities: Accounts receivable, net............................... (3,951,334) (5,756,962) Prepaid expenses....................................... (128,649) (261,261) Other.................................................. (6,016) (6,016) ----------- ----------- Total deferred tax liabilities................. (4,085,999) (6,024,239) ----------- ----------- Net deferred tax asset......................... $ 1,038,906 $ 1,314,685 =========== ===========
(7) EMPLOYEE BENEFIT PLANS PROFIT SHARING PLAN The Company maintains a defined contribution retirement plan (the "Plan") covering substantially all employees. The Company makes an annual contribution to the Plan based upon the prior fiscal year's operating results. Employees' rights to Company contributions to the Plan vest ratably over four years of service. As of February 29, 1996 and February 28, 1997, the Company has accrued for contributions totaling approximately $3,654,000 and $4,774,000, respectively, which are included in accrued compensation in the accompanying balance sheets. DEFERRED COMPENSATION PLAN The Company has deferred compensation agreements with 38 of its employees. Under the terms of the agreements, employees elect to defer a portion of their compensation to be received, together with accrued interest, upon termination of the agreements, as defined. Interest is earned on deferred amounts at a rate determined annually by the Company (9% at February 28, 1997). The Company is the beneficiary of whole life insurance policies with an aggregate cash surrender value of approximately $1,207,000 and $2,255,000 and an aggregate face amount of $14,600,000 and $14,725,000 as of February 29, 1996 and February 28, 1997, respectively. The aggregate cash surrender value of these policies is included in other assets in the accompanying balance sheets. Proceeds from the policies are intended to fund the deferred compensation agreements. F-11 53 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (8) COMMITMENTS AND CONTINGENCIES OPERATING LEASES The Company leases certain office equipment and real property under noncancellable operating leases. Future minimum lease payments under these leases are as follows:
YEAR ENDING AMOUNT - ----------- ----------- February 28, 1998........................................... $ 2,890,322 February 28, 1999........................................... 2,483,325 February 29, 2000........................................... 2,283,352 February 28, 2001........................................... 2,263,112 February 28, 2002........................................... 2,015,206 Thereafter.................................................. 7,141,894 ----------- $19,077,211 ===========
Certain real property leases provide for periods of free rent or escalating lease payments throughout the lease term. In accordance with generally accepted accounting principles, rent expense is recognized ratably over the term of the agreement. Rent expense totaled approximately $1,077,000, $1,438,000 and $2,294,000 during the three years ended February 28, 1997, respectively. LETTERS OF CREDIT As of February 28, 1997, the Company has standby letters of credit totaling $450,000. The letters of credit, which are required by certain lessors as security deposits, expire October 1997. LITIGATION The Company is involved in various legal actions arising in the normal course of business. While it is not possible to determine with certainty the outcome of these matters, in the opinion of management, the eventual resolution of these claims and actions outstanding will not have a material adverse effect on the Company's financial position or results of operations. (9) SUBSEQUENT EVENTS INITIAL PUBLIC OFFERING AND REINCORPORATION The Company's Board of Directors authorized management to prepare and file a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission in connection with the contemplated initial public offering of its Common Stock (the "Offering"). On June 3, 1997, in connection with the Offering, the Company reincorporated from Delaware to Florida; effected a 1,000 for one stock split of each outstanding share of Common Stock; increased the authorized Common Stock to 35,000,000 shares, $0.01 par value per share; and authorized 3,000,000 shares of Preferred Stock, $0.01 par value per share. Upon the completion of the Offering, the Company intends to terminate the Stock Restriction Agreement and expects to obtain a release from the related guarantee under the stockholder financing agreement (See Note 5). STOCK AND OPTION PLANS In connection with the Offering, the Company has adopted the following stock and option plans which will become effective upon completion of the Offering. F-12 54 LAMALIE ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1997 Omnibus Stock and Incentive Plan (the "Omnibus Plan"). Under the Omnibus Plan, incentive stock options, nonqualified stock options, stock appreciation rights, performance units, performance shares, restricted stock, restricted stock units and stock not subject to restrictions may be granted to employees of the Company at prices determined at the time of grant. Generally, incentive stock options, nonqualified stock options, restricted stock and restricted stock units will vest each year beginning on the first anniversary of the date of grant at 25% per year and will expire after 10 years. An aggregate of 950,000 shares of Common Stock are reserved for issuance under the Omnibus Plan. Immediately after completion of the Offering, the Board of Directors intends to grant under the Omnibus Plan stock options to acquire 415,500 shares of Common Stock at an exercise price equal to the initial public offering price and 67,500 shares of Common Stock at an exercise price equal to $7.50 per share (assuming an $11.00 per share initial public offering price). 1997 Employee Stock Purchase Plan (the "ESPP"). An aggregate of 200,000 shares of Common Stock are reserved for issuance under the ESPP, which is intended to qualify under the provisions of Section 423 of the Internal Revenue Code. Eligible employees generally will be given the right to purchase shares of Common Stock two times a year at a price equal to 85% of the market price of the Common Stock. Non-Employee Directors' Stock Plan (the "Directors' Stock Plan"). An aggregate of 80,000 shares of Common Stock are reserved for issuance under the Directors' Stock Plan. Among other provisions, outside directors will annually receive options to purchase 5,000 shares of Common Stock at an exercise price equal to the market price of the Common Stock on the date of grant. The options will vest fully on the first anniversary of the date of grant and expire after five years. Immediately after completion of the Offering, three outside directors will become members of the Board of Directors and will be granted stock options to acquire an aggregate of 15,000 shares of Common Stock under the Directors' Stock Plan at an exercise price equal to the initial public offering price. COMMITMENT LETTER -- CREDIT FACILITIES The Company has obtained a commitment letter from a bank to provide various credit facilities of $10.0 million. Outstanding borrowings under these facilities will bear interest at various rates based on the bank's prime lending rate. F-13 55 [The following text will appear printed over a photograph of three people standing in a hallway. Behind and partially obscured by the people are a global map depicting the locations of offices of LAI and other members of Amrop International beneath four clocks.] WE ARE A KNOWLEDGE-BASED FIRM. LAI is one of the fastest growing executive search firms and is the fifth largest search firm in the United States. The extensive industry experience of our consultants has been the foundation of our knowledge-based business strategy, which is primarily organized around five practice groups. As a result, a diverse set of clients retain us to help them fulfill their leadership needs. We believe our competitive advantage is our knowledge, experience and responsiveness in finding exceptional leaders. 56 ====================================================== NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 6 Use of Proceeds....................... 10 Dividend Policy....................... 10 Capitalization........................ 11 Dilution.............................. 12 Selected Financial Data............... 13 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 14 Business.............................. 19 Management............................ 28 Principal Stockholders................ 34 Certain Transactions.................. 35 Description of Capital Stock.......... 35 Shares Eligible for Future Sale....... 37 Underwriting.......................... 38 Legal Matters......................... 39 Experts............................... 39 Additional Information................ 40 Index to Financial Statements......... F-1
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. ====================================================== ====================================================== 2,000,000 SHARES LOGO LAMALIE ASSOCIATES, INC. COMMON STOCK ------------------------ PROSPECTUS ------------------------ ROBERT W. BAIRD & CO. INCORPORATED WILLIAM BLAIR & COMPANY , 1997 ====================================================== 57 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JUNE 4, 1997 PROSPECTUS SUPPLEMENT 200,000 SHARES LAMALIE LOGO LAMALIE ASSOCIATES, INC. PROFIT SHARING PLAN AND TRUST --------------------------- This Prospectus Supplement relates to the offer and sale to participants (the "Participants") in the Lamalie Associates, Inc. Profit Sharing Plan and Trust (the "Plan") of shares of Lamalie Associates, Inc. common stock, par value $.01 per share (the "Common Stock"), as set forth herein. It is currently estimated that the initial public offering price for the Common Stock will be between $10.00 and $12.00 per share. In addition to the Common Stock, and because any offer and sale of shares of Common Stock to or for the account of a Participant is deemed under applicable law to be an offer and sale of a corresponding interest in the Plan, this Prospectus Supplement also relates to the offer and sale of such "participation interests." The Plan has been amended, effective as of the date hereof, to permit Participants to direct the Trustees of the Plan to purchase Common Stock with up to 10% of the amounts in the Plan that are held in the accounts of such Participants. This Prospectus Supplement relates to the initial election of a Participant to direct the purchase of Common Stock in connection with the Offering as of the date hereof, and also to elections to purchase Common Stock hereafter. The Prospectus dated , 1997 of the Company (the "Prospectus"), which accompanies this Prospectus Supplement, includes detailed information with respect to the Offering, the Common Stock and the financial condition, results of operation and business of the Company. This Prospectus Supplement, which provides detailed information with respect to the Plan, should be read only in conjunction with the Prospectus. Terms not otherwise defined in this Prospectus Supplement are defined in the Plan or the Prospectus. PARTICIPANTS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED UNDER THE CAPTION "RISK FACTORS" AT PAGE 6 IN THE PROSPECTUS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, OR ANY OTHER AGENCY, NOR HAS SUCH COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUPPLEMENTAL PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS SUPPLEMENT IS , 1997. 58 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PROSPECTUS OR THIS PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE PLAN. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE PLAN SINCE THE DATE HEREOF, OR THAT THE INFORMATION HEREIN CONTAINED OR INCORPORATED BY REFERENCE IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS THAT ACCOMPANIES IT AND SHOULD BE RETAINED FOR FUTURE REFERENCE. PS-2 59 TABLE OF CONTENTS
PAGE ----- THE OFFERING..................................................... PS-4 Securities Offered............................................. PS-4 Valuation of Participation Interests........................... PS-4 Election To Purchase Common Stock.............................. PS-4 Method of Directing Investment................................. PS-4 Time for Directing Investment.................................. PS-5 Irrevocability of Investment Direction......................... PS-5 Direction To Purchase Common Stock at a Later Date............. PS-5 Purchase Price of Common Stock................................. PS-5 Voting and Tender Rights for Common Stock...................... PS-5 DESCRIPTION OF THE PLAN (SUMMARY PLAN DESCRIPTION)..................................... PS-6 1. Introduction................................................ PS-6 2. Background.................................................. PS-6 a. General.................................................. PS-6 b. Definitions.............................................. PS-7 3. How Is the Plan Managed?.................................... PS-7 4. How Important Is the Amount of Time that I Work for the PS-7 Company?.................................................... 5. How Do I Become Eligible To Enter the Plan?................. PS-8 6. When Do I Enter the Plan?................................... PS-8 7. Who Pays for the Plan?...................................... PS-8 8. What Is My Share of the Company's Contribution?............. PS-8 9. Sounds Good but What Does All This Mean in Dollars and PS-8 Cents?...................................................... 10. Is There a Limit on the Amount Added to My Share?........... PS-9 11. What Happens to My Share?................................... PS-9 12. May I Direct the Investment of My Share of the Plan?........ PS-9 13. What Adjustments Are Made to My Share?...................... PS-10 14. What If I Do Not Complete 1,000 Hours of Service During a PS-10 Plan Year?.................................................. 15. What If I Leave the Company During a Plan Year?............. PS-11 16. May I Borrow from the Plan?................................. PS-11 17. May I Withdraw any Portion of My Accounts While I Am Still PS-11 Employed if I Am Faced with a Hardship?..................... 18. When Will I Be Eligible to Receive My Share of the Plan?.... PS-12 a. Retirement at or After Your Normal Retirement Date....... PS-12 b. Death.................................................... PS-12 c. Total And Permanent Disability........................... PS-12 d. Resignation or Dismissal Before Your Normal Retirement PS-12 Date........................................................ 19. What Is the Vested Portion of My Accounts?.................. PS-12 20. When and How Are My Benefits To Be Paid?.................... PS-13 21. Are My Benefits Guaranteed by the PBGC?..................... PS-14 22. How Do I Make a Claim for Benefits?......................... PS-14 23. Can My Share in the Plan Be Assigned or Attached?........... PS-14 24. Does The Plan Affect My Social Security Benefits or PS-14 Payments?................................................... 25. What If I Am Rehired After I Leave the Company?............. PS-14 26. What Are My Rights Under the Plan?.......................... PS-15 27. May the Plan Be Amended or Terminated?...................... PS-15 28. What are the Tax Effects of the Plan?....................... PS-15 APPENDIX......................................................... PS-18 Investment Designations.......................................... PS-19
PS-3 60 THE OFFERING SECURITIES OFFERED The securities offered hereby are participation interests in the Lamalie Associates, Inc. Profit Sharing Plan and Trust (the "Plan") and up to an aggregate of 200,000 shares of Common Stock, which may be acquired by the Plan upon the direction of Participants in the Plan for their Plan Accounts. Lamalie Associates, Inc. (the "Company") is the issuer of the Common Stock and the sponsor of the Plan. Only employees of the Company who meet certain participation requirements of the Plan may participate in the Plan. Information with regard to the Plan is contained in this Prospectus Supplement, and information with regard to the Offering and the financial condition, results of operation and business of the Company is contained in the accompanying Prospectus. The address of the principal executive office of the Company is 200 Park Avenue, Suite 3100, New York, NY 10166-0136 13920, telephone (212) 953-7900. The address of Company's administrative offices, from which more information about the Plan and the Offering may be obtained, is 3903 Northdale Boulevard, Tampa, Florida 33624, telephone (813) 961-7494. A copy of the Plan has been filed as exhibit to the Registration Statement under the Securities Act of 1933, as amended, filed with the Securities and Exchange Commission regarding the Offering. Copies of the Plan or any other exhibit to the Registration Statement are available to all Participants by submitting a written request to the Plan Administrator at the Company's administrative office in Tampa. Participants are urged to carefully read the Prospectus, this Prospectus Supplement and the Plan. VALUATION OF PARTICIPATION INTERESTS The assets of the Plan are valued quarterly, and each Participant is informed of the value of his or her beneficial interest in the Plan on a quarterly basis. This value represents the current market value of past contributions to the Plan by the Company, as adjusted by actual and accrued gains and losses thereon, plus any forfeitures attributable to other Participants whose employment with the Company terminates prior to their being 100% vested in their Account balances, less previous withdrawals. ELECTION TO PURCHASE COMMON STOCK Under the Plan, the Participants are given the opportunity from time to time (but generally no more than once each quarter) to direct the investment of the balances in their Plan Accounts in certain specified funds. (See "Description of the Plan -- 12. May I Direct the Investment of My Share of the Plan?") The Plan has been amended, effective the date of this Supplemental Prospectus, to add a Company stock fund (the "Employer Stock Fund") as one of the investment options. This fund is to be invested by the Trustees primarily in Common Stock, although the Trustees have the right to invest the fund in other investments. The Trustees have the right to decide the timing and manner of purchasing shares of Company Stock, although it is the intent of the Trustees to invest all available designated funds in the Employer Stock Fund as of the date of this Preliminary Prospectus in the purchase of Common Stock as soon as they are so permitted to do so. A Participant may not direct more than 10% of the amounts allocated to his or her Accounts at the time of the direction to be invested in the Employer Stock Fund. In addition, a Participant may not direct more than 10% of any future contributions allocated to his or her Accounts to be invested in this fund. Account balances not invested in the Employer Stock Fund will be invested in other investment funds of the Plan as directed by the Participants. METHOD OF DIRECTING INVESTMENT The last page of this Prospectus Supplement is an investment designation form (the "Investment Form") to be used to direct an investment of part of a Participant's Plan Account balances into the Employer Stock Fund. If a Participant wishes to invest part of his or her interest in the Plan in the Employer Stock Fund, and have the Trustees purchase Common Stock in connection with the Offering, he or she should indicate that decision (and his or her other investment choices with respect to the Plan) on the Investment Form. Any such election will also apply to any additional amounts allocated to the Participant's Accounts under the Plan until the Participant makes a new election; the next regularly scheduled election provided to Participants is to be effective as of October 1, PS-4 61 1997. If a Participant does not wish to make an election to invest in the Employer Stock Fund in connection with the Offering, he or she does not need to take any action, but any present investment elections of the Participant will remain in effect until a new election is made. TIME FOR DIRECTING INVESTMENT The deadline for submitting a Participant's investment election that will permit the purchase of shares of Common Stock by the Plan in connection with the Offering is , 1997. The Investment Form should be returned to the Company's administrative office in Tampa no later than 12:00 noon, Eastern Time, on such date. IRREVOCABILITY OF INVESTMENT DIRECTION The deadline for submitting a Participant's investment election that will permit the purchase of shares of Common Stock by the Plan in connection with the Offering shall be irrevocable. Participants, however, will be able to direct the reinvestment of their Accounts under the Plan in the future as explained below. DIRECTION TO PURCHASE COMMON STOCK AT A LATER DATE A Participant is entitled to change his or her investment directions with respect to his or her Account balances under the Plan (including any election with respect to the Employer Stock Fund) from time to time, but generally no more frequently than once each quarter. The Plan Administrator determines the timing of the quarterly election periods. In connection with a new election, a Participant may direct that funds be transferred from other investment options into the Employer Stock Fund (subject to the limit that no more than 10% of the Participant's Account balances may be so invested), or from the Employer Stock Funds to other investment options under the Plan. Any such election will also govern how future contributions, forfeitures and other amounts allocated to the Participant's Accounts will be invested. Participants who are officers, directors, managing partners and principal stockholders of the Company who are subject to certain provisions of the federal securities laws affecting the purchase and sale of Common Stock, including Section 16(b) of the Securities Exchange Act of 1934, as amended, which may affect their ability to effect transfers. Such persons should contact the Plan Administrator for additional information. PURCHASE PRICE OF COMMON STOCK The funds transferred to the Employer Stock Fund for the initial purchase of Common Stock in connection with the Offering will be used by the Trustees to purchase shares of Common Stock. The price paid for such shares of Common Stock will be the Price to Public for the Common Stock, as disclosed on the cover of the Prospectus. Any shares of Common Stock purchased by the Trustees after the initial Offering may be acquired in open market transactions. Alternatively, the Trustees may engage in purchase and sale transactions with the Company if the Company agrees and certain requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") are met. The prices paid by the Trustees for shares of Common Stock will not exceed "adequate consideration" as defined in Section 3(18) of ERISA. VOTING AND TENDER RIGHTS FOR COMMON STOCK The Trustees generally will exercise all voting and tender rights attributable to shares of Common Stock held in the Employer Stock Fund in their discretion, and Participants generally will not have any rights in connection therewith. PS-5 62 DESCRIPTION OF THE PLAN (SUMMARY PLAN DESCRIPTION) 1. INTRODUCTION. The Lamalie Associates, Inc. Profit Sharing Plan and Trust (the "Plan"), as amended to date, is described below. Lamalie Associates, Inc. (the "Company") is the sponsor of the Plan. The Plan is a tax-qualified (under Section 401(a) of the Internal Revenue Code) retirement plan through which the Company provides benefits to those employees who are Participants in the Plan. Amounts paid in by the Company are for the exclusive benefit of the Participants and their beneficiaries. Formal legal documents specify the rules governing the Plan. The Plan Administrator has copies of these documents and they are available for your inspection. However, to save you the trouble of trying to read and understand the technical, legal jargon that is typical of these types of documents, we have prepared this description. It simplifies the Plan provisions and explains them in the questions and answers that follow. Because this description is a summary only, it does not describe all of the provisions of the Plan and all of the possible fact situations that may occur. Therefore, in the case of any conflict between the content of this description and the content of the Plan itself, or in the case of the omission in this description of a discussion of any Plan provisions, the terms of the Plan itself (and not the language of this description) shall control. The primary purpose of the Plan is to provide benefits to you or your beneficiary upon your retirement, disability or death. AS A CONSEQUENCE, THE PLAN GENERALLY DOES NOT PERMIT THE WITHDRAWAL OF FUNDS UNTIL AFTER THE TERMINATION OF YOUR EMPLOYMENT WITH THE COMPANY, ALTHOUGH THE PLAN DOES PERMIT IN-SERVICE WITHDRAWALS AND LOANS IN LIMITED SITUATIONS. (See "16. May I Borrow from the Plan?" and "17. May I Withdraw any Portion of My Accounts While I Am Still Employed if I Am Faced with a Hardship?") The Plan also means a lot to the Company. Through it the Company hopes to increase your interest in the Company by providing you with an opportunity to receive benefits over and above your regular pay. Therefore, the Plan is an incentive for you to work toward the increased success of the Company. 2. BACKGROUND A. GENERAL This description serves, among other things, as a Summary Plan Description for the Plan under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). It also serves as part of a Prospectus under the Securities Act of 1933 (the "1933 Act") for up to an aggregate of 200,000 shares of common stock of the Company (the "Common Stock") and, because any offer or sale of shares of Common Stock to or for the account of a Participant is deemed under applicable law also to be an offer or sale of a corresponding interest in the Plan, for an indeterminate number of "participation interests" in the Plan. As discussed hereafter, the Common Stock is available to Participants through the Employer Stock Fund, one of the investment options under the Plan. As a defined contribution, "individual account" plan that is other than a money purchase plan, the Plan is subject to many of the provisions of ERISA, including generally the parts relating to reporting and disclosure, participation and vesting, funding (except for the portions not applicable to individual account profit-sharing plans) and fiduciary responsibility. The Plan in not of a type that is covered by the plan termination insurance provisions contained in ERISA. For additional information about the Plan and its administration, you may contact the Plan through the Company's Tampa administrative office, with street and mailing address of 3903 Northdale Boulevard, Tampa, Florida 33624. The telephone number is (813) 961-7494. A copy of the Plan has been filed as exhibit to the Registration Statement under the Securities Act of 1933, as amended, filed with the Securities and Exchange Commission regarding the Offering. Participants may obtain copies of the Plan itself or any other exhibit to the Registration Statement by written request to the Company at its Tampa administrative office. PS-6 63 B. DEFINITIONS In this description, terms such as the "Company," the "Plan Year" and the "Plan Administrator" appear in many places. These terms are defined in the Appendix at the end of this description. The terms "Year of Service" and "Hour of Service" also appear in many places. For a discussion of these terms see "4. How Important Is the Amount of Time that I Work for the Company?" One other term, "Top Heavy Plan," appears several times. The Plan will be "Top Heavy" in any Plan Year in which the account balances of the "Key Employees" comprise more than 60% of the total account balances in the Plan. The "Key Employees" are certain officers and owners of the Company. The Plan Administrator can provide you with information from time to time as to whether the Plan is a Top Heavy Plan. 3. HOW IS THE PLAN MANAGED? A Plan Administrator is named in the Plan and is given the responsibility to manage the operation and administration of the Plan (except as to investments). Among other things, the Plan Administrator determines the eligibility of each employee to participate, supervises the payment of benefits and interprets the provisions of the Plan. The Plan Administrator is the person to contact if you have any questions about the Plan. The Plan Administrator will communicate with you from time to time concerning your share of the Plan and any special considerations about your participation. See the Appendix at the end of this Prospectus Supplement for the name and address of the current Plan Administrator. 4. HOW IMPORTANT IS THE AMOUNT OF TIME THAT I WORK FOR THE COMPANY? The number of years and the number of hours in a year you work for the Company are important for several reasons. Among these reasons are the following: First, the time you work is used in deciding when you are eligible to enter the Plan. (See "5. How Do I Become Eligible To Enter the Plan?") Second, the time you work is used in determining whether you are allocated a share of the Company's contribution to the Plan for a year. (See "8. What Is My Share of the Company's Contribution?") Third, the time you work is used in deciding your vested interest in your Employer Contribution Account. If you leave the Company before retirement, death or disability, you do not lose this vested interest. (See "19. What Is the Vested Portion of My Accounts?") Fourth, the time you work is used in deciding when you forfeit the portion of your Employer Contribution Account that is not vested if you leave the Company before retirement, death or disability. (See "19. What Is the Vested Portion of My Accounts?") In computing your length of service, you first determine the number of your Hours of Service during a year. The computation is rather complicated and is based on regulations issued by the Department of Labor. In general, you count each hour that you work plus each hour for which you are paid even if you do not work (such as paid vacation time, paid sick leave, etc.). If you have a question about the counting of your Hours of Service, you should contact the Plan Administrator. If you have at least 1,000 Hours of Service in any Plan Year, you are credited with a Year of Service for vesting purposes. In general, you must have at least 1,000 Hours of Service during a year in order to be credited with a Year of Service for contribution purposes. If you do not have 1,000 Hours of Service during the Plan Year, you generally do not receive credit for a Year of Service for these purposes. The Plan Year is the period for which you count your Hours of Service for all purposes of the Plan. The Plan Year is March 1 through the end of February. PS-7 64 If you previously worked or if you later work for businesses that are related to the Company by similar ownership, your work for these other businesses may be counted in some cases in deciding your eligibility to enter the Plan, your vested interest in the Plan and other matters. If you have any questions about this special rule, please contact the Plan Administrator. 5. HOW DO I BECOME ELIGIBLE TO ENTER THE PLAN? To be eligible to enter the Plan, you must complete one calendar month of service with the Company. 6. WHEN DO I ENTER THE PLAN? You will enter the Plan on the first February 28 (February 29 for leap years) after you become eligible. However, once you enter the Plan, you are deemed to be a Participant as of the first day of the Plan Year in which you become a Participant or, if later, as of the first day on which you are employed. If your employment with the Company is terminated for any reason after you have become eligible to participate, but before the next entry date, you will not become a Participant in the Plan. 7. WHO PAYS FOR THE PLAN? The Plan is paid for primarily by the Company. Each year the Board of Directors of the Company will determine the amount of any contribution that the Company will make to the Plan for that year. Although the Company expects to make contributions each year, there is no guarantee of this, and the Company is free to decide not to make a contribution. You are no longer permitted to make voluntary contributions to the Plan. However, the Plan permits you to roll funds over from another qualified plan in which you were a Participant. The funds would be invested by the Trustees in the same fashion as all other funds in your Accounts. The rules as to what types of benefits from other plans may be rolled over into this Plan are detailed. Therefore, if you would like to take advantage of the rollover provisions, please contact the Plan Administrator. 8. WHAT IS MY SHARE OF THE COMPANY'S CONTRIBUTION? The amount of money the Company contributes to the Plan each year is divided among you and the other Participants. You do not actually receive any of the contributions. They are allocated to Accounts established for you and each of the other Participants. The Company's contributions are allocated to you on the basis of your compensation for the Plan Year. You will share in the contributions in the same ratio that your compensation during the Plan Year bears to the total compensation of all Participants during the Plan Year. For these purposes, all compensation paid to you, whether in the form of salary, regular wages, overtime pay, bonuses or commissions, is included. For 1997, no contribution will be made with respect to any Participant's compensation in excess of $160,000. This amount will be adjusted for later years in accordance with IRS regulations. For example, if your compensation for the Plan Year is $20,000, and the total compensation of all Participants during the Plan Year is $500,000, you would be allocated 4% of the total contribution (i.e., $20,000 is 4% of $500,000). Thus, under this illustration, if the Company's contribution was $20,000, you would be allocated $800. 9. SOUNDS GOOD BUT WHAT DOES ALL THIS MEAN IN DOLLARS AND CENTS? That's a tough question to answer specifically because of all of the factors involved. The Company's profit will change from year to year and the amount contributed to the Plan will also change. Likewise, your compensation will vary, as will the compensation of all the Participants. PS-8 65 10. IS THERE A LIMIT ON THE AMOUNT ADDED TO MY SHARE? The Internal Revenue Code places a limitation on the maximum amount of money that may be credited to your Accounts for any one year. In determining whether the limit has been exceeded, the amount of the Company's contribution and forfeitures allocated to your Employer Contribution Account must be considered. 11. WHAT HAPPENS TO MY SHARE? Your share of the Company's contribution, plus any rollover contributions and prior voluntary contributions, if any, made by you, are held in a trust fund or funds, along with the shares of the other Participants. A portion of the funds may be used to pay administrative expenses incurred by the Plan; however, the Plan is presently administered by the Company, which does not charge for such services. Moreover, the Company has paid and presently anticipates that it will continue to pay for the foreseeable future all third party administrative expenses charged to the Plan (such as accounting and legal fees); however, the Company is not obligated to do so. The balance of the money in the trust does not lie idle but rather is invested in sound investments for your benefit. This method of handling the funds works to your advantage, as such investments bring income to the Plan in the form of interest, dividends and other earnings. You share in these earnings and any increases in fund value with other Participants in an amount proportionate to your share in the fund. Of course, if there are any losses, you likewise share in them. (See "13. What Adjustments Are Made to My Share?") Trustees are named and given responsibility for holding the funds contributed to or otherwise belonging to the Plan. You have the right to designate how the funds being held for you are to be invested. (See "12. May I Direct the Investment of My Share of the Plan?") In turn, professional Investment Managers select and make the specific investments in the various funds available for selection. The names of the current Trustees and Investment Managers are set forth in the Appendix at the end of this booklet. 12. MAY I DIRECT THE INVESTMENT OF MY SHARE OF THE PLAN? Yes, you may direct the general nature of the investments by electing to have the funds in your Accounts invested among a selection of nine mutual or collective fund offerings sponsored by various Investment Managers. As indicated below, you also may direct that a part of your Accounts be invested in Common Stock of the Company. The following is a list of the mutual or collective fund offerings currently available for your selection: - Vanguard Money Market Reserves -- Prime Portfolio, which invests in short-term fixed income securities and seeks to maintain (but does not guarantee) a constant net asset value of $1.00 per share - Vanguard Admiral Short-Term U.S. Treasury Portfolio, which invests in short-term, direct United States Treasury bills, notes and bonds - Vanguard Bond Index Fund, which invests in bonds and other fixed income securities with the intent to match the performance of the Lehman Brothers Aggregate Bond Index - T. Rowe Price International Bond Fund, which invests in a global portfolio of debt instruments denominated in various currencies and multi-national currency units - Vanguard S&P 500 Index Trust, which invests primarily in equity securities with the intent to match the performance of the unmanaged Standard & Poor's 500 Composite Stock Price Index (dominated by large capitalization stocks) - Vanguard European Equity Index Trust, which invests primarily in securities of European companies with the intent to match the performance of the unmanaged Morgan Stanley Capital International Europe Index (consisting of equity securities of companies located in various European countries) - Vanguard Pacific Equity Index Trust, which invests primarily in securities of Pacific basin companies with the intent to match the performance of the unmanaged Morgan Stanley Capital International Pacific Index PS-9 66 (consisting of equity securities of companies located in Japan, or in certain other Pacific basin jurisdictions) - Scudder Latin America Fund, which invests primarily in Latin American equity and debt securities - AIM Aggressive Growth Fund, which invests primarily in common stock and other equity securities of small capitalization companies You may also elect to have the funds in your Accounts invested in an Employer Stock Fund, which the Trustees invest primarily in the Company's Common Stock, although the Trustees have the right to invest any part of this fund in other investments. The Trustees will decide the timing and manner of purchasing shares of the Company's Common Stock. Cash dividends earned on the Common Stock, if any, will be reinvested in this fund, and any stock dividends or shares accrued as a result of a stock split in the Common Stock held by this fund will be added to the fund. The Trustees holds all voting rights for shares in this fund. You may not direct more than 10% of the amounts allocated to your Accounts at the time of the direction to be invested in this fund. In addition, you may not direct more than 10% of any future contributions allocated to your Accounts to be invested in this fund. From time to time, the Plan Administrator will provide you with detailed information about these fund offerings and their characteristics to help you make informed decisions about the investment of the amounts in your Accounts. You may contact the Plan Administrator (Attention: Jack P. Wissman) at 3903 Northdale Boulevard, Tampa, Florida 33624, telephone (813) 961-7494 for additional information. The information that is available to you on request from the Plan Administrator (if the information is available to the Plan) includes a description of the annual operating expenses of each fund that reduce the rate of return to you and the aggregate amount of such expenses expressed as a percentage of average net assets of the fund; a copy of any prospectus, financial statement and report, or other material relating to the available funds; information about the value of shares or units in the various funds, as well as the past and current investment performance of the funds; and information on the value of the shares or units in each fund held in your Accounts. Because of your ability to select how your Accounts will be invested, the Plan is intended to comply with the rules described in Section 404(c) of the Employee Retirement Income Security Act and the regulations issued thereunder (including 29 C.F.R. Section 2550.404c-1). ACCORDINGLY, THE TRUSTEES, THE PLAN ADMINISTRATOR AND OTHER FIDUCIARIES OF THE PLAN MAY BE RELIEVED OF LIABILITY FOR ANY LOSSES THAT ARE THE DIRECT AND NECESSARY RESULT OF INVESTMENT INSTRUCTIONS GIVEN BY YOU. To elect to allocate the funds in your Accounts among the various investment options, you must complete a form approved by the Plan Administrator designating the percentage of funds held in your Accounts that are to be allocated to the various mutual fund investment offerings. Such designations must be the same for each account and in 5% increments; no more than 10% may be designated for the Employer Stock Fund. The designations may be changed no more than once each quarter and only during a period determined by the Plan Administrator. Any change must be in writing on a form approved by the Plan Administrator. 13. WHAT ADJUSTMENTS ARE MADE TO MY SHARE? In addition to being increased by your portion of the Company's contribution, your share is adjusted each quarter to reflect your portion of any income or loss of the Trust, any increase or decrease in the value of the Trust assets and the funds that are forfeited by Participants who leave the Company without being fully vested in their Employer Contribution Account. The Plan Administrator will provide you with quarterly reports on the value and status of your Accounts. 14. WHAT IF I DO NOT COMPLETE 1,000 HOURS OF SERVICE DURING A PLAN YEAR? If you have entered the Plan as a Participant and you continue to work for the Company, but you do not complete 1,000 Hours of Service during a Plan Year, you remain as a Participant in the Plan. However, for any Plan Year in which you do not complete 1,000 Hours of Service, generally you will not receive any allocation of PS-10 67 the Company's contribution (except in certain cases where the Plan is a Top Heavy Plan), and you will not receive credit for a Year of Service for vesting purposes. 15. WHAT IF I LEAVE THE COMPANY DURING A PLAN YEAR? If you leave the Company for any reason (including retirement, death or disability) during a Plan Year, you remain a Participant as long as you have an account balance. However, in the year you leave the Company, you will not receive credit for vesting purposes unless you complete at least 1,000 Hours of Service. Also, you generally will not receive any share of the Company's contribution for the year or any share of the forfeitures allocated as of the end of the year. Finally, you may forfeit all or a portion of your Employer Contribution Account. (See "19. What Is the Vested Portion of My Accounts?") 16. MAY I BORROW FROM THE PLAN? Yes. While you are employed by the Company, the Plan Administrator may authorize a loan to you from your Accounts. The Plan Administrator has discretion in granting loans, although the Plan Administrator is required to act in accordance with a uniform nondiscriminatory policy. If you are interested in obtaining a loan, contact Jack Wissman at the Tampa, Florida office of the Company. You may have only one loan outstanding at any one time; and you may obtain only one loan in any one twelve-month period. The amount of the loan may not exceed the lesser of (1) 50% of your vested interest in your Accounts or (2) $50,000. The $50,000 limit is subject to reduction by the amount of certain previously outstanding loans. Any loan must be for at least $500. Each loan that you receive from the Plan must be adequately secured, and the security for the loan must include 50% of your vested interest in your Accounts. Any out-of-pocket legal and administrative costs incurred by the Trustees as a result of a loan to you or your application for a loan must be paid by you. Any loan must also provide for a commercially reasonable interest rate (based on prevailing rates for comparable loans made by commercial lending institutions) and must be repaid within an agreed period of time (generally speaking, within five years unless the loan is used to purchase your principal residence). The principal and interest of any loan must be amortized at least quarterly. In order to obtain a loan, the Plan Administrator may require you to agree to have your required loan payments deducted from each of your paychecks and paid to the Trustees. Each loan will provide for specific terms of default, including those more fully described in the Plan. 17. MAY I WITHDRAW ANY PORTION OF MY ACCOUNTS WHILE I AM STILL EMPLOYED IF I AM FACED WITH A HARDSHIP? You may request the Plan Administrator to authorize a withdrawal from your Accounts in the event of "hardship." The amount of the withdrawal cannot exceed the lesser of (i) your vested account balance and (ii) the amount of your total hardship. The Plan Administrator has complete discretion in the matter of hardship withdrawals, although the Plan Administrator will permit you to make a hardship withdrawal upon receipt of satisfactory evidence that you have an immediate and material financial need that cannot be met by your other reasonably available financial resources, such as insurance, liquidation of other assets or borrowing from commercial sources. Such hardship may include expenses of medical needs for you or a member of your family; expenditures committed prior to a change in your financial situation, which change makes it impossible to satisfy the obligations with available resources; and other similar situations of financial hardship. The Plan specifically provides that hardship does not include expenses related to the purchase or repair of your principal residence or expenses related to the education of you or a member of your family except to the extent the principles described in the last sentence apply. If you desire to make a hardship withdrawal and wish a further explanation of the rules and guidelines, please contact the Plan Administrator. PS-11 68 18. WHEN WILL I BE ELIGIBLE TO RECEIVE MY SHARE OF THE PLAN? You or your designated beneficiary become eligible to receive a benefit under the Plan upon your retirement, death, disability or other termination of employment. (See "20. When and How Are My Benefits To Be Paid?" for a discussion of the timing and form of payment of these benefits.) A. RETIREMENT AT OR AFTER YOUR NORMAL RETIREMENT DATE. If you retire from the Company or your employment is otherwise terminated at any time after you reach your Normal Retirement Date (age 65), you will be entitled to receive 100% of the amount of your Accounts. Until you actually retire, either as a result of your own action or the Company's action, no retirement benefits will be paid to you and you will continue as a Participant in the Plan; however, if you are a principal owner of the Company, you must begin receiving benefits shortly after the year you reach age 70 1/2, even if you are still employed at that time, and if you are not a principal owner, you may have the right to elect to begin to receive benefits at that age. B. DEATH. If you die while you are a Participant in the Plan, 100% of the amount in your Accounts will be paid to your surviving spouse. If you are not married at the time of your death, or if your spouse consents, this benefit may be paid to your designated beneficiary. The Plan Administrator has forms on which you may designate the beneficiary to receive the death benefits, and on which your spouse may consent to the designation. If you are not married, you are free to change your beneficiary designation at any time. If you are married, your spouse must consent to any change that does not name him or her as the designated beneficiary. If your beneficiary should die before you, or if you are not married and for some reason you do not designate a beneficiary, your death benefits will be paid to your estate or, if no Personal Representative is appointed for your estate, to your next of kin under the laws of descent and distribution of the State of Florida. C. TOTAL AND PERMANENT DISABILITY. If you become unable to perform the usual duties of your employment as a result of a total and permanent disability, you will be entitled to receive 100% of the amount in your Accounts. For purposes of the Plan, you will be considered to have suffered a total and permanent disability only if your disability has been certified to by a physician acceptable to the Plan Administrator within 60 days after the date of the termination of your employment. D. RESIGNATION OR DISMISSAL BEFORE YOUR NORMAL RETIREMENT DATE. If your employment by the Company is terminated for reasons other than retirement after your Normal Retirement Date, death or disability, you will be entitled to receive the "vested" portion of your Accounts. (See "19. What Is the Vested Portion of My Accounts?") 19. WHAT IS THE VESTED PORTION OF MY ACCOUNTS? The vested portion of your Account containing the Company's contributions (the "Employer Contribution Account") is determined in accordance with the following schedule based upon your Years of Service with the Company through the date of your resignation or termination of employment:
VESTED NUMBER OF YEARS OF SERVICE INTEREST - -------------------------- -------- Less than 1 Year of Service................................. 0% 1 year, but less than 2 years............................... 25% 2 years, but less than 3 years.............................. 50% 3 years, but less than 4 years.............................. 75% 4 years or more............................................. 100%
If you leave the Company as a result of death or disability (as described above), or if you leave after you reach your Normal Retirement Date (age 65), you are 100% vested in your Accounts. The vested portion of your Employer Contribution Account is in effect the portion of such account that is not lost upon your termination of employment. If you leave before you are fully vested (that is, before you are entitled to get all of your account balance), the amount in which you are not vested will be forfeited after you incur five consecutive One-Year Breaks in Service or, if earlier, when you are "cashed out." PS-12 69 For these purposes, a "One-Year Break in Service" is a Plan Year in which you complete fewer than 501 Hours of Service. However, in some cases, if you are absent because you have had or adopted a child, you might not incur a One Year Break in Service for certain parts of your absence. You are "cashed out" if you receive your entire vested portion of your Accounts no later than the end of the fifth Plan Year following the Plan Year in which the termination of employment occurs. The amount you forfeit will be reallocated among the accounts of other Participants at the end of the five-year Break in Service period or at the end of the Plan Year in which you are "cashed out." A Participant generally is entitled to share in the forfeited interests if he or she completes at least 1,000 Hours of Service during the Plan Year in which the forfeiture is deemed to occur, and if he or she was a Participant as of the end of the Plan Year and the preceding Plan Year. EXAMPLE. Bill Brown has completed three Years of Service. The total amount in his account that consists of Company contributions is $4,000. If he now resigns from the employment of the Company, he will have a vested interest equal to 75% of $4,000, or $3,000. The balance of $1,000 will be forfeited when Bill Brown has fewer than 501 Hours of Service in each Plan Year for five consecutive Plan Years or, if earlier, when he is "cashed out." In determining your vested percentage, each Year of Service that you have with the Company is counted (except years before the Company maintained the Plan), and certain years if you once left the Company and were later reemployed. (See "25. What If I Am Rehired After I Leave the Company?") This vesting method has been created to encourage lengthy service. It is another way of rewarding you for your long-term contributions to the success of the Company. The vesting schedule described above only relates to contributions made by the Company and any earnings thereon. You are fully vested at all times in any amounts contributed by you to any rollover or voluntary contribution account; such amounts therefore may not be forfeited, but they are subject to decrease if the investments made go down in value. 20. WHEN AND HOW ARE MY BENEFITS TO BE PAID? If you are entitled to a benefit because of your retirement at or after your Normal Retirement Age (age 65), payment of your benefit will be made or will begin as soon as practicable after your retirement. Payment must begin no later than 60 days after the end of the Plan Year in which your retirement occurs, or such later date as you may request; however, if you are a principal owner of the Company, you must begin receiving benefits shortly after the year you reach age 70 1/2, even if you are still employed at that time, and if you are not a principal owner, you may have the right to elect to begin to receive benefits at that age. If you are entitled to a benefit because of your death, disability or severance of employment before retirement, payment of your benefit will be made as soon as practicable after the date of your death, disability or severance of employment. However, if at the time you are to receive your benefit its value exceeds $3,500, you will not receive payment of your benefit until you reach your Normal Retirement Date (age 65), unless you consent to the earlier payment. A retirement benefit generally will be paid under one of the following payment options selected by you or, in the event of your death, your beneficiary: 1. Payment of your benefit in a single lump sum. 2. Payment of your benefit in equal annual installments of at least $100 per year over a period not extending past your life expectancy or the joint life expectancy of you and your designated beneficiary. If this option is selected, the portion of your Accounts that is not used to make the annual payment will share in the gain or loss, or increase or decrease in value, resulting during the year from the investment of Trust assets. Any benefit of $3,500 or less will be paid in a lump sum. PS-13 70 With respect to all benefits other than a retirement benefit, your benefit will be paid in a lump sum. If your payment is to be made in a lump sum, or in annual installments of less than 10 years, you will be given the opportunity to elect whether to receive the funds yourself or whether to have them rolled over from the Plan directly to an IRA or another employer plan on your behalf. Each alternative involves different tax and other consequences, which will be referred to in the information then provided you. 21. ARE MY BENEFITS GUARANTEED BY THE PBGC? No. Because the Plan is a profit sharing plan, your benefits are not guaranteed by the Pension Benefit Guaranty Corporation or any other entity or individual. 22. HOW DO I MAKE A CLAIM FOR BENEFITS? You do not need to file any form or take any other action in order to receive benefits under the Plan. However, if you believe that you are not receiving a benefit that you should, you may file a claim with the Plan Administrator for the benefit. Once you file a claim, you should receive written notice within 90 days of the action taken on the claim. If the Plan Administrator needs more time to consider your claim, it will so inform you within 90 days, and you will receive written notice of the decision within 180 days from the date you filed the claim. If the claim is denied (either because you receive a written denial or because you do not receive notice of the action taken within the required time period), you may ask for a review of your claim. You have 60 days after your claim is denied to ask the Plan Administrator for this review. During this 60-day period, you have the right to look at all relevant documents and to give your views and comments in writing. The Plan Administrator must make a decision within 60 days after it gets your request for review, unless special circumstances require a longer time (but not more than 120 days after you have asked for the review). The decision of the Plan Administrator must be given to you in writing and must include specific reasons for the decision, with specific references to the Plan provisions on which the decision is based. If you disagree with the decision of the Plan Administrator, you may sue the Plan to get the benefit you believe is due you. However, the Company hopes that any dispute will be resolved without the need for a lawsuit. 23. CAN MY SHARE IN THE PLAN BE ASSIGNED OR ATTACHED? Generally not. As long as your share in the Plan has not been paid to you, your share in the Plan generally cannot be pledged or assigned by you, or reached by any of your creditors. However, if a court issues a qualified domestic relations order, benefits that otherwise would be paid to you may be required to be paid to your spouse, former spouse or child. 24. DOES THE PLAN AFFECT MY SOCIAL SECURITY BENEFITS OR PAYMENTS? No. The benefits of the Plan are in addition to any Social Security benefits or payments you are entitled to receive. 25. WHAT IF I AM REHIRED AFTER I LEAVE THE COMPANY? Because of the requirements of the law, there are several rules set forth in the Plan as to what happens if you are rehired by the Company after you have once left its employment. These rules are extremely complex, and because they will not apply to most of the Participants, the Company does not believe it appropriate to discuss them further in this description. However, if you believe that one of these rules applies to you and wish a further explanation, please contact the Plan Administrator. PS-14 71 26. WHAT ARE MY RIGHTS UNDER THE PLAN? The following statement is required by federal law and regulations concerning your rights under the Plan: As a Participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA provides that all Plan Participants shall be entitled to: Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites, all Plan documents, including insurance contracts and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report. Obtain a statement telling you whether you have a right to receive a benefit at normal retirement age (age 65) and, if so, what your benefits would be at normal retirement age if you stop working under the Plan now. If you do not have a right to a benefit, the statement will tell you how many more years you have to work to get a right to the benefit. This statement must be requested in writing and is not required to be given more than once a year. The Plan must provide the statement free of charge. In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and beneficiaries. No one, including the Company or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit under the Plan or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan Administrator review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees. It may do so, for example, if it finds your claim is frivolous. If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. 27. MAY THE PLAN BE AMENDED OR TERMINATED? The Company has the right to amend the Plan at any time. Thus, your rights as discussed in this description may be changed. However, if they are changed materially, the Company must notify you of the change within a reasonable time. The Company intends to continue the Plan and to make contributions to it for an indefinite period. However, the Company has the right to discontinue contributions to the Plan or even to terminate the Plan at any time. If the Company terminates the Plan or discontinues contributions to it, you will be 100% vested in your share of the Plan without regard to the number of years you have worked for the Company. 28. WHAT ARE THE TAX EFFECTS OF THE PLAN? The Plan is intended and is believed to be qualified under Section 401(a) of the Internal Revenue Code (the "Code"). As long as the Plan is so qualified: (1) you and the other Participants do not realize taxable income at PS-15 72 the time contributions are made to the Plan; (2) as long as the applicable contribution limits imposed by the Code are not exceeded, the Company is entitled to a deduction from its taxable income for the amount of the contributions made by it to the Plan; and (3) neither the Plan nor you and the other Participants recognize taxable income or loss on either the realized or unrealized gain or loss with respect to investments made under the Plan. Because you do not pay tax on the amounts contributed to the Plan or on any annual gains within the Trust, the amount of any distribution or withdrawal is generally taxable to you in full as ordinary income in the year of payment. You may continue to defer current taxation, however, if you elect to rollover your account balances to an Individual Retirement Account or directly into another employer's qualified plan. If you choose a direct rollover: - Your payment will not be taxed in the current year and no income tax will be withheld. - Your payment will be made directly to your IRA or to another employer plan that accepts your rollover. - Your payment will be taxed later when you take it out of the IRA or the employer plan. If you choose to have your Plan benefits paid to you: - You will receive only 80% of the payment because the Plan Administrator is generally required to withhold 20% of the payment and send it to the IRS as income tax withholding to be credited against your taxes. - You can roll over the payment you receive by paying it to your IRA or to another employer plan that accepts your rollover within 60 days of receiving the payment. The amount rolled over will not be taxed until you take it out of the IRA or employer plan. - If you want to roll over 100% of the payment to an IRA or an employer plan, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and that is not rolled over. - Your payment will be taxed in the current year unless you roll it over. You may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59 1/2, you also may have to pay an additional 10% penalty tax (see Note). NOTE: If you receive a payment before you reach age 59 1/2 and you do not roll it over, then, in addition to the regular income tax, you may have to pay an extra tax equal to 10% of the taxable portion of the payment. This extra tax is not due if your benefit is (1) paid to you because you separate from service after you have reached age 55 or (2) paid because you separate due to disability, as defined by the Internal Revenue Code or (3) paid to you as a beneficiary of a deceased Participant or (4) paid to you as an alternate payee pursuant to a Qualified Domestic Relations Order. A final distribution from the Plan will generally qualify as a "lump sum distribution" and may be eligible for special tax treatment. A lump sum distribution is a payment, within one year, of your entire balance under the Plan (and other similar plans, if any, of the Company) that is payable to you because you have reached age 59 1/2 or have separated from service with the Company. For a payment to qualify as a lump sum distribution, you must have been a participant in the plan for at least five years. The special tax treatment for lump sum distributions is described below. - If you receive a lump sum distribution after you are age 59 1/2, you may be able to make a one-time election to figure the tax on the payment by using "5-year averaging". Five-year averaging often reduces the tax you owe because it treats the payment much as if it were paid over 5 years. This special rule will not be available for distributions made in tax years beginning after December 31, 1999. PS-16 73 - If you receive a lump sum distribution and you were born before January 1, 1936, you can make a one-time election to figure the tax on the payment by using "10-year averaging" (using 1986 tax rates). Like the 5-year averaging rules, 10-year averaging often reduces the tax you owe. The tax laws with respect to distributions and withdrawals from qualified plans are quite complex and are subject to change. Accordingly, you are urged to consult your own tax advisor to determine the particular tax consequences -- Federal, state and local -- that may result from your participation in the Plan and your receipt of plan withdrawals or distributions. PS-17 74 APPENDIX NAME OF PLAN: Lamalie Associates, Inc. Profit Sharing Plan EMPLOYERS WHOSE EMPLOYEES ARE COVERED BY THE PLAN (THE "COMPANY"): Lamalie Associates, Inc. IRS EMPLOYER IDENTIFICATION NO. OF COMPANY ADOPTING THE PLAN: 59-2776441 PLAN NUMBER ASSIGNED BY SPONSOR OF THE PLAN: 001 NAME, BUSINESS ADDRESS AND TELEPHONE NUMBER OF THE PLAN ADMINISTRATOR: Lamalie Associates, Inc. 3903 Northdale Boulevard Tampa, Florida 33624 (813) 961-7494 The Plan Administrator has designated Jack P. Wissman as its contact. NAME AND ADDRESS OF AGENT FOR SERVICE OF LEGAL PROCESS: Mr. Jack P. Wissman 3903 Northdale Boulevard Tampa, Florida 33624 (Service of legal process may also be made upon a Trustee of the Plan or the Plan Administrator.) NAME, TITLE AND BUSINESS ADDRESS OF EACH TRUSTEE OF THE PLAN: Mr. Jack P. Wissman 3903 Northdale Boulevard Tampa, Florida 33624 Ms. Cynthia S. Jetmore 3903 Northdale Boulevard Tampa, Florida 33624 NAME AND ADDRESS OF EACH INVESTMENT MANAGER OF THE PLAN: The Vanguard Group of Investment Companies Vanguard Financial Center Valley Forge, PA 19482 The Scudder Funds Post Office Box 2291 Boston, MA 02107-2291 AIM Advisors, Inc. 11 Greenway Plaza, Suite 1919 Houston, TX 77046 T. Rowe Price Services, Inc. Post Office Box No. 8900 Baltimore, MD 21289-0250 ENDING DATE OF THE PLAN YEAR: Last day of February PS-18 75 LAMALIE ASSOCIATES, INC. PROFIT-SHARING PLAN PROSPECTUS SUPPLEMENT INVESTMENT DESIGNATIONS INVESTMENT DESIGNATIONS: This represents the Plan's authorization to invest my entire account balance, including both existing profit sharing dollars together with any interim earnings, gains or losses, as designated below. I understand that these designations will be effective for the period commencing with the completion of the Offering, and that I will next be eligible to change these percentages effective October 1, 1997. (PLEASE USE 5% INCREMENTS)
CURRENT NEW DESIGNATIONS DESIGNATIONS ------------ ------------ Vanguard Money Market Reserves -- Prime Portfolio........... % % Vanguard Admiral Short-term U.S. Treasury Portfolio......... Vanguard Bond Index Fund -- Total Bond Market Portfolio..... T. Rowe Price International Bond Fund....................... Vanguard S&P 500 Index Trust................................ AIM Aggressive Growth Fund.................................. Vanguard European Equity Index Trust........................ Vanguard Pacific Equity Index Trust......................... Scudder Latin America Fund.................................. Lamalie Associates, Inc. Common Stock....................... % % ---- --- (Investment in Common Stock may not exceed 10% of total account balance.) Total............................................... 100% 100% ==== === - -------------------------------------------------------- ------------------------------ Signature Date
PLEASE RETURN THIS FORM TO THE ATTENTION OF MARILYN LONG ON OR BEFORE 12:00 NOON ON 1997. THE AUTHORIZATION SET FORTH ABOVE WILL NOT BE EFFECTIVE AND NO PORTION OF YOUR ACCOUNT BALANCE WILL BE USED TO PURCHASE SHARES IN THE OFFERING UNLESS THIS FORM IS RETURNED NO LATER THAN SUCH DATE AND TIME. PS-19 76 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission registration fee......... $ 8,364 NASD filing fee............................................. 3,260 Nasdaq listing fees......................................... 31,000* Printing and engraving expenses............................. 150,000* Accounting fees and expenses................................ 200,000* Legal fees and expenses..................................... 210,000* Blue Sky fees and expenses.................................. 5,000* Transfer Agent's fees and expenses.......................... 2,000* Miscellaneous............................................... 90,376* -------- Total............................................. $700,000* ========
- --------------- * Estimated ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Florida Business Corporation Act, as amended (the "Florida Act"), provides that, in general, a business corporation may indemnify any person who is or was a party to any proceeding (other than an action by, or in the right of, the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, against liability incurred in connection with such proceeding, including any appeal thereof, provided certain standards are met, including that such officer or director acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and provided further that, with respect to any criminal action or proceeding, the officer or director had no reasonable cause to believe his or her conduct was unlawful. In the case of proceedings by or in the right of the corporation, the Florida Act provides that, in general, a corporation may indemnify any person who was or is a party to any such proceeding by reason of the fact that he or she is or was a director or officer of the corporation against expenses and amounts paid in settlement actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof, provided that such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim as to which such person is adjudged liable unless a court of competent jurisdiction determines upon application that such person is fairly and reasonably entitled to indemnity. To the extent that any officers or directors are successful on the merits or otherwise in the defense of any of the proceedings described above, the Florida Act provides that the corporation is required to indemnify such officers or directors against expenses actually and reasonably incurred in connection therewith. However, the Florida Act further provides that, in general, indemnification or advancement of expenses shall not be made to or on behalf of any officer or director if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and constitute: (i) a violation of the criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe it was unlawful; (ii) a transaction from which the director or officer derived an improper personal benefit; (iii) in the case of a director, a circumstance under which the director has voted for or assented to a distribution made in violation of the Florida Act or the corporation's articles of incorporation; or (iv) willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor or in a proceeding by or in the right of a shareholder. Under the terms of the Company's Articles of Incorporation and Bylaws, the Company may indemnify any director, officer or employee or any former director, officer or employee to the fullest extent permitted by law. The Company intends to enter into indemnity agreements with each of its directors and certain officers which provide that the Company will indemnify such persons against any costs and expenses, judgments, II-1 77 settlements and fines incurred in connection with any claim involving such person by reason of his or her position as director or officer, provided that such person meets certain standards of conduct. The underwriters also will agree to indemnify the directors and officers of the Company against certain liabilities pursuant to the Underwriting Agreement (see Exhibit 1, to be filed by amendment). ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. During the past three years, the Company has issued 1,639,000 shares of Common Stock to 45 of its current and former professional employees in 74 transactions for an aggregate of $2,348,510. The Company believes that all such transactions were exempt from registration pursuant to Section 4(2) and/or Rule 701 under the Securities Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (A) EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 -- Form of Underwriting Agreement 3.1 -- Form of Articles of Incorporation to be in effect upon completion of the Offering to which this Registration Statement relates 3.2 -- Form of Bylaws to be in effect upon completion of the Offering to which this Registration Statement relates 4 -- Form of Common Stock Certificate 5 -- Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, as to the legality of the Common Stock being Registered 10.1 -- 1997 Omnibus Stock and Incentive Plan 10.2 -- Non-Employee Directors' Stock Option Plan 10.3 -- Profit Sharing Plan 10.4 -- 1997 Employee Stock Purchase Plan 10.5 -- Form of Agreement for Deferred Compensation Plan 10.6 -- Managing Partners' Compensation Plan+* 10.7 -- Partners' Compensation Plan+* 10.8 -- Employment Agreement for Mr. Gow+* 10.9 -- Employment Agreement for Mr. H. Johnson+* 10.10 -- Employment Agreement for Mr. Rothschild+* 10.11 -- Form of Indemnification Agreement for Directors and Certain Officers 10.12 -- Directors' Deferral Plan 23.1 -- Consent of Counsel to the Company (included in Exhibit 5) 23.2 -- Consent of Arthur Andersen LLP 23.3 -- Consent of Joe D. Goodwin 23.4 -- Consent of Roderick C. Gow 23.5 -- Consent of John S. Rothschild 23.6 -- Consent of Ray J. Groves 23.7 -- Consent of Richard W. Pogue 23.8 -- Consent of John C. Pope 27 -- Financial Data Schedule* (for SEC use only)
II-2 78 - --------------- * Previously filed. + Confidential treatment has been requested with respect to portions of this Exhibit. (B) FINANCIAL STATEMENT SCHEDULE: Report of Independent Certified Public Accountants Schedule II: Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. ITEM 17. UNDERTAKINGS. 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 provisions described in Item 14, 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 Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the 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 question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt deliver to each purchaser. The undersigned registrant hereby undertakes that: i. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. ii. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 79 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 Tampa, State of Florida, on the 3rd day of June, 1997. LAMALIE ASSOCIATES, INC. By: /s/ ROBERT L. PEARSON ------------------------------------ Robert L. Pearson President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ROBERT L. PEARSON President and Chief Executive - ----------------------------------------------------- Officer and Director Robert L. Pearson (Principal Executive Officer) June 3, 1997 /s/ JACK P. WISSMAN Executive Vice President, Chief - ----------------------------------------------------- Administrative and Financial Jack P. Wissman Officer and Director (Principal Financial Officer) June 3, 1997 /s/ PHILIP R. ALBRIGHT Director of Finance and - ----------------------------------------------------- Controller (Principal Philip R. Albright Accounting Officer) June 3, 1997 /s/ JOHN F. JOHNSON Chairman of the Board of - ----------------------------------------------------- Directors June 3, 1997 John F. Johnson */s/ MICHAEL E. BRENNER Director June 3, 1997 - ----------------------------------------------------- Michael E. Brenner */s/ ARTHUR J. DAVIDSON Director June 3, 1997 - ----------------------------------------------------- Arthur J. Davidson */s/ MARK P. ELLIOTT Director June 3, 1997 - ----------------------------------------------------- Mark P. Elliott */s/ DAVID W. GALLAGHER Director June 3, 1997 - ----------------------------------------------------- David W. Gallagher */s/ HAROLD E. JOHNSON Director June 3, 1997 - ----------------------------------------------------- Harold E. Johnson
*By: /s/ JACK P. WISSMAN - --------------------------------------- Jack P. Wissman, Attorney-in-Fact II-4 80 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Lamalie Associates, Inc.: We have audited in accordance with generally accepted auditing standards, the financial statements of Lamalie Associates, Inc. included in this registration statement and have issued our report thereon dated April 11, 1997 (except with respect to the matters discussed in Note 9, as to which the date is June 3, 1997). Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index in Item 16(b) is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Tampa, Florida April 11, 1997 (except with respect to the matters discussed in Note 9, as to which the date is June 3, 1997) S-1 81 SCHEDULE II LAMALIE ASSOCIATES, INC. VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT CHARGED TO BALANCE AT BEGINNING COST AND END OF DESCRIPTION OF PERIOD EXPENSES PERIOD - ----------- ---------- ---------- ---------- Year ended February 28, 1995 Deducted from asset account: Allowance for doubtful accounts........................... $138,000 $137,000 $275,000 -------- -------- -------- Year ended February 29, 1996 Deducted from asset account: Allowance for doubtful accounts........................... $275,000 $350,000 $625,000 -------- -------- -------- Year ended February 28, 1997 Deducted from asset account: Allowance for doubtful accounts........................... $625,000 $265,000 $890,000 -------- -------- --------
S-2 82 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 -- Form of Underwriting Agreement 3.1 -- Form of Articles of Incorporation to be in effect upon completion of the Offering to which this Registration Statement relates 3.2 -- Form of Bylaws to be in effect upon completion of the Offering to which this Registration Statement relates 4 -- Form of Common Stock Certificate 5 -- Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, as to the legality of the Common Stock being Registered 10.1 -- 1997 Omnibus Stock and Incentive Plan 10.2 -- Non-Employee Directors' Stock Option Plan 10.3 -- Profit Sharing Plan 10.4 -- 1997 Employee Stock Purchase Plan 10.5 -- Form of Agreement for Deferred Compensation Plan 10.6 -- Managing Partners' Compensation Plan+* 10.7 -- Partners' Compensation Plan+* 10.8 -- Employment Agreement for Mr. Gow+* 10.9 -- Employment Agreement for Mr. H. Johnson+* 10.10 -- Employment Agreement for Mr. Rothschild+* 10.11 -- Form of Indemnification Agreement for Directors and Certain Officers 10.12 -- Directors' Deferral Plan 23.1 -- Consent of Counsel to the Company (included in Exhibit 5) 23.2 -- Consent of Arthur Andersen LLP 23.3 -- Consent of Joe D. Goodwin 23.4 -- Consent of Roderick C. Gow 23.5 -- Consent of John S. Rothschild 23.6 -- Consent of Ray J. Groves 23.7 -- Consent of Richard W. Pogue 23.8 -- Consent of John C. Pope 27 -- Financial Data Schedule* (for SEC use only)
- --------------- * Previously filed. + Confidential treatment has been requested with respect to portions of this Exhibit. (B) FINANCIAL STATEMENT SCHEDULE: Report of Independent Certified Public Accountants Schedule II: Valuation and Qualifying Accounts EX-1 2 UNDERWRITING AGREEMENT 1 EXHIBIT 1 LAMALIE ASSOCIATES, INC. 2,000,000 Shares of Common Stock* FORM OF UNDERWRITING AGREEMENT , 1997 -------- --- ROBERT W. BAIRD & CO. INCORPORATED WILLIAM BLAIR & COMPANY, L.L.C. As Representatives of the Several Underwriters Identified in Schedule I Annexed Hereto c/o Robert W. Baird & Co. Incorporated 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Ladies and Gentlemen: SECTION 1. INTRODUCTORY. Lamalie Associates, Inc., a Florida corporation, (the "Company"), proposes to sell 2,000,000 shares (the "Firm Shares") of common stock, $.01 par value per share (the "Common Stock"), to the several underwriters identified in Schedule I annexed hereto (the "Underwriters"), who are acting severally and not jointly. In addition, the Company agreed to grant to the Underwriters an option to purchase up to 300,000 additional shares of Common Stock (the "Optional Shares") as provided in Section 5 hereof. The Firm Shares and, to the extent such option is exercised, the Optional Shares are hereinafter collectively referred to as the "Shares." You, as representatives of the Underwriters (the "Representatives"), have advised the Company that the Underwriters propose to make a public offering of their respective portions of the Shares as soon hereafter as in your judgment is advisable and that the public offering price of the Shares initially will be [$_____] per share. - ----------------- * Plus an option to acquire up to 300,000 additional shares of Common Stock from the Company to cover over-allotments. 2 The Company hereby confirms agreements with the Underwriters as follows: SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to, and agrees with, the several Underwriters, and shall be deemed to represent and warrant to the several Underwriters on each Closing Date (as hereinafter defined), that: (a) The Company has been duly incorporated and is validly existing as a corporation and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and described in the Prospectus and the Registration Statement (as such terms are hereinafter defined). The Company is duly registered and qualified to do business as a foreign corporation under the laws of, and is in good standing as such in, each jurisdiction in which such registration or qualification is required, except where the failure to so register or qualify would not have a material adverse effect on the condition (financial or other), business, property, net worth, results of operations or prospects of the Company (a "Material Adverse Effect"). No proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. Complete and correct copies of the certificate of incorporation and by-laws, as amended or restated ("Articles of Incorporation" and "By-laws," respectively), of the Company as in effect on the date hereof have been delivered to the Representatives, and no changes thereto will be made on or subsequent to the date hereof and prior to each Closing Date. (b) All of the shares of Common Stock issued and outstanding immediately prior to the issuance and sale of the Shares as set forth in the Prospectus have been duly authorized and validly issued, are fully paid and nonassessable and conform to the description thereof contained in the Prospectus and the Registration Statement. There are no preemptive, preferential or, except as described in the Prospectus, other rights to subscribe for or purchase any shares of Common Stock (including the Shares), and no shares of Common Stock have been issued in violation of such rights. The Shares to be issued and sold to the Underwriters have been duly authorized and, when issued, delivered and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus and the Registration Statement. The delivery of certificates for the Shares to be issued and sold hereunder and payment therefor pursuant to the terms of this Agreement will pass valid title to such Shares to the Underwriters, free and clear of any lien, claim, encumbrance or defect in title. Except as described in the Prospectus, there are no outstanding options, warrants or other rights of any description, contractual or otherwise, entitling any person to be issued any class of security by the Company, and there are no holders of Common Stock or other securities of the Company, or of securities that are convertible or exchangeable into Common Stock or other securities of the Company, that have rights to the registration of such Common Stock or securities under the Securities Act of 1933, as amended, and the regulations thereunder (together, the "Act") or the securities laws or regulations of any of the states (the "Blue Sky Laws"). -2- 3 (c) The Company has no subsidiaries and does not own any equity interest in or control, directly or indirectly, any other corporation, limited liability company, partnership, joint venture, association, trust or other business organization. (d) The Company has full corporate power and authority to enter into and perform this Agreement, and the execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder and the consummation of the transactions described herein, have been duly authorized with respect to the Company by all necessary corporate action and will not: (i) violate any provisions of the Articles of Incorporation or By-laws of the Company; (ii) violate any provisions of, or result in the breach, modification or termination of, or constitute a default under, any provision of any agreement, lease, franchise, license, indenture, permit, mortgage, deed of trust, evidence of indebtedness or other instrument to which the Company is a party or by which the Company, or any property owned or leased by the Company, may be bound or affected; (iii) violate any statute, ordinance, rule or regulation applicable to the Company, or order or decree of any court, regulatory or governmental body, arbitrator, administrative agency or instrumentality of the United States or other country or jurisdiction having jurisdiction over the Company; or (iv) result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company. No consent, approval, authorization or other order of any court, regulatory or governmental body, arbitrator, administrative agency or instrumentality of the United States or other country or jurisdiction is required for the execution and delivery of this Agreement by the Company, the performance of its obligations hereunder or the consummation of the transactions contemplated hereby, except for compliance with the Act, the Securities Exchange Act of 1934, as amended, and the regulations thereunder (together, the "Exchange Act"), the Blue Sky Laws applicable to the public offering of the Shares by the several Underwriters and the clearance of such offering and the underwriting arrangements evidenced hereby with the National Association of Securities Dealers, Inc. (the "NASD"). This Agreement has been duly executed and delivered by and on behalf of the Company and is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms. (e) A registration statement on Form S-1 (Reg. No. 333-_______) with respect to the Shares, including a preliminary form of prospectus and a preliminary form of prospectus supplement relating to the offer and sale of Shares and of participation interests in the Company's Profit Sharing Plan (the "Profit Sharing Plan") to the trustee of the Profit Sharing Trust, at the election and for the account of participants thereof, has been carefully prepared by the Company in conformity with the requirements of the Act and has been filed with the Securities and Exchange Commission (the "Commission"). Such registration statement, as finally amended and revised at the time such registration statement was or is declared effective by the Commission (including all financial schedules and exhibits and including the information contained in the form of final prospectus and related prospectus supplement, if any, filed with the Commission pursuant to Rule 424(b) and Rule 430A under the Act and deemed to be part of the registration statement if the registration statement has been declared effective pursuant to Rule 430A(b)) and as thereafter amended by post-effective amendment or as supplemented by any supplements thereto, -3- 4 if any, is herein referred to as the "Registration Statement." If an abbreviated registration statement is prepared and filed with the Commission in accordance with Rule 462(b) under the Act (an "Abbreviated Registration Statement"), the term "Registration Statement" as used in this Agreement includes the Abbreviated Registration Statement. The final prospectus and the related prospectus supplement, each in the form first filed with the Commission pursuant to Rule 424(b) or, if no such filing is required, as included in the Registration Statement, or any supplement thereto, is herein referred to collectively as the "Prospectus." The prospectus and the related prospectus supplement, each as subject to completion and in the forms included in the Registration Statement at the time of the initial filing of the Registration Statement with the Commission, and each such prospectus and related prospectus supplement as amended from time to time until the date of the Prospectus, is referred to herein collectively as the "Preliminary Prospectus." The Company has prepared and filed such amendments to the Registration Statement since its initial filing with the Commission, if any, as may have been required to the date hereof, and will file such additional amendments thereto as may hereafter be required. There have been delivered to the Representatives two signed copies of the Registration Statement and each amendment thereto, if any, together with two copies of each exhibit filed therewith, and such number of conformed copies for each of the Underwriters of the Registration Statement and each amendment thereto, if any (but without exhibits), and of each Preliminary Prospectus and of the Prospectus as the Representatives have requested. (f) Neither the Commission nor any state securities commission has issued any order preventing or suspending the use of any Preliminary Prospectus, nor, to the knowledge of the Company, have any proceedings for that purpose been initiated or threatened, and each Preliminary Prospectus filed with the Commission as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto complied when so filed with the requirements of the Act and, as of its date, did not include 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 not misleading. As of the effective date of the Registration Statement, and at all times subsequent thereto up to each Closing Date, the Registration Statement and the Prospectus contained or will contain all statements that are required to be stated therein in accordance with the Act and conformed or will conform in all respects to the requirements of the Act, and neither the Registration Statement nor the Prospectus included or will include any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Neither the Company, nor any person that controls, is controlled by (including the Subsidiaries) or is under common control with the Company, has distributed or will distribute prior to each Closing Date any offering material in connection with the offering and sale of the Shares other than a Preliminary Prospectus, the Prospectus, the Registration Statement or other materials permitted by the Act and provided to the Representatives. (g) Arthur Andersen LLP, which has expressed its opinion with respect to the financial statements and schedules filed with the Commission and included as a part of each -4- 5 Preliminary Prospectus, the Prospectus or the Registration Statement are independent accountants as required by the Act. (h) The financial statements and the related notes thereto included in each Preliminary Prospectus, the Prospectus and the Registration Statement present fairly the financial position, results of operations and cash flows of the Company as of their respective dates or for the respective periods covered thereby, all in conformity with generally accepted accounting principles consistently applied throughout the periods involved. The financial statement schedules, if any, included in the Registration Statement present fairly the information required to be stated therein on a basis consistent with the financial statements of the Company contained therein. The pro forma financial statements, together with the related schedules and notes, if any, in each Preliminary Prospectus, the Prospectus and the Registration Statement (i) have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, (ii) give effect to the pro forma adjustments specified therein, which adjustments are based on reasonable assumptions, and (iii) present fairly the historical and proposed transactions specified therein. The other financial information and statistical and data included in each Preliminary Prospectus, the Prospectus and the Registration Statement, whether historical or pro forma, are, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company. The financial statements and schedules and the related notes thereto included in each Preliminary Prospectus, the Prospectus or the Registration Statement are the only such financial statements and schedules required under the Act to be set forth therein. The Company had an outstanding capitalization as set forth in the Registration Statement and under "Capitalization" in the Prospectus as of the date indicated therein, and there has been no material change thereto since such date except as disclosed in the Prospectus. (i) The Company is not and, with the giving of notice or passage of time or both, would be, in violation or in breach of: (i) its Articles of Incorporation or By-laws; (ii) any statute, ordinance, order, rule or regulation applicable to the Company; (iii) any order or decree of any court, regulatory body, arbitrator, administrative agency or other instrumentality of the United States or other country or jurisdiction having jurisdiction over the Company; or (iv) any provision of any agreement, lease, franchise, license, indenture, permit, mortgage, deed of trust, evidence of indebtedness or other instrument to which the Company is a party or by which any property owned or leased by the Company is bound or affected. The Company has not received notice of any violation of any applicable statute, ordinance, order, rule or regulation applicable to the Company. The Company has obtained and holds, and is in compliance with, all permits, certificates, licenses, approvals, registrations, franchises, consents and authorizations of governmental or regulatory authorities required under all laws, rules and regulations in connection with its business (hereinafter "permit" or "permits"), and all of such permits are in full force and effect; and the Company has fulfilled and performed all of its obligations with respect to each such permit and no event has occurred which would result in, or after notice or lapse of time would result in, revocation or termination of any such permit or result in any other impairment of the rights of the holder of such permit. The Company is not and has not been (by virtue of any -5- 6 action, omission to act, contract to which it is a party or other occurrence) in violation of any applicable foreign, federal, state, municipal or local statutes, laws, ordinances, rules, regulations or orders (including those relating to environmental protection, occupational safety and health and equal employment practices) heretofore or currently in effect. (j) There are no legal or governmental proceedings or investigations pending or, to the knowledge of the Company, threatened to which the Company is or may be a party or to which any property owned or leased by the Company is or may be subject, including, without limitation, any such proceedings that are related to environmental or employment discrimination matters, which are required to be described in the Registration Statement or the Prospectus which are not so described, or which question the validity of this Agreement or any action taken or to be taken pursuant hereto. Except as described in the Registration Statement or the Prospectus, the Company: (i) is not in violation of any statute, ordinance, rule or regulation, or any decision, order or decree of any court, regulatory body, arbitrator, administrative agency or other instrumentality of the United States or other country or jurisdiction having jurisdiction over the Company relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environmental or human exposure to hazardous or toxic substances (collectively, "environmental laws"); (ii) does not own or operate any real property contaminated with any substance that is subject to any environmental laws; (iii) is not liable for any off-site disposal or contamination pursuant to any environmental laws; and (iv) is not subject to any claim relating to any environmental laws, which violation, contamination, liability or claim could have a Material Adverse Effect. (k) There is no transaction, relationship, obligation, agreement or other document required to be described in the Registration Statement or the Prospectus or to be filed or deemed to be filed as an exhibit to the Registration Statement by the Act, which has not been described or filed as required. All such contracts or agreements to which the Company is a party have been duly authorized, executed and delivered by the Company, constitute valid and binding agreements of the Company, and are enforceable by and against the Company, in accordance with the respective terms thereof. (l) The Company does not own any real property. The Company has good and valid title to all property and assets reflected as owned by the Company in the Company's financial statements included in the Registration Statement (or elsewhere in the Registration Statement or the Prospectus), free and clear of all liens, claims, mortgages, security interests or other encumbrance of any kind or nature whatsoever except those, if any, reflected in such financial statements (or elsewhere in the Registration Statement or the Prospectus). All property (real and personal) held or used by the Company under leases, licenses, franchises or other agreements is held by the Company under valid, subsisting, binding and enforceable leases, franchises, licenses or other agreements. (m) Neither the Company nor any person that controls, is controlled by or is under common control with the Company has taken or will take, directly or indirectly, any action -6- 7 designed to cause or result in, or which constituted, or which could cause or result in, stabilization or manipulation, under the Exchange Act or otherwise, of the price of any security of the Company to facilitate the sale or resale of the Common Stock. (n) Except as described in the Registration Statement or the Prospectus, since the respective dates as of which information is given in the Registration Statement or the Prospectus and prior to each Closing Date: (i) the Company does not have or will not have incurred any liability or obligation, direct or contingent, or entered into any transaction, that is material to the Company, except as in the ordinary course of business; (ii) the Company has not and will not have paid or declared any dividend or other distribution with respect to its capital stock and the Company is not and will not be delinquent in the payment of principal or interest on any outstanding debt obligation; and (iii) there has not been and will not have been any change in the capital stock, any material change in the indebtedness of the Company, or any change or development involving or which could be expected to involve, a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business. (o) Neither the Company nor any person that controls, is controlled by or is under common control with the Company has, directly or indirectly: (i) made any unlawful contribution to any candidate for political office, or failed to disclose fully any contribution in violation of law; or (ii) made any payment to any federal, state or foreign governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof or applicable foreign jurisdictions. (p) The Company owns or possesses adequate rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses presently used in or necessary for the conduct of its business or ownership of its properties, and the Company has not violated or infringed upon the rights of others, or received any notice of conflict with the asserted rights of others, in respect thereof. (q) The Company has in place and effective such policies of insurance, with limits of liability in such amounts, as are normal and prudent in the ordinary course of the business of the Company. (r) No labor dispute with the employees of the Company exists or, to the knowledge of the Company, is imminent, and the Company is not a party to any collective bargaining agreement and, to the knowledge of the Company, no union organizational attempts have occurred or are pending. There has been no change in the relationship of the Company with any of its principal suppliers, manufacturers, contractors or customers resulting in or that could result in a Material Adverse Effect. -7- 8 (s) The Company is not an "investment company", an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended. (t) All federal, state and local tax returns required to be filed by or on behalf of the Company have been filed (or are the subject of valid extension) with the appropriate federal, state and local authorities, and all such tax returns, as filed, are accurate in all material respects; all federal, state and local taxes (including estimated tax payments) required to be shown on all such tax returns or claimed to be due from or with respect to the business of the Company have been paid or reflected as a liability on the financial statements of the Company for appropriate periods; all deficiencies asserted as a result of any federal, state or local tax audits have been paid or finally settled, and no issue has been raised in any such audit which, by application of the same or similar principles, reasonably could be expected to result in a proposed deficiency for any other period not so audited; no state of facts exist or has existed which would constitute grounds for the assessment of any tax liability with respect to the periods which have not been audited by appropriate federal, state or local authorities; there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any federal, state or local tax return of any period; and the Company has never been a member of an affiliated group of corporations filing consolidated federal income tax returns, other than a group of which the Company is and has been the common parent. On [DATE], the Company validly elected to be an S corporation under federal income tax law and such S corporation election continued in full force and effect without interruption until November 1, 1994. For purposes of this Section 2(t), "S corporation" means a corporation with respect to which a valid election has been made under Section 1362 of the Internal Revenue Code of 1986, as amended (the "Code"), and any corresponding provision of state, local or foreign law. (u) Except for the Company's [NAME EACH GROUP HEALTH, LIFE, DISABILITY OR OTHER WELFARE PLAN], the Profit Sharing Plan and its deferred compensation plan for employees, deferred compensation plan for directors, and [NAME ANY OTHER CONTRIBUTORY OR NONCONTRIBUTORY DEFINED CONTRIBUTION RETIREMENT PLAN AND DEFINED BENEFIT RETIREMENT PLANS] (collectively, the "Plans"), the Company is not a participating employer or plan sponsor with respect to any employee pension benefit plan as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any employee welfare benefit plan as defined in Section 3(1) of ERISA, including, without limitation, any multiemployer welfare or pension plan. With respect to the Plans, the Company is in substantial compliance with all applicable regulations, including ERISA and the Code. With respect to each defined benefit retirement plan, such plan does not have benefit liabilities (as defined in Section 4001(a)(16) of ERISA) exceeding the assets of the plan. The Company or the administrator of each of the Plans, as the case may be, has timely filed the reports required to be filed by ERISA and the Code in connection with the maintenance of the Plans, and no facts, including, without limitation, any "reportable event" as defined by ERISA and the regulations thereunder, exist in connection with the Plans which, under applicable law, would constitute grounds for the termination of any of the Plans by the Pension -8- 9 Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any of the Plans. (v) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of consolidated financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorizations; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (w) None of the Company, any officer or director of the Company, or any person who owns, of record or beneficially, any class of securities issued by the Company is: (i) an officer, director or partner of any brokerage firm, broker or dealer that is a member of the NASD ("NASD Member"); or (ii) directly or indirectly, a "person associated with" an NASD member or an "affiliate" of an NASD member, as such terms are used in the Conduct Rules of the NASD. In addition, the Company has not issued or transferred any Common Stock, warrants, options or other securities, or any other items of value, to any of the Underwriters or any "related person" of any Underwriter, as such term is used in the Conduct Rules of the NASD, except as provided in this Agreement. (x) The Company has prepared and filed with the Commission a registration statement for the Common Stock pursuant to Section 12(g) of the Exchange Act. Such registration statement either has been declared effective by the Commission under the Exchange Act or will be declared effective by the Commission prior to or concurrently with the commencement of the public offering of the Shares. The Common Stock has been approved for designation upon notice of issuance as a Nasdaq National Market security on The Nasdaq Stock Market ("Nasdaq") concurrently with the effectiveness of the Registration Statement. (y) Neither the Company nor any affiliate of the Company does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075 of the Florida Statutes, and the Company agrees to comply with such Section if, prior to the completion of the distribution of the Shares, the Company, or any affiliate of the Company commences doing such business. (z) All offers and sales of the securities of the Company prior to the date hereof were made in compliance with the Act and all other applicable state and federal laws or regulations. (aa) The Company has obtained for the benefit of the Underwriters the agreement, enforceable by Robert W. Baird & Co. Incorporated ("Baird"), of each of the current stockholders of the Company, that for a period of two years after the date of the Prospectus, such -9- 10 persons will not, without the prior written consent of Baird, directly or indirectly, offer, sell, transfer, or pledge, contract to sell, transfer or pledge, or cause or in any way permit to be sold, transferred, pledged, or otherwise disposed of, any shares of Common Stock owned by such persons on the date hereof (excluding shares of Common Stock that may be issued upon the exercise of stock options currently outstanding or that may be granted under the Company's 1997 Omnibus Stock and Incentive Plan and its Non-Employee Directors' Stock Option Plan, or any Firm Shares or Optional Shares any of such persons may acquire, directly or indirectly as participants in the Profit Sharing Plan). A certificate signed by any officer of the Company and delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby. A certificate delivered by the Company to its counsel for purposes of enabling such counsel to render the opinion referred to in Section 8(d) will also be furnished to the Representatives and counsel for the Underwriters and shall be deemed to be additional representations and warranties to the Underwriters by the Company as to the matters covered thereby. SECTION 3. REPRESENTATION OF UNDERWRITERS. The Representatives will act as the representatives for the several Underwriters in connection with the public offering of the Shares, and any action under or in respect of this Agreement taken by the Representatives will be binding upon all of the Underwriters. SECTION 4. INFORMATION FURNISHED BY THE UNDERWRITERS. The information set forth in the last paragraph on the outside front cover page of the Prospectus concerning the terms of the offering by the Underwriters, the paragraph on the inside front cover page of the Prospectus relating to stabilization practices, and the concession and reallowance amounts appearing under the caption "Underwriting" in the Prospectus constitute all of the information furnished to the Company by and on behalf of the Underwriters for use in connection with the preparation of the Registration Statement and the Prospectus, as such information is referred to in this Agreement. SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. (a) On the basis of the representations, warranties and agreements herein contained, and subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters identified in Schedule I annexed hereto 2,000,000 Firm Shares, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company that number of Firm Shares set forth opposite the name of such Underwriter on Schedule I hereto, at the price per share of $__________. (b) On the First Closing Date (as hereinafter defined), the Company will deliver to the Representatives, at the offices of Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or through the facilities of The Depository Trust Company, for the accounts of the several Underwriters, certificates representing the Firm Shares -10- 11 to be sold against payment in Milwaukee, Wisconsin of the purchase price therefor by certified or official bank check or checks in New York Clearing House (next day) funds payable to the order of the Company with respect to the Firm Shares. As referred to in this Agreement, the "First Closing Date" shall be on the third full business day after the date of the Prospectus, at 9:00 a.m., Milwaukee, Wisconsin time, or at such other date or time not later than ten full business days after the date of the Prospectus as the Representatives and the Company may agree. The certificates for the Firm Shares to be so delivered will be in denominations and registered in such names as the Representatives request by notice to the Company prior to the First Closing Date, and such certificates will be made available for checking and packaging at 9:00 a.m., Milwaukee, Wisconsin time on the first full business day preceding the First Closing Date at a location to be designated by the Representatives. (c) In addition, on the basis of the representations, warranties and agreements herein contained, and subject to the terms and conditions herein set forth, the Company hereby agrees to sell to the Underwriters, and the Underwriters, severally and not jointly, shall have the right at any time within thirty days after the date of the Prospectus to purchase from the Company, up to 300,000 Optional Shares at the purchase price per share to be paid for the Firm Shares, for use solely in covering any over-allotments made by the Underwriters in the sale and distribution of the Firm Shares. The option granted hereunder may be exercised upon notice by the Representatives to the Company within thirty days after the date of the Prospectus setting forth the aggregate number of Optional Shares to be purchased by the Underwriters and sold by the Company, the names and denominations in which the certificates for such shares are to be registered and the date and place at which such certificates will be delivered. Such date of delivery (the "Second Closing Date") shall be determined by the Representatives, provided that the Second Closing Date, which may be the same as the First Closing Date, shall not be earlier than the First Closing Date and, if after the First Closing Date, shall not be earlier than three nor later than ten full business days after delivery of such notice to exercise. Upon exercise of such option, each Underwriter, severally and not jointly, agrees to purchase that number of full Optional Shares (as nearly as practicable in full shares as determined by the Representatives) which bears the same proportion to the total number of Optional Shares to be sold as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto (or such number of Firm Shares increased as set forth in Section 11 hereof) bears to the total number of Firm Shares. Certificates for the Optional Shares will be made available for checking and packaging at 9:00 a.m., Milwaukee, Wisconsin time, on the first full business day preceding the Second Closing Date at a location to be designated by the Representatives. The manner of payment for and delivery of (including the denominations of and the names in which certificates are to be registered) the Optional Shares shall be the same as for the Firm Shares. (d) The Representatives have advised the Company that each Underwriter has authorized the Representatives to accept delivery of the Shares and to make payment therefor. It is understood that the Representatives, individually and not as representatives of the Underwriters, may (but shall not be obligated to) make payment for any Shares to be purchased by any Underwriter whose funds shall not have been received by the Representatives by the First Closing -11- 12 Date or the Second Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any obligation under this Agreement. As referred to in this Agreement, "Closing Date" shall mean either the First Closing Date or the Second Closing Date. SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the several Underwriters that: (a) If the effective time of the Registration Statement is not prior to the execution and delivery of this Agreement, the Company will use its best efforts to cause the Registration Statement to become effective at the earliest possible time and, upon notification from the Commission that the Registration Statement has become effective, will so advise the Representatives and counsel to the Underwriters promptly. If the effective time of the Registration Statement is prior to the execution and delivery of this Agreement and any information shall have been omitted therefrom in reliance upon Rule 430A, the Company, at the earliest possible time, will furnish the Representatives with a copy of the Prospectus to be filed by the Company with the Commission to comply with Rule 424(b) and Rule 430A under the Act and, if the Representatives do not object to the contents thereof, will comply with such Rules. Upon compliance with such Rules, the Company will so advise the Representatives promptly. The Company will advise the Representatives and counsel to the Underwriters promptly of the issuance by the Commission or any state securities commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose, or of any notification of the suspension of qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for that purpose, and will also advise the Representatives and counsel to the Underwriters promptly of any request of the Commission for amendment or supplement of the Registration Statement, of any Preliminary Prospectus or of the Prospectus, or for additional information, and the Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), to any Preliminary Prospectus or to the Prospectus (including a prospectus filed pursuant to Rule 424(b)) if the Representatives have not been furnished with a copy prior to such filing (with a reasonable opportunity to review such amendment or supplement) or if the Representatives object to such filing. (b) If, at any time when a prospectus relating to the Shares is required by law to be delivered in connection with sales by an Underwriter or dealer, any event occurs as a result of which the Prospectus would include an untrue statement of a material fact, or would omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to supplement the Prospectus to comply with the Act, the Company promptly will advise the Representatives and counsel to the Underwriters thereof and will promptly prepare and file with the Commission, at its expense, an amendment to the Registration Statement which will correct such statement or omission or an amendment which will effect such compliance; and, if any Underwriter is required to deliver a prospectus after the effective date of the Registration -12- 13 Statement, the Company, upon request of the Representatives, will prepare promptly such prospectus or prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. The Company consents to the use, in accordance with the provisions of the Act and with the Blue Sky Laws of the jurisdictions in which the Shares are offered by the several Underwriters and by dealers, of each Preliminary Prospectus. (c) The Company will not, prior to the Second Closing Date, if any, incur any liability or obligation, direct or contingent, or enter into any material transaction, other than in the ordinary course of business, or enter into any transaction with an "affiliate," as defined in Rule 405 under the Act, which is required to be described in the Prospectus pursuant to Item 404 of Regulation S-K under the Act, except as described in the Prospectus. (d) The Company will not, prior to the Second Closing Date, if any, acquire any of the Common Stock nor will the Company declare or pay any dividend or make any other distribution upon its Common Stock payable to stockholders of record on a date prior to such earlier date, except as described in the Prospectus. (e) The Company will make generally available to its security holders and the Representatives an earnings statement as soon as practicable, but in no event later than sixty days after the end of its fiscal quarter in which the first anniversary of the effective date of the Registration Statement occurs, covering a period of twelve consecutive calendar months beginning after the effective date of the Registration Statement, which will satisfy the provisions of the last paragraph of Section 11(a) of the Act and Rule 158 promulgated thereunder. (f) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company will furnish to the Representatives, at the expense of the Company, copies of the Registration Statement, the Prospectus, any Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as the Representatives may reasonably request. (g) The Company will apply the net proceeds from the sale of the Shares to be sold by it hereunder for the purposes set forth in the Prospectus, and will timely file Form SR, and any amendments thereto, as required by Rule 463 under the Act. (h) The Company will cooperate with the Representatives and counsel to the Underwriters in qualifying or registering the Shares for sale under the Blue Sky Laws of such jurisdictions as the Representatives designate, and will continue such qualifications or registrations in effect so long as reasonably requested by the Representatives to effect the distribution of the Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction where it is not presently qualified. In each jurisdiction where any of the Shares shall have been qualified as provided above, the Company will file such reports and statements as may be required to continue such qualification for a period -13- 14 of not less than one year from the date of the Prospectus. The Company shall promptly prepare and file with the Commission, from time to time, such reports as may be required to be filed by the Act and the Exchange Act, and the Company shall comply in all respects with the undertakings given by the Company in connection with the qualification or registration of the Shares for offering and sale under the Blue Sky Laws. (i) During the period of three years from the date of the Prospectus, the Company will furnish to each of the Representatives and to each of the other Underwriters who may so request, as soon as available, each report, statement or other document of the Company or its Board of Directors mailed to its stockholders or filed with the Commission, and such other information concerning the Company as the Representatives may reasonably request. (j) The Company shall deliver the requisite notice of issuance to Nasdaq and shall take all necessary or appropriate action within its power to maintain the authorization for trading of the Common Stock as a Nasdaq National Market security, or take such action to authorize the Common Stock for listing on the New York Stock Exchange or the American Stock Exchange, for a period of at least thirty-six months after the date of the Prospectus. (k) Except for the issuance and sale by the Company of Common Stock pursuant to the Company's Employee Stock Purchase Plan, upon the exercise of stock options granted under the Company's 1997 Omnibus Stock and Incentive Plan and its Non-Employee Directors' Stock Option Plan, copies of which are filed as exhibits to the Registration Statement (collectively, the "Option Plans"), the sale of the Shares to be sold pursuant to this Agreement, and the grant of stock options pursuant to the Option Plans, the Company shall not, for a period of two years after the date of the Prospectus, without the prior written consent of Baird, directly or indirectly, offer, sell or otherwise dispose of, contract to sell or otherwise dispose of, or cause or in any way permit to be sold or otherwise disposed of, any: (i) shares of Common Stock; (ii) rights to purchase shares of Common Stock; or (iii) securities that are convertible or exchangeable into shares of Common Stock. (l) The Company has furnished or will furnish to Baird the agreements described in Section 2(aa) hereof, in the form previously delivered to the Company, signed by each of the Company's current stockholders. (m) The Company will maintain a transfer agent and, if required by law or the rules of Nasdaq or any national securities exchange on which the Common Stock is listed, a registrar (which, if permitted by applicable laws and rules, may be the same entity as the transfer agent) for its Common Stock. The Company shall, as soon as practicable after the date hereof, use its best efforts to obtain listing in Standard and Poor's Stock Guide, or such other recognized securities manuals for which it may qualify for listing, and the Company shall use its best efforts to maintain such listings for at least five years after the First Closing Date. -14- 15 (n) If at any time when a prospectus relating to the Shares is required to be delivered under the Act, any rumor, publication or event relating to of affecting the Company shall occur as a result of which, in the opinion of Baird, the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to the Prospectus), the Company will, after written notice from Baird advising the Company of any of the matters set forth above, promptly consult with Baird concerning the advisability and substance of, and, if the Company and Baird determine that it is appropriate, disseminate, a press release or other public statement responding to or commenting on, such rumor, publication or event. (o) If the sale to the Underwriters of the Shares is not consummated for any reason other than termination of this Agreement pursuant to Section 11 hereof, without limiting any other rights the Underwriters may have, the Company agrees to reimburse the Underwriters upon demand for all out-of-pocket expenses (including reasonable fees and expenses of counsel for the Underwriters), that shall have been incurred by the Underwriters in connection with the proposed purchase and sale of the Shares, and the provisions of Sections 7 and 10 hereof shall at all times be effective and apply. Notwithstanding the foregoing sentence, if the sale to the Underwriters of the Shares is not consummated for any reason other than termination of this Agreement by the Underwriters pursuant to Section 11 hereof, and the Company or any of the stockholders of the Company enter into an agreement on or before December 31, 1997 with respect to the sale, lease, disposition or other transfer of all or substantially all of the Company's assets or a majority interest in its capital stock, directly or indirectly, by merger, share exchange, business combination or otherwise (such sale, lease, disposition or other transfer of assets or stock is hereinafter referred to as a "Business Combination"), then the Company will (i) engage Robert W. Baird & Co., Incorporated as its financial advisor for any such Business Combination and (ii) pay Baird, in addition to the reimbursement of out-of-pocket expenses as provided in the first sentence of this Section 6(o), a financial advisory fee equal to $400,000, or 1.0% of the aggregate consideration paid to the Company or its stockholders in such Business Combination, whichever is greater, in immediately available funds upon consummation of such Business Combination for financial advisory services to be rendered by the Representatives in connection therewith. (p) The Company will comply or cause to be complied with the conditions to the obligations of the Underwriters in Section 8 hereof. SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions contemplated hereunder are consummated or this Agreement becomes effective, or if this Agreement is terminated for any reason, the Company will pay the costs, fees and expenses incurred in connection with the public offering of the Shares. Such costs, fees and expenses to be paid by the Company include, without limitation: (a) All costs, fees and expenses (excluding the expenses incurred by the Underwriters and the legal fees and disbursements of counsel for the Underwriters, but including such fees and disbursements described in subsection (b) of this Section 7) incurred in connection -15- 16 with the performance of the Company's obligations hereunder, including without limiting the generality of the foregoing: the registration fees related to the filing of the Registration Statement with the Commission; the fees and expenses related to the quotation or listing of the Shares on Nasdaq or other national securities exchange; the fees and expenses of the Company's counsel, accountants, transfer agent and registrar; the costs and expenses incurred in connection with the preparation, printing, shipping and delivery of the Registration Statement, each Preliminary Prospectus and the Prospectus (including all exhibits and financial statements) and all agreements and supplements provided for herein, this Agreement and the Preliminary and Supplemental Blue Sky Memoranda, including, without limitation, shipping expenses via overnight delivery and/or courier service to comply with applicable prospectus delivery requirements; and the costs and expenses associated with the production of materials related to, and travel expenses incurred by the management of the Company in connection with, the various meetings to be held between the Company's management and prospective investors. (b) All registration fees and expenses, including reasonable legal fees and disbursements of counsel for the Underwriters, incurred in connection with (i) the preparation of the Blue Sky Memoranda and Blue Sky filings and with qualifying or registering all or any part of the Shares for offer and sale under the Blue Sky Laws and (ii) the clearing of the public offering and the underwriting arrangements evidenced hereby with the NASD. (c) All fees and expenses related to printing of the certificates for the Shares, and all transfer taxes, if any, with respect to the sale and delivery of the Shares. SECTION 8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters under this Agreement shall be subject to the accuracy of the representations and warranties on the part of the Company herein set forth as of the date hereof and as of each Closing Date, to the accuracy of the statements of the Company's officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to the following additional conditions, unless waived in writing by the Representatives: (a) The Registration Statement shall have been declared effective by the Commission not later than 5:30 p.m., Washington, D. C. time, prior to or on the date of this Agreement, or such later time as shall have been consented to by the Representatives; all filings required by Rules 424(b) and 430A under the Act shall have been timely made; no stop order suspending the effectiveness of the Registration Statement shall have been issued by the Commission or any state securities commission nor, to the knowledge of the Company, shall any proceedings for that purpose have been initiated or threatened; and any request of the Commission or any state securities commission for inclusion of additional information in the Registration Statement, or otherwise, shall have been complied with to the satisfaction of the Representatives. (b) Since the dates as of which information is given in the Registration Statement: -16- 17 (i) there shall not have occurred any change or development involving, or which could be expected to involve, a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business; and (ii) the Company shall not have sustained any loss or interference from any labor dispute, strike, fire, flood, windstorm, accident or other calamity (whether or not insured) or from any court or governmental action, order or decree, the effect of which on the Company, in any such case described in clause (i) or (ii) above, is in the opinion of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement and the Prospectus. (c) The Representatives shall not have advised the Company that the Registration Statement or the Prospectus contains an untrue statement of fact that, in the opinion of the Representatives or counsel for the Underwriters, is material, or omits to state a fact that, in the opinion of the Representatives or such counsel, is material and is required to be stated therein or necessary to make the statements therein not misleading. (d) The Representatives shall have received an opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A., counsel for the Company, addressed to the Representatives, as the representatives of the Underwriters, and dated the First Closing Date or the Second Closing Date, as the case may be, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and as described in the Prospectus and the Registration Statement. The Company is duly registered and qualified to do business as a foreign corporation under the laws of, and is in good standing as such in, each jurisdiction in which such registration or qualification is required, except where the failure to so register or qualify would not have a Material Adverse Effect. (ii) The authorized capital stock of the Company consists of 35.0 million shares of Common Stock, par value $0.01 per share, and 3.0 million shares of Preferred Stock, and all such stock conforms as to legal matters to the descriptions thereof in the Prospectus and the Registration Statement. (iii) The issued and outstanding shares of capital stock of the Company immediately prior to the issuance and sale of the Shares have been duly authorized and validly issued, are fully paid and nonassessable, and there are no preemptive, -17- 18 preferential or, except as described in the Prospectus, other rights to subscribe for or purchase any shares of capital stock of the Company, and to such counsel's knowledge, no shares of capital stock of the Company have been issued in violation of such rights. (iv) The Company has no subsidiaries and the Company does not own any equity interest in or control, directly or indirectly, any other corporation, limited liability company, partnership, joint venture, association, trust or other business organization. (v) The certificates for the Shares to be delivered hereunder are in due and proper form and conform to the requirements of applicable law and, when duly countersigned by the Company's transfer agent and delivered to the Representatives or upon the order of the Representatives against payment of the agreed consideration therefor in accordance with the provisions of this Agreement, the Shares represented thereby will be duly authorized and validly issued, fully paid and nonassessable, and free of any preemptive, preferential or other rights to subscribe for or purchase shares of Common Stock. (vi) The Registration Statement has become effective under the Act, and to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or are threatened under the Act or any Blue Sky Laws. The Registration Statement and the Prospectus and any amendment or supplement thereto (except for the financial statements and other statistical or financial data included therein as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act. No facts have come to the attention of such counsel which lead it to believe that either the Registration Statement or the Prospectus or any amendment or supplement thereto, contains any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of the First Closing Date or the Second Closing Date, as the case may be, contained any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made (except for the financial statements and other financial data included therein as to which such counsel need express no opinion). To such counsel's knowledge, there are no legal or governmental proceedings pending or threatened, including, without limitation, any such proceedings that are related to environmental or employment discrimination matters, required to be described in the Registration Statement or the Prospectus which are not so described or which question the validity of this Agreement or any action taken or to be taken pursuant thereto, nor is there any transaction, -18- 19 relationship, agreement, contract or other document of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement by the Act, which is not described or filed as required. (vii) The Company has full corporate power and authority to enter into and perform this Agreement. The performance of the Company's obligations hereunder and the consummation of the transactions described herein have been duly authorized by the Company by all necessary corporate action and this Agreement has been duly executed and delivered by and on behalf of the Company, and is a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except that rights to indemnity or contribution may be limited by applicable law and except as enforceability of this Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, and by equitable principles limiting the right to specific performance or other equitable relief. No consent, approval, authorization or other order or decree of any court, regulatory or governmental body, arbitrator, administrative agency or other instrumentality of the United States or other country or jurisdiction having jurisdiction over the Company is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement (except for compliance with the Act, the Exchange Act, applicable Blue Sky Laws and the clearance of the underwriting arrangements by the NASD). (viii) The execution, delivery and performance of this Agreement by the Company will not: (A) violate any provisions of the Articles of Incorporation or By-laws of the Company; (B) violate any provisions of, or result in the breach, modification or termination of, or constitute a default under, any agreement, lease, franchise, license, indenture, permit, mortgage, deed of trust, other evidence of indebtedness or other instrument to which the Company is a party or by which the Company, or any of its owned or leased property, is bound and which is filed as an exhibit to the Registration Statement; or (C) violate any statute, ordinance, order, rule, decree or regulation of any court, regulatory or governmental body, arbitrator, administrative agency or other instrumentality of the United States or other country or jurisdiction having jurisdiction over the Company (assuming compliance with all applicable federal and state securities laws). (ix) To such counsel's knowledge, except as described in the Prospectus, there are no holders of Common Stock or other securities of the Company, or securities that are convertible or exchangeable into Common Stock or other securities of the Company, that have rights to the registration of such securities under the Act or any Blue Sky Laws. -19- 20 (x) The Common Stock has been designated for inclusion as a National Market security on Nasdaq and is registered under the Exchange Act. (xi) The Company is not, and with the giving of notice or passage of time or both would not be, in violation of its Articles of Incorporation or By-laws or, to such counsel's knowledge, in default in any material respect in the performance of any agreement, lease, franchise, license, permit, mortgage, deed of trust, evidence of indebtedness or other instrument, or any other document that is filed as an exhibit to the Registration Statement, to which the Company is subject or bound. (xii) The Company is not an "investment company," an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended, and, upon its receipt of any proceeds from the sale of the Shares, the Company will not become or be deemed to be an "investment company" thereunder. (xiii) The description in the Registration Statement and the Prospectus of statutes, law, regulations, legal and governmental proceedings, and contracts and other legal documents described therein fairly and correctly present, in all material respects, the information required to be included therein by the Act. (xiv) All offers and sales by the Company of its capital stock before the date hereof were at all relevant times duly registered under or exempt from the registration requirements of the Act, and were duly registered under or the subject of an available exemption from the registration requirements of any applicable Blue Sky Laws. In rendering such opinion, counsel for the Company may rely, to the extent counsel deems such reliance proper, as to matters of fact upon certificates of officers of the Company and of governmental officials, and copies of all such certificates shall be furnished to the Representatives and for the Underwriters on or before each Closing Date. (e) The Representatives shall have received an opinion of Neal, Gerber & Eisenberg, counsel for the Underwriters, dated the First Closing Date or the Second Closing Date, as the case may be, with respect to the issuance and sale of the Shares by the Company, the Registration Statement and other related matters as the Representatives may require, and the Company shall have furnished to such counsel such documents and shall have exhibited to them such papers and records as they request for the purpose of enabling them to pass upon such matters. -20- 21 (f) The Representatives shall have received on each Closing Date, a certificate of Robert Pearson, President and Chief Executive Officer, and Jack Wissman, Executive Vice President and Chief Administrative Officer, of the Company, to the effect that: (i) The representations and warranties of the Company set forth in Section 2 hereof are true and correct as of the date of this Agreement and as of the date of such certificate, and the Company has complied with all the agreements and satisfied all the conditions to be performed or satisfied by it at or prior to the date of such certificate. (ii) The Commission has not issued an order preventing or suspending the use of the Prospectus or any Preliminary Prospectus or any amendment or supplement thereto; no stop order suspending the effectiveness of the Registration Statement has been issued; and to the knowledge of the respective signatories, no proceedings for that purpose have been initiated or are pending or contemplated under the Act or under the Blue Sky Laws of any jurisdiction. (iii) Each of the respective signatories has carefully examined the Registration Statement and the Prospectus, and any amendment or supplement thereto, and such documents contain all statements required to be stated therein, and do not include any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and since the date on which the Registration Statement was initially filed, no event has occurred that was required to be set forth in an amended or supplemented prospectus or in an amendment to the Registration Statement that has not been so set forth. (iv) Since the date on which the Registration Statement was initially filed with the Commission, there shall not have occurred any change or development involving, or which could be expected to involve, a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business, except as disclosed in the Prospectus and the Registration Statement as heretofore amended or (but only if the Representatives expressly consent thereto in writing) as disclosed in an amendment or supplement thereto filed with the Commission and delivered to the Representatives after the execution of this Agreement; since such date and except as so disclosed or in the ordinary course of business, the Company has not incurred any liability or obligation, direct or indirect, or entered into any transaction which is material to the Company; since such date and except as so disclosed, there has not been any change in the outstanding capital stock of the Company, or any change that is material to the Company in the short-term debt or long-term debt of the Company; since such date and except as so disclosed, the Company has not acquired any of the Common Stock or other capital stock of the Company nor has the Company declared or paid any dividend, or made any other -21- 22 distribution, upon its outstanding Common Stock payable to stockholders of record on a date prior to such Closing Date; since such date and except as so disclosed, the Company has not incurred any material contingent obligations, and no material litigation is pending or threatened against the Company; and, since such date and except as so disclosed, the Company has not sustained any material loss or interference from any strike, fire, flood, windstorm, accident or other calamity (whether or not insured) or from any court or governmental action, order or decree. The delivery of the certificate provided for in this subsection (f) shall be and constitute a representation and warranty of the Company as to the facts required in the immediately foregoing clauses (i), (ii), (iii) and (iv) to be set forth in said certificate. (g) At the time this Agreement is executed and also on each Closing Date, there shall be delivered to the Representatives a letter addressed to the Representatives, as the representative of the Underwriters, from Arthur Andersen LLP, the Company's independent accountants, the first letter to be dated the date of this Agreement, the second letter to be dated the First Closing Date and the third letter (if applicable) to be dated the Second Closing Date, which shall be in form and substance satisfactory to the Representatives and shall contain information as of a date within five days of the date of such letter. There shall not have been any change or decrease set forth in any of the letters referred to in this subsection (g) which makes it impracticable or inadvisable in the judgment of the Representatives to proceed with the public offering or purchase of the Shares as contemplated hereby. (h) The Shares shall have been qualified or registered for sale under the Blue Sky Laws of such jurisdictions as shall have been specified by the Representatives, the underwriting terms and arrangements for the offering shall have been cleared by the NASD, and the Common Stock shall have been designated for inclusion as a Nasdaq National Market security on Nasdaq and shall have been registered under the Exchange Act. (i) Such further certificates and documents as the Representatives may reasonably request (including certificates of officers of the Company). All such opinions, certificates, letters and documents shall be in compliance with the provisions hereof only if they are satisfactory to the Representatives and to Neal, Gerber & Eisenberg, counsel for the Underwriters. The Company shall furnish the Representatives with such manually signed or conformed copies of such opinions, certificates, letters and documents as the Representatives may reasonably request. If any condition to the Underwriters' obligations hereunder to be satisfied prior to or at either Closing Date is not so satisfied, this Agreement at the election of the Representatives will terminate upon notification to the Company without liability on the part of (i) any Underwriter, including the Representatives, (ii) the Company except for the provisions of Section -22- 23 6 (o) hereof, the expenses to be paid by the Company pursuant to Section 7 hereof and (iii) except to the extent provided in Section 10 hereof. SECTION 9. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company will use its best efforts to prevent the issuance of any stop order suspending the effectiveness of the Registration Statement, and, if such stop order is issued, to obtain as soon as possible the lifting thereof. SECTION 10. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act or the Exchange Act, from and against any losses, claims, damages, expenses, liabilities or actions in respect thereof ("Claims"), joint or several, to which such Underwriter or each such controlling person may become subject under the Act, the Exchange Act, Blue Sky Laws or other federal or state statutory laws or regulations, at common law or otherwise (including payments made in settlement of any litigation), insofar as such Claims arise out of or are based upon any breach of any representation, warranty or covenant made by the Company in this Agreement, or any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or in any application filed under any Blue Sky Law or other document executed by the Company for that purpose or based upon written information furnished by the Company and filed in any state or other jurisdiction to qualify any or all of the Shares under the securities laws thereof (any such document, application or information being hereinafter called a "Blue Sky Application") or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. The Company agrees to reimburse each Underwriter and each such controlling person for any legal fees or other expenses incurred by such Underwriter or any such controlling person in connection with investigating or defending any such Claim; provided, however, that the Company will not be liable in any such case to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Prospectus or supplement thereto or in any Blue Sky Application in reliance upon and in conformity with the written information furnished to the Company pursuant to Section 4 of this Agreement. The indemnification obligations of the Company as provided above are in addition to and in no way limit any liabilities the Company may otherwise have. (b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company, each of its directors and each of its officers who signs the Registration Statement, and each person, if any, who controls the Company within the meaning of the Act or the Exchange Act against any Claim to which the Company, or any such director, officer, controlling person may become subject under the Act, the Exchange Act, Blue Sky Laws or other federal or state statutory laws or regulations, at common law or otherwise (including payments -23- 24 made in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter and Baird), insofar as such Claim arises out of or is based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or in any Blue Sky Application, or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or in any Blue Sky Application, in reliance solely upon and in conformity with the written information furnished by the Representatives to the Company pursuant to Section 4 of this Agreement. Each Underwriter will severally reimburse any legal fees or other expenses incurred by the Company, or any such director, officer, controlling person in connection with investigating or defending any such Claim, and from any and all Claims solely resulting from failure of an Underwriter to deliver a Prospectus, if the person asserting such Claim purchased Shares from such Underwriter and a copy of the Prospectus (as then amended if the Company shall have furnished any amendments thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Shares to such person, and if the Prospectus (as so amended) would have cured the defect giving rise to such Claim. The indemnification obligations of each Underwriter as provided above are in addition to any liabilities any such Underwriter may otherwise have. Notwithstanding the provisions of this Section, no Underwriter shall be required to indemnify or reimburse the Company, or any officer, director, controlling person in an aggregate amount in excess of the total price at which the Shares purchased by any such Underwriter hereunder were offered to the public, less the amount of any damages such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (c) Promptly after receipt by an indemnified party under this Section 10 of notice of the commencement of any action in respect of a Claim, such indemnified party will, if a Claim in respect thereof is to be made against an indemnifying party under this Section 10, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve an indemnifying party from any liability it may have to any indemnified party under this Section 10 or otherwise. In case any such action is brought against any indemnified party, and such indemnified party notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in and, to the extent that he, she or it may wish, jointly with all other indemnifying parties, similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and any indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to the indemnified party and/or other indemnified parties which are different from or additional to those available to any indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. -24- 25 (d) Upon receipt of notice from the indemnifying party to such indemnified party of the indemnifying party's election to assume the defense of such action and upon approval by the indemnified party of counsel selected by the indemnifying party, the indemnifying party will not be liable to such indemnified party under this Section 10 for any legal fees or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, unless: (i) the indemnified party shall have employed separate counsel in connection with the assumption of legal defenses in accordance with the proviso to the last sentence of subsection (c) of this Section 10. (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the indemnified party's notice to the indemnifying party of commencement of the action; or (iii) the indemnifying party has authorized the employment of counsel at the expense of the indemnifying party. (e) If the indemnification provided for in this Section is unavailable to an indemnified party under subsection (a) or (b) hereof in respect of any Claim referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall, subject to the limitations hereinafter set forth, contribute to the amount paid or payable by such indemnified party as a result of such Claim: (f) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Underwriters from the offering of the Shares; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such Claim, as well as any other relevant equitable considerations. The relative benefits received by each of the Company and the Underwriters shall be deemed to be in such proportion so that the Underwriters are responsible for that portion represented by the percentage that the amount of the underwriting discounts and commissions per share appearing on the cover page of the Prospectus bears to the public offering price per share appearing thereon, and the Company (including its officers and directors and controlling persons) is responsible for the remaining portion. The relative fault of the Company and the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, -25- 26 knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the Claims referred to above shall be deemed to include, subject to the limitations set forth in subsections (c) and (d) of this Section 10, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. (g) The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata or per capita allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method or allocation which does not take into account the equitable considerations referred to in subsection (d) of this Section 10. Notwithstanding the other provisions of this Section 10, no Underwriter shall be required to contribute any amount that is greater than the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section are several in proportion to their respective underwriting commitments and not joint. SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a condition to the obligations of each Underwriter to purchase the Shares in the manner as described herein, that, except as hereinafter provided in this Section, each of the Underwriters shall purchase and pay for all the Shares agreed to be purchased by such Underwriter hereunder upon tender to the Representatives of all such Shares in accordance with the terms hereof. If any Underwriter or Underwriters default in their obligations to purchase Shares hereunder on either the First Closing Date or the Second Closing Date and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed ten percent (10%) of the total number of Shares which the Underwriters are obligated to purchase on such Closing Date, the Representatives may make arrangements for the purchase of such Shares by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date the nondefaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Shares which such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate number of Shares with respect to which such default or defaults occur is greater than ten percent (10%) of the total number of Shares which the Underwriters are obligated to purchase on such Closing Date, and arrangements satisfactory to the Representatives for the purchase of such Shares by other persons are not made within thirty-six hours after such default, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Company, except for the expenses to be paid by the Company pursuant to Section 7 hereof and except to the extent provided in Section 10 hereof. -26- 27 In the event that Shares to which a default relates are to be purchased by the nondefaulting Underwriters or by another party or parties, the Representatives shall have the right to postpone the First Closing Date or the Second Closing Date, as the case may be, for not more than seven business days in order that the necessary changes in the Registration Statement, Prospectus and any other documents, as well as any other arrangements, may be effected. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. SECTION 12. EFFECTIVE DATE. This Agreement shall become effective upon the execution and delivery of this Agreement by the parties hereto. Such execution and delivery shall include an executed copy of this Agreement sent by telecopier, facsimile transmission or other means of transmitting written documents. SECTION 13. TERMINATION. Without limiting the right to terminate this Agreement pursuant to any other provision hereof, this Agreement may be terminated by the Representatives prior to or on the First Closing Date and the over-allotment option from the Company referred to in Section 5 hereof, if exercised, may be cancelled by the Representatives at any time prior to or on the Second Closing Date, if in the judgment of the Representatives, payment for and delivery of the Shares is rendered impracticable or inadvisable because: (a) additional governmental restrictions, not in force and effect on the date hereof, shall have been imposed upon trading in securities generally or minimum or maximum prices shall have been generally established on the New York Stock Exchange or the American Stock Exchange, or trading in securities generally shall have been suspended or materially limited on either such exchange or on Nasdaq or a general banking moratorium shall have been established by either federal or state authorities in New York, Chicago or Wisconsin; (b) any event shall have occurred or shall exist which makes untrue or incorrect in any material respect any statement or information contained in the Registration Statement or which is not reflected in the Registration Statement but should be reflected therein to make the statements or information contained therein not misleading in any material respect; or (c) an outbreak or escalation of hostilities or other national or international calamity or any substantial change in political, financial or economic conditions shall have occurred or shall have accelerated to such extent, in the judgment of the Representatives, as to have a material adverse effect on the financial markets of the United States, or to make it impracticable or inadvisable to proceed with completion of the sale of and payment for the Shares as provided in this Agreement. Any termination pursuant to this Section shall be without liability on the part of any Underwriter to the Company, or on the part of the Company to any Underwriter, except for expenses to be paid by the Company pursuant to Section 7 hereof or reimbursed by the Company -27- 28 pursuant to Section 6(o) hereof and except as to indemnification to the extent provided in Section 10 hereof. SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective indemnities, agreements, representations, warranties, covenants and other statements of the Company, of its officers or directors, and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of its or their partners, officers, directors or any controlling person, as the case may be, and will survive delivery of and payment for the Shares sold hereunder. SECTION 15. NOTICES. All communications hereunder will be in writing and, if sent to the Representatives, will be mailed, delivered, telecopied (with receipt confirmed) or telegraphed and confirmed to C. Christopher Coetzee, Robert W. Baird & Co. Incorporated, 227 West Monroe Street, Suite 2100, Chicago, Illinois 60606, with a copy to William M. Holzman, Neal, Gerber & Eisenberg, Two North LaSalle Street, Chicago, Illinois 60602, and if sent to the Company, will be mailed, delivered, telecopied (with receipt confirmed) or telegraphed and confirmed to the Company at Lamalie Associates, Inc., Northdale Plaza, Suite 220E, 3903 Northdale Boulevard, Tampa, Florida 33624-1824, Attention: Jack P. Wissman, with a copy to Richard M. Leisner, Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A., 2700 Barnett Plaza, 101 East Kennedy Boulevard, Tampa, Florida 33602. SECTION 16. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, personal representatives and assigns, and to the benefit of the officers and directors and controlling persons referred to in Section 10 hereof and no other person will have any right or obligation hereunder. The term "successors" shall not include any purchaser of the Shares as such from any of the Underwriters merely by reason of such purchase. SECTION 17. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause or provision of this Agreement is for any reason determined to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other section, paragraph clause or provision hereof. SECTION 18. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Wisconsin without reference to conflict of law principles thereunder. This Agreement may be signed in various counterparts which together shall constitute one and the same instrument, and shall be effective when at least one counterpart hereof shall have been executed by or on behalf of each party hereto. -28- 29 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company and the several Underwriters, including the Representatives, all in accordance with its terms. Very truly yours, LAMALIE ASSOCIATES, INC. By: ------------------------------------- , President ---------------- The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. ROBERT W. BAIRD & CO. INCORPORATED WILLIAM BLAIR & COMPANY, L.L.C. By: ROBERT W. BAIRD & CO. INCORPORATED Acting as Representatives of the several Underwriters (including themselves) identified in Schedule I annexed hereto. By: ------------------------------------ Authorized Representative -29- 30 LAMALIE ASSOCIATES, INC. SCHEDULE I
NUMBER OF FIRM SHARES TO NAME OF UNDERWRITER BE PURCHASED Robert W. Baird & Co. Incorporated......................................... William Blair & Company, L.L.C............................................. Total.....
-30- EX-3.1 3 CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF LAMALIE ASSOCIATES, INC. ARTICLE I NAME The name of this Corporation shall be: LAMALIE ASSOCIATES, INC. ARTICLE II TERM OF EXISTENCE This Corporation is to exist perpetually. ARTICLE III GENERAL PURPOSE The general purpose for which this Corporation is organized is the transaction of any and all lawful business for which corporations may be incorporated under the Business Corporation Act of the State of Florida, and any amendments or successor thereto, and in connection therewith, this Corporation shall have and may exercise any and all powers conferred from time to time by law upon corporations formed under such Act. ARTICLE IV CAPITAL STOCK 1. AUTHORIZED CAPITALIZATION. (a) The total number of shares of capital stock authorized to be issued by this Corporation shall be: 35,000,000 shares of common stock, par value $0.01 per share (the "Common Stock"); and 2 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 2 - -------------------------------------------------------------------------------- 3,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"). (b) The designation, relative rights, preferences and liabilities of each class of stock, itemized by class, shall be as follows: (i) Preferred. Shares of the Preferred Stock may be issued from time to time in one or more series. The board of directors of this Corporation (hereafter the "Board of Directors" or "Board") by resolution shall establish each series of Preferred Stock and fix and determine the number of shares and the designations, preferences, limitations and relative rights of each such series, provided that all shares of the Preferred Stock shall be identical except as to the following relative rights and preferences, as to which there may be variations fixed and determined by the Board of Directors between different series: (A) The rate or manner of payment of dividends. (B) Whether shares may be redeemed and, if so, the redemption price and the terms and conditions of redemption. (C) The amount payable upon shares in the event of voluntary and involuntary liquidation. (D) Sinking fund provisions, if any, for the redemption or purchase of shares. (E) The terms and conditions, if any, on which the shares may be converted. (F) Voting rights, if any. (G) Any other rights or preferences now or hereafter permitted by the laws of the State of Florida as variations between different series of preferred stock. (ii) Common. Each share of Common Stock shall be entitled to one vote on all matters submitted to a vote of stockholders, except matters required to be voted on exclusively by holders of Preferred Stock or of any series of Preferred Stock. The holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors from time to time, provided that required dividends, if any, on the Preferred Stock have been paid or provided for. In the event of the liquidation, dissolution, or winding up, whether voluntary or involuntary, of this Corporation, the assets and funds of this Corporation available for distribution to stockholders, and remaining after the payment to holders of Preferred Stock of the amounts to which they are entitled, shall be divided and paid to the holders of the Common Stock according to their respective shares. 3 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 3 - -------------------------------------------------------------------------------- 2. NO PREEMPTIVE RIGHTS. (a) Preferred Stock. Unless otherwise specifically provided in the terms of the Preferred Stock, the holders of any class of Preferred Stock of this Corporation shall have no preemptive right to subscribe for and purchase their proportionate share of any additional Preferred Stock (of the same class or otherwise) or Common Stock issued by this Corporation, from and after the issuance of the shares originally subscribed for by the stockholders of this Corporation, whether such additional shares be issued for cash, property, services or any other consideration and whether or not such shares be presently authorized or be authorized by subsequent amendment to these Articles of Incorporation. (b) Common Stock. The holders of Common Stock of this Corporation shall have no preemptive right to subscribe for and purchase their proportionate share of any additional Preferred Stock or Common Stock issued by this Corporation, from and after the issuance of the shares originally subscribed for by the stockholders of this Corporation, whether such additional shares be issued for cash, property, services or any other consideration and whether or not such shares be presently authorized or be authorized by subsequent amendment to these Articles of Incorporation. 3. PAYMENT FOR STOCK. The consideration for the issuance of shares of capital stock may be paid, in whole or in part, in cash, in promissory notes, in other property (tangible or intangible), in labor or services actually performed for this Corporation, in promises to perform services in the future evidenced by a written contract, or in other benefits to this Corporation at a fair valuation to be fixed by the Board of Directors. When issued, all shares of stock shall be fully paid and nonassessable. 4. TREASURY STOCK. The Board of Directors of this Corporation shall have the authority to acquire by purchase and hold from time to time any shares of its issued and outstanding capital stock for such consideration and upon such terms and conditions as the Board of Directors in its discretion shall deem proper and reasonable in the interest of this Corporation. ARTICLE V DIRECTORS 1. NUMBER. The Board of Directors of this Corporation shall consist of no fewer than three (3) nor more than twelve (12) members, the exact numbers of directors to be fixed from time to time as provided in the bylaws of this Corporation. 2. CLASSIFICATION. The Board of Directors shall be divided into three classes, Class I, Class II and Class III, as nearly equal in number as possible. Upon the effectiveness of this provision, and determined on the basis of prior election, directors of the first class (Class I) shall hold office for a 4 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 4 - -------------------------------------------------------------------------------- term expiring at the 1998 annual meeting of stockholders; directors of the second class (Class II) shall be elected to hold office for a term expiring at the 1999 annual meeting of stockholders; and directors of the third class (Class III) shall be elected to hold office for a term expiring at the 2000 annual meeting of stockholders. Subject to adjustment as contemplated by the following paragraph, at each annual meeting of stockholders after 1997, the successors to the class of directors whose terms then shall expire shall be identified as being the same class as the directors they succeed and elected to hold office for a term expiring at the third succeeding annual meeting of stockholders. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional directors of any class elected by stockholders to fill a vacancy shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Notwithstanding the foregoing, if and whenever the holders of any one or more classes or series of Preferred Stock issued by this Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of these Articles of Incorporation or the resolution or resolutions adopted by the Board of Directors pursuant to Article IV hereof, and such directors so elected shall not be divided into classes pursuant to this Article V unless expressly provided by such terms. 3. POWERS. The business and affairs of this Corporation shall be managed by the Board of Directors, which may exercise all such powers of this Corporation and do all such lawful acts and things as are not by law directed or required to be exercised or done by the stockholders. 4. QUORUM. A quorum for the transaction of business at all meetings of the Board of Directors shall be a majority of the number of directors determined from time to time to comprise the Board of Directors, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the directors. 5. REMOVAL. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of this Corporation may be removed from office at any annual or special meeting of stockholders by the affirmative vote of at least a majority of the then outstanding shares of Common Stock of this Corporation. Notice of any such annual or special meeting of stockholders shall state that the removal of a director or directors is among the purposes of the meeting and shall state the grounds therefor. Directors may not be removed by the stockholders without cause. 5 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 5 - -------------------------------------------------------------------------------- 6. VACANCIES. Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office until the next stockholders' meeting at which directors are elected (or, if permitted under applicable law, until the expiration of the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred)and until such director's successor is duly elected and qualifies, unless such director sooner dies, resigns or is removed by the stockholders at any annual or special meeting. A director elected by stockholders to fill a vacancy shall be elected for the unexpired term of such director's predecessor in office. 7. NOMINATIONS AND ELECTIONS. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors at meetings of stockholders. Nominations of persons for election to the Board of Directors of this Corporation may be made at a meeting of stockholders by or at the direction of: (a) the Board of Directors; (b) by any nominating committee or person appointed by the Board; (c) or by any stockholder of this Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article V, Section 7. Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary of this Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of this Corporation not less than 60 days prior to the date of the meeting at which the director(s) are to be elected, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled meeting is given or made, notice by the stockholder, to be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which notice was given or such public disclosure was made. A stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of this Corporation which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Schedule 14A under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on this Corporation's books, of the stockholder and (ii) the class and number of shares of this Corporation's stock which are beneficially owned by the stockholder on the date of such stockholder notice. This Corporation may require any proposed nominee to furnish 6 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 6 - -------------------------------------------------------------------------------- such other information as may reasonably be required by this Corporation to determine the eligibility of such proposed nominee to serve as a director of this Corporation. The presiding officer of the meeting shall determine and declare at the meeting whether the nomination was made in accordance with the terms of this Article V, Section 7. If the presiding officer determines that a nomination was not made in accordance with the terms of this Article V, Section 7, he or she shall so declare at the meeting and any such defective nomination shall be disregarded. ARTICLE VI STOCKHOLDER MEETINGS 1. ANNUAL MEETINGS. At an annual meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting (a) by, or at the direction of, the Board of Directors, or (b) by any stockholder of this Corporation who complies with the notice procedures set forth in this Article VI, Section 1 and the requirements of Rule 14a-8 under the Securities Exchange Act of 1934. For a proposal to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of this Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of this Corporation not less than 60 days prior to the scheduled annual meeting, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder, to be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was given or the day on which such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting, in addition to any other information as may be required by law, (a) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on this Corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (c) the class and number of shares of this Corporation's stock which are beneficially owned by the stockholder on the date of such stockholder notice and by any other stockholders known by such stockholder to be supporting such proposal on the date of such stockholder notice, and (d) any financial interest of the stockholder in such proposal. 7 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 7 - -------------------------------------------------------------------------------- The presiding officer of the annual meeting shall determine and declare at the annual meeting whether the stockholder proposal was made in accordance with the terms of this Article VI, Section 1. If the presiding officer determines that a stockholder proposal was not made in accordance with the terms of this Article VI, Section 1, he or she shall so declare at the annual meeting and any such proposal shall not be acted upon at the annual meeting. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at such annual meeting unless stated, filed and received as herein provided. 2. SPECIAL MEETINGS. Special meetings of the stockholders of this Corporation for any purpose or purposes may be called at any time by (a) the Board of Directors; (b) the Chairman of the Board of Directors (if one is so appointed); (c) the President of this Corporation; or (d) by holders of not less than 33-1/3% of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting, if such stockholders sign, date and deliver to this Corporation's secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held. Special meetings of the stockholders of this Corporation may not be called by any other person or persons. At any special meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been set forth in the notice of such special meeting. 3. WRITTEN CONSENTS. Any action required or permitted to be taken at any annual or special meeting of stockholders of this Corporation may be taken only upon the vote of such stockholders at an annual or special meeting duly called in accordance with the terms of this Article VI, Section 1 and 2, and may not be taken by written consent of such stockholders. ARTICLE VII AMENDMENTS This Corporation reserves the right to amend, alter, change or repeal any provisions contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are subject to this reservation. Notwithstanding anything contained in these Articles of Incorporation to the contrary, the affirmative vote of at least 66-2/3% of the outstanding shares of Common Stock of this Corporation shall be required to amend or repeal this Article VII, Article V or Article VI of these Articles of Incorporation or to adopt any provision inconsistent therewith. 8 LAMALIE ASSOCIATES, INC. ARTICLES OF INCORPORATION PAGE 8 - -------------------------------------------------------------------------------- ARTICLE VIII BYLAWS 1. ADOPTION, AMENDMENT, ETC. The power to adopt the bylaws of this Corporation, to alter, amend or repeal the bylaws, or to adopt new bylaws, shall be vested in the Board of Directors of this Corporation; provided, however, that any bylaw or amendment thereto as adopted by the Board of Directors may be altered, amended, or repealed in accordance with the bylaws of this Corporation by vote of the stockholders entitled to vote thereon, or a new bylaw in lieu thereof may be adopted by the stockholders, and the stockholders may prescribe in any bylaw made by them that such bylaw shall not be altered, amended or repealed by the Board of Directors. 2. SCOPE. The bylaws of this Corporation shall be for the government of this Corporation and may contain any provisions or requirements for the management or conduct of the affairs and business of this Corporation, provided the same are not inconsistent with the provisions of these Articles of Incorporation, or contrary to the laws of the State of Florida or of the United States. IN WITNESS WHEREOF, LAMALIE ASSOCIATES, INC. has caused these Amended and Restated Articles of Incorporation to be executed and acknowledged by its undersigned duly authorized officers this _________ day of May, 1997. ATTEST: LAMALIE ASSOCIATES, INC. (CORPORATE SEAL) By: - --------------------------------------- ------------------------------ , [Assistant] Secretary , [Vice] President EX-3.2 4 FORM OF BYLAWS 1 EXHIBIT 3.2 * * * * * * * BYLAWS OF LAMALIE ASSOCIATES, INC. * * * * * * * 2 BYLAWS OF LAMALIE ASSOCIATES, INC. TABLE OF CONTENTS
Title Page - ----- ---- ARTICLE I OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 4. Notice of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5. Notice of Adjourned Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 6. Waiver of Call and Notice of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 8. Adjournment: Quorum for Adjourned Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 9. Voting on Matters Other Than Election of Directors . . . . . . . . . . . . . . . . . . . . . 3 Section 10. Voting for Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 11. Voting Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 12. Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 13. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 14. Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1. General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2. Number, Tenure and Qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 3. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 4. Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 5. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 6. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 8. Adjournment: Quorum for Adjourned Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 9. Manner of Acting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 10. Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 11. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
i 3 Section 12. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 13. Presumption of Assent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 14. Informal Action by Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 15. Meeting by Telephone, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE IV OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 1. Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 2. Appointment and Term of Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 3. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 4. Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 5. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 6. Duties of Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 7. Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 8. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 9. Disaster Emergency Powers of Acting Officers. . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE V EXECUTIVE AND OTHER COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 1. Creation of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 2. Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3. Other Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 4. Removal or Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 5. Vacancies on Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 6. Meetings of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 7. Absence of Committee Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 8. Quorum of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 9. Manner of Acting of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 10. Minutes of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 11. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 12. Informal Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 2. Actions by or in the Right of this Corporation . . . . . . . . . . . . . . . . . . . . . . 10 Section 3. Obligation to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 4. Determination that Indemnification is Proper . . . . . . . . . . . . . . . . . . . . . . . 10 Section 5. Evaluation and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 6. Prepayment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 7. Nonexclusivity and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 8. Continuation of Indemnification Right . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ii 4 ARTICLE VII INTERESTED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2. Determination of Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 3. Approval by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE VIII CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 1. Certificates for Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 2. Signatures of Past Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 3. Transfer Agents and Registrars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 4. Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 5. Lost Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE IX RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 1. Record Date for Stockholder Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 2. Record Date for Dividend and Other Distributions . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE X DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE XI FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE XII SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE XIII STOCK IN OTHER CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE XIV AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE XV EMERGENCY BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 1. Scope of Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2. Call and Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3. Quorum and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 4. Appointment of Temporary Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 5. Modification of Lines of Succession . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 6. Change of Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 7. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 8. Amendment or Repeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE XVI PRECEDENCE OF LAW AND ARTICLES OF INCORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
iii 5 BYLAWS OF LAMALIE ASSOCIATES, INC. ARTICLE I OFFICES Section 1. Principal Office. The principal office of LAMALIE ASSOCIATES, INC. (this "Corporation") shall be at such place within or without the State of Florida as the Board of Directors of this Corporation (the "Board of Directors" or the "Board") or the officers of this Corporation acting within their authority shall from time to time determine. Section 2. Other Offices. This Corporation may also have offices at such other places both within and without the State of Florida as the Board of Directors or the officers of this Corporation acting within their authority may from time to time determine or the business of this Corporation may require. ARTICLE II STOCKHOLDERS Section 1. Annual Meeting. The annual meeting of the stockholders shall be held between January 1 and December 31, inclusive, in each year for the purpose of electing directors and for the transaction of such other proper business as may come before the meeting, the exact date to be established by the Board of Directors from time to time. Section 2. Special Meetings. Special meetings of the stockholders may be called, for any purpose or purposes, by the Board of Directors, the Chairman of the Board (if one is so appointed) or the President and shall be called by the President or the Secretary if the holders of not less than 33-1/3% percent of all the votes entitled to be cast on any issue proposed to be considered at such special meeting sign, date and deliver to this Corporation's Secretary one or more written demands for a special meeting, describing the purpose(s) for which it is to be held. Special meetings of the stockholders of this Corporation may not be called by any other person or persons. Notice and call of any such special meeting shall state the purpose or purposes of the proposed meeting, and business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice thereof. Section 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Florida, as the place of meeting for any annual or special meeting of 1 6 the stockholders. If no designation is made, the place of meeting shall be the principal executive office of this Corporation. Section 4. Notice of Meeting. Written notice stating the place, day and hour of an annual or special meeting and the purpose or purposes for which it is called shall be given no fewer than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, except that no notice of a meeting need be given to any stockholder for which notice is not required to be given under law. Notice may be delivered personally, via United States mail, telegraph, teletype, facsimile or other electronic transmission, or by private mail carriers handling nationwide mail services, by or at the direction of the President, the Secretary, the Board of Directors, or the person(s) calling the meeting. If mailed via United States mail, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at the stockholder's address as it appears on the stock transfer books of this Corporation, with postage thereon prepaid. If the notice is mailed at least 30 days before the date of the meeting, the mailing may be done by a class of United States mail other than first class. Section 5. Notice of Adjourned Meeting. If an annual or special stockholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before an adjournment is taken, and any business may be transacted at the adjourned meeting that might have been transacted on the original date of the meeting. If, however, a new record date for the adjourned meeting is or must be fixed under law, notice of the adjourned meeting must be given to persons who are stockholders as of the new record date and who are otherwise entitled to notice of such meeting. Section 6. Waiver of Call and Notice of Meeting. Call and notice of any stockholders' meeting may be waived by any stockholder before or after the date and time stated in the notice. Such waiver must be in writing signed by the stockholder and delivered to this Corporation. Neither the business to be transacted at nor the purpose of any special or annual meeting need be specified in such waiver. A stockholder's attendance at a meeting (a) waives such stockholder's ability to object to lack of notice or defective notice of the meeting, unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (b) waives such stockholder's ability to object to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter when it is presented. Section 7. Quorum. Except as otherwise provided in these Bylaws or in the Articles of Incorporation of this Corporation, as amended from time to time (the "Articles of Incorporation"), a majority of the outstanding shares of this Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the stockholders. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for that adjourned meeting, and the withdrawal of stockholders after a quorum has been established at a meeting shall not effect the validity of any action taken at the meeting or any adjournment thereof. Section 8. Adjournment: Quorum for Adjourned Meeting. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn 2 7 the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented or deemed to be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. Section 9. Voting on Matters Other Than Election of Directors. At any meeting at which a quorum is present, action on any matter other than the election of directors shall be approved if the votes cast by the holders of shares represented at the meeting and entitled to vote on the subject matter favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes or voting by classes is required by law, the Articles of Incorporation or these Bylaws. Section 10. Voting for Directors. Directors shall be elected by a plurality of the votes cast by the shares entitled to vote at a meeting at which a quorum is present. Section 11. Voting Lists. At least ten (10) days prior to each meeting of stockholders, the officer or agent having charge of the stock transfer books for shares of this Corporation shall make a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, with the address and the number, class and series (if any) of shares held by each, which list shall be subject to inspection by any stockholder during normal business hours for at least ten (10) days prior to the meeting. The list also shall be available at the meeting and shall be subject to inspection by any stockholder at any time during the meeting or its adjournment. The stockholders list shall be prima facie evidence as to who are the stockholders entitled to examine such list or the transfer books and to vote at any meeting of the stockholders. Section 12. Voting of Shares. Except as otherwise provided by law or in the Articles of Incorporation, each stockholder entitled to vote shall be entitled at every meeting of the stockholders to one vote in person or by proxy on each matter for each share of voting stock held by such stockholder. Such right to vote shall be subject to the right of the Board of Directors to close the transfer books or to fix a record date for voting stockholders as hereinafter provided. Treasury shares, and shares of stock of this Corporation owned directly or indirectly by another corporation the majority of the voting stock of which is owned or controlled by this Corporation, shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares. Section 13. Proxies. At all meetings of stockholders, a stockholder may vote by proxy, executed in writing and delivered to this Corporation in the original or transmitted via telegram, or as a photographic, photostatic or equivalent reproduction of a written proxy by the stockholder or by the stockholder's duly authorized attorney-in-fact; but, no proxy shall be valid after eleven (11) months from its date, unless the proxy provides for a longer period. Each proxy shall be filed with the Secretary of this Corporation before or at the time of the meeting. In the event that a proxy shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one is present, that one, shall have all of the powers conferred by the proxy upon all the persons so designated, unless the instrument shall provide otherwise. Section 14. Inspectors. For each meeting of the stockholders, the Board of Directors or the President may appoint one or more inspectors to supervise the voting; and, if one or more inspectors are so appointed, all questions respecting the qualification of any vote, the validity of any 3 8 proxy, and the acceptance or rejection of any vote shall be decided by such inspector(s). Before acting at any meeting, the inspector(s) shall take an oath to execute their duties with strict impartiality and according to the best of their ability. If any inspector shall fail to be present or shall decline to act, the President shall appoint another inspector to act in his or her place. In case of a tie vote by the inspectors on any question, the presiding officer shall decide the issue. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of this Corporation shall be managed by its Board of Directors, which may exercise all such powers of this Corporation and do all such lawful acts and things as are not by law, the Articles of Incorporation or these Bylaws directed or required to be exercised or done only by the stockholders. Section 2. Number, Tenure and Qualifications. The number of directors of the Corporation shall be not less than three (3) nor more than nine (9), the number of the same to be fixed by resolution adopted by a vote of a majority of the then authorized number of directors; provided that no decrease in the number of directors shall have the effect of shortening the term of any then incumbent director. Each director shall hold office until his or her term of office expires and until such director's successor is duly elected and qualifies, unless such director sooner dies, resigns or is removed by the stockholders at any annual or special meeting. It shall not be necessary for directors to be stockholders. All directors shall be natural persons who are 18 years of age or older. Section 3. Annual Meeting. The Board of Directors shall hold an annual meeting for the purpose of the election of officers and the transaction of such other business as may come before the meeting. If no other date, place and/or time is set by the Board for such meeting, the same shall be held at the same place as and immediately following the annual meeting of stockholders; and, if a majority of the directors are present at such place and time, no prior notice of such meeting shall be required to be given to the directors. Section 4. Regular Meetings. Regular meetings of the Board of Directors may be held without notice from time to time on such date(s), at such time(s) and at such place(s) as shall have been determined in advance in accordance with a schedule, resolution or other action duly adopted or taken by the Board of Directors. Section 5. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, if there be one, or the President. The person or persons authorized to call special meetings of the Board of Directors may fix the place for holding any special meetings of the Board of Directors called by such person or persons, as the case may be. If no such designation is made, the place of meeting shall be the principal executive office of this Corporation. Notice of any special meeting of the Board shall be given, unless waived, in accordance with Section 6 of this Article. 4 9 Section 6. Notice. Whenever notice of a meeting is required, written notice stating the place, day and hour of the meeting shall be delivered at least two (2) days prior thereto to each director, either personally, or by United States mail, telegraph, teletype, facsimile or other form of electronic communication, or by private mail carriers handling nationwide mail services, to the director's business address. If notice is given by United States mail, such notice shall be deemed to be delivered five (5) days after deposited in the United States mail so addressed with postage thereon prepaid or when received, if such date is earlier. If notice is given by telegraph, teletype, facsimile transmission or other form of electronic communication or by private mail carriers handling nationwide mail services, such notice shall be deemed to be delivered when received by the director. Any director may waive notice of any meeting, either before, at or after such meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened and so states at the beginning of the meeting or promptly upon arrival at the meeting. Section 7. Quorum. A majority of the total number of directors as determined from time to time to comprise the Board of Directors shall constitute a quorum. Section 8. Adjournment: Quorum for Adjourned Meeting. If less than a majority of the total number of directors are present at a meeting, a majority of the directors so present may adjourn the meeting from time to time without further notice. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed. Section 9. Manner of Acting. If a quorum is present when a vote is taken, the act of a majority of the directors present at the meeting shall be the act of the Board of Directors unless otherwise provided in the Articles of Incorporation. Section 10. Removal. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of this Corporation may be removed from office at any annual or special meeting of stockholders by the affirmative vote of at least a majority of the then outstanding shares of Common Stock of this Corporation. Notice of any such annual or special meeting of stockholders shall state that the removal of a director or directors is among the purposes of the meeting and shall state the grounds therefor. Directors may not be removed by the stockholders without cause. Section 11. Vacancies. Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office until the next stockholders' meeting at which directors are elected (or, if permitted under applicable law, until the expiration of the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred)and until such director's successor is duly elected and qualifies, unless such director sooner dies, resigns or is removed by the stockholders at any annual or special meeting. A director elected by stockholders to fill a vacancy shall be elected for the unexpired term of such director's predecessor in office. 5 10 Section 12. Compensation. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid compensation for attendance at each meeting of the Board of Directors or for serving as directors. No payment shall preclude any director from serving this Corporation in any other capacity and receiving compensation therefor. Section 13. Presumption of Assent. A director of this Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such director objects at the beginning of the meeting (or promptly upon his or her arrival) to the holding of the meeting or the transacting of specified business at the meeting or such director votes against such action or abstains from voting in respect of such matter. Section 14. Informal Action by Board. Any action required or permitted to be taken by any provisions of law, the Articles of Incorporation or these Bylaws at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if each and every member of the Board or of such committee, as the case may be, signs a written consent thereto and such written consent is filed in the minutes of the proceedings of the Board or such committee, as the case may be. Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date, in which case it is effective on the date so specified. Section 15. Meeting by Telephone, Etc. Directors or the members of any committee thereof shall be deemed present at a meeting of the Board of Directors or of any such committee, as the case may be, if the meeting is conducted using a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. ARTICLE IV OFFICERS Section 1. Number. The officers of this Corporation shall consist of a Chief Executive Officer, a President, a Secretary and a Treasurer, each of whom shall be appointed by the Board of Directors. The Board of Directors may also appoint a Chairman of the Board, who may be an officer of this Corporation if the Board so determines, one or more Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers and such other officers as the Board of Directors shall deem appropriate. The same individual may simultaneously hold more than one office in this Corporation. Section 2. Appointment and Term of Office. The officers of this Corporation shall be appointed annually by the Board of Directors at its annual meeting. If the appointment of officers shall not be made at such meeting, such appointment shall be made as soon thereafter as is convenient. Each officer shall hold office until such officer's successor is duly appointed and qualifies, unless such officer sooner dies, resigns or is removed by the Board. The appointment of an officer does not itself create contract rights. 6 11 Section 3. Resignation. An officer may resign at any time by delivering notice to this Corporation. A resignation shall be effective when the notice is delivered unless the notice specifies a later effective date. An officer's resignation shall not affect this Corporation's contract rights, if any, with the officer. Section 4. Removal. The Board of Directors may remove any officer at any time with or without cause. An officer's removal shall not affect the officer's contract rights, if any, with this Corporation. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise may be filled by the Board of Directors for the unexpired portion of the term. Section 6. Duties of Officers. The Chairman of the Board of this Corporation, or the President if there shall not be a Chairman of the Board, shall preside at all meetings of the Board of Directors and of the stockholders. The Chief Executive Officer shall be the chief executive officer of this Corporation. The Secretary shall be responsible for preparing minutes of the directors' and stockholders' meetings and for authenticating records of this Corporation. Subject to the foregoing, the officers of this Corporation shall have such powers and duties as ordinarily pertain to their respective offices and such additional powers and duties specifically conferred by law, the Articles of Incorporation and these Bylaws, or as may be assigned to them from time to time by the Board of Directors or an officer authorized by the Board of Directors to prescribe the duties of other officers. Section 7. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors, by any duly appointed committee thereof, or otherwise as approved by the Board, and no officer shall be prevented from receiving a salary or other compensation by reason of the fact that the officer is also a director of this Corporation. Section 8. Delegation of Duties. In the absence or disability of any officer of this Corporation, or for any other reason deemed sufficient by the Board of Directors, the Board may delegate the powers or duties of such officer to any other officer or to any other director for the time being. Section 9. Disaster Emergency Powers of Acting Officers. Unless otherwise expressly prescribed by action of the Board of Directors taken pursuant to Article XV of these Bylaws, if, as a result of some catastrophic event, a quorum of this Corporation's directors cannot readily be assembled and the Chief Executive Officer is unable to perform the duties of the office of Chief Executive Officer and/or other officers are unable to perform their duties, (a) the powers and duties of Chief Executive Officer shall be held and performed by that officer of this Corporation highest on the list of successors (adopted by the Board of Directors for such purpose) who shall be available and capable of holding and performing such powers and duties; and, absent any such prior designation, by the President; or, if the President is not available and capable of holding and performing such powers and duties, then by that Vice President who shall be available and capable of holding and performing such powers and duties whose surname commences with the earliest letter of the alphabet among all such Vice Presidents; or, if no Vice President is available and capable of holding and performing such powers and duties, then by the Secretary; or, if the Secretary is likewise unavailable, 7 12 by the Treasurer; (b) the officer so selected to hold and perform such powers and duties shall serve as Acting Chief Executive Officer until the Chief Executive Officer again becomes capable of holding and performing the powers and duties of Chief Executive Officer, or until the Board of Directors shall have elected a new Chief Executive Officer or designated another individual as Acting Chief Executive Officer; (c) such officer (or the Chief Executive Officer, if such person is still serving) shall have the power, in addition to all other powers granted to the Chief Executive Officer by law, the Articles of Incorporation, these Bylaws and the Board of Directors, to appoint acting officers to fill vacancies that may have occurred, either permanently or temporarily, by reason of such disaster or emergency, each of such acting appointees to serve in such capacity until the officer for whom the acting appointee is acting is capable of performing the duties of such office, or until the Board of Directors shall have designated another individual to perform such duties or shall have elected or appointed another person to fill such office; (d) each acting officer so appointed shall be entitled to exercise all powers invested by law, the Articles of Incorporation, these Bylaws and the Board of Directors in the office in which such person is serving; and (e) anyone transacting business with this Corporation may rely upon a certificate signed by any two officers of this Corporation that a specified individual has succeeded to the powers and duties of the Chief Executive Officer or such other specified office. Any person, firm, corporation or other entity to which such certificate has been delivered by such officers may continue to rely upon it until notified of a change by means of a writing signed by two officers of this corporation. ARTICLE V EXECUTIVE AND OTHER COMMITTEES Section 1. Creation of Committees. The Board of Directors may designate an Executive Committee and one or more other committees, each to consist of two (2) or more of the directors of this Corporation. Section 2. Executive Committee. The Executive Committee, if there shall be one, shall consult with and advise the officers of this Corporation in the management of its business, and shall have, and may exercise, except to the extent otherwise provided in the resolution of the Board of Directors creating such Executive Committee, such powers of the Board of Directors as can be lawfully delegated by the Board. Section 3. Other Committees. Such other committees, to the extent provided in the resolution or resolutions creating them, shall have such functions and may exercise such powers of the Board of Directors as can be lawfully delegated. Section 4. Removal or Dissolution. Any Committee of the Board of Directors may be dissolved by the Board at any meeting; and any member of such committee may be removed by the Board of Directors with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 5. Vacancies on Committees. Vacancies on any committee of the Board of Directors shall be filled by the Board of Directors at any regular or special meeting. 8 13 Section 6. Meetings of Committees. Regular meetings of any committee of the Board of Directors may be held without notice from time to time on such date(s), at such time(s) and at such place(s) as shall have been determined in advance in accordance with a schedule, resolution or other action duly adopted or taken by such committee and special meetings of any such committee may be called by any member thereof upon two (2) days notice of the date, time and place of the meeting given to each of the other members of such committee, or on such shorter notice as may be agreed to in writing by each of the other members of such committee, given either personally or in the manner provided in Section 6 of Article III of these Bylaws (pertaining to notice for directors' meetings). Section 7. Absence of Committee Members. The Board of Directors may designate one or more directors as alternate members of any committee of the Board of Directors, who may replace at any meeting of such committee, any member not able to attend. Section 8. Quorum of Committees. At all meetings of committees of the Board of Directors, a majority of the total number of members of the committee as determined from time to time shall constitute a quorum for the transaction of business. Section 9. Manner of Acting of Committees. If a quorum is present when a vote is taken, the act of a majority of the members of any committee of the Board of Directors present at the meeting shall be the act of such committee. Section 10. Minutes of Committees. Each committee of the Board of Directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. Section 11. Compensation. Members of any committee of the Board of Directors may be paid compensation in accordance with the provisions of Section 12 of Article III of these Bylaws (pertaining to compensation of directors). Section 12. Informal Action. Any committee of the Board of Directors may take such informal action and hold such informal meetings as allowed by the provisions of Sections 14 and 15 of Article III of these Bylaws. ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 1. General. To the fullest extent permitted by law, this Corporation shall be entitled but, subject to Sections 2 and 3 below, not obligated to indemnify any person who is or was a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or other type of proceeding (other than an action by or in the right of this Corporation), whether civil, criminal, administrative, investigative or otherwise, and whether formal or informal, by reason of the fact that such person is or was a director or officer of this Corporation or is or was serving at the request of this Corporation as a director, officer, employee, agent, trustee or fiduciary of another corporation, partnership, joint venture, trust (including, without limitation, an employee benefit trust) 9 14 or other enterprise, against judgments, amounts paid in settlement, penalties, fines (including an excise tax assessed with respect to any employee benefit plan) and expenses (including attorneys' fees, paralegals' fees and court costs) actually and reasonably incurred in connection with any such action, suit or other proceeding, including any appeal thereof, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of this Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any such action, suit or other proceeding by judgment, order, settlement or 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 that such person reasonably believed to be in, or not opposed to, the best interests of this Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. Section 2. Actions by or in the Right of this Corporation. To the fullest extent permitted by law, whenever indemnification is proper as determined below, this Corporation shall be obligated to indemnify any person who is or was a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or other type of proceeding (as further described in Section 1 of this Article VI) by or in the right of this Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of this Corporation or is or was serving at the request of this Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees, paralegals' fees and court costs) and amounts paid in settlement not exceeding, in the judgment of the Board of Directors, the estimated expenses of litigating the action, suit or other proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such action, suit or other proceeding, including any appeal thereof, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of this Corporation, except that no indemnification shall be made under this Section 2 in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such action, suit or other proceeding was brought, or any other court of competent jurisdiction, 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 indemnification for such expenses that such court shall deem proper. Section 3. Obligation to Indemnify. To the extent that a director or officer has been successful on the merits or otherwise in defense of any action, suit or other proceeding referred to in Section 1 or Section 2 of this Article VI, or in the defense of any claim, issue or matter therein, such person shall, upon application, be indemnified against expenses (including attorneys' fees, paralegals' fees and court costs) actually and reasonably incurred by such person in connection therewith. Section 4. Determination that Indemnification is Proper. Indemnification pursuant to Section 1 or Section 2 of this Article VI, unless made under the provisions of Section 3 of this Article VI or unless otherwise made pursuant to a determination by a court, shall be made by this Corporation only as authorized in the specific case upon a determination that the indemnification is proper in the circumstances because the indemnified person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VI. Such determination shall be made either 10 15 (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or other proceeding to which the indemnification relates; (2) if such a quorum is not obtainable or, even if obtainable, by majority vote of a committee duly designated by the Board of Directors (the designation being one in which directors who are parties may participate) consisting solely of two or more directors not at the time parties to such action, suit or other proceeding; (3) by independent legal counsel (i) selected by the Board of Directors in accordance with the requirements of subsection (1) or by a committee designated under subsection (2) or (ii) if a quorum of the directors cannot be obtained and a committee cannot be designated, selected by majority vote of the full Board of Directors (the vote being one in which directors who are parties may participate); or (4) by the stockholders by a majority vote of a quorum consisting of stockholders who were not parties to such action, suit or other proceeding or, if no such quorum is obtainable, by a majority vote of stockholders who were not parties to such action, suit or other proceeding. Section 5. Evaluation and Authorization. Evaluation of the reasonableness of expenses and authorization of indemnification shall be made in the same manner as is prescribed in Section 4 of this Article VI for the determination that indemnification is permissible; provided, however, that if the determination as to whether indemnification is permissible is made by independent legal counsel, the persons who selected such independent legal counsel shall be responsible for evaluating the reasonableness of expenses and may authorize indemnification. Section 6. Prepayment of Expenses. Expenses (including attorneys' fees, paralegals' fees and court costs) incurred by a director or officer in defending a civil or criminal action, suit or other proceeding referred to in Section 1 or Section 2 of this Article VI may, in the discretion of the Board of Directors, be paid by this Corporation in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if such person is ultimately found not to be entitled to indemnification by this Corporation pursuant to this Article VI. Section 7. Nonexclusivity and Limitations. The indemnification and advancement of expenses provided pursuant to this Article VI shall not be deemed exclusive of any other rights to which a person may be entitled under any law, Bylaw, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person's official capacity and as to action in any other capacity while holding office with this Corporation, and shall continue as to any person who has ceased to be a director or officer and shall inure to the benefit of such person's heirs and personal representatives. The Board of Directors may, at any time, approve indemnification of or advancement of expenses to any other person that this Corporation has the power by law to indemnify, including, without limitation, employees and agents of this Corporation. In all cases not specifically provided for in this Article VI, indemnification or advancement of expenses shall not be made to the extent that such indemnification or advancement of expenses is expressly prohibited by law. Section 8. Continuation of Indemnification Right. Unless expressly otherwise provided when authorized or ratified by this corporation, indemnification and advancement of expenses as provided for in this Article VI shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. For purposes of this Article VI, the term "corporation" includes, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a 11 16 consolidation or merger, so that any person who is or was a director or officer of a constituent corporation, or is or was serving at the request of a constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, is in the same position under this Article VI with respect to the resulting or surviving corporation as such person would have been with respect to such constituent corporation if its separate existence had continued. Section 9. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of this Corporation, or who is or was serving at the request of this Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person's status as such, whether or not this Corporation would have the power to indemnify such person against the liability under Section 1 or Section 2 of this Article VI. ARTICLE VII INTERESTED PARTIES Section 1. General. No contract or other transaction between this Corporation and any one or more of its directors or any other corporation, firm, association or entity in which one or more of its directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such director or directors were present at the meeting of the Board of Directors or of a committee thereof that authorizes, approves or ratifies such contract or transaction or because such director's or directors' votes are counted for such purpose if: (a) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee that authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; (b) the fact of such relationship or interest is disclosed or known to the stockholders entitled to vote on the matter, and they authorize, approve or ratify such contract or transaction by vote or written consent; or (c) the contract or transaction is fair and reasonable as to this Corporation at the time it is authorized by the Board of Directors, a committee thereof or the stockholders. Section 2. Determination of Quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof that authorizes, approves or ratifies a contract or transaction referred to in Section 1 of this Article VII. Section 3. Approval by Stockholders. For purposes of Section 1(b) of this Article VII, a conflict of interest transaction shall be authorized, approved or ratified if it receives the vote of a majority of the shares entitled to be counted under this Section 3. Shares owned by or voted under the control of a director who has a relationship or interest in the transaction described in Section 1 of this Article VII may not be counted in a vote of stockholders to determine whether to authorize, approve or ratify a conflict of interest transaction under Section 1(b) of this Article VII. The vote of the shares owned by or voted under the control of a director who has a relationship or interest in 12 17 the transaction described in Section 1 of this Article VII, shall be counted, however, in determining whether the transaction is approved under other sections of this Corporation's Bylaws and law. A majority of those shares that would be entitled, if present, to be counted in a vote on the transaction under this Section 3 shall constitute a quorum for the purpose of taking action under this Section 3. ARTICLE VIII CERTIFICATES OF STOCK Section 1. Certificates for Shares. Shares may but need not be represented by certificates. The rights and obligations of stockholders shall be identical whether or not their shares are represented by certificates. If shares are represented by certificates, each certificate shall be in such form as the Board of Directors may from time to time prescribe, signed (either manually or in facsimile) by the President or a Vice President (and may be signed (either manually or in facsimile) by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal of this Corporation or its facsimile), exhibiting the holder's name, certifying the number of shares owned and stating such other matters as may be required by law. The certificates shall be numbered and entered on the books of this Corporation as they are issued. If shares are not represented by certificates, then, within a reasonable time after issue or transfer of shares without certificates, this Corporation shall send the stockholder a written statement in such form as the Board of Directors may from time to time prescribe, certifying as to the number of shares owned by the stockholder and as to such other information as would have been required to be on certificates for such shares. If and to the extent this Corporation is authorized to issue shares of more than one class or more than one series of any class, every certificate representing shares shall set forth or fairly summarize upon the face or back of the certificate, or shall state that the Corporation will furnish to any stockholder upon request and without charge a full statement of: (a) the designations, relative rights, preferences and limitations of the shares of each class or series authorized to be issued; (b) the variations in rights, preferences and limitations between the shares of each such series, if this Corporation is authorized to issue any preferred or special class in series insofar as the same have been fixed and determined; and (c) the authority of the Board of Directors to fix and determine the variations, relative rights and preferences of future series. Section 2. Signatures of Past Officers. If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate shall nevertheless be valid. Section 3. Transfer Agents and Registrars. The Board of Directors may, in its discretion, appoint responsible banks or trust companies in such city or cities as the Board may deem advisable 13 18 from time to time to act as transfer agents and registrars of the stock of this Corporation; and, when such appointments shall have been made, no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars. Section 4. Transfer of Shares. Transfers of shares of this Corporation shall be made upon its books by the holder of the shares in person or by the holder's lawfully constituted representative, upon surrender of the certificate of stock for cancellation if such shares are represented by a certificate of stock or by delivery to this Corporation of such evidence of transfer as may be required by this Corporation if such shares are not represented by certificates. The person in whose name shares stand on the books of this Corporation shall be deemed by this Corporation to be the owner thereof for all purposes and this Corporation shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Florida. Section 5. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by this Corporation and alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or the owner's legal representative, to pay a reasonable charge for issuing the new certificate, to advertise the matter in such manner as it shall require and/or to give this Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against this Corporation with respect to the certificate alleged to have been lost or destroyed. ARTICLE IX RECORD DATE Section 1. Record Date for Stockholder Actions. The Board of Directors is authorized from time to time to fix in advance a date, not more than seventy (70) nor less than ten (10) days before the date of any meeting of the stockholders, a date in connection with the obtaining of the consent of stockholders for any purpose, or the date of any other action requiring a determination of the stockholders, as the record date for the determination of the stockholders entitled to notice of and to vote at any such meeting and any adjournment thereof, or of the stockholders entitled to give such consent or take such action, as the case may be. In no event may a record date so fixed by the Board of Directors precede the date on which the resolution establishing such record date is adopted by the Board of Directors. Only those stockholders listed as stockholders of record as of the close of business on the date so fixed as the record date shall be entitled to notice of and to vote at such meeting and any adjournment thereof, or to exercise such rights or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of this Corporation after any such record date fixed as aforesaid. If the Board of Directors fails to establish a record date as provided herein, the record date shall be deemed to be the date ten (10) days prior to the date of the stockholders' meeting. 14 19 Section 2. Record Date for Dividend and Other Distributions. The Board of Directors is authorized from time to time to fix in advance a date as the record date for the determination of the stockholders entitled to receive a dividend or other distribution. Only those stockholders listed as stockholders of record as of the close of business on the date so fixed as the record date shall be entitled to receive the dividend or other distribution, as the case may be, notwithstanding any transfer of any stock on the books of this Corporation after any such record date fixed as aforesaid. If the Board of Directors fails to establish a record date as provided herein, the record date shall be deemed to be the date of authorization of the dividend or other distribution. ARTICLE X DIVIDENDS The Board of Directors may from time to time declare, and this Corporation may pay, dividends on its outstanding shares of capital stock in the manner and upon the terms and conditions provided by the Articles of Incorporation and by law. Subject to the provisions of the Articles of Incorporation and to law, dividends may be paid in cash or property, including shares of stock or other securities of this Corporation. ARTICLE XI FISCAL YEAR The fiscal year of this Corporation shall be the period selected by the Board of Directors as the fiscal year. ARTICLE XII SEAL A corporate seal, if adopted by the Board, shall have the name of this Corporation, the word "SEAL" and the year of incorporation inscribed thereon, or be in such other form as the Board may determine, and may be a facsimile, engraved, printed or impression seal. ARTICLE XIII STOCK IN OTHER CORPORATIONS Shares of stock in other corporations held by this Corporation shall be voted by the President or such other officer or officers or other agent or agents of this Corporation as the Board of Directors shall from time to time designate for the purpose or by a proxy thereunto duly authorized by the Board or the President. 15 20 ARTICLE XIV AMENDMENTS Except as may be contrary to law of the Articles of Incorporation of this Corporation, these Bylaws may be altered, amended or repealed in any respect and one or more new Bylaws may be adopted by the Board of Directors; provided that any Bylaw or amendment thereto as adopted by the Board of Directors may be altered, amended or repealed by vote of the stockholders entitled to vote thereon, or a new Bylaw in lieu thereof may be adopted by the stockholders, and the stockholders may prescribe in any Bylaw made by them that such Bylaw shall not be altered, amended or repealed by the Board of Directors. ARTICLE XV EMERGENCY BYLAWS Section 1. Scope of Emergency Bylaws. The emergency Bylaws provided in this Article XV shall be operative during any emergency, notwithstanding any different provision set forth in the preceding Articles hereof; provided, however, that to the extent not inconsistent with the provisions of this Article XV and the emergency Bylaws, the Bylaws provided in the preceding Articles shall remain in effect during such emergency. For purposes of the emergency Bylaw provisions of this Article XV, an emergency shall exist if a quorum of this Corporation's directors cannot readily be assembled because of some catastrophic event. Upon termination of the emergency, these emergency Bylaws shall cease to be operative. Section 2. Call and Notice of Meeting. During any emergency, a meeting of the Board of Directors may be called by any officer or director of this Corporation. Notice of the date, time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting. Section 3. Quorum and Voting. At any such meeting of the Board of Directors, a quorum shall consist of any one or more directors, and the act of the majority of the directors present at such meeting shall be the act of this Corporation. Section 4. Appointment of Temporary Directors. (a) The director or directors who are able to be assembled at a meeting of directors during an emergency may assemble for the purpose of appointing, if such directors deem it necessary, one or more temporary directors (the "Temporary Directors") to serve as directors of this Corporation during the term of any emergency. (b) If no directors are able to attend a meeting of directors during an emergency, then such stockholders as may reasonably be assembled shall have the right, by majority vote of those 16 21 assembled, to appoint Temporary Directors to serve on the Board of Directors until the termination of the emergency. (c) If no stockholders can reasonably be assembled in order to conduct a vote for Temporary Directors, then the President or his or her successor, as determined pursuant to Section 9 of Article IV herein, shall be deemed a Temporary Director of this Corporation, and such President or his or her successor, as the case may be, shall have the right to appoint additional Temporary Directors to serve with him or her on the Board of Directors of this Corporation during the term of the emergency. (d) Temporary Directors shall have all of the rights, duties and obligations of directors appointed pursuant to Article III hereof, provided, however, that a Temporary Director may be removed from the Board of Directors at any time by the person or persons responsible for appointing such Temporary Director, or by vote of the majority of the stockholders present at any meeting of the stockholders during an emergency, and, in any event, the Temporary Director shall automatically be deemed to have resigned from the Board of Directors upon the termination of the emergency in connection with which the Temporary Director was appointed. Section 5. Modification of Lines of Succession. Either before or during any emergency, the Board of Directors may provide, and from time to time modify, lines of succession different from that provided in Section 9 of Article IV in the event that during such an emergency any or all officers or agents of this Corporation shall for any reason be rendered incapable of discharging their duties. Section 6. Change of Principal Office. The Board of Directors may, either before or during any such emergency, and effective during such emergency, change the principal office of this Corporation or designate several alternative head offices or regional offices, or authorize the officers of this Corporation to do so. Section 7. Limitation of Liability. No officer, director or employee acting in accordance with these emergency Bylaws during an emergency shall be liable except for willful misconduct. Section 8. Amendment or Repeal. These emergency Bylaws shall be subject to amendment or repeal by further action of the Board of Directors or by action of the stockholders, but no such amendment or repeal shall affect the validity of any action taken prior to the time of such amendment or repeal. Any amendment of these emergency Bylaws may make any further or different provision that may be practical or necessary under the circumstances of the emergency. ARTICLE XVI PRECEDENCE OF LAW AND ARTICLES OF INCORPORATION Any provision of the Articles of Incorporation of this Corporation shall, subject to law, control and take precedence over any provision of these Bylaws inconsistent therewith. 17 EX-4 5 FORM OF COMMON STOCK CERTIFICATE 1 NUMBER SHARES SEE REVERSE FOR CERTAIN DEFINITIONS LAMALIE ASSOCIATES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA CUSIP 512814104 THIS CERTIFIES THAT IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.01 PER SHARE, OF LAMALIE ASSOCIATES, INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid unless countersigned by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed with the facsimile signatures of its duly authorized officers and to be sealed with the facsimile seal of the Corporation. Dated (CORPORATE SEAL) /s/ /s/ Secretary President COUNTERSIGNED AND REGISTERED: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. NEW YORK, NEW YORK AND RIDGEFIELD, NEW JERSEY TRANSFER AGENT AND REGISTRAR By AUTHORIZED SIGNATURE 2 The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT (TRAN) ACT - .......... Custodian .......... TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of under Uniform Gifts (Transfers) survivorship and not as tenants to Minors Act ................. in common (State)
Additional abbreviations may also be used though not in the above list. For Value Received ____________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ______________________________________ ________________________________________________________________________________ ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ _________________________________________________________________________ Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _______________________________________________________________________ Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated: __________________________________________ __________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE- MENT OR ANY CHANGE WHATEVER SIGNATURE GUARANTEED THE PROVISIONS OF THE CORPORATION'S ARTICLES OF INCORPORATION, AS PRESENTLY IN EFFECT, SHOWING THE CLASSES AND SERIES OF STOCK AUTHORIZED TO BE ISSUED BY THE CORPORATION AND THE DISTINGUISHING CHARACTERISTICS THEREOF, ARE HEREBY INCORPORATED BY REFERENCE TO THE SAME EXTENT AS IF HEREIN SET FORTH AT LENGTH; A COPY OF SAID PROVISIONS, CERTIFIED BY AN OFFICER OF THE CORPORATION, WILL BE FURNISHED BY THE CORPORATION OR BY ITS TRANSFER AGENT, WITHOUT COST, TO AND UPON THE REQUEST OF THE HOLDER OF THIS CERTIFICATE. REQUESTS MAY BE ADDRESSED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE OR TO THE CORPORATION'S TRANSFER AGENT. EX-5 6 OPINION 1 EXHIBIT 5
TRENAM, KEMKER, SCHARF, BARKIN, FRYE, O'NEILL & MULLIS PROFESSIONAL ASSOCIATION ATTORNEYS AT LAW TAMPA OFFICE ST. PETERSBURG OFFICE 2700 BARNETT PLAZA 2100 BARNETT TOWER 101 EAST KENNEDY BOULEVARD ONE PROGRESS PLAZA POST OFFICE BOX 1102 POST OFFICE BOX 2245 TAMPA, FLORIDA 33601-1102 ST. PETERSBURG, FLORIDA 33731-2245 TELEPHONE (813) 223-7474 TELEPHONE (813) 898-7474 TELEFAX (813) 229-6553 TELEFAX (813) 821-0407
PLEASE REPLY TO TAMPA June 4, 1997 Securities and Exchange Commission Judiciary Plaza 450 5th Street, N.W. Washington, DC 20549 Re: Lamalie Associates, Inc. Registration Statement on Form S-1 File No. 333-26027 ---------------------------------- Ladies and Gentlemen: We have represented Lamalie Associates, Inc. (the "Company") in connection with the Company's Registration Statement on Form S-1 (File No. 333-26027), as amended (the "Registration Statement") relating to the proposed public offering by the Company of up to 2,000,000 shares (2,300,000 shares if the Underwriters' over-allotment option is exercised)(the "Shares") of the Company's Common Stock (the "Offering"). This opinion is being provided as Exhibit 5 to the S-1 Registration Statement. In our capacity as counsel to the Company in connection with the Registration Statement and the Offering, we have examined and are familiar with: the Company's Articles of Incorporation and Bylaws, as currently in effect, the Registration Statement and such other corporate records, documents and instruments as in our opinion are necessary or relevant as the basis for the opinions expressed below. As to various questions of fact material to our opinion, we have relied without independent investigation on statements or certificates of officials and representatives of the Company, the Department of State of the State of Florida and others. In all such examinations, we have assumed the genuineness of all signatures on original and certified documents and the conformity 2 to original and certified documents of all copies submitted to us as conformed, photostatic or other exact copies. We express no opinion as to the law of any jurisdiction other than the general corporate law of the State of Florida and the Federal laws of the United States of America. Based upon and in reliance on the foregoing, we are of the opinion that: 1. The Company is a duly organized and validly existing as a corporation under the laws of the State of Florida and its status as such is active. 2. When the following events shall have occurred: a. the Registration Statement shall have become effective in accordance with the Securities Act of 1933, as amended; b. the Shares shall have been offered and sold as provided in the Registration Statement, and the consideration specified in the Registration Statement shall have been received by the Company; and c. the certificates representing the Shares shall have been duly executed, countersigned and issued by or on behalf of the Company, the Shares so offered and sold in the Offering will be duly authorized, validly issued, fully paid and non- assessable shares of the capital stock of the Company. This firm hereby consents to the filing of this opinion as an Exhibit to the Registration Statement and to the reference to it under the heading "Legal Matters." Sincerely, TRENAM, KEMKER, SCHARF, BARKIN, FRYE, O'NEILL & MULLIS, Professional Association By: /s/ Richard M. Leisner ------------------------------ EX-10.1 7 1997 OMNIBUS STOCK & INCENTIVE PLAN 1 EXHIBIT 10.1 LAMALIE ASSOCIATES, INC. 1997 OMNIBUS STOCK AND INCENTIVE PLAN SECTION 1. ESTABLISHMENT; PURPOSE. Lamalie Associates, Inc. (the "Company") hereby establishes the 1997 Omnibus Stock and Incentive Plan (the "Plan"), pursuant to which key employees of the Company will be given the ability to participate in increases in value of the Company. Under the Plan, the Company may grant any one or more type of incentive awards to professional and managerial employees who measurably impact the performance of the Company. SECTION 2. DEFINITIONS. The following words and terms as used herein shall have that meaning set forth therefor in this Section 2 unless a different meaning is clearly required by the context. (a) "AWARDS" shall mean any Options, SARs, Performance Units, Performance Shares, Restricted Stock Units, Restricted Stock and Unrestricted Stock granted or awarded under the Plan. (b) "AWARD AGREEMENT(S)" shall mean any document, agreement or certificate deemed by the Committee as necessary or advisable to be entered into with or delivered to a Participant in connection with or as a condition precedent to the valid completion of the grant of an Award under the Plan. Award Agreements include Stock Option Agreements, Stock Appreciation Right Agreements, Performance Agreements and Restriction Agreements. (c) "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. (d) "CHANGE IN CONTROL" shall mean: (i) a change in control of the Company of a nature that is required, pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), to be reported in response to Item 1(a) of a Current Report on Form 8- K or Item 6(e) of Schedule 14A, in each case as such requirements are in effect on June 1, 1997; (ii) the adoption by the Company of a plan of dissolution or liquidation; (iii) the closing of a sale of all or substantially all of the assets of the Company; (iv) the closing of a merger, reorganization or similar transaction (a "Transaction") involving the Company in which the Company is not the surviving corporation or, if the Company is the surviving corporation, immediately following the closing of the Transaction, persons who were shareholders of the Company immediately prior to 2 the Transaction own less than 75% of the combined voting power of the surviving corporation's voting securities; (v) the acquisition of "Beneficial Ownership" (as defined in Rule 13d-3 under the 1934 Act) of the Company's securities comprising 25% or more of the combined voting power of the Company's outstanding securities by any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the 1934 Act and the rules and regulations promulgated thereunder, but not including any trustee or fiduciary acting in that capacity for an employee benefit plan sponsored by the Company) and such person's "affiliates" and "associates" (as those terms are defined under the 1934 Act); or (vi) the failure of the "Incumbent Directors" (as defined below) to constitute at least a majority of all directors of the Company (for these purposes, "Incumbent Directors" mean individuals who were the directors of the Company on June 1, 1997, and, after his or her election, any individual becoming a director subsequent to June 1, 1997, whose election, or nomination for election by the Company's shareholders, is approved by a vote of at least two-thirds of the directors then comprising the Incumbent Directors, except that no individual shall be considered an Incumbent Director whose initial assumption of office as a director is in connection with an actual or threatened "election contest" relating to the "election of directors" of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the 1934 Act). Notwithstanding any provision above to the contrary, no Change in Control shall be deemed to have occurred with respect to any particular Participant by virtue of a transaction, or series of transactions, that results in the Participant, or a group of persons that includes the Participant, acquiring the Beneficial Ownership of more than 25% of the combined voting power of the Company's outstanding securities. (e) "CODE" shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include a reference to any successor provision. (f) "COMMITTEE" shall mean the Compensation Committee of the Board of Directors. (g) "COMMON STOCK" shall mean the common stock of the Company. (h) "COMPANY" shall mean Lamalie Associates, Inc. and its successors. (i) "FAIR MARKET VALUE" of the Common Stock is defined in Section 7(a). 2. 3 (j) "INCENTIVE STOCK OPTION" shall mean an Option that is intended to qualify under Section 422 of the Code. (k) "NON-INCENTIVE STOCK OPTION" shall mean an Option that is not intended to qualify under Section 422 of the Code. (l) "OPTION" shall mean an Incentive Stock Option or a Non-Incentive Stock Option granted in accordance with the provisions of Section 7. (m) "OPTION PERIOD" is defined in Section 7(c). (n) "PARTICIPANT" shall mean any individual employed by the Company or any Subsidiary to whom the Committee grants an Award. (o) "PERFORMANCE ACCOUNT" is defined in Section 9(b). (p) "PERFORMANCE AWARD" shall mean an Award of Performance Shares and/or Performance Units. (q) "PERFORMANCE PERIOD" is defined in Section 9(c). (r) "PERFORMANCE SHARES" shall mean shares of Common Stock granted in accordance with the provisions of Section 9. (s) "PERFORMANCE UNITS" shall mean an Award in a form other than shares of Common Stock granted in accordance with the provisions of Section 9. (t) "PLAN" shall mean the Lamalie Associates, Inc. 1997 Omnibus Stock and Incentive Plan, as set forth herein and as amended from time to time. (u) "RESTRICTED STOCK" shall mean shares of Common Stock subject to the provisions of Section 10 and such other terms and conditions as the Committee may prescribe, and granted in accordance with the provisions of Section 10. (v) "RESTRICTED STOCK UNITS" shall mean the right to receive shares of Common Stock or the cash equivalent thereof subject to the provisions of Section 10 and such other terms and conditions as the Committee may prescribe, and granted in accordance with the provisions of Section 10. (w) "RESTRICTION PERIOD" is defined in Section 10(b). (x) "SAR" shall mean a Stock Appreciation Right granted in accordance with the provisions of Section 8. (y) "STOCK APPRECIATION RIGHT" shall mean a SAR. 3. 4 (z) "SUBSIDIARY" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Code. (aa) "UNRESTRICTED STOCK" shall mean shares of Common Stock granted in accordance with the provisions of Section 10 and not subject to restrictions. SECTION 3. TYPES OF AWARDS UNDER PLAN. The Company may grant under this Plan Incentive Stock Options, Non-Incentive Stock Options, SARs, Performance Units, Performance Shares, Restricted Stock, Restricted Stock Units, and Unrestricted Stock. SECTION 4. ELIGIBILITY. The Company may grant an Award to any person, including any officer but not a person who is solely a director, who is in the employ of the Company or any Subsidiary on the date of a grant of an Award. Awards shall primarily be made to officers and other management and professional employees of the Company. Any individual to whom the Committee has granted an Award (a "Participant") shall be bound by the terms of this Plan and the Award Agreement applicable to him or her. SECTION 5. NUMBER OF SHARES COVERED BY AWARDS. The total number of shares that may be issued and sold pursuant to Awards under this Plan shall be Nine Hundred Fifty Thousand (950,000) shares of Common Stock (or the number and kind of shares of common stock of the Company or other securities of the Company which, in accordance with Section 11, shall be substituted for such shares of Common Stock or to which said shares shall be adjusted; hereinafter, all references to Common Stock includes references to said shares to which said shares are adjusted). The issuance of shares of Common Stock pursuant to the provisions of this Plan for Awards shall be free from any preemptive or preferential right of subscription or purchase on the part of any stockholder. If any outstanding Option or Restricted Stock granted or awarded under this Plan expires, is terminated or is forfeited for any reason, the shares of Common Stock subject to the unexercised portion of such Option or grant of Restricted Stock will again be available for Awards under this Plan. SECTION 6. ADMINISTRATION. (a) This Plan shall be administered by the committee (the "Committee") referred to in subsection (b) of this Section 6. Subject to the express provisions of this Plan, the Committee shall have complete authority, in its discretion, (i) to interpret this Plan, to prescribe, amend and rescind rules and regulations relating to the Plan; (ii) to determine the terms and provisions of Awards granted hereunder and to make such determinations as to the Participants to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards, and the Award Agreements evidencing the same, which need not be uniform and which the Committee may make selectively among Participants who receive, or who are to receive, 4. 5 Awards under the Plan, whether or not the Participants are similarly situated; (iii) to determine to whom the Options shall be granted, the times and the prices at which Options are granted, the Option periods, the number of shares of Common Stock to be subject to each Option, whether each Option shall be an Incentive Stock Option or a Non-Incentive Stock Option, and to determine the terms and provisions of each Option (which need not be identical); (iv) to determine to whom SARs shall be granted, the times and duration of each SAR, the number of shares of Common Stock to which each SAR relates, whether an SAR is granted with respect to Options or alone, without reference to any related stock option, and to determine the terms and provisions of each SAR (which need not be identical); (v) to determine to whom Performance Shares and Performance Units shall be granted, the applicable Performance Period, and the number of shares of Common Stock represented by Performance Shares and Performance Units, to maintain Performance Accounts, and to determine the terms and provisions of Performance Awards (which need not be identical); (vi) to determine to whom Restricted Stock, Restricted Stock Units and Unrestricted Stock shall be granted, the Restriction Period (if applicable), the number of shares of Restricted Stock and/or Unrestricted Stock, the terms and provisions (which need not be identical) of awards of Restricted Stock and Restricted Stock Units and whether the Participant has met the goals on or before the close of the Restriction Period; (vii) to impose such limitations with respect to Options and Restricted Stock, including without limitation, any relating to the application of federal or state securities laws, as the Committee may deem necessary or desirable; (viii) to determine the dates of employment of any employee of the Company, the term of service of any director and the reasons for termination of any Participant; (ix) to determine whether any leave of absence constitutes a termination of employment for purposes of this Plan and the impact, if any, of such leave of absence on awards theretofore made under this Plan; 5. 6 (x) to determine when a person's change of status with respect to the Company constitutes a termination of such person's employment for purposes of this Plan; (xi) to make such determinations as it deems equitable with respect to the impact, if any, of leaves of absence from the Company upon Awards hereunder; (xii) to grant dividend equivalents upon Awards (other than Restricted Stock or Unrestricted Stock, for which Participants are entitled to receive dividends and other distributions paid with respect to shares of Common Stock so held), provided that any such dividend equivalents shall be subject to the terms and conditions imposed by the Committee; and (xiii) to make all other determinations necessary or advisable for the administration of the Plan. In making determinations under this Section 6, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and such other factors as the Committee, in its discretion, deems relevant. The Committee's determination on all of the matters referred to in this Section 6 shall be conclusive. (b) The Committee shall consist of a compensation committee of the Board of Directors of the Company that is comprised of two (2) or more outside directors. The Committee shall be appointed by the Board, which may at any time and from time to time, remove any member of the Committee, with or without cause, appoint additional members to the Committee and fill vacancies, however caused, in the Committee. A majority of members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination of the Committee reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made at a meeting duly called and held. (c) No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan. (d) Nothing contained in this Plan shall be deemed to give any individual any right to be granted an Award except to the extent and upon such terms and conditions as may be determined by the Committee. SECTION 7. STOCK OPTIONS. Each Option granted under this Plan shall be evidenced by a written agreement (the "Stock Option Agreement"), which shall be executed by the Company and by the Participant, and shall be subject to the following terms and conditions: (a) The price at which shares of Common Stock covered by each Option may be purchased pursuant thereto shall be determined in each case on the date of grant by the Committee; 6. 7 provided, however, that with respect to Incentive Stock Options, the price shall be an amount not less than the Fair Market Value of the shares of Common Stock at the time the Incentive Stock Option is granted. The date on which the Committee approves the grant of an Option shall be considered to be the date on which such Option is granted. For purposes of this Section, the Fair Market Value of shares of Common Stock on any day shall be: (i) in the event the Common Stock is not publicly traded, the fair market value of such shares on such day as determined by the Committee in good faith and based on all relevant factors; or (ii) in the event the Common Stock is publicly traded, the closing price of such shares on the date in question (or, if no shares are traded on such day, on the next preceding day on which shares were traded), of the Common Stock as reported on the Composite Tape, or if not reported thereon, then such price as reported in the trading reports of the principal securities exchange in the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the mean between the dealer closing "bid" and "ask" prices on the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Committee in good faith and based on all relevant factors or as otherwise determined by the Committee in its discretion pursuant to any reasonable method contemplated by Section 422 of the Code and any Treasury regulations issued pursuant to that Section. (b) The option price of the shares to be purchased pursuant to each Option shall be paid in full (i) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (ii) in the discretion of and in the manner determined by the Committee, by the delivery of shares of Common Stock already owned by the Participant; (iii) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions); or (iv) in the discretion of the Committee, through a combination of (i), (ii) and (iii) of this subsection (b). Shares of Common Stock delivered will be valued on the day of delivery for the purpose of determining the extent to which the option price has been paid thereby, in the same manner as provided for in the determination of Fair Market Value as set forth in subsection (a) of this Section 7, or as otherwise determined by the Committee in its discretion pursuant to any reasonable method contemplated by Section 422 of the Code and any Treasury regulations issued pursuant to that Section. (c) Each Stock Option Agreement shall provide that such Option may be exercised by the Participant, in such parts and at such times, as may be specified in such Stock Option Agreement, within a period ending not later than ten years after the date on which the Option is granted (the "Option Period"); provided, however, that the Option Period shall end on the earlier of 7. 8 the date specified in such Stock Option Agreement or the ending date of the period specified in the next sentence. Options may be exercised only (i) during the continuance of the Participant's employment with the Company or a Subsidiary; (ii) if the Participant terminates employment with the Company or a Subsidiary other than by reason of death, during the period ending ninety (90) days after the date of termination of employment, but only to the extent that the right to exercise such Options had accrued on or before the date of termination and had not previously been exercised; provided, that if the Participant terminates such employment by reason of disability (within the meaning of Section 22(e)(3) of the Code) or if the Participant dies during the ninety (90) day period, the ninety (90) day period shall be extended to one (1) year; and (iii) if the Participant dies while employed by the Company or a Subsidiary, during the period ending on the first to occur of (A) the expiration of the Option Period or (B) the first anniversary of the Participant's death, but only to the extent that the right to exercise such Options had accrued on or before the date of death and had not previously been exercised. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. In the event of the death of a Participant, Options held by the Participant may be exercised, to the extent specified in the Stock Option Agreement and this subsection (c), by the person or persons entitled to do so under the Participant's will, or, if the Participant fails to make testamentary disposition of said Options, or dies intestate, by the Participant's legal representative or representatives. (d) Unless otherwise specified by the Committee, each Option shall be exercisable, in whole or in part, only in accordance with the following chart:
PERCENTAGE OF NUMBER OF YEARS FROM SHARES DATE OPTION IS GRANTED EXERCISABLE ---------------------- ----------- Less than 1 year 0% 1 year but less than 2 years 25.00% 2 years but less than 3 years 50.00% 3 years but less than 4 years 75.00% 4 years or more 100%
8. 9 Notwithstanding the foregoing, a Participant shall be 100% vested in the number of shares of Common Stock originally covered by an Option in the event Participant dies or becomes totally and permanently disabled (as determined in the sole discretion of the Committee) while still employed by the Company or upon a Change in Control. When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which an Option may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth above in the chart, or as otherwise specified by the Committee, would permit. (e) In the discretion of the Committee, a single Stock Option Agreement may include both Incentive Stock Options and Non-Incentive Stock Options, or separate Stock Option Agreements may be set forth for Incentive Stock Options and Non-Incentive Stock Options. (f) Each Option granted under this Plan shall be non-transferable, and its terms shall state that it is non-transferable and shall, during the lifetime of the Participant be exercisable only by the Participant; notwithstanding the foregoing, Options shall be transferable by will or the laws of descent and distribution as set forth in subsection (c) of this Section 7. However, a Participant may transfer a Non-Incentive Stock Option to a trust, provided that the Committee may require that the Participant submit an opinion of his or her legal counsel, satisfactory to the Committee, that such holding has no adverse tax or securities law consequences for the Company. (g) Notwithstanding anything contained herein to the contrary, if Options as to 100 or more shares of Common Stock are held by a Participant, then the Participant may exercise such Options only with respect to at least 100 shares at any one time, and if Options for less than 100 shares are held by a Participant, then the Participant must exercise Options for all shares at one time. (h) The Stock Option Agreements under this Plan may contain such other terms, provisions and conditions not inconsistent herewith as shall be determined by the Committee, in its discretion, including, without limitation, provisions (i) relating to the vesting and termination of Options; (ii) requiring the giving of satisfactory assurances by the Participant that the shares are purchased for investment and not with a view to resale in connection with a distribution of such shares, and will not be transferred in violation of applicable securities laws; (iii) restricting the transferability of such shares during a specified period; and (iv) requiring the resale of such shares to the Company, at a price as specified in the Stock Option Agreement, if the Participant's employment by the Company terminates prior to a time specified in the Stock Option Agreement. (i) All grants of Options made prior to the date on which shareholders approve this Plan shall be contingent upon subsequent approval of the shareholders of this Plan. (j) This Section 7 shall terminate on, and no additional Awards shall be granted after, ten years from the first to occur of (i) the date on which the Plan is adopted or (ii) the date on which the shareholders of the Company approve the Plan. (k) Each Option that is intended to qualify as an Incentive Stock Option pursuant to Section 422 of the Code, and each Option that is intended to qualify as another type of incentive stock option that may subsequently be authorized by law, shall comply with the applicable provisions 9. 10 of the Code pertaining to such options. Accordingly, the provisions of this Plan with respect to Incentive Stock Options shall be construed in a manner consistent with such requirements, and no person shall be eligible to receive any Incentive Stock Options under the Plan if such person would not be able qualify for the benefits of incentive stock options under Section 422 of the Code. Without limitation on the foregoing, and notwithstanding the foregoing provisions of this Section 7, if any Incentive Stock Option is granted to any person at a time when such person owns, within the meaning of Section 424(d) of the Code, more than ten percent (10%) of the total combined voting power of all classes of stock of the employer corporation (or a parent or subsidiary of such corporation within the meaning of Section 424 of the Code), the price at which each share of Common Stock covered by such Option may be purchased pursuant to such Option shall not be less than one hundred ten percent (110%) of the Fair Market Value of the shares of Common Stock at the time the Option is granted, and such Option must be exercised no event later than the fifth anniversary of the date on which the Option was granted. Moreover, as long as and to the extent required by the Code, the aggregate Fair Market Value (determined as of the time an Incentive Stock Option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant in any calendar year under the Plan and under all other incentive stock option plans of the Company and any parent and subsidiary corporations of the Company (as those terms are defined in Section 424 of the Code) shall not exceed $100,000. SECTION 8. STOCK APPRECIATION RIGHTS. (a) An SAR is a right to receive, without payment (except for applicable withholding taxes) to the Company, a number of shares of Common Stock, cash or a combination thereof, the amount of which is determined under subsection (e) of this Section 8. An SAR may be granted (i) with respect to any Option granted under this Plan, either concurrently with the grant of such Option, or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the Option), or (ii) alone, without reference to any related Option. Each SAR granted by the Committee under this Plan shall be subject to the terms and conditions of this Section 8. (b) Each SAR granted to any Participant shall relate to the number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 11. In the case of an SAR granted with respect to an Option, the number of shares of Common Stock to which the SAR relates shall be reduced in the same proportion that the holder of such Option exercises with respect to such related Option, and the number of shares subject to an Option shall be reduced in the same proportion that the holder of the SAR exercises with respect to the related Option. (c) The term of each SAR shall be determined by the Committee. Unless otherwise provided by such Committee, an SAR granted in connection with an Option shall be exercisable only at such time or times, to such extent and by such persons as the Option to which it relates shall be exercisable, provided that an SAR granted in connection with an Incentive Stock Option shall not be exercisable on any date on which the Fair Market Value of a share of Common Stock is less than or equal to the per share exercise price of the Incentive Stock Option. An SAR shall be canceled when, and to the extent that, any related Option is exercised, and an Option shall be canceled when, and to the extent that, the Option is surrendered to the Company upon the exercise 10. 11 of a related SAR. The Committee, in its discretion, may accelerate the time within which a SAR may be exercised. (d) An SAR may be exercised, in whole or in part, by giving written notice to the Committee, specifying the number of SARs that the holder wishes to exercise. Upon receipt of such written notice, the Committee shall direct the Company to deliver to the exercising holder within ninety (90) days after receipt of the notice a certificate for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled. (e) Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock, the number of shares of Common Stock that shall be issuable upon the exercise of an SAR shall be determined by dividing: (i) the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of appreciation in such shares (for this purpose, the "appreciation" shall be the amount by which the Fair Market Value of the shares of Common Stock subject to the SAR on the exercise date exceeds (A) in the case of an SAR related to an Option, the purchase price of the shares of Common Stock under the Option or (B) in the case of an SAR granted alone, without reference to a related Option, an amount that shall be determined by the Committee at the time of the grant, subject to adjustment under Section 11; by (ii) the Fair Market Value of a share of Common Stock on the exercise date. In lieu of issuing shares of Common Stock upon the exercise of an SAR, the Committee may elect to pay the holder of an SAR cash equal to the Fair Market Value on the exercise date of any or all of the shares that would otherwise be issuable. No fractional shares of Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise. (f) SARs awarded under the Plan shall be evidenced by either a Stock Option Agreement or a separate signed Stock Appreciation Right Agreement between the Company and the Participant to whom the SAR is granted. SECTION 9. PERFORMANCE SHARES AND UNITS. (a) The Committee may award to any Participant Performance Shares and/or Performance Units ("Performance Awards"). Each Performance Share shall represent one share of Common Stock. Each Performance Unit shall represent the right of a Participant to receive an amount equal to the value to be determined in the manner established by the Committee at the time of the award, which value may, without limitation, be equal to the Fair Market Value of one share 11. 12 of Common Stock. Each Performance Award under the Plan shall be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine (the "Performance Agreement"). (b) At the time of the Performance Award, the Committee shall establish an account (the "Performance Account") for each Participant to whom a Performance Award has been granted. Performance Units and Performance Shares awarded to a Participant shall be credited to the Participant's Performance Account. (c) The performance period for each Performance Award shall be of such duration as the Committee shall establish at the time of the award (the "Performance Period"). There may be more than one Performance Award in existence for a Participant at any time, and more than one Performance Period applicable to a Participant, and the duration of Performance Periods may differ. (d) At the time of each Performance Award, the Committee may, in its complete discretion, establish performance target(s) to be achieved within the Performance Period(s). The performance target(s) shall be determined by the Committee using such measures of performance of the Company over the Performance Period as the Committee shall select. During any Performance Period, the Committee may adjust the performance targets for such Performance Period as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles or such other factors as the Committee may determine. If the Committee determines that the Participant has failed to meet the performance target(s), the Participant will not receive payment of the Performance Award. (e) Performance Awards will be earned as determined by the Committee in respect of a Performance Period in relation to the degree of attainment of performance target(s). (f) Performance Awards shall be earned to the extent that their terms and conditions are met. Notwithstanding the foregoing, Performance Awards and any other amounts credited to the Participant's Performance Account shall be payable to the Participant only in accordance with the Performance Agreement. The Committee shall make all payment determinations during the four-month period beginning on the first day following the close of the Performance Period. Payment for Performance Awards may be made in a lump sum or in installments, in cash, in shares of Common Stock or in a combination thereof as the Committee may determine. (g) In the event that a Participant's employment by the Company terminates before the end of a Performance Period with the consent of the Committee, or upon a Participant's death or disability before the end of a Performance Period, the Committee, taking into consideration the performance of such Participant and the performance of the Company over such portion of the Performance Period, may authorize the payment to such Participant (or his or her legal representative or designated beneficiary) of all or a portion of the amount that would have been paid to the Participant had he or she continued employment until the end of the Performance Period. In the event a Participant ceases his or her employment for any other reason, any unpaid amounts for any outstanding Performance Periods shall be forfeited. 12. 13 SECTION 10. RESTRICTED STOCK, RESTRICTED STOCK UNITS, AND UNRESTRICTED STOCK. (a) The Committee may award to any Participant shares of Common Stock subject to no restrictions ("Unrestricted Stock"). (b) At the time of an Award under subsection (c) or (d) below, there shall be established for each Participant a restriction period (the "Restriction Period"), which shall lapse (i) upon the completion of a period of time ("Time Goal") as shall be determined by the Committee, or (ii) upon the achievement of stock price goals within certain time periods ("Price/Time Goal") as shall be determined by the Committee. (c) The Committee may award to any Participant shares of Common Stock, subject to this Section 10 and such other terms and conditions as the Committee may prescribe ("Restricted Stock"). Each certificate for Restricted Stock shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Committee. Restricted Stock awarded under this Plan shall be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine in its discretion (the "Restriction Agreement"). Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the Restriction Period. Except for such restrictions on transfer, the Participant as owner of such Restricted Stock shall have all the rights of a holder of such Common Stock. A Participant may transfer Restricted Stock to a trust, provided that the Committee may require that the Participant submit an opinion of his or her legal counsel, satisfactory to the Committee, that such holding has no adverse tax or securities law consequences for the Company. With respect to Restricted Stock that is issued subject to a Time Goal, the Committee shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to subsection (b) of this Section 10 at the expiration of the Restriction Period. With respect to Restricted Stock that is issued subject to a Price/Time Goal, the Committee shall redeliver to the Participant (or the Participant's legal representative or designated beneficiary) the certificates deposited pursuant to subsection (b) of this Section 10 at the expiration of the Restriction Period. Notwithstanding the foregoing, if Restricted Stock is issued subject to a Price/Time Goal or Time Goal and the Committee determines that a Participant has not achieved the Time Goal or Price/Time Goal before the end of the Restriction Period, the Participant shall have no further rights with respect to the Restricted Stock, all such shares shall be forfeited and the Committee shall have the right to complete a blank stock power in order to return such shares to the Company. (d) The Committee may award to a Participant a right to receive Common Stock or the cash equivalent of the Fair Market Value of the Common Stock, in the Committee's discretion, at the end of the Restriction Period ("Restricted Stock Units") subject to achievement of a Time Goal or Price/Time Goal established by the Committee. Restricted Stock Units awarded under this Plan shall be evidenced by a signed written agreement containing such terms and conditions as the Committee may from time to time determine in its discretion (the "Restriction Agreement"). With respect to Restricted Stock Units that are subject to a Time Goal, the Committee shall deliver notice to the Participant (or the Participant's legal representative or designated beneficiary) at the end of the 13. 14 Restriction Period as to whether the Participant has achieved the Time Goal. With respect to Restricted Stock Units that are awarded subject to a Price/Time Goal, the Committee shall deliver notice to the Participant (or the Participant's legal representative or designated beneficiary) at the end of the Restriction Period as to whether the Participant has achieved the Price/Time Goal. If the Committee determines that a Participant has not achieved the Time Goal or Price/Time Goal before the end of the Restriction Period, the Participant shall have no further rights with respect to the Restricted Stock Units. (e) In the event a Participant ceases employment with the Company with the consent of the Committee or upon the Participant's death or disability before the end of the Restriction Period and the Participant has received an Award subject to a Time Goal, the restrictions imposed under this Section 10 shall lapse with respect to the number of those shares or units subject to a Time Goal as shall be determined by the Committee. In no event, however, shall the number of shares or units be less than a number equal to the product of (i) a fraction, the numerator of which is the number of completed months elapsed after the date of the Award subject to a Time Goal to the date of termination and the denominator of which is the number of months in the Restriction Agreement, multiplied by (ii) the number of shares of Restricted Stock or Restricted Stock Units awarded to the Participant subject to the Time Goal. In the event a Participant ceases employment the Company with the consent of the Committee or upon the Participant's death or disability before the end of the Restriction Period and the Participant has received an Award subject to a Price/Time Goal, the restrictions imposed under this Section 10 shall lapse upon the achievement of the Price/Time Goal within two (2) years of the Participant's termination of employment with respect to such number of shares or units subject to a Price/Time Goal as shall be determined by the Committee. In no event, however, shall the number of shares or units be less than a number equal to the product of (i) a fraction, the numerator of which is the number of completed months elapsed after the date of the Award subject to a Price/Time Goal to the date of termination and the denominator of which is the number of months elapsed after the date of the Award subject to a Price/Time Goal to the date of achievement of the Price/Time Goal, multiplied by (ii) the number of shares of Restricted Stock or Restricted Stock Units subject to the Price/Time Goal. In the event a Participant ceases employment with the Company for any other reason, all Restricted Stock or Restricted Stock Units theretofore awarded to that Participant that are still subject to restrictions shall be forfeited and the Committee shall have the right to complete the blank stock power with respect to any such Restricted Stock. SECTION 11. ADJUSTMENT OF NUMBER OF SHARES. (a) In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Common Stock) or any other increase or decrease in the number of shares of Common Stock effected without any receipt of consideration by the Company, then, in any such event, the number of shares of Common Stock that remain available under the Plan, the number of shares covered by each outstanding Option, the exercise price per share covered by each outstanding Option, the number of shares covered by each outstanding SAR and the exercise 14. 15 price per share and the number and any purchase price for any other Award shares (or equivalents) granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such increase or decrease. (b) Subject to any required action by the stockholders, if any change occurs in the Common Stock by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting Common Stock, then, in any such event, the number and type of shares of Common Stock then covered by each outstanding Option, the purchase price per share covered by each outstanding Option, the number of shares covered by each outstanding SAR and the exercise price per share and the number and any purchase price for any other Award shares (or equivalents) granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such change. (c) In the event of a change in the Common Stock as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be Common Stock within the meaning of the Plan. (d) To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Board of Directors, whose determination in that respect shall be final, binding and conclusive; provided, however, that any Incentive Stock Option granted pursuant to Section 7 shall not be adjusted in a manner that causes such Option to fail to continue to qualify as an incentive stock option within the meaning of Section 422 of the Code. (e) Except as hereinabove expressly provided in this Section 11, a Participant shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock, any Option, any SAR or any other Award shares (or equivalents) granted but not yet issued. (f) The existence of the Plan, or the grant of an Option, SAR or other Award under the Plan, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. SECTION 12. CHANGE OF CONTROL. In the event of a Change of Control, any Option, SAR (whether or not granted with respect to an Option) or Restricted Stock subject to a Time Goal shall immediately become fully vested without regard to any other terms of the Award. SECTION 13. BENEFICIARY DESIGNATION. Each Participant under the Plan may name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to 15. 16 whom any benefit (other than an Option) under the Plan is to be paid in case of his or her death before the Participant receives any or all of such benefit. Each designation will be effective only with the written consent of the Participant's spouse and will revoke all prior designations by that Participant, shall be in the form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his or her lifetime. In the absence of any such designation, benefits (other than those under Options) that are vested and remain unpaid at the Participant's death shall be paid to his or her estate. SECTION 14. TAX WITHHOLDING. (a) The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any federal, state or local withholding or other tax due from the Company with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer such payment or issuance unless indemnified to its satisfaction. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. (b) Subject to the consent of the Committee, with respect to (i) the exercise of a Non-Incentive Stock Option, (ii) the lapse of restrictions on Restricted Stock, or (iii) the issuance of any other stock Award under the Plan, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable under (i) withheld, or (B) tender back to the Company shares of Common Stock received pursuant to (i), (ii), or (iii), or (C) deliver back to the Company pursuant to (i), (ii), or (iii) previously acquired shares of Common Stock having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. SECTION 15. INDEMNIFICATION. To the fullest extent permitted by law, each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided that the person shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. SECTION 16. GENDER AND NUMBER. Except where otherwise indicated by the context, words in the masculine gender when used in the Plan will include the feminine gender, the singular shall include the plural, and the plural shall include the singular. 16. 17 SECTION 17. CONTROLLING LAW. This document shall be construed under the laws of the State of Florida. SECTION 18. NO STOCKHOLDER RIGHTS. No Participant hereunder shall have any rights of a stockholder of the Company by reason of being granted an Award under this Plan until the date on which he or she becomes a record owner of shares of Common Stock purchased upon the exercise of an Option or otherwise received under this Plan (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date. SECTION 19. AMENDMENTS; TERMINATION OR SUSPENSION. (a) This Plan may be amended from time to time by written resolution of the Board of Directors of the Company; provided, however, that no Participant's existing rights are adversely affected thereby without the consent of such person, and provided further that, without approval of the stockholders of the Company, no amendment shall (i) increase the total number of shares of Common Stock that may be issued pursuant to Awards granted under this Plan, (ii) change the designation of the class of employees eligible to receive Incentive Stock Options or Non-Incentive Stock Options, (iii) decrease the minimum Option price set forth in subsection (a) of Section 7 of this Plan, (iv) extend the period during which an Option may be granted or exercised beyond the maximum period specified in this Plan, (v) otherwise materially modify the requirements as to eligibility for participation in the Plan, (vi) otherwise materially increase the benefits under the Plan, or (vii) withdraw the authority to administer this Plan from the Committee. Notwithstanding the foregoing, the Board may amend the Plan to incorporate or conform to requirements imposed by and amendments made to the Code or regulations promulgated thereunder which the Board deems to be necessary or desirable to preserve (A) incentive stock option status for outstanding Incentive Stock Options and to preserve the ability to issue Incentive Stock Options pursuant to this Plan, (B) the deductibility by the Company of amounts taxed to Plan Participants as ordinary compensation income, and (C) the status of any Award as exempt from registration requirements under any securities law for which the Award was intended to be exempt. The foregoing prohibitions in this Section 19 shall not be affected by adjustments in shares and purchase price made in accordance with the provisions of Section 11. (b) The Board of Directors of the Company may terminate the Plan or any portion thereof at any time by written resolution. No suspension or termination shall impair the rights of Participants under outstanding Awards without the consent of the Participants affected thereby. SECTION 20. MISCELLANEOUS. (a) LISTING AND REGISTRATION OF COMMON STOCK. Each Award shall be subject to the requirement that if at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of the Common Stock that is the subject thereof or that is covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the issuance or purchase of Common Stock thereunder, such Award may not be exercised unless and until such listing, registration, qualification, consent or 17. 18 approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 20(a) become operative, and if, as a result thereof, the exercise of an Award is delayed, then and in that event, the term of the Award shall not be affected. Notwithstanding the foregoing or any other provision in the Plan, the Company shall have no obligation under the Plan to cause any shares of Common Stock to be registered or qualified under any federal or state law or listed on any stock exchange or admitted to any national marketing system. (b) NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the Plan and the granting of Awards under the Plan shall in no way give any employee the right to continued employment, give any employee the right to receive any additional Awards or any additional compensation under the Plan, or otherwise provide any employee any rights not specifically set forth in the Plan or in any Award Agreement. (c) CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the effective date of the Plan being the date that the last such condition is satisfied: (i) the adoption of the Plan by the Board of Directors; (ii) the approval of the Plan by the stockholders of the Company within twelve (12) months after its adoption by the Board; and (iii) the closing of the initial public offering of the Common Stock. 18. EX-10.2 8 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN 1 EXHIBIT 10.2 LAMALIE ASSOCIATES, INC. NON-EMPLOYEE DIRECTORS' STOCK PLAN ARTICLE 1 GENERAL 1.1 PURPOSE. The purpose of the Lamalie Associates, Inc. Non-Employee Directors' Stock Plan is to secure for Lamalie Associates, Inc. and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors of the Company who are not employees of the Company or any of its Subsidiaries. 1.2 MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common Stock that may be offered under the Plan is 80,000, subject to adjustment as provided in Section 3.1 below. The Common Stock to be issued may be either authorized and unissued shares or issued shares acquired by the Company or its Subsidiaries. In the event that Options granted under the Plan shall terminate or expire without being exercised in whole or in part, new Options may be granted covering the shares not purchased under such lapsed Options. 1.3 DEFINITIONS. The following words and terms as used herein shall have that meaning set forth therefor in this Section 1.3 unless a different meaning is clearly required by the context. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. 1.3.1 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. 1.3.2 "CODE" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute. Reference to a specific section of the Code shall include a reference to any successor provision. 1.3.3 "COMMON STOCK" shall mean the common stock of the Company. 1.3.4 "COMPANY" shall mean Lamalie Associates, Inc. and its successors. 1.3.5 "EFFECTIVE DATE" is defined in Section 3.9. 2 1.3.6 "FAIR MARKET VALUE" of the shares of Common Stock shall mean the closing price on the date in question (or, if no shares are traded on such day, on the next preceding day on which shares were traded), of the Common Stock as reported on the Composite Tape, or if not reportedin the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the mean between the dealer closing "bid" and "ask" prices on the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Board in good faith and based on all relevant factors. 1.3.7 "NSO" shall mean a nonqualified stock option granted in accordance with the provisions of Article 2 of this Plan. 1.3.8 "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of Directors who is not an employee of the Company or any Subsidiary. 1.3.9 "OPTION" shall mean an NSO. 1.3.10 "OPTIONEE" shall mean a Non-Employee Director to whom an Option is granted under the Plan. 1.3.11 "PLAN" shall mean the Lamalie Associates, Inc. Non-Employee Directors' Stock Plan, as set forth herein and as amended from time to time. 1.3.12 "SUBSIDIARY" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Code. 1.4 ADMINISTRATION. The Plan shall be administered by the Board. 1.4.1 The Board shall have all the powers vested in it by the terms of the Plan, such powers to include authority (within the limitations described herein) to prescribe the form of the agreement embodying awards of nonqualified stock options made under the Plan. The Board shall, subject to the provisions of the Plan, issue shares of the Common Stock in payment of the Annual Retainer, grant Options under the Plan and shall have the power to construe the Plan, to determine all questions arising thereunder and to adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable. Any decision of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Board may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their number or the Secretary or any other officer of the Company to execute and deliver documents on behalf of the Board. 1.4.2 To the fullest extent permitted by law, each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be 3 a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided that the person shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 1.5 ELIGIBILITY REQUIREMENTS. Each Non-Employee Director shall be eligible to receive Options in accordance with Article 2 below. The adoption of this Plan shall not be deemed to give any director any right to or be granted options to purchase Common Stock, except to the extent and upon such terms and conditions as set forth in this Plan. ARTICLE 2 TERMS AND CONDITIONS OF OPTIONS 2.1 GRANT. Options granted under the Plan shall be evidenced by an agreement in such form as the Board shall prescribe from time to time in accordance with the Plan and shall comply with the terms and conditions set forth under this Article 2. The date of the Annual Meeting of Stockholders shall be the date of grant of the Options. 2.2 NUMBER OF SHARES. Each Non-Employee Director shall receive an Option for 5,000 shares of Common Stock upon his initial appointment to the Board. In addition, each year, as of the date of the Annual Meeting of Stockholders of the Company, each Non-Employee Director who is then reelected or who is continuing as a member of the Board after the adjournment of the Annual Meeting shall receive an Option for 5,000 shares of Common Stock. 2.3 OPTION PRICE. The Option exercise price shall be the Fair Market Value of the Common Stock on the date of the Annual Meeting of Stockholders. 2.4 METHOD OF EXERCISE. An Option may be exercised by a Non-Employee Director during such time as may be permitted by the Option and the Plan by providing written notice to the Board and tendering the purchase price in accordance with the provisions of Section 2.5, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Board. 2.5 METHOD OF PAYMENT. Each Option shall state the method of payment of the Option price upon the exercise of the Option. The method of payment stated in the Option shall include payment in full (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company, (b) in the discretion of and in the manner determined by the Board, by the delivery of shares of Common Stock already owned by the Optionee, (c) by any other legally 3. 4 permissible means acceptable to the Board at the time of the grant of the Option (including cashless exercise as permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions), or (d) in the discretion of the Board, through a combination of (a), (b) and (c) of this Section 2.5. If the option price is paid in whole or in part through the delivery of shares of Common Stock, the decision of the Board with respect to the Fair Market Value of such shares shall be final and conclusive. 2.6 TERM AND EXERCISE OF OPTIONS. 2.6.1 One hundred percent (100%) of the total number of shares of Common Stock covered by the Option shall become exercisable beginning with the first anniversary date of the grant of the Option and shall be exercisable by the Non-Employee Director for a period of five (5) years from the date of grant. Not less than one hundred (100) shares may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option. 2.6.2 Notwithstanding the foregoing, no Option or any part of an Option shall be exercisable (a) before the Non-Employee Director has served one term-year as a member of the Board since the date such Option was granted (as used herein, the term "term-year" means that period from one Annual Meeting to the subsequent Annual Meeting), (b) after the expiration of five (5) years from the date the Option was granted, and (c) unless written notice of the exercise is delivered to the Company specifying the number of shares to be purchased and payment in full is made for the shares of Common Stock being acquired thereunder at the time of exercise. 2.7 DEATH OR OTHER TERMINATION OF POSITION AS A DIRECTOR. Subject to the provisions of Section 2.6: 2.7.1 In the event that a Non-Employee Director (a) shall be removed as a director for dishonesty or violation of his fiduciary duty to the Company, (b) shall voluntarily resign under or followed by such circumstances as would constitute a violation of his fiduciary duty to the Company, or (c) shall have committed an act of dishonesty not discovered by the Company prior to the cessation of his employment but that would have resulted in his removal if discovered prior to such date, then forthwith from the happening of any such event, any Option then held by him shall terminate and become void to the extent that it them remains unexercised. 2.7.2 If a person shall cease to be a Non-Employee Director for any reason other than one or more of the reasons set forth in section 2.7.1, such person, or in the case of death, the executors, administrators, legatees or distributees of such person, as the case may be, may, at any time prior to the date of the expiration of the Option, exercise the Option with respect to any shares of Common Stock as to which such person has not exercised the Option on the date the person ceased to be such a Non-Employee Director. 2.7.3 In the event any Option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased Optionee, the Company shall be under no obligation to issue Common Stock thereunder unless and until the Company is satisfied that the person or persons 4. 5 exercising the Option are the duly appointed legal representatives of the deceased Optionee's estate or the proper legatees or distributees thereof. 2.8 TRANSFERABILITY OF OPTIONS. The Option shall not be transferable by the Optionee otherwise than by will or the laws of descent and distribution, and shall be exercisable during his lifetime only by him. 2.9 DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable after the exercise of an Option, the Company shall deliver, or cause to be delivered, to the Non-Employee Director exercising the Option, a certificate or certificates representing the shares of Common Stock purchased upon the exercise. Certificates representing shares of Common Stock to be delivered to a Non-Employee Director shall be registered in the name of such director. 2.10 RIGHTS AS A STOCKHOLDER. A Non-Employee Director shall have no rights as a stockholder with respect to any shares of Common Stock covered by his or her Option until the date on which he or she becomes a record owner of the shares purchased upon the exercise of the Option (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 3. ARTICLE 3 MISCELLANEOUS 3.1 STOCK ADJUSTMENTS. 3.1.1 In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Common Stock) or any other increase or decrease in the number of such shares effected without any receipt of consideration by the Company, then, in any such event, the number of shares of Common Stock that remain available under the Plan, the number of shares of Common Stock covered by each outstanding Option, and the purchase price per share of Common Stock covered by each outstanding Option shall be proportionately and appropriately adjusted for any such increase or decrease. 3.1.2 Subject to any required action by the stockholders, if any change occurs in the Common Stock by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting Common Stock, then, in any such event, the number and type of shares covered by each outstanding Option, and the purchase price per share of Common Stock covered by each outstanding Option, shall be proportionately and appropriately adjusted for any such change. A dissolution or liquidation of the Company shall cause each outstanding Option to terminate. 5. 6 3.1.3 In the event of a change in the Common Stock as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be shares of Common Stock within the meaning of the Plan. 3.1.4 To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive. 3.1.5 Except as hereinabove expressly provided in this Section 3.1, a Non-Employee Director shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to the Option. 3.1.6 The existence of the Plan, and the grant of any Option pursuant to the Plan, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. 3.2 LISTING AND REGISTRATION OF COMMON STOCK. Each Option shall be subject to the requirement that if at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of the Common Stock covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 3.2 become operative, and if, as a result thereof, the exercise of an Option is delayed, then and in that event, the term of the Option shall not be affected. Notwithstanding the foregoing or any other provision in the Plan, the Company shall have no obligation under the Plan to cause any shares of Common Stock to be registered or qualified under any federal or state law or listed on any stock exchange or admitted to any national marketing system. 3.3 TERM OF THE PLAN. The Plan shall terminate upon the earlier of the following dates or events: (a) upon the adoption of a resolution of the Board terminating the Plan; or (b) ten years from the Effective Date. 3.4 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as permitted by law, from time to time, with respect to any shares of Common Stock at the time not subject to Options, suspend, discontinue or terminate the Plan or revise or amend it in any respect whatsoever. 6. 7 3.5 APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to Options will be used for general corporate purposes. 3.6 NO OBLIGATION TO EXERCISE. The granting of any Option under the Plan shall impose no obligation upon any Optionee to exercise such Option. 3.7 NO IMPLIED RIGHTS TO DIRECTORS. Except as expressly provided for in the Plan, no Non-Employee Director or other person shall have any claim or right to be granted an Option under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any Non-Employee Director any right to be retained as a Directoror or in any other capacity. 3.8 WITHHOLDING. Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax liability prior to the delivery of any certificate or certificates for such shares. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 3.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the Effective Date being the date that the last such condition is satisfied: 3.9.1 the adoption of the Plan by the Board of Directors; and 3.9.2 the closing of the initial public offering of the Common Stock. 7. EX-10.3 9 PROFIT SHARING PLAN 1 EXHIBIT 10.3 LAMALIE AMROP INTERNATIONAL PROFIT SHARING PLAN AS AMENDED THROUGH APRIL 30, 1997 ARTICLE I DEFINITIONS (a) "ACCOUNT" or "ACCOUNTS" shall mean a Participant's Employer Contribution Account, Rollover Contribution Account, Voluntary Contribution Account and/or such other accounts as may be established by the Plan Administrator. (b) "ADMINISTRATOR" shall mean the Plan Administrator. (c) "AFFILIATE" shall mean, with respect to an Employer, any corporation other than such Employer that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which such Employer is a member; all other trades or businesses (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with such Employer; any service organization other than such Employer that is a member of an affiliated service group, within the meaning of Section 414(m) of the Code, of which such Employer is a member; and any other organization that is required to be aggregated with such Employer under Section 414(o) of the Code. For purposes of determining the limitations on Annual Additions, the special rules of Section 415(h) of the Code shall apply. (d) "AGREEMENT AND DECLARATION OF TRUST" shall mean the agreement providing for the Trust Fund, as it may be amended from time to time. (e) "ANNUAL ADDITIONS" shall mean, with respect to each Limitation Year beginning after December 31, 1986, the sum of: (1) the amount of Employer contributions allocated to the Participant under any defined contribution plan maintained by an Employer or an Affiliate; (2) the amount of the Employee's contributions (other than rollover contributions, if any) to any contributory defined contribution plan maintained by an Employer or an Affiliate; (3) any forfeitures allocated to the Participant under any defined contribution plan maintained by an Employer or an Affiliate; and (4) if the Participant is a Key Employee, to the extent required by law, any contributions allocated to any individual account on behalf of such Participant under Section 401(h) or Section 419A(d) of the Code. 2 (f) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors of the Company. (g) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute. Reference to a specific section of the Code shall include a reference to any successor provision. (h) "COMPANY" shall mean Lamalie Associates, Inc. and its successors. (i) "COMPENSATION" shall mean, with respect to a Participant, the regular salaries and wages, overtime pay, bonuses and commissions paid (or, for Limitation Years beginning before January 1, 1992, accrued) by an Employer, but shall not include third party disability payments, stock options, relocation expense payments, benefits under this Plan, any amount contributed to any pension, employee welfare, life insurance or health insurance plan or arrangement, or any other tax-favored fringe benefits. No Compensation in excess of $200,000 ($150,000 for Plan Years beginning on or after January 1, 1994) (adjusted under such regulations as may be issued by the Secretary of the Treasury) shall be taken into account for any Employee; for these purposes, if any Employee is a Family Member of a Highly Compensated Employee who is (1) a 5% owner of an Employer or (2) one of the ten Highly Compensated Employees paid the greatest amount of Compensation during the Plan Year, then such Family Member shall not be considered as a separate Employee and any Compensation paid to such Family Member shall be treated as if it were paid to or on behalf of the related Highly Compensated Employee. (j) "EFFECTIVE DATE" of this Amendment shall mean March 1, 1989, except as may otherwise be noted herein. (k) "ELIGIBILITY DATE" shall mean the last day of February of each year. (l) "EMPLOYEE" shall mean any person employed by an Employer or an Affiliate. The term "Employee" shall also include any individual required to be treated as an Employee by reason of Section 414(n) of the Code (but only for the purposes specified in such Section 414(n)). (m) "EMPLOYER" shall mean the Company and any subsidiary, related corporation, or other entity that adopts this Plan with the consent of the Company. (n) "EMPLOYER CONTRIBUTION ACCOUNT" shall mean an account established pursuant to Article VII(b) with respect to Employer contributions made to this Plan pursuant to paragraph (a) of Article VI. (o) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. References to a specific section of ERISA shall include references to any successor provisions. (p) "FAMILY MEMBER" of a Highly Compensated Employee shall mean such Employee's spouse, lineal descendant or ascendant, or the spouse of his lineal descendant or ascendant; provided, 2. 3 however, that for purposes of determining the $200,000 limit on a Highly Compensated Employee's Compensation, the term "Family Member" shall include only the Employee's spouse and his lineal descendants who have not attained age 19 before the close of the Plan Year. (q) "HIGHLY COMPENSATED EMPLOYEE" shall mean, for each Plan Year beginning after December 31, 1986, any Employee during the Plan Year or the immediately preceding Plan Year (1) who was a 5% owner of an Employer; (2) whose Section 415 Compensation was more than $75,000 (adjusted under such regulations as may be issued by the Secretary of Treasury); (3) whose Section 415 Compensation was more than $50,000 (adjusted under such regulations as may be issued by the Secretary of Treasury), and who was a member of the "top paid group." As used herein, "top paid group" shall mean all Employees who are in the top 20% of the Employer's work force on the basis of Section 415 Compensation paid during the year; or (4) who was an officer of an Employer and received compensation in excess of 50% of the amount in effect under Section 415(b)(1)(A) of the Code for any such Plan Year; provided, however, that in no event shall more than 50 Employees be considered Highly Compensated Employees merely by reason of their status as officers of an Employer. The term "Highly Compensated Employee" shall also mean any former Employee who separated from service (or was deemed to have separated from service) prior to the Plan Year, performs no service for an Employer during the Plan Year, and was an actively employed Highly Compensated Employee in the separation year or any Plan Year ending on or after the date the Employee attained age 55. For purposes of determining whether a Participant is a Highly Compensated Employee, if any Employee is a Family Member of a Highly Compensated Employee who is (i) a 5% owner of an Employer or (ii) one of the ten Highly Compensated Employees paid the greatest amount of Compensation during the Plan Year, then such Family Member shall not be considered as a separate Employee and any Compensation paid to such Family Member (and any applicable benefit or contribution on behalf of such Family Member) shall be treated as if it were paid to or on behalf of the related Highly Compensated Employee. (r) "HOUR OF SERVICE" shall mean (1) (A) an hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Employer or an Affiliate; (B) an hour for which an Employee is paid, or entitled to payment, by an Employer or an Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), lay-off, jury duty, military duty or leave of absence. Notwithstanding the preceding, 3. 4 (i) no more than 501 Hours of Service shall be credited under this section (B) to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single Plan Year); (ii) an hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed shall not be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workmen's compensation, or unemployment compensation or disability insurance laws; and (iii) an hour shall not be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee; and (C) an hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Employer or an Affiliate; provided, however, that the same Hour of Service shall not be credited both under section (A) or section (B), as the case may be, and under this section (C). Crediting of an Hour of Service for back pay awarded or agreed to with respect to periods described in section (B) shall be subject to the limitations set forth in that section. The definition set forth in this subparagraph (1) is subject to the special rules contained in Department of Labor Regulations Sections 2530.200b-2(b) and (c), and any regulations amending or superseding such Sections, which special rules are hereby incorporated in the definition of "Hour of Service" by this reference. (2) An Employee required to be credited with at least one Hour of Service during any calendar month under subparagraph (1) shall be credited with 190, and only 190, Hours of Service for such month. (3) (A) Notwithstanding the other provisions of this "Hour of Service" definition, in the case of an Employee who is absent from work for any period by reason of her pregnancy, by reason of the birth of a child of the Employee, by reason of the placement of a child with the Employee in connection with the adoption of such child by the Employee or for purposes of caring for such child for a reasonable period beginning immediately following such birth or placement, the Employee shall be treated as having those Hours of Service described in section (B). (B) The Hours of Service to be credited to an Employee under the provisions of section (A) are the Hours of Service that otherwise would normally have been credited to such Employee but for the absence in question or, in any case in which the Plan is unable to determine such hours, eight Hours of Service per day of such absence; provided, however, that the total number of hours treated as Hours 4. 5 of Service under this subparagraph (3) by reason of any such pregnancy or placement shall not exceed 501 hours. (C) The hours treated as Hours of Service under this subparagraph (3) shall be credited only in the Plan Year in which the absence from work begins, if the crediting is necessary to prevent a One Year Break in Service in such Plan Year or, in any other case, in the immediately following Plan Year. (D) Credit shall be given for Hours of Service under this subparagraph (3) solely for purposes of determining whether a One Year Break in Service has occurred for participation or vesting purposes; credit shall not be given hereunder for any other purposes (including, without limitation, benefit accrual). (E) Notwithstanding any other provision of this subparagraph (3), no credit shall be given under this subparagraph (3) unless the Employee in question furnishes to the Administrator such timely information as the Administrator may reasonably require to establish that the absence from work is for reasons referred to in section (A) and the number of days for which there was such an absence. (s) "KEY EMPLOYEE" shall mean any Employee or former Employee (or any beneficiary of such Employee) who is at any time during the Plan Year (or was at any time during the four preceding Plan Years) (1) an officer of an Employer (within the meaning of Section 416(i)(1)(B) of the Code) having an aggregate annual compensation from the Employer and its Affiliates in excess of 50% of the amount in effect under Section 415(b)(1)(A) of the Code for any such Plan Year, (2) one of the ten Employees owning (or considered as owning) the largest interests in an Employer, owning more than a 1/2% interest in the Employer, and having an aggregate annual compensation from the Employer and its Affiliates of more than the limitation in effect under Section 415(c)(1)(A) of the Code for the calendar year that includes the last day of the Plan Year (if two Employees have equal interests in an Employer, the Employee having the greater annual compensation from the Employer shall be deemed to have a larger interest), (3) a 5% owner of an Employer (within the meaning of Section 416(i)(1)(B) of the Code) or (4) a 1% owner of an Employer (within the meaning of Section 416(i)(1)(B) of the Code) having an aggregate annual compensation from the Employer and its Affiliates of more than $150,000. (t) "LEAVE OF ABSENCE" shall mean the time granted to an Employee for vacation, sick leave, temporary layoff or other purposes, all as authorized in accordance with uniform rules adopted by his Employer from time to time. Leave of Absence shall also include the time that an Employee serves in the armed forces of the United States of America during a period of national emergency or as a result of the operation of a compulsory military service law of the United States of America and during any period after his discharge from such armed forces in which his employment rights are guaranteed by law. (u) "LIMITATION YEAR" shall mean the Plan Year. 5. 6 (v) "NON-KEY EMPLOYEE" shall mean, with respect to any Plan Year, an Employee or former Employee who is not a Key Employee (including any such Employee who formerly was a Key Employee). (w) "NORMAL RETIREMENT DATE" shall mean the date on which a Participant attains the age of 65 years. (x) "ONE YEAR BREAK IN SERVICE" shall mean a Plan Year in which an Employee has 500 or fewer Hours of Service, and it shall be deemed to occur on the last day of any such Plan Year. (y) "PARTICIPANT" shall mean any eligible Employee of an Employer who has become a Participant under the Plan and shall include any former employee of an Employer who became a Participant under the Plan and who still has a balance in an Account under the Plan. (z) "PLAN" shall mean the profit sharing plan as herein set forth, as it may be amended from time to time. (aa) "PLAN ADMINISTRATOR" shall mean the Company. (bb) "PLAN YEAR" shall mean the 12-month period ending on the last day of February. (cc) "ROLLOVER CONTRIBUTION ACCOUNT" shall mean an account established pursuant to Article VII(b) with respect to rollover contributions to this Plan made pursuant to paragraph (d) of Article VI. (dd) "SECTION 415 COMPENSATION" shall mean all compensation received by or made available to the Participant from all Employers and all Affiliates for personal services actually rendered, but does not include deferred compensation, stock options and other distributions that receive special tax benefit. (ee) "TOP HEAVY PLAN" shall mean this Plan if the aggregate account balances (not including voluntary rollover contributions made by any Participant from an unrelated plan) of the Key Employees and their beneficiaries for such Plan Year exceed 60% of the aggregate account balances (not including voluntary rollover contributions made by any Participant from an unrelated plan) for all Participants and their beneficiaries. Such values shall be determined for any Plan Year as of the last day of the immediately preceding Plan Year. The account balances on any determination date shall include the aggregate distributions made with respect to Participants during the five-year period ending on the determination date. For the purposes of this definition, the aggregate account balances for any Plan Year shall include the account balances and accrued benefits of all retirement plans qualified under Section 401(a) of the Code with which this Plan is required to be aggregated to meet the requirements of Section 401(a)(4) or 410 of the Code (including terminated plans that would have been required to be aggregated with this Plan) and all plans of an Employer or an Affiliate in which a Key Employee participates; and such term may include (at the discretion of the Plan Administrator) any other retirement plan qualified under Section 401(a) of the Code that is maintained by an Employer or an Affiliate, provided the resulting aggregation group satisfies the 6. 7 requirements of Sections 401(a) and 410 of the Code. All calculations shall be on the basis of actuarial assumptions that are specified by the Plan Administrator and applied on a uniform basis to all plans in the applicable aggregation group. The account balance of any Participant shall not be taken into account if: (1) he is a Non-Key Employee for any Plan Year, but was a Key Employee for any prior Plan Year, or (2) for Plan Years beginning after December 31, 1984, he has not performed any service for an Employer during the five- year period ending on the determination date. (ff) "TRUST" shall mean the trust established by the Agreement and Declaration of Trust. (gg) "TRUSTEE" shall mean the individual, individuals or corporation designated as trustee under the Agreement and Declaration of Trust. (hh) "TRUST FUND" shall mean the trust fund established under the Agreement and Declaration of Trust from which the amounts of supplementary compensation provided for by the Plan are to be paid or are to be funded. (ii) "VALUATION DATE" shall mean the last day of February, May, August or November of each year or such other date as may be selected by the Plan Administrator. (jj) "VALUATION PERIOD" shall mean the period beginning with the first day after a Valuation Date and ending with the next Valuation Date. (kk) "VOLUNTARY CONTRIBUTION ACCOUNT" shall mean an account established pursuant to Article VII(b) with respect to voluntary after- tax contributions previously made to this Plan. (ll) (1) "YEAR OF SERVICE" shall mean a Plan Year during which an Employee completes 1,000 or more Hours of Service. (2) For purposes of Article VIII and paragraph (a)(5) of the Article entitled "Amendment and Termination," an Employee's "Years of Service" shall not include the following: (A) any Year of Service during which the Company did not maintain this Plan or a predecessor plan; (B) any Year of Service prior to a One Year Break in Service, but only prior to such time as the Participant has completed a Year of Service after such One Year Break in Service; and (C) any Year of Service prior to a One Year Break in Service if the Participant had no vested interest in the balance of his Employer Contribution 7. 8 Account at the time of such One Year Break in Service and if the number of consecutive years in which a One Year Break in Service occurred equaled or exceeded the greater of five or the number of Years of Service completed by the Employee prior thereto (not including any Years of Service not required to be taken into consideration under the Plan as then in effect as a result of any prior One Year Break in Service); provided, however, that for these purposes, any One Year Break in Service resulting from a Leave of Absence shall not be counted but shall be disregarded. Notwithstanding the foregoing, Years of Service shall not be determined under this subparagraph (2) until the first Plan Year beginning after December 31, 1984, but shall be determined for prior periods under the Plan as then in effect; and, provided further, that any Year of Service not required to be taken into account as of the day before the first day of the first Plan Year beginning after December 31, 1984, shall not be taken into account as a Year of Service under this Amendment. ARTICLE II NAME OF THE PLAN A profit sharing plan is hereby continued in accordance with the terms hereof and shall be known as the "LAMALIE AMROP INTERNATIONAL PROFIT SHARING PLAN." ARTICLE III PURPOSE OF THE PLAN AND THE TRUST (a) EXCLUSIVE BENEFIT. This Plan is created for the sole purpose of providing benefits to the Participants and enabling them to share in the growth of their Employer. Except as otherwise permitted by law, in no event shall any part of the principal or income of the Trust be paid to or reinvested in any Employer or be used for or diverted to any purpose whatsoever other than for the exclusive benefit of the Participants and their beneficiaries. (b) RETURN OF CONTRIBUTIONS. Notwithstanding the provisions of paragraph (a), any contribution made by an Employer to this Plan by a mistake of fact may be returned to the Employer within one year after the payment of the contribution; and any contribution made by an Employer that is conditioned upon the deductibility of the contribution under Section 404 of the Code (each contribution shall be presumed to be so conditioned unless the Employer specifies otherwise) may be returned to the Employer if the deduction is disallowed and the contribution is returned (to the extent disallowed) within one year after the disallowance of the deduction. (c) PARTICIPANT'S RIGHTS. The establishment of this Plan shall not be considered as giving any Employee, or any other person, any legal or equitable right against any Employer, any 8. 9 Affiliate, the Plan Administrator, the Trustee or the principal or the income of the Trust, except to the extent otherwise provided by law. The establishment of this Plan shall not be considered as giving any Employee, or any other person, the right to be retained in the employ of any Employer or any Affiliate. (d) QUALIFIED PLAN. This Plan and the Trust, are intended to qualify under the Code as a tax-free employees' plan and trust, and the provisions of this Plan and the Trust should be interpreted accordingly. ARTICLE IV PLAN ADMINISTRATOR (a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall control and manage the operation and administration of the Plan, except with respect to investments. The Administrator shall have no duty with respect to the investments to be made of the funds in the Trust except as may be expressly assigned to it by the terms of the Agreement and Declaration of Trust. (b) POWERS AND DUTIES. The Administrator shall have complete control over the administration of the Plan herein embodied, with all powers necessary to enable it to carry out its duties in that respect. Not in limitation, but in amplification of the foregoing, the Administrator shall have the power and discretion to interpret or construe this Agreement and to determine all questions that may arise as to the status and rights of the Participants and others hereunder. (c) DIRECTION OF TRUSTEE. It shall be the duty of the Administrator to direct the Trustee with regard to the allocation and the distribution of the benefits to the Participants and others hereunder. (d) SUMMARY PLAN DESCRIPTION. The Administrator shall prepare or cause to be prepared a Summary Plan Description (if required by law) and such periodic and annual reports as are required by law. (e) DISCLOSURE. At least once each year, the Administrator shall furnish to each Participant a statement containing the value of his interest in the Trust Fund and such other information as may be required by law. (f) CONFLICT IN TERMS. The Administrator shall notify each Employee, in writing, as to the existence of the Plan and Trust and the basic provisions thereof. In the event of any conflict between the terms of this Plan and Trust as set forth in this Agreement and in the Agreement and Declaration of Trust and as set forth in any explanatory booklet or other description, this Agreement and the Agreement and Declaration of Trust shall control. (g) NONDISCRIMINATION. The Administrator shall not take any action or direct the Trustee to take any action whatsoever that would result in unfairly benefiting one Participant or group of 9. 10 Participants at the expense of another or in improperly discriminating between Participants similarly situated or in the application of different rules to substantially similar sets of facts. (h) RECORDS. The Administrator shall keep a complete record of all its proceedings as such Administrator and all data necessary for the administration of the Plan. All of the foregoing records and data shall be located at the principal office of the Administrator. (i) FINAL AUTHORITY. Except to the extent otherwise required by law, the decision of the Administrator in matters within its jurisdiction shall be final, binding and conclusive upon each Employer and each Employee, member and beneficiary and every other interested or concerned person or party. (j) CLAIMS. (1) Claims for benefits under the Plan may be made by a Participant or a beneficiary of a Participant on forms supplied by the Plan Administrator. Written notice of the disposition of a claim shall be furnished to the claimant by the Administrator within ninety (90) days after the application is filed with the Administrator, unless special circumstances require an extension of time for processing, in which event action shall be taken as soon as possible, but not later than one hundred eighty (180) days after the application is filed with the Administrator; and in the event that no action has been taken within such ninety (90) or one hundred eighty (180) day period, the claim shall be deemed to be denied for the purposes of subparagraph (2). In the event that the claim is denied, the denial shall be written in a manner calculated to be understood by the claimant and shall include the specific reasons for the denial, specific references to pertinent Plan provisions on which the denial is based, a description of the material information, if any, necessary for the claimant to perfect the claim, an explanation of why such material information is necessary and an explanation of the claim review procedure. (2) If a claim is denied (either in the form of a written denial or by the failure of the Plan Administrator, within the required time period, to notify the claimant of the action taken), a claimant or his duly authorized representative shall have sixty (60) days after the receipt of such denial to petition the Plan Administrator in writing for a full and fair review of the denial, during which time the claimant or his duly authorized representative shall have the right to review pertinent documents and to submit issues and comments in writing. The Plan Administrator shall promptly review the claim and shall make a decision not later than sixty (60) days after receipt of the request for review, unless special circumstances require an extension of time for processing, in which event a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after the receipt of the request for review. If such an extension is required because of special circumstances, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. The decision of the review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, with specific references to the Plan provisions on which the decision is based. 10. 11 (k) APPOINTMENT OF ADVISORS. The Administrator may appoint such accountants, counsel (who may be counsel for an Employer), specialists and other persons that it deems necessary and desirable in connection with the administration of this Plan. The Administrator, by action of its Board of Directors, may designate one or more of its employees to perform the duties required of the Administrator hereunder. ARTICLE V ELIGIBILITY AND PARTICIPATION (a) CURRENT PARTICIPANTS. Any Employee who was a Participant in this Plan on the date of adoption of this Amendment shall remain as a Participant in the Plan. (b) ELIGIBILITY AND PARTICIPATION. Thereafter, any Employee of an Employer shall be eligible to become a Participant in the Plan upon completing one month of service. Any such eligible Employee shall enter the Plan as a Participant, if he is still an Employee of an Employer, on the first Eligibility Date concurring therewith or occurring thereafter and shall be deemed to be a Participant as of the first day of the Plan Year during which he became a Participant or, if later, the date he became an Employee of an Employer. (c) FORMER EMPLOYEES. An Employee who ceases to be a Participant and who subsequently reenters the employ of an Employer shall be eligible again to become a Participant on the date of his reemployment. An Employee who has completed one month of service prior to becoming an Employee of an Employer shall enter the Plan as a Participant on the date he becomes an Employee of an Employer. (d) RIGHT TO DECLINE PARTICIPATION. An Employee, with the approval of the Plan Administrator, may decline to participate in the Plan, but any request by an Employee for such approval shall be in writing. ARTICLE VI CONTRIBUTIONS TO THE TRUST (a) EMPLOYER CONTRIBUTIONS. The amount, if any, to be contributed to the Trust by an Employer for each Plan Year shall be determined by its Board of Directors. (b) FORM AND TIMING OF CONTRIBUTIONS. Payments on account of the contributions due from an Employer for any Plan Year shall be made in cash. Such payments may be made by a contributing Employer at any time, but payment of the contribution for any Plan Year shall be completed on or before the time prescribed by law, including extensions thereof, for filing such Employer's federal income tax return for its taxable year with which or within which such Plan Year ends. 11. 12 (c) PARTICIPANTS' VOLUNTARY CONTRIBUTIONS. This Plan will not accept voluntary employee contributions for Plan Years beginning after December 31, 1988. Employee contributions for Plan Years beginning after December 31, 1986, shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code. (d) ROLLOVER CONTRIBUTIONS. Each Participant at any time during a Plan Year, with the consent of the Plan Administrator and in such manner as prescribed by the Plan Administrator, may pay or cause to be paid to the Trustee a rollover contribution (as defined in the applicable sections of the Code, except that for this purpose "rollover contribution" shall be deemed to include both a direct payment from a Participant and a direct transfer from a trustee of another qualified plan in which the Participant is or was a participant). Any Rollover Contribution Account that would cause this Plan to be a transferee plan within the meaning of Section 401(a)(11)(B)(iii)(III) of the Code shall be accounted for separately, and shall be subject to the requirements of Sections 401(a)(11) and 417 of the Code. (e) NO DUTY TO INQUIRE. The Trustee shall have no right or duty to inquire into the amount of any contribution made by an Employer or any Participant or the method used in determining the amount of any such contribution, or to collect the same, but the Trustee shall be accountable only for funds actually received by it. ARTICLE VII PARTICIPANTS' ACCOUNTS AND ALLOCATION OF CONTRIBUTIONS (a) COMMON FUND. The assets of the Trust shall constitute a common fund in which each Participant shall have an undivided interest. (b) ESTABLISHMENT OF ACCOUNTS. The Plan Administrator shall establish and maintain with respect to each Participant an account, designated as an Employer Contribution Account, that shall reflect the Participant's interest in the Trust Fund with respect to contributions made by his Employer. In addition, for each Participant who has made a voluntary contribution pursuant to Article VI, the Plan Administrator shall establish and maintain a Voluntary Contribution Account; and for each Participant who has made a rollover contribution pursuant to Article VI, the Plan Administrator shall establish and maintain a Rollover Contribution Account. The Plan Administrator may establish such additional Accounts as are necessary to reflect a Participant's interest in the Trust Fund. (c) INTERESTS OF PARTICIPANTS. The interest of a Participant in the Trust Fund shall be the vested balance remaining from time to time in his Accounts after making the adjustments required pursuant to paragraph (d) of this Article VII. (d) ADJUSTMENTS TO ACCOUNTS. Subject to the provisions of paragraph (e) of this Article VII, the Accounts of a Participant shall be adjusted from time to time as follows: 12. 13 (1) As of each Valuation Date, each of a Participant's Accounts shall be credited or charged, as the case may be, with a share of the "earnings factor" of the Trust Fund for the Valuation Period ending with such current Valuation Date. The earnings factor of the Trust Fund and the share attributable to a Participant's Accounts are to be determined as follows: (A) The earnings factor attributable to the Trust Fund for any Valuation Period shall consist of the aggregate of the unrealized appreciation or depreciation occurring in the value of the Trust Fund during such period that is attributable to contributions theretofore made to the Participants' Accounts and earnings thereon, and that portion of the income earned or the loss sustained by the Trust Fund during such period (whether from investments or from the sale or exchange of assets) that is attributable to contributions theretofore made to the Participants' Accounts and earnings thereon. (B) The share of the earnings factor attributable to each Account of a Participant for any Valuation Period shall be that amount that shall bear the same ratio to such earnings factor as the balance in such Account as of the end of the immediately preceding Valuation Period (less any amounts distributed from such Account to the Participant during the Valuation Period ending with the current Valuation Date) bears to the aggregate of the balances in the Accounts of like kind as of the end of the immediately preceding Valuation Period of all Participants who are entitled to share in the earnings factor (less the aggregate amounts distributed from such Accounts to such Participants during the Valuation Period ending with the current Valuation Date). (2) Each of a Participant's Accounts shall be credited with contributions made during the Plan Year as follows: (A) As of each Valuation Date that is the last day of a Plan Year, the Employer Contribution Account of a Participant shall be credited with his share of the contribution, if any, made by his Employer with respect to the Plan Year ending with such Valuation Date. The Participants entitled to share in any contribution and their respective shares thereof shall be determined as follows: (i) Subject to the provisions of subsections (ii), (iii), (iv) and (v), a Participant's share of the amount of the contribution for the Plan Year shall be the amount that shall bear the same ratio to the total of such contribution as the Participant's Compensation for such Plan Year bears to the aggregate of the Compensation of all Participants employed by such Employer for such Plan Year who are entitled to share in the contribution for such Plan Year. (ii) A Participant shall be entitled to share in the contribution if a. the Plan Year constitutes a Year of Service for such Participant and 13. 14 b. he is employed by his Employer on the last day of the Plan Year. (iii) In the event that the requirement set forth in subsection (ii)b. immediately above would cause this Plan to fail to meet the requirements of Section 401(a)(26) and 410(b)(1) of the Code (and any regulations thereunder issued by the Secretary of the Treasury), a Participant shall be entitled to share in the contribution if such Plan Year constitutes a Year of Service for such Participant, regardless of whether he is employed by his Employer on the last day of the Plan Year. (iv) In the event that the requirements set forth in subsections (ii) and (iii) immediately above would cause this Plan to fail to meet the requirements of Sections 401(a)(26) and 410(b)(1) of the Code (and any regulations thereunder issued by the Secretary of the Treasury), a Participant shall be entitled to share in the contribution if he completes 500 Hours of Service during such Plan Year, regardless of whether such Plan Year constitutes a Year of Service for such Participant or whether he is employed by his Employer on the last day of the Plan Year. (v) For each Plan Year in which this Plan is a Top Heavy Plan, a Participant who is employed by an Employer on the last day of such Plan Year, who is a Non-Key Employee and who earns Compensation from an Employer for such Plan Year shall be entitled to share in the contribution (as described in this section (A)) to the extent such allocation does not exceed at least three percent (3%) of his Section 415 Compensation (or, if less, the highest percentage of such Section 415 Compensation allocated to the Employer Contribution Account of a Key Employee hereunder, as well as his employer contribution accounts under any other defined contribution plan maintained by such Employer or an Affiliate, including any elective contribution to any plan subject to Code Section 401(k)), regardless of whether such Plan Year constitutes a Year of Service for such Participant, except to the extent such a contribution is made by an Employer or any Affiliate thereof on behalf of the Employee for the Plan Year to any other defined contribution plan maintained by such Employer or Affiliate. (B) As of each Valuation Date, the Rollover Contribution Account of a Participant shall be credited with the rollover contributions, if any, made by the Participant pursuant to Article VI with respect to the Valuation Period ending with such Valuation Date. (3) As of each Valuation Date that is the last day of a Plan Year, the Employer Contribution Account of a Participant shall be credited with his share of the value of interests forfeited pursuant to Article VIII (except to the extent applied pursuant to Article VIII(c)(4)(C)) by Participants employed by his Employer during such Plan Year. A 14. 15 Participant's share of the forfeitures attributable to Employees of his Employer shall be the amount that shall bear the same ratio to the total of the forfeited interests for such Plan Year as the Compensation of the Participant with respect to such Plan Year bears to the aggregate of all Compensation of all Participants of such Employer for that period who are entitled to share in forfeitures for such Plan Year; provided, however, that a Participant shall not be entitled to share in forfeitures for a Plan Year unless such Participant shall be entitled to share in the Employer's contribution for such Plan Year as provided in subparagraph (2)(A), and unless such Participant was also a Participant as of the end of the immediately preceding Plan Year. (4) As of each Valuation Date, each Account of a Participant shall be charged with the amount of any distribution made to the Participant or his beneficiary from such Account during the Valuation Period ending with such Valuation Date. (5) For purposes of all computations required by this Article VII, the accrual method of accounting shall be used, and the Trust Fund and the assets thereof shall be valued at their fair market value as of each Valuation Date. (6) In making the adjustments for any Valuation Date as provided in this paragraph (d), any life insurance contract or contracts purchased and held by the Trustee shall be disregarded, and the value of such contracts shall not be included in the value of a Participant's Account or in the appreciation, depreciation, income or loss of the Trust for any such purposes. For all other purposes, the value of such contracts shall be included in the value of a Participant's Account. (7) The Plan Administrator may adopt such additional accounting procedures as are necessary to accurately reflect each Participant's interest in the Trust Fund, which procedures shall be effective upon approval by the Employer. All such procedures shall be applied in a consistent and nondiscriminatory manner. (e) LIMITATION ON ALLOCATION OF CONTRIBUTIONS. (1) Notwithstanding anything contained in this Plan to the contrary, the aggregate Annual Additions to a Participant's Accounts under this Plan and under any other defined contribution plans maintained by an Employer or an Affiliate for any Limitation Year shall not exceed the lesser of $30,000 (or, for Plan Years beginning after December 31, 1986, if greater, one quarter of the dollar limitation in effect under Section 415(b)(1)(A) of the Code) or 25% of the Participant's Section 415 Compensation for such Plan Year. (2) In the event that the Annual Additions, under the normal administration of the Plan, would otherwise exceed the limits set forth above for any Participant, or in the event that any Participant participates in both a defined benefit plan and a defined contribution plan maintained by any Employer or any Affiliate and the aggregate annual additions to and projected benefits under all of such plans, under the normal administration of such plans, would otherwise exceed the limits provided by law, then the Plan Administrator shall take 15. 16 such actions, applied in a uniform and nondiscriminatory manner, as will keep the annual additions and projected benefits for such Participant from exceeding the applicable limits provided by law. Excess Annual Additions shall be disposed of as provided in subparagraph (3). Adjustments shall be made to this Plan, if necessary to comply with such limits, before any adjustments shall be made to any other plan; provided, however, that any excess Annual Additions attributable to voluntary contributions to other plans shall first be returned to the Participant from such other plans. (3) If as a result of the allocation of forfeitures, a reasonable error in estimating a Participant's Section 415 Compensation or other circumstances permitted under Section 415 of the Code, the Annual Additions attributable to Employer contributions for a particular Participant would cause the limitations set forth in this paragraph (e) to be exceeded, the excess amount shall be held unallocated in a suspense account for the Plan Year and reallocated among the Participants as of the end of the next Plan Year to all of the Participants in the Plan in the same manner as an Employer contribution under the terms of paragraph (d)(2) of this Article VII before any further Employer contributions are allocated to the Accounts of the Participants, and such allocations shall be treated as Annual Additions to the Accounts of the Participants. In the event that the limits on Annual Additions for any Participant would be exceeded before all of the amounts in the suspense account are allocated among the Participants, then such excess amounts shall be retained in the suspense account to be reallocated as of the end of the next Plan Year and any succeeding Plan Years until all amounts in the suspense account are exhausted. The suspense account shall be credited or charged, as the case may be, with a share of the "earnings factor" for each Valuation Period during which it is in existence as if it were an Account of a Participant. (4) In the event that any Participant participates in both a defined benefit plan and a defined contribution plan maintained by his Employer or an Affiliate thereof, then the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction for any Limitation Year shall not exceed 1.0. For these purposes, (A) The Defined Benefit Plan Fraction is a fraction, the numerator of which is the projected annual benefit of the Participant under the defined benefit plan determined as of the close of the Limitation Year and the denominator of which is the lesser of (1) the product of 1.25 times the dollar limitation in effect under Section 415(b)(1)(A) of the Code for such Limitation Year or (2) the product of 1.4 times the amount that may be taken into account under Section 415(b)(1)(B) of the Code with respect to such Participant for such Limitation Year. (B) The Defined Contribution Plan Fraction is a fraction, the numerator of which is the sum of the Annual Additions to the Participant's Accounts as of the close of the Limitation Year (less any amount that may be subtracted from the numerator in accordance with any applicable statutes, notices or rulings) and the denominator of which is the sum of the lesser of the following amounts determined for such year and for each prior Year of Service with the Employer: (1) the product of 1.25 times the dollar limitation in effect under Section 415(c)(1)(A) of the Code 16. 17 for such Limitation Year (determined without regard to Section 415(c)(6) of the Code) or (2) the product of 1.4 times the amount that may be taken into account under Section 415(c)(1)(B) of the Code with respect to such Participant for such Limitation Year. (C) The figure "1.0" shall be substituted for the figure "1.25" set forth in sections (A) and (B) for each year in which this Plan is a Top Heavy Plan unless (1) the defined benefit plan provides a minimum benefit equal to 3% of each Participant's Compensation times the number of years (not exceeding 10) the Plan is a Top Heavy Plan or the defined contribution plan provides a minimum contribution equal to 4% (7-1/2% if the Participant participates in both the defined benefit plan and the defined contribution plan) of each Participant's Section 415 Compensation, and (2) the present value of the cumulative accrued benefits (not including rollover contributions made after December 31, 1983) of the Key Employees for such year does not exceed 90% of the present value of the accrued benefits (not including rollover contributions made after December 31, 1983) under all plans. Such values shall be determined in the same manner as described in the "Top Heavy" definition in Article I. (D) At the election of the Administrator, the denominator under section (B) may be determined with respect to all Limitation Years ending before January 1, 1983, by multiplying (1) the denominator, as calculated under section (B) (as in effect for the Plan Year ending in 1982), for the Limitation Year ending in 1982 by (2) the transition fraction. For these purposes, the term "transition fraction" means a fraction with a numerator equal to the lesser of (1) $51,875 or (2) 1.4 multiplied by 25% of the Compensation of the Participant for the Limitation Year ending in 1981 and with a denominator equal to the lesser of (1) $41,500 or (2) 25% of the Compensation of the Participant for the Plan Year ending in 1981. The transition fraction shall be applied by substituting the figure $41,500 for the figure $51,875 if this Plan is a Top Heavy Plan. (5) For purposes of applying the limitations of this paragraph (e) for a particular Limitation Year, (A) all qualified defined benefit plans (without regard to whether a plan has been terminated) ever maintained by the Employer will be treated as one defined benefit plan, and (B) all qualified defined contribution plans (without regard to whether a plan has been terminated) ever maintained by the Employer will be treated as one defined contribution plan. 17. 18 ARTICLE VIII BENEFITS UNDER THE PLAN (a) RETIREMENT BENEFIT. (1) A Participant shall be entitled to retire from the employ of his Employer upon such Participant's Normal Retirement Date. Until a Participant actually retires from the employ of his Employer, no retirement benefits shall be payable to him, and he shall continue to be treated in all respects as a Participant; provided, however, that a Participant who attains age 70-1/2 shall begin receiving payment of his retirement benefit no later than the April 1 after the end of the calendar year in which he attains age 70-1/2. (2) Upon the retirement of a Participant as provided in subparagraph (1), and subject to adjustment as provided in paragraph (d) of Article IX, such Participant shall be entitled to a retirement benefit in an amount equal to 100% of the balances in his Accounts as of the Valuation Date immediately preceding or concurring with the date of his retirement, plus the amount of any contributions to his Rollover Contribution Account made subsequent to such Valuation Date and not used to purchase insurance. (b) DISABILITY BENEFIT. (1) In the event a Participant's employment with his Employer is terminated by reason of his total and permanent disability, and subject to adjustment as provided in paragraph (d) of Article IX, such Participant shall be entitled to a disability benefit in an amount equal to 100% of the balances in his Accounts as of the Valuation Date immediately preceding or concurring with the date of the termination of his employment, plus the amount of any contributions to his Rollover Contribution Account made subsequent to such Valuation Date and not used to purchase insurance. (2) Total and permanent disability shall mean the total incapacity of a Participant to perform the usual duties of his employment with his Employer and will be deemed to have occurred only when certified by a physician who is acceptable to the Plan Administrator and only if such proof is received by the Administrator within sixty (60) days after the date of the termination of such Participant's employment. (c) SEVERANCE OF EMPLOYMENT BENEFIT. (1) In the event a Participant's employment with his Employer is terminated for reasons other than retirement, total and permanent disability or death, and subject to adjustment as provided in paragraph (d) of Article IX, such Participant shall be entitled to a severance of employment benefit in an amount equal to his vested interest in the balances in his Accounts as of the Valuation Date immediately preceding or concurring with the date of the termination of his employment, plus the amount of any contributions to his Rollover 18. 19 Contribution Account made subsequent to such Valuation Date and not used to purchase insurance. (2) A Participant's vested interest in his Employer Contribution Account shall be a percentage of the balance of such Account as of the applicable Valuation Date, based upon such Participant's Years of Service as of the date of the termination of his employment, as follows:
TOTAL NUMBER OF VESTED YEARS OF SERVICE INTEREST ---------------- -------- Less than 1 Year of Service 0% 1 year, but less than 2 years 25% 2 years, but less than 3 years 50% 3 years, but less than 4 years 75% 4 years or more 100%
Notwithstanding the foregoing, a Participant shall be 100% vested in his Employer Contribution Account upon attaining his Normal Retirement Date, and he shall be 100% vested in his Rollover Contribution Account and his Voluntary Contribution Account at all times, regardless of his age or the number of his Years of Service. (3) (A) If the termination of employment results in five consecutive One Year Breaks in Service, then upon the occurrence of such five consecutive One Year Breaks in Service, the nonvested interest of the Participant in his Employer Contribution Account as of the Valuation Date immediately preceding or concurring with the date of his termination of employment shall be deemed to be forfeited and such forfeited amount shall be reallocated, pursuant to the provisions of paragraph (d) of Article VII, at the end of the Plan Year concurring with the date the fifth such consecutive One Year Break in Service occurs. If the Participant is later reemployed by an Employer or an Affiliate, the unforfeited balance, if any, in his Employer Contribution Account that has not been distributed to such Participant shall be set aside in a separate account, and such Participant's Years of Service after any five consecutive One Year Breaks in Service resulting from such termination of employment shall not be taken into account for the purpose of determining the vested interest of such Participant in the balance of his Employer Contribution Account that accrued before such five consecutive One Year Breaks in Service. (B) Notwithstanding any other provision of this paragraph (c), if a Participant is reemployed by an Employer or an Affiliate and, as a result, no five consecutive One Year Breaks in Service occur, the Participant shall not be entitled to any severance of employment benefit as a result of such termination of employment; provided, however, that nothing contained herein shall require or permit the Participant to return or otherwise have restored to his Employer Contribution 19. 20 Account any funds distributed to him prior to his reemployment and the determination that no five consecutive One Year Breaks in Service would occur. (4) (A) Notwithstanding any other provision of this paragraph (c), if at any time a Participant is less than 100% vested in his Employer Contribution Account and, as a result of his severance of employment, he receives his entire vested severance of employment benefit pursuant to the provisions of Article IX, and the distribution of such benefit is made not later than the close of the fifth Plan Year following the Plan Year in which such termination occurs (or such longer period as may be permitted by the Secretary of the Treasury, through regulations or otherwise), then upon the occurrence of such distribution, the non-vested interest of the Participant in his Employer Contribution Account shall be deemed to be forfeited and such forfeited amount shall be reallocated, pursuant to the provisions of paragraph (d) of Article VII, at the end of the Plan Year immediately following or concurring with the date such distribution occurs. (B) If a Participant is not vested as to any portion of his Employer Contribution Account, he will be deemed to have received a distribution immediately following his severance of employment. Upon the occurrence of such deemed distribution, the non-vested interest of the Participant in his Employer Contribution Account shall be deemed to be forfeited and such forfeited amount shall be reallocated, pursuant to the provisions of paragraph (d) of Article VII, at the end of the Plan Year immediately following or concurring with the date such deemed distribution occurs. (C) If a Participant whose interest is forfeited under this subparagraph (4) is reemployed by an Employer or an Affiliate, then such Participant shall have the right to repay to the Trust, before the date that is the earlier of (1) five years after the Participant's resumption of employment or (2) the close of a period of five consecutive One Year Breaks in Service commencing after his distribution, the full amount of the severance of employment benefit previously distributed to him. If the Participant elects to repay such amount to the Trust within the time periods prescribed herein, or if a non- vested Participant whose interest was forfeited under this subparagraph (4) is reemployed by an Employer or an Affiliate prior to the occurrence of five consecutive One Year Breaks in Service, the non-vested interest of the Participant previously forfeited pursuant to the provisions of this subparagraph (4) shall be restored to the Employer Contribution Account of the Participant, such restoration to be made from forfeitures of non-vested interests and, if necessary, by contributions of his Employer, so that the aggregate of the amounts repaid by the Participant and restored by the Employer shall not be less than the Employer Contribution Account balance of the Participant at the time of forfeiture unadjusted by any subsequent gains or losses. 20. 21 (d) DEATH BENEFIT. (1) In the event of the death of a Participant, and subject to adjustment as provided in paragraph (d) of Article IX, his beneficiary shall be entitled to a death benefit in an amount equal to 100% of the balances in his Accounts as of the Valuation Date immediately preceding or concurring with the date of his death, plus the death benefits provided by any insurance contract or contracts purchased and held by the Trustee in excess of the cash value, if any, thereof included in such balances as of such Valuation Date, and plus the amount of any contributions to his Rollover Contribution Account made subsequent to such Valuation Date and not used to purchase insurance. (2) Subject to the provisions of subparagraph (3), at any time and from time to time, each Participant shall have the unrestricted right to designate a beneficiary to receive his death benefit and to revoke any such designation. Each designation or revocation shall be evidenced by written instrument filed with the Plan Administrator, signed by the Participant and bearing the signatures of at least two persons as witnesses to his signature. In the event that a Participant has not designated a beneficiary or beneficiaries, or if for any reason such designation shall be legally ineffective, or if such beneficiary or beneficiaries shall predecease the Participant, then the estate of such Participant shall be deemed to be the beneficiary designated to receive such death benefit, or if no personal representative is appointed for the estate of such Participant, then his next of kin under the statute of descent and distribution of the state of such Participant's domicile at the date of his death shall be deemed to be the beneficiary or beneficiaries to receive such death benefit. (3) Notwithstanding the foregoing, if the Participant is married as of the date of his death, the Participant's surviving spouse shall be deemed to be his designated beneficiary and shall receive the full amount of the death benefit attributable to the Participant unless the spouse consents or has consented to the Participant's designation of another beneficiary. Any such consent to the designation of another beneficiary must acknowledge the effect of the consent, must be witnessed by a Plan representative or by a notary public and shall be effective only with respect to that spouse. A spouse's consent may be either a restricted consent (which may not be changed as to the beneficiary or (except as otherwise permitted by law) form of payment unless the spouse consents to such change in the manner described herein) or a blanket consent (which acknowledges that the spouse has the right to limit consent only to a specific beneficiary or a specific form of payment, and that the spouse voluntarily elects to relinquish one or both of such rights). Notwithstanding the preceding provisions of this subparagraph (3), a Participant shall not be required to obtain a spousal consent if (A) the Participant is legally separated or the Participant has been abandoned, and the Participant provides the Administrative Committee with a court order to such effect, or (B) the spouse cannot be located. 21. 22 ARTICLE IX FORM AND PAYMENT OF BENEFITS (a) TIME FOR DISTRIBUTION OF BENEFITS. (1) Except as otherwise provided under this Article IX, the amount of the benefit to which a Participant is entitled under paragraphs (a), (b) or (d) of Article VIII shall be paid to him or, in the case of a death benefit, shall be paid to said Participant's beneficiary or beneficiaries as provided in paragraph (b) of this Article IX, beginning as soon as practicable following the Participant's retirement, disability or death, as the case may be. (2) Except as otherwise provided under this Article IX, the amount of the severance of employment benefit to which a Participant is entitled under paragraph (c) of Article VIII shall be paid to a Participant as provided in paragraph (b) of this Article IX, as soon as practicable following the Participant's severance of employment. (3) Notwithstanding the provisions of subparagraphs (1) and (2): (A) Any distribution paid to a Participant (or, in the case of a death benefit, to his beneficiary or beneficiaries) pursuant to subparagraph (1) or (2) shall commence not later than the earlier of: (i) the 60th day after the last day of the Plan Year in which the Participant's employment is terminated or, if later, in which occurs the Participant's Normal Retirement Date, or in the case of a retirement benefit, such later date as the Participant may request; or (ii) April 1 of the year immediately following the calendar year in which he reaches age 70-1/2. (B) No distribution shall be made of the benefit to which a Participant is entitled under paragraph (a), (b) or (c) of Article VIII prior to his Normal Retirement Date unless the value of his benefit does not exceed $3,500, or unless the Participant consents to the distribution. In the event that a Participant does not consent to a distribution of a benefit in excess of $3,500 to which he is entitled under paragraph (a), (b) or (c) of Article VIII, the amount of his benefit shall begin to be paid to the Participant not later than sixty (60) days after the last day of the Plan Year in which the Participant reaches his Normal Retirement Date, or in the case of a retirement benefit, such later date as the Participant may request. (b) MANNER OF PAYMENT. (1) Solely with respect to the retirement benefit provided under paragraph (a) of Article VIII, the manner of payment shall be determined by the Participant. The options are: 22. 23 (A) Option A - Such amount shall be paid or applied in annual installments as nearly equal as practicable; provided, however, that no annual payment shall be less than $100; and provided, further, that the Participant may elect to accelerate the payment of any part or all of the unpaid installments or to provide that the unpaid balance shall be used for the benefit of the Participant under Option B. In the event this option is selected, the portion of the account of a Participant that is not needed to make annual payments during the then current Plan Year shall remain a part of the Trust Fund under Article VII and shall participate in the net increase or net decrease in the value of said Trust Fund as provided therein. In no event shall payments under this Option A extend beyond the life expectancy of the Participant or the joint life expectancy of the Participant and his designated beneficiary. If the Participant dies before receiving the entire amount payable to him, the balance shall be paid in a lump sum to his designated beneficiary as specified in paragraph (d) of Article VIII. (B) Option B - Such amount shall be paid in a lump sum. (2) With respect to all benefits other than a retirement benefit, the benefit shall be paid in a lump sum. (3) The Participant (or his spouse) shall be permitted to elect whether life expectancies will be recalculated for purposes of distributions hereunder. Such election must be made by the Participant (or his spouse) no later than the date that distributions are required to commence pursuant to Section 401(a)(9) of the Code. If the Participant (or his spouse) fails to make such election, life expectancies shall not be recalculated. (4) Notwithstanding the foregoing, payments under any of the options described in this paragraph shall satisfy the incidental death benefit requirements and all other applicable provisions of Section 401(a)(9) of the Code, the regulations issued thereunder (including Prop. Reg. Section 1.401(a)(9)-2), and such other rules thereunder as may be prescribed by the Commissioner. (c) LUMP SUM PAYMENT. Notwithstanding the provisions of paragraphs (a) and (b) of this Article IX, any benefit provided under this Plan that is not more than $3,500 shall be paid in the form of a lump sum. (d) PERIODIC ADJUSTMENTS. To the extent the balance of a Participant's Account has not been distributed and remains in the Plan as of a Valuation Date and notwithstanding anything contained in the Plan to the contrary, the value of such remaining balance shall be subject to adjustment pursuant to the provisions of Article VII. (e) DISTRIBUTION ELECTIONS BEFORE JANUARY 1, 1984. To the extent permitted by the Code and other applicable law, the provisions of this Article IX shall not apply to the distribution of any portion of the balance of a Participant's Account that is subject to a designation made by the 23. 24 Participant prior to January 1, 1984, if such designation was accepted by the Plan Administrator and met the requirements of applicable law on December 31, 1983. (f) DIRECT ROLLOVER DISTRIBUTIONS. (1) Notwithstanding any provision of this Plan to the contrary that would otherwise limit a Distributee's election under this Article XIV, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have all or any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. In the event that a Distributee elects to have only a portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan, the portion must not be less than $500 (adjusted under such regulations as may be issued from time to time by the Secretary of the Treasury). (2) For purposes of this paragraph (f): (A) "Direct Rollover" shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. (B) "Distributee" shall mean (i) a Participant, or former Participant, who is entitled to benefits payable as a result of his retirement, disability or other severance of employment as provided in Article VIII; (ii) a Participant's, or former Participant's, surviving spouse who is entitled to death benefits payable pursuant to paragraph (d) of Article VIII; and (iii) a Participant's, or former Participant's, spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, entitled to benefits payable as provided by paragraph (b)(2) of Article XV. (C) "Eligible Retirement Plan" shall mean an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code that will accept a Distributee's Eligible Rollover Distribution; provided, however, that in the case of an Eligible Rollover Distribution to a Participant's, or former Participant's, surviving spouse who is entitled to death benefits payable pursuant to paragraph (d) of Article VIII, an Eligible Retirement Plan shall mean only an individual retirement account described in Section 408(a) of the Code or an individual retirement annuity described in Section 408(b) of the Code. 24. 25 (D) "Eligible Rollover Distribution" shall mean any distribution of all or any portion of the balance to the credit of a Distributee, other than: (i) any distribution made under the provisions of paragraph (b)(1)(A) of Article IX that is one of a series of substantially equal periodic payments made for a specified period of ten years or more; (ii) any distribution to the extent that such distribution is required under Section 410(a)(9) of the Code; and (iii) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Notwithstanding the preceding provisions of this subparagraph (D), an Eligible Rollover Distribution shall not include one or more distributions during a Plan Year if the aggregate amount distributed during the Plan Year is less than $200 (adjusted under such regulations as may be issued from time to time by the Secretary of the Treasury). ARTICLE X DESIGNATED INVESTMENTS (a) SELECTION OF INVESTMENT FUNDS. The Plan Administrator shall select four or more mutual funds to be available to Participants for the investment of their Accounts. The available funds shall include at least one fund meeting the description below for Fund A, at least one fund meeting the description below for Fund B, at least one fund meeting the description below for Fund C, and at least one fund meeting the description below for Fund D: (1) Fund A - a money market fund or short-term income fund, which shall consist of commercial paper, U.S. Government or federal agency obligations, short term corporate obligations, bank certificates of deposit and/or other types of similar short maturity investments; (2) Fund B - an income fund, which fund may consist of United States treasury and agency bonds, notes and bills, corporate bonds, fixed rate annuity contracts (provided, however, that no such annuity contract shall be deemed to permit any Participant to receive any benefit under this Plan in the form of a life annuity), mortgages, savings accounts or comparable investments; (3) Fund C - an equity fund, which shall consist of common stock and other equity investments; 25. 26 (4) Fund D - an international fund, which shall consist of equity securities and/or fixed income securities issued outside of the United States. In addition to the foregoing mutual or collective fund offerings, each Participant shall also be given an election to designate that all or a portion of the funds in his Accounts are to be invested in an employer stock fund, which shall invest primarily in the Company's common stock; provided, however, that the Agreement of Trust that provides for custody of such fund shall permit the Trustee thereof to invest such funds, or any part thereof, in other investments; and provided, further, that no amount shall be invested in the Company's common stock until all securities registration requirements applicable to either the Company's common stock or the Plan have been complied with. Notwithstanding the foregoing, with respect to investments in existing mutual or collective fund offerings, no Participant may direct more than 10% of the amounts allocated to his Accounts at the time of the direction be invested in the employer stock fund and, with respect to future contributions, no Participant may direct more than 10% of the contributions allocated to his Accounts for any Plan Year be invested in the employer stock fund. (b) ELECTION PROCEDURE. The election described in paragraph (a) shall be made in writing on such forms as may be approved by the Plan Administrator, with the Participant designating the percentage of the funds held in his Accounts that are to be allocated to the various fund offerings; provided, that such designations shall be in increments of 5% only and may be changed no more than once in any quarter (and only during such period during the quarter as may be determined by the Plan Administrator) by written notice to the Administrator; and, provided further, that the percentage to be allocated to the various fund offerings shall be the same for each Account of a Participant. Funds in a Participant's Accounts that are not specifically elected to be invested in the fund offerings (including those situations where a Participant fails to make any election at all) shall be invested by the Trustee in accordance with the general provisions of Article V of the Agreement and Declaration of Trust. (c) INVESTMENT OF FUNDS WHERE NO ELECTION IS MADE. Any unallocated funds in the Trust shall be deemed part of the general fund and shall be invested by the Trustee in accordance with the general provisions of Article V of the Agreement and the Declaration of Trust. ARTICLE XI IN-SERVICE WITHDRAWALS (a) HARDSHIP WITHDRAWALS. Notwithstanding the provisions of Article IX and any other provisions of this Plan to the contrary, if a Participant incurs a Hardship, he may apply to the Administrator for the withdrawal of all or a portion of the vested balance in his Accounts, the total amount not to be in excess of the amount of such Hardship. If the Administrator approves a Hardship withdrawal, it shall direct the Trustee to distribute to the Participant the amount so approved. The Administrator, in its absolute discretion, shall determine whether or not the Participant has incurred a Hardship and shall determine the amount of such Hardship (or a lesser amount, if any, to be distributed to the Participant) pursuant to the provision of paragraph (b) below. 26. 27 (b) DEFINITION. "Hardship," for purposes of this Article XI, shall mean an immediate and substantial financial need of the Participant that cannot readily be met by other financial resources to the Participant. As determined in the Administrator's discretion, which shall be exercised in a uniform and non-discriminatory manner, such financial need may include (1) expenses of medical care of the Participant or a member of his family that cannot be met by other financial resources, (2) expenditures committed prior to a change in the Participant's financial situation that makes it not possible to satisfy such obligations with available resources, and (3) other similar situations of financial Hardship. Such financial need shall not include expenses related to the purchase or repair of the principal residence of the Participant or expense related to the education of a member of the Participant's family, except as such expenses may come within the provisions of subparagraph (2) above. (c) ADJUSTMENTS TO ACCOUNTS. Any distribution that is provided pursuant to the provisions of this Article XI shall, in accordance with the provisions of Article VII, reduce the balances of the affected Accounts of the Participant. If the distribution should occur between the last Valuation Date immediately prior to the retirement, death, disability or other separation from service of a Participant and the date of such termination of service, than, notwithstanding any other provision of Article VIII to the contrary, the benefits otherwise payable upon the retirement, disability, death or severance of employment of a Participant shall be reduced by the amount of such distribution. ARTICLE XII TRUST FUND The Trust Fund shall be held by Jack P. Wissman and Cynthia S. Jetmore as Trustee, or by a successor trustee or trustees, for use in accordance with the Plan under the Agreement and Declaration of Trust. The Agreement and Declaration of Trust may from time to time be amended in the manner therein provided. Similarly, the Trustee may be changed from time to time in the manner provided in the Agreement and Declaration of Trust. ARTICLE XIII EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND The Company shall bear all expenses of implementing this Plan and the Trust. For its services, any corporate trustee shall be entitled to receive reasonable compensation in accordance with its rate schedule in effect from time to time for the handling of a retirement trust. Any individual Trustee shall be entitled to such compensation as shall be arranged between the Company and the Trustee by separate instrument; provided, however, that no person who is already receiving full-time pay from any Employer or any Affiliate shall receive compensation from the Trust Fund (except for the reimbursement of expenses properly and actually incurred). The Company may pay all expenses of the administration of the Trust Fund, including the Trustee's compensation, the com- 27. 28 pensation of any investment manager, the expense incurred by the Plan Administrator in discharging its duties, all income or other taxes of any kind whatsoever that may be levied or assessed under existing or future laws upon or in respect of the Trust Fund, and any interest that may be payable on money borrowed by the Trustee for the purpose of the Trust and any Employer may pay such expenses as relate to Participants employed by such Employer. Any such payment by the Company or an Employer shall not be deemed a contribution to this Plan. Such expenses shall be paid out of the assets of the Trust Fund unless paid or provided for by the Company or another Employer. Notwithstanding anything contained herein to the contrary, no excise tax or other liability imposed upon the Trustee, the Plan Administrator or any other person for failure to comply with the provisions of any federal law shall be subject to payment or reimbursement from the assets of the Trust. ARTICLE XIV AMENDMENT AND TERMINATION (a) RESTRICTIONS ON AMENDMENT AND TERMINATION OF THE PLAN. It is the present intention of the Company to maintain the Plan set forth herein indefinitely. Nevertheless, the Company specifically reserves to itself the right at any time and from time to time to amend or terminate this Plan in whole or in part; provided, however, that no such amendment: (1) shall have the effect of vesting in any Employer, directly or indirectly, any interest, ownership or control in any of the present or subsequent funds held subject to the terms of the Trust; (2) shall cause or permit any property held subject to the terms of the Trust to be diverted to purposes other than the exclusive benefit of the Participants and their beneficiaries or for the administrative expenses of the Plan Administrator and the Trust; (3) shall reduce any vested interest of a Participant on the later of the date the amendment is adopted or the date the amendment is effective, except as permitted by law; (4) shall reduce the Accounts of any Participant; (5) shall amend any vesting schedule with respect to any Participant who has at least three Years of Service at the end of the election period described below, except as permitted by law, unless each such Participant shall have the right to elect to have the vesting schedule in effect prior to such amendment apply with respect to him, such election, if any, to be made during the period beginning not later than the date the amendment is adopted and ending no earlier than sixty (60) days after the latest of the date the amendment is adopted, the amendment becomes effective or the Participant is issued written notice of the amendment by his Employer or the Plan Administrator; or 28. 29 (6) shall increase the duties or liabilities of the Trustee without its written consent. (b) AMENDMENT OF PLAN. Subject to the limitations stated in paragraph (a), the Company shall have the power to amend this Plan in any manner that it deems desirable, and, not in limitation but in amplification of the foregoing, it shall have the right to change or modify the method of allocation of contributions hereunder, to change any provision relating to the administration of this Plan and to change any provision relating to the distribution or payment, or both, of any of the assets of the Trust. (c) TERMINATION OF PLAN. Any Employer, in its sole and absolute discretion, may permanently discontinue making contributions under this Plan or may terminate this Plan and the Trust (with respect to all Employers if it is the Company, or with respect to itself alone if it is an Employer other than the Company), completely or partially, at any time without any liability whatsoever for such permanent discontinuance or complete or partial termination. In any of such events, the affected Participants, notwithstanding any other provisions of this Plan, shall have fully vested interests in the amounts credited to their respective Accounts at the time of such complete or partial termination of this Plan and the Trust or permanent discontinuance of contributions. All such vested interests shall be nonforfeitable. (d) METHOD OF DISCONTINUANCE. In the event an Employer decides to permanently discontinue making contributions, such decision shall be evidenced by an appropriate resolution of its Board and a certified copy of such resolution shall be delivered to the Plan Administrator and the Trustee. All of the assets in the Trust Fund belonging to the affected Participants on the date of discontinuance specified in such resolutions shall, aside from becoming fully vested as provided in paragraph (c), be held, administered and distributed by the Trustee in the manner provided under this Plan. In the event of a permanent discontinuance of contributions without such formal documentation, full vesting of the interests of the affected Participants in the amounts credited to their respective Accounts will occur on the last day of the year in which a substantial contribution is made to the Trust. (e) METHOD OF TERMINATION. (1) In the event an Employer decides to terminate this Plan and the Trust, such decision shall be evidenced by an appropriate resolution of its Board and a certified copy of such resolution shall be delivered to the Plan Administrator and the Trustee. After payment of all expenses and proportional adjustments of individual accounts to reflect such expenses and other changes in the value of the Trust Fund as of the date of termination, each affected Participant or the beneficiary of any such Participant shall be entitled to receive, in a lump sum, any amount then credited to his Accounts. (2) At the election of the Participant, the Plan Administrator may transfer the amount of any Participant's distribution under this paragraph (e) to the trustee of another qualified plan or the trustee of an individual retirement account or individual retirement 29. 30 annuity instead of distributing such amount to the Participant. Any such election by a Participant shall be in writing and filed with the Plan Administrator. ARTICLE XV MISCELLANEOUS (a) MERGER OR CONSOLIDATION. This Plan and the Trust may not be merged or consolidated with, and the assets or liabilities of this Plan and the Trust may not be transferred to, any other plan or trust unless each Participant would receive a benefit immediately after the merger, consolidation or transfer, if the plan and trust then terminated, that is equal to or greater than the benefit the Participant would have received immediately before the merger, consolidation or transfer if this Plan and the Trust had then terminated. (b) ALIENATION. (1) Except as provided in subparagraph (2), no Participant or beneficiary of a Participant shall have any right to assign, transfer, appropriate, encumber, commute, anticipate or otherwise alienate his interest in this Plan or the Trust or any payments to be made thereunder; no benefits, payments, rights or interests of a Participant or beneficiary of a Participant of any kind or nature shall be in any way subject to legal process to levy upon, garnish or attach the same for payment of any claim against the Participant or beneficiary of a Participant; and no Participant or beneficiary of a Participant shall have any right of any kind whatsoever with respect to the Trust, or any estate or interest therein, or with respect to any other property or right, other than the right to receive such distributions as are lawfully made out of the Trust, as and when the same respectively are due and payable under the terms of this Plan and the Trust. (2) Notwithstanding the provisions of subparagraph (1), the Plan Administrator shall direct the Trustee to make payments pursuant to a Qualified Domestic Relations Order as defined in Section 414(p) of the Code. The Plan Administrator shall establish procedures consistent with Section 414(p) of the Code to determine if any order received by the Plan Administrator or any other fiduciary of the Plan is a Qualified Domestic Relations Order. (c) GOVERNING LAW. This Plan shall be administered, construed and enforced according to the laws of the State of Florida, except to the extent such laws have been expressly preempted by federal law. (d) ACTION BY EMPLOYER. Whenever the Company or another Employer under the terms of this Plan is permitted or required to do or perform any act, it shall be done and performed by the Board of Directors of the Company or such other Employer and shall be evidenced by proper resolution of such Board of Directors certified by the Secretary or Assistant Secretary of the Company or such other Employer. 30. 31 (e) ALTERNATIVE ACTIONS. In the event it becomes impossible for the Company, another Employer, the Plan Administrator or the Trustee to perform any act required by this Plan, then the Company, such other Employer, the Plan Administrator or the Trustee, as the case may be, may perform such alternative act that most nearly carries out the intent and purpose of this Plan. (f) GENDER. Throughout this Plan, and whenever appropriate, the masculine gender shall be deemed to include the feminine and neuter; the singular, the plural; and vice versa. ARTICLE XVI LOANS TO PARTICIPANTS (a) AVAILABILITY OF LOANS. (1) The Plan Administrator, in accordance with its uniform nondiscriminatory policy, may direct the Trustee, upon application of a Participant who is actively employed by an Employer, to make a loan to such Participant out of his Accounts as a designated investment by such Participant. (2) Unless otherwise directed by the Administrator, Jack Wissman in Tampa, Florida shall act as agent of the Administrator for purposes of the loan program and shall be authorized to coordinate the loan program set forth herein on behalf of the Administrator. Applications shall be submitted to such person on forms obtained from such person. (3) The amount advanced, when added to the outstanding balance of all other loans to the Participant from this Plan or any other qualified retirement plan adopted by the Participant's Employer or an Affiliate, may not exceed the lesser of: (A) $50,000, reduced by the excess, if any, of: (i) the Participant's highest aggregate outstanding balance of all loans from the Plan (or any other qualified retirement plan adopted by the Participant's Employer or an Affiliate) during the one (1) year period ending on the day before the date on which the loan is made, over (ii) the aggregate outstanding balance of all loans from the Plan (or any other qualified retirement plan adopted by the Participant's Employer or an Affiliate) on the date on which the loan is made; or (B) 50% of the vested aggregate balances of the Participant's Accounts. (4) The minimum amount that may be borrowed by the Participant shall be $500. 31. 32 (5) A Participant may have only one loan outstanding at any one time; and a Participant may obtain only one loan in any one twelve-month period. (6) Notwithstanding the foregoing, no Participant shall be entitled to borrow an amount that the Plan Administrator determines could not be adequately secured by the portion of such Participant's Accounts that is permitted to be held as security pursuant to applicable Department of Labor Regulations. (7) Each loan shall be secured by 50% of the vested interest of the Participant in his Accounts. The Administrator shall not accept any other form of security. (b) TIME AND MANNER OF REPAYMENT. Any loan made under this Article shall be repayable to the Trust at such times and in such manner as may be provided by the Administrator, subject to the following limitations: (1) The Administrator may, but is not obligated to, require each Participant to agree to have each required loan payment deducted from his pay and remitted to the Trustee. (2) Each loan shall bear interest at a reasonable rate and shall provide for substantially level amortization of principal and interest no less frequently than quarterly. The interest rate charged shall be comparable to the rate charged by commercial lending institutions in the region in which the Employer is located for comparable loans as determined by the Plan Administrator at the time the loan is approved. (3) Each loan shall be repaid within a specified period of time. Such period shall not exceed (5) years, unless the loan is used to acquire the principal residence of the Participant. (c) DEFAULT. In the event of default, the Trustee, at the direction of the Administrator, may proceed to collect said loan with any legal remedy available, including reducing the amount of any distribution permitted under Articles VIII and IX by the amount of any such loan that may be due and owing as of the date of distribution or any other action that may be permitted by law. "Events of Default" shall include any failure to make a payment of principal or interest attributable to the loan when due; failure to perform or to comply with any obligations imposed by any agreement executed by the Borrower securing his loan obligation; and any other conditions or requirements set forth within a promissory note or security agreement that may be required in order to ensure that the terms of the loan are consistent with commercially reasonable practices. 32. EX-10.4 10 1997 EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 10.4 LAMALIE ASSOCIATES, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN ARTICLE 1 PURPOSE The purpose of the Lamalie Associates, Inc. 1997 Employee Stock Purchase Plan (the "Plan") is to provide employees of Lamalie Associates, Inc. (the "Company") and its subsidiaries with an opportunity to acquire a proprietary interest in the Company through the purchase of authorized but unissued shares of common stock of the Company or issued shares acquired by the Company or its subsidiaries on the open market or otherwise (the "Common Stock"). It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. ARTICLE 2 DEFINITIONS The following words and terms as used herein shall have that meaning set forth therefor in this Article 2 unless a different meaning is clearly required by the context. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. 2.1 "ACCOUNT" shall mean the payroll deduction account maintained for an electing Eligible Employee as provided in Article 7. 2.2 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. 2.3 "CODE" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, or any successor statute. References to a specified section of the Code shall include a reference to any successor provision. 2.4 "COMMITTEE" is defined in Section 3.1. 2.5 "COMMON STOCK" shall mean the common stock of the Company. 2 2.6 "COMPANY" shall mean Lamalie Associates, Inc. and its successors. 2.7 "COMPENSATION" shall mean an Eligible Employee's regular salary and wages, overtime pay, bonuses and commissions (in all cases, before any reduction for elective contributions to any Code Section 401(k) or Code Section 125 Plan), but does not include credits or benefits under the Plan, or any amount contributed by the Company to any pension, profit sharing or employee stock ownership plan, or any employee welfare, life insurance or health insurance plan or arrangement, or any deferred compensation plan or arrangement. 2.8 "ELIGIBLE EMPLOYEE" shall mean any individual employed by the Company or any Subsidiary who meets the eligibility requirements of Article 4. 2.9 "FAIR MARKET VALUE" of the shares of Common Stock shall mean the closing price, on the date in question (or, if no shares are traded on such day, on the next preceding day on which shares were traded), of the Common Stock as reported on the Composite Tape, or if not reported thereon, then such price as reported in the trading reports of the principal securities exchange in the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the mean between the dealer closing "bid" and "ask" prices on the over-the- counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Committee in good faith and based on all relevant factors. 2.10 "OFFERING PERIOD" is defined in Section 5.1. 2.11 "PURCHASE DOCUMENTS" is defined in Section 6.1. 2.12 "PURCHASE PRICE" is defined in Section 5.2. 2.13 "PLAN" shall mean the Lamalie Associates, Inc. 1997 Employee Stock Purchase Plan, as set forth herein and as amended from time to time. 2.14 "SUBSIDIARY" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Code. ARTICLE 3 ADMINISTRATION 3.1 COMMITTEE. This Plan shall be administered by a committee appointed by the Board of Directors (the "Committee"). The Committee shall consist of not less than two (2) nor more than five (5) persons, each of whom shall be a member of the Board, and none of whom shall be eligible to participate under the Plan. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors. 2 3 3.2 ORGANIZATION. The Committee shall select one of its members as chairman, and shall hold meetings at such time and places as it may determine. The acts of a majority of the Committee at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be valid acts of the Committee. 3.3 POWER AND AUTHORITY. Subject to the provisions of the Plan, the Committee shall have full authority, in its discretion: (a) to determine the employees of the Company and its Subsidiaries who are eligible to participate in the Plan; (b) to determine the purchase price of the shares of Common Stock being offered; and (c) to interpret the Plan, and to prescribe, amend and rescind rules and regulations with respect thereto. The interpretation and construction by the Committee of any provision of the Plan over which it has discretionary authority shall be final and conclusive. All actions and policies of the Committee shall be consistent with the qualification of the Plan at all times as an employee stock purchase plan under Section 423 of the Code. 3.4 INDEMNIFICATION. To the fullest extent permitted by law, each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided that the person shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE 4 EMPLOYEES ELIGIBLE TO PARTICIPATE 4.1 GENERAL RULE. Any person, including any officer but not a person who is solely a director, who is in the employment of the Company or any Subsidiary on the first day of an Offering Period is eligible to participate in the Plan with respect to that Offering Period, except: (a) a person who has been employed less than one year; (b) a person whose customary employment is 20 hours or less per week; and (c) a person whose customary employment is for not more than five months in any calendar year. The Committee shall have the sole power to determine who is and who is not an Eligible Employee. 4.2 SPECIAL RULES. Notwithstanding any provision of the Plan to the contrary, no employee shall be eligible to subscribe for any shares of Common Stock under the Plan if: 4.2.1 immediately after the subscription, the employee would own stock and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power 3 4 or value of all classes of stock of the Company or of any Subsidiary (as determined in accordance with the provisions of Section 423(b)(3) of the Code); 4.2.2 the subscription would permit the employee's rights to purchase shares under all stock purchase plans of the Company and its parent and subsidiary corporations to accrue at a rate that exceeds $25,000 of fair market value of such shares (determined at the time such right to subscribe accrues) for each calendar year in which such right to subscribe is outstanding at any time; 4.2.3 the subscription is otherwise prohibited by law; or 4.2.4 the employee's employment is terminated for any reason prior to the time revocation or cancellation of participation in an offering is prohibited under Section 6.2. ARTICLE 5 OFFERS 5.1 OFFERING PERIODS. There shall be twenty-one (21) offering periods under the Plan: the first offering period shall commence on the closing of the initial public offering for the Common Stock and shall conclude 45 days after such closing; thereafter, separate offering periods shall commence on the fifteenth days of January and July and conclude on the fourteenth days of February and August, respectively, in each of the years 1998 to 2007, inclusive (each an "Offering Period"). Except for the maximum number of shares of Common Stock to be offered under the Plan, except for a lack of available shares of Common Stock, and except for the limitation on the number of shares of Common Stock for which each Eligible Employee may subscribe, there shall be no limit on the aggregate number of shares of Common Stock for which subscriptions may be made with respect to any particular Offering Period. The right of an Eligible Employee to subscribe for shares of Common Stock in an Offering Period shall not be deemed to accrue until the first day of that Offering Period. 5.2 PRICE. The purchase price per share of Common Stock for an Offering Period shall be 85% of the fair market value of the Shares on the last day immediately preceding the first day of the Offering Period (the "Purchase Price"); provided, however, that with respect to the first offering period, the purchase price per share shall be 85% of the lesser of (a) the fair market value of the Common Stock on the last day immediately preceding the first day of the offering period or (b) the fair market value of the Common Stock on the last day immediately preceding the last day of the offering period. 5.3 NUMBER OF SHARES TO BE OFFERED. 5.3.1 The maximum number of shares of Common Stock that may be offered under the Plan is 200,000. 5.3.2 During each Offering Period, an Eligible Employee shall be entitled to subscribe for a total number of shares of Common Stock equal to 3% of the employee's Compensation for the preceding calendar year divided by the Purchase Price. For example, if the 4 5 Purchase Price of the shares is $10, an Eligible Employee who receives Compensation of $30,000 would be able to subscribe for 90 shares ($30,000 x 3% = $900/$10 = 90). However, no Eligible Employee shall be entitled to subscribe for fewer than ten (10) shares during an Offering Period. 5.3.3 Subscriptions shall be allowed for full shares only. Any rights to subscribe for fractional shares shall be void; and any computation relating to fractional shares shall be rounded down to the next lowest whole number of shares. 5.3.4 If with respect to an Offering Period the available shares are oversubscribed, the aggregate of the subscriptions allowable under Section 5.3.2 shall be reduced to such lower figure as may be necessary to eliminate the oversubscription. Such reduction shall be effected on a proportionate basis as equitably as possible; but in no event shall such reduction result in a subscription for fractional shares. In the event of an oversubscription and cutback as provided in this Section 5.3.4, the Company will refund to the participating Eligible Employees any excess payment for subscribed Shares as soon as practicable after the end of the Offering Period. ARTICLE 6 PARTICIPATION AND PAYMENT 6.1 ELECTION TO PARTICIPATE. An Eligible Employee may become a participant in an offering: (a) by completing a subscription agreement, indicating the number of shares of Common Stock to be purchased, and such other documents as the Company may require (the "Purchase Documents"); and (b) by tendering the Purchase Documents and cash or a check (payable in U.S. funds) for the full subscription price (less the amount to be withdrawn from such Eligible Employee's Account pursuant to Section 7.3) to the Secretary of the Company (or such other person as may be designated by the Committee) at any time during the offering. With respect to the first offering period, the Eligible Employee shall tender an amount equal to the purchase price based on the fair market value of the stock as of the beginning of the offering period. If the final purchase price is less, the Company shall refund the excess amount to the Eligible Employee as soon as practicable after the close of the offering period. Purchase Documents and cash or check received by the Secretary of the Company (or other designated person) before or after the offering shall be void and shall be given no effect with respect to the offering; and the Secretary shall return such documents and cash or check to the involved employee as soon as practicable after receipt. 6.2 NO REVOCATION OF ELECTION. No election to participate in an offering may be revoked or canceled by an Eligible Employee once the Purchase Documents and full payment have been tendered to the Company; provided, however, that with respect to the first offering period, an Eligible Employee may revoke his election to participate in the offering by providing written notice thereof to the Secretary of the Company (or other designated person) on or before the last day of such offering period. Such revocation may be with respect to all or less than all of the shares of Common Stock originally elected to be purchased. In the event of any such revocation, the Company shall refund to such Eligible Employee, as soon as practicable after such revocation, the amount previously tendered for the shares to which the revocation relates. 5 6 6.3 NO INTEREST. No interest shall be payable on the purchase price of the shares of Common Stock subscribed for or on the funds returned to employees as a result of an oversubscription or an overpayment, pursuant to Section 6.1 for early or late delivery, or pursuant to Section 6.2 after a revocation. 6.4 DELIVERY OF CERTIFICATES REPRESENTING SHARES. 6.4.1 As soon as practicable after the completion of each offering, the Company shall deliver or cause to be delivered to each participating employee a certificate or certificates representing the shares of Common Stock purchased in the offering. 6.4.2 Certificates representing shares of Common Stock to be delivered to a participating employee under the Plan will be registered in the name of the participating employee, or if the participating employee so directs, by written notice to the Company prior to the termination date of the pertinent offering, and to the extent permitted by applicable law, in the names of the participating employee and one such other person as may be designated by the participating employee, as joint tenants with rights of survivorship. 6.5 RIGHTS AS STOCKHOLDER. No participating employee shall have any right as a stockholder of the Company until after the completion of the offering in which the employee participated and the date on which the employee becomes a record owner of the shares purchased under the Plan (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date. 6.6 TERMINATION OF EMPLOYMENT. An employee whose employment is terminated for any reason shall have no right to participate in the Plan after termination. However, the termination shall not affect any election to participate in the Plan that is made prior to termination in accordance with the provisions of Section 6.1. 6.7 RIGHTS NOT TRANSFERABLE. The right of an Eligible Employee to participate in the Plan shall not be transferable by the employee, and no right of an Eligible Employee under this Plan may be exercised after his death, by his Personal Representative or anyone else, or during his lifetime by any person other than the Eligible Employee. ARTICLE 7 PAYROLL DEDUCTION 7.1 ELECTION OF PAYROLL DEDUCTION. As permitted in the discretion of the Committee from time to time, each Eligible Employee may elect (on such form as may be provided from time to time by the Company) to have a portion of the employee's Compensation deducted from each paycheck (or, if the Company so permits, from only the first paycheck in each month), which amounts shall not exceed in the aggregate such amount as determined by the Committee from time to time. An Eligible Employee may change the amount to be withheld from time to time in accordance with rules 6 7 established by the Committee, which rules may include, among other things, limitations on the number of times changes are permitted and when changes are permitted. A change shall be effective no earlier than the first full payroll period following receipt of the new form by the Committee. The Committee may, however, on a uniform and non-discriminatory basis delay the effective date of a change if it determines that such a delay is either necessary or appropriate for the proper administration of the Plan. 7.2 MAINTENANCE OF ACCOUNTS. A separate Account shall be maintained for each Eligible Employee who has amounts withheld from the employee's Compensation under this Article 7. The maintenance of separate Accounts shall not require the segregation of any assets from any other assets held under this Article 7. The Accounts shall not bear interest. Each Account shall be adjusted from time to time to reflect the amounts withheld from the Compensation of the Eligible Employee to whom the Account relates, the amounts withdrawn by such Eligible Employee for purchases of Common Stock under the Plan, and for other amounts withdrawn by such Eligible Employee from the Account. 7.3 USE OF ACCOUNTS TO PURCHASE COMMON STOCK. At the time that an Eligible Employee elects to participate in an offering under Section 6.1, the Eligible Employee may elect to have a specified amount from his Account (up to the whole amount thereof) used to pay all or a portion of the purchase price. 7.4 OTHER USE OF ACCOUNTS. At any time that a person is no longer an employee (including by reason of death) or an Eligible Employee, the balance in such person's Account shall be paid to such person or his legal representative. In addition, the Committee may also permit the complete withdrawal of the amounts in an Account under such uniform and non-discriminatory conditions as it may impose from to time to time (including, without limitation, not permitting the Eligible Employee making such withdrawal from again electing payroll deductions for a specified period of time). Except as otherwise provided in Section 7.3 and this Section 7.4, an Eligible Employee shall not withdraw any amount from his Account, in whole or in part. ARTICLE 8 MISCELLANEOUS 8.1 STOCK ADJUSTMENTS. 8.1.1 In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Common Stock) or any other increase or decrease in the number of such shares of Common Stock effected without any receipt of consideration by the Company, then, in any such event, the number of shares of Common Stock that remain available under the Plan, and the number of shares of Common Stock and the purchase price per share of Common Stock then subject to subscription by Eligible Employees, shall be proportionately and appropriately adjusted for any such increase or decrease. 7 8 8.1.2 Subject to any required action by the stockholders, if any change occurs in the Common Stock by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting Common Stock, then, in any such event, the number and type of shares then subject to subscription by Eligible Employees, and the purchase price thereof, shall be proportionately and appropriately adjusted for any such change. 8.1.3 In the event of a change in the Common Stock as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be Common Stock within the meaning of the Plan. 8.1.4 To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive. 8.1.5 Except as hereinabove expressly provided in this Section 8.1, an Eligible Employee shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to any subscription. 8.1.6 The existence of the Plan, and any subscription for shares of Common Stock hereunder, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. 8.2 LISTING AND REGISTRATION OF COMMON STOCK. If at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of the Common Stock covered by the Plan upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Plan or the offering, issue or purchase of shares thereunder, the Plan shall not be effective as to later offerings unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 8.2 become operative and if, as a result thereof, an offering is missed in whole or in part, then and in that event, the missed portion of the offering shall be passed and the term of the Plan shall not be affected. Notwithstanding the foregoing or any other provision in the Plan, the Company shall have no obligation under the Plan to cause any shares of Common Stock to be registered or qualified under any federal or state law or listed on any stock exchange or admitted to any national marketing system. 8.3 TERM OF PLAN. The Plan, unless sooner terminated as provided in Section 8.4, shall commence upon the satisfaction of the conditions of Section 8.9 and shall terminate on the conclusion of the offering to be made beginning on July 15, 2007. 8 9 8.4 AMENDMENT OF THE PLAN; TERMINATION. The Board shall have the right to revise, amend or terminate the Plan at any time without notice, provided that no Eligible Employee's existing rights are adversely affected thereby without the consent of the Eligible Employee, and provided further that, without approval of the stockholders of the Company, no such revision or amendment shall: (a) increase the total number of shares of Common Stock to be offered; or (b) materially modify the requirements as to eligibility for participation in the Plan. The foregoing prohibitions of this Section 8.4 shall not be affected by adjustments in shares and purchase price made in accordance with the provisions of Section 8.1. 8.5 APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to the Plan will be used for general corporate purposes. 8.6 NO OBLIGATION TO PARTICIPATE. The offering of any Common Stock under the Plan shall impose no obligation upon any Eligible Employee to subscribe to purchase any such shares. 8.7 NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the Plan, and the offering of shares of Common Stock under the Plan, shall in no way give any employee the right to continued employment, give any employee the right to receive any Common Stock or any additional Common Stock under the Plan, or otherwise provide any employee any rights not specifically set forth in the Plan. 8.8 WITHHOLDING. Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require a participating employee to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax liability prior to the delivery of any certificate or certificates for such shares. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 8.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the effective date of the Plan being the date that the last such condition is satisfied: 8.9.1 the adoption of the Plan by the Board of Directors; 8.9.2 the approval of the Plan by the stockholders of the Company within twelve (12) months after its adoption by the Board; and 8.9.3 the closing of the initial public offering of the Common Stock. 9 EX-10.5 11 FORM OF AGREEMENT FOR DEFERRED COMPENSATION PLAN 1 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ EXHIBIT 10.5 THIS AGREEMENT, made and entered into this ______ day of _______________, 1996, by and between Lamalie Amrop International, with principal offices and place of business in the State of Florida (hereinafter referred to as the "Corporation"), and_______________________________, an individual residing in the State of ______________ (hereinafter referred to as the "Employee"), WITNESSETH THAT: WHEREAS, the Employee is employed by the Corporation, and WHEREAS, the Corporation recognizes the valuable services heretofore performed for it by the Employee and wishes to encourage continued employment, and WHEREAS, the Employee wishes to defer a certain portion of his/her compensation payable, and WHEREAS, the parties hereto wish to provide the terms and conditions upon which the Corporation shall pay such deferred compensation to the Employee or designated beneficiary; and WHEREAS, the parties hereto intend that this Agreement be considered an unfunded arrangement, maintained primarily to provide deferred compensation benefits for the Employee, a member of a select group of management or highly compensated employees of the Corporation, for purposes of the Employee Retirement Income Act of 1974, as amended; NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows: 1. DEFINITION OF TERMS. Certain words and phrases are defined when first used in later paragraphs of this Agreement. In addition, the following words and phrases when used herein, unless the context clearly requires otherwise, shall have the following respective meanings: (a) Accrued Benefit: The sum of all deferred amounts credited to the Employee's Retirement Account and due and owing to the Employee or beneficiaries pursuant to this Agreement, together with additions thereto calculated as set forth in paragraph 4 hereof, minus any distributions hereunder. - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 1 DEFERRED COMPENSATION PLAN 2 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ (b) Affiliate: Any corporation, partnership, joint venture, association, or similar organization or entity, the employees of which would be treated as employed by the Corporation under Section 414(b) and 414(c) of the Code. (c) Agreement: This Plan Agreement, together with any and all amendments or supplements thereto. (d) Code: The Internal Revenue Code of 1986, as amended or as it may be amended from time to time. (e) Compensation: Total salary, bonuses and commissions of the Employee paid or accrued by the Corporation. (f) Deferred Amounts: The amounts of compensation actually deferred. (g) Effective Date: November 1, 1994. (h) Election of Deferral: A written notice filed by the Employee with the Secretary/Treasurer of the Corporation in substantially the form attached hereto as Exhibit A, specifying the amount of Compensation and/or bonus to be deferred and the form and timing of the subsequent payment. (i) Calendar Year: January 1 through December 31. (j) Notice of Discontinuance: A written notice filed by the Employee with the Secretary/Treasurer of the Corporation in substantially the form attached hereto as Exhibit B, requesting discontinuance of the deferral of the Employee's Compensation and/or bonuses. (k) Retirement Account: Book entries maintained by the Corporation reflecting deferred amounts and additions thereon; provided, however, that the existence of such book entries and the Retirement Account shall not create and shall not be deemed to create a trust of any kind, or a fiduciary relationship between the Corporation and the Employee, designated beneficiary, or other beneficiaries under this Agreement. - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 2 DEFERRED COMPENSATION PLAN 3 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ 2. DEFERRED COMPENSATION. Commencing on the Effective Date, and continuing through the date on which the Employee's employment terminates because of death, retirement, disability, or any other cause, the Employee and the Corporation agree that the Employee shall be entitled to elect to defer into a Retirement Account, a portion (as set forth in the Deferral Election Form) of Compensation that the Employee would otherwise be entitled to receive from the Corporation in each Calendar Year. The amount selected for deferral by the Employee pursuant to the Deferral Election Form is referred to as the "Annual Deferral Sum". The amounts of Compensation actually deferred, taking into account discontinuance of deferral pursuant to a Notice of Discontinuance, are hereinafter collectively referred to as "Deferred Amounts". The maximum amount of Compensation that can be deferred by the Employee is hereinafter referred to as the "Maximum Annual Deferral Sum," the amount of which can be defined and subsequently changed by the Corporation. The Employee's Deferred Amounts shall be credited to the Employee's Retirement Account as of the dates such Deferred Amounts would, but for such deferral, be payable to the Employee. 3. DEFERRAL IN PARTIAL CALENDAR YEAR. If the Effective Date of this Agreement is not the first day of the Calendar Year, the Employee shall be entitled to elect to defer a portion of the Maximum Annual Deferral Sum in such partial Calendar Year, calculated as follows: the Maximum Annual Deferral Sum under paragraph 2 hereof shall be multiplied by a fraction, the numerator of which is the number of full calendar months in the Calendar Year from and after the Effective Date, and the denominator of which is twelve (12). 4. ADDITIONS TO DEFERRED AMOUNTS. The Corporation hereby agrees that it will credit Deferred Amounts in the Employee's Retirement Account with additions thereon ("Additions") from and after the dates Deferred Amounts are credited to the Retirement Account. Additions to Deferred Amounts shall accrue commencing on the date the Retirement Account first has a positive balance and shall continue up to the date that Retirement Benefits begin as described in Paragraphs 7, 8 and 9 of this Agreement. Additions shall be calculated at a compound rate of interest which shall be declared by the Corporation on an annual basis. - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 3 DEFERRED COMPENSATION PLAN 4 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ 5. ELECTION TO DEFER COMPENSATION. The Employee may elect an Annual Deferral Sum hereunder by filing an Election of Deferral. The initial Election of Deferral must be filed within twenty-eight (28) days of the Effective Date of this Agreement. Such initial Election of Deferral, if any, to defer compensation for services performed, shall be effective commencing November 1, 1994. If the Employee was not an Employee on the Effective Date, or was otherwise ineligible to file an Election of Deferral, he may file an Election of Deferral within twenty (20) days after he first becomes eligible, which Election of Deferral shall be effective to defer compensation for services performed after the date of the Election of Deferral. Thereafter, an Election of Deferral must be filed at least twenty (20) days prior to the beginning of the Calendar Year to which it pertains and shall be effective to defer compensation for services performed after the first day of the Calendar Year following the filing thereof. 6. TERMINATION OF ELECTION. The Employee's initial Election of Deferral shall continue in effect, pursuant to the terms of the Election of Deferral, unless and until the Employee files with the Corporation a Notice of Discontinuance or a subsequent Election of Deferral specifying a different amount of deferral. Each Election of Deferral filed subsequent to the initial Election of Deferral shall similarly continue in effect until the Employee files a Notice of Discontinuance or a new Election of Deferral. Any new Election of Deferral, to be effective, must be filed at least twenty (20) days prior to the beginning of the Calendar Year in which deferral is sought. A Notice of Discontinuance shall be effective if filed at least twenty (20) days prior to any January 1st. Such Notice of Discontinuance shall be effective commencing with the January 1st, following its filing and shall apply only with respect to the Employee's Total Compensation attributable to services not yet performed. 7. RETIREMENT BENEFIT. The Corporation agrees that, from and after the dates elected by the Employee as the dates to begin receiving deferred compensation and earnings thereon, the Corporation shall thereafter pay as a retirement benefit ("Retirement Benefit") to the Employee, in accordance with the Employee's applicable election as specified in the Deferral Election Form: a. Single Payment: the Employee's entire Accrued Benefit, in a single sum, payable on the first day of the plan year following the Employee's retirement; or - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 4 DEFERRED COMPENSATION PLAN 5 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ b. Installment Payments: the Employee's entire Accrued Benefit, payable in equal annual installments, annuitized for the number of years elected in the deferral election form, based on annuity prices available at that time. 8. DISABILITY RETIREMENT. Notwithstanding any other provision hereof, the Employee shall be entitled to receive payments hereunder, upon termination of employment, in any case in which it is determined by a duly licensed physician selected by the Corporation that, because of ill health, accident, disability or general inability because of age, the Employee is no longer able, properly and satisfactorily, to perform his regular duties as an Employee. If the Employee's employment is terminated pursuant to this paragraph, the disability retirement benefit payable hereunder ("Disability Retirement Benefit") shall be that amount that would have been payable as a Retirement Benefit had the Employee attained his Early Retirement Date on the date of the physician's disability determination. The Disability Retirement Benefit payable under this paragraph shall be distributed in accordance with the provisions of paragraph 7 as if the employee had retired on the date of the physician's disability determination. 9. (a) Death Benefit Prior to Retirement. In the event of the Employee's death while in the employment of the Corporation, the Corporation shall pay the Accrued Benefit in the Employee's Retirement Account in a lump sum as soon as is practical following the Employee's death. The Retirement Account shall continue to be credited with Additions until payment is made. Payment shall be made to the Employee's designated beneficiary, in accordance with the last such designation received by the Corporation from the Employee prior to death. If no such designation has been received by the Corporation from the Employee prior to death, said payment shall be made to the Employee's then living spouse. If the Employee is not survived by a spouse then the payment will be made to the estate of the Employee. (b) Death Benefit After Commencement of Benefits. In the event of the Employee's death after the commencement of Retirement Benefits, or Disability Retirement Benefits, but prior to the completion of all such payments due and owing hereunder, the Corporation shall continue to make such payments, in equal annual installments, over the remainder of the period - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 5 DEFERRED COMPENSATION PLAN 6 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ specified in paragraph 7 or 8 hereof that would have been applicable had the Employee survived. Such continuing payments shall be made to the Employee's designated beneficiary, in accordance with the last such designation received by the Corporation from the Employee prior to death. If no such designation has been received by the Corporation from the Employee prior to death or if said payments are otherwise to be made as provided herein, said payments shall be made to the Employee's then living spouse, so long as the spouse shall live and thereafter to such person or persons, including the spouse's estate, as the spouse may appoint under a Will, making specific reference hereto; if the Employee is not survived by a spouse or if the spouse shall fail to so appoint, then said payments shall be made to the then living children of the Employee, if any, in equal shares, for their joint and survivor lives; and if none, or after their respective joint and survivor lives, any balance thereof in one lump sum to the estate of the Employee. Such continuing payments shall commence on the first day of the plan year following the Employee's death. 10. TERMINATION BENEFIT. Not Applicable. 11. EMERGENCY WITHDRAWAL. If the Employee has an unforeseeable emergency (as hereinafter defined), the Corporation may, if it deems advisable in its sole and absolute discretion, distribute to or utilize on behalf of the Employee as an emergency benefit (the "Emergency Benefit") any portion of the Employee's Retirement Account up to, but not in excess of, the Termination Benefit to which the Employee would have been entitled as of the date of the unforeseeable emergency distribution. Any Emergency Benefit shall be distributed or utilized at such times as the Corporation shall determine, and the Accrued Benefit in the Employee's Retirement Account shall be reduced by the amount so distributed and/or utilized. "Unforeseeable Emergency" means an unanticipated emergency that is caused by an event beyond the control of the Employee and that would result in severe financial hardship to the Employee if early withdrawal were not permitted. A withdrawal based upon unforeseeable emergency pursuant to this Section shall not exceed the amount required to meet the immediate financial need created by the unforeseeable emergency (including the amount required to pay taxes due on the withdrawal) and not reasonably available from other resources of the Employee. The determination of the existence of an Employee's unforeseeable emergency and the amount required to be - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 6 DEFERRED COMPENSATION PLAN 7 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ distributed to meet the need created by the unforeseeable emergency shall be made by the Corporation. 12. CONSULTATIVE SERVICES. As further consideration for the agreements of the Corporation contained herein and as a condition to the performance by the Corporation of its obligations hereunder, the Employee expressly agrees to make himself available to the Corporation following retirement from service with the Corporation in a consultative and advisory capacity, unless his retirement is caused by disability as provided in paragraph 8 hereof. The Employee shall perform consultative and advisory services for such period of time as benefit payments are due and owing hereunder and on a part-time basis, at such times as he may from time to time deem appropriate, subject to the following conditions.: (a) In rendering such services, the Employee shall not be considered an employee of the Corporation, but shall act in the capacity of an independent contractor and as such shall not be subject to control and direction by the Board of Directors of the Corporation, but shall be subject to his own control, and direction in the performance of such services; (b) such services shall be performed in such place or places as the Employee may, from time to time, designate; (c) the Employee shall not be required to devote a major part of his time to such services; and (d) the Employee shall not be required to render such services during vacation periods or during any periods of illness or other incapacity. The Corporation agrees that it will pay the Employee for the performance of such advisory and consultative services. 13. OFFSET FOR OBLIGATIONS TO CORPORATION. If, at such time as the Employee becomes entitled to benefit payments hereunder, the Employee has any debt, obligation or other liability representing an amount owing to the Corporation or an Affiliate of the Corporation, and if such debt, obligation, or other liability is due and owing at the time benefit payments are payable - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 7 DEFERRED COMPENSATION PLAN 8 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ hereunder, the Corporation may offset the amount owing it or an Affiliate against the amount of the benefits otherwise distributable hereunder. 14. BENEFICIARY DESIGNATION. The Employee shall have the right, at any time, to submit in substantially the form attached hereto as Exhibit C, a written designation of primary and secondary beneficiaries to whom payment under this Agreement shall be made in the event of death prior to complete distribution of the benefits due and payable under the Agreement. Each beneficiary designation shall become effective only when receipt thereof is acknowledged in writing by the Corporation. 15. NO TRUST CREATED. Nothing contained in this Agreement, and no action taken pursuant to its provisions by either party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Corporation and the Employee, designated beneficiary, other beneficiaries of the Employee or any other person. The preceding sentence shall not be construed to prevent the Corporation from establishing a grantor's trust to assist it in meeting its obligations under this Agreement, provided, however, that any such grantor's trust must, at all times, conform to the terms of the model trust, as described in Revenue Procedure 92-64, or any successor thereof. - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 8 DEFERRED COMPENSATION PLAN 9 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ 16. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS: UNSECURED GENERAL CREDITOR STATUS OF EMPLOYEE. (a) The payments to the Employee or designated beneficiary or any other beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Corporation; no person shall have any interest in any such assets by virtue of the provisions of this Agreement. The Corporation's obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Corporation under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Corporation; no such person shall have nor require any legal or equitable right, interest or claim in or to any property or assets of the Corporation. (b) In the event that, in its discretion, the Corporation purchases an insurance policy or policies insuring the life of the Employee (or any other property), to allow the Corporation to recover the cost of providing benefits, in whole or in part, hereunder, neither the Employee, designated beneficiary nor any other beneficiary shall have any ownership rights whatsoever therein. The Corporation shall be the sole owner of any such insurance policy and shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for the Employee or any other person nor as collateral security for any obligation of the Corporation hereunder. 17. NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be construed to be a contract of employment for any term of years, nor as conferring upon the Employee the right to continue to be employed by the Corporation in his present capacity, or in any capacity. It is expressly understood by the parties hereto that this Agreement relates to the payment of deferred compensation for the Employee's services, payable after termination of employment with the Corporation, and is not intended to be an employment contract. 18. BENEFITS NOT TRANSFERABLE. Neither the Employee, designated beneficiary, nor any other beneficiary under this Agreement shall have any - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 9 DEFERRED COMPENSATION PLAN 10 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ power or right to transfer, assign, anticipate, alienate, sell, pledge, hypothecate or otherwise encumber any part or all of the amounts payable hereunder. No such amounts shall be subject to attachment, garnishment, or any other type of seizure by any creditor of any such Employee or beneficiary, by any proceeding at law or in equity, nor shall such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of the Employee, designated beneficiary, or any other beneficiary hereunder. Any such attempted assignment or transfer shall be void. 19. DETERMINATION OF BENEFITS. (a) Claim. A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a "Claimant":) may file a written request for such benefit with the Corporation, setting forth his claim. The request must be addressed to the Secretary/Treasurer of the Corporation at its then principal place of business. (b) Claim Decision. Upon receipt of a claim, the Corporation shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Corporation may, however, extend the reply period for an additional ninety (90) days for reasonable cause. If the claim is denied in whole or in part, the Corporation shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth: (i) The specific reason or reasons for such denial; (ii) The specific reference to pertinent provisions of this Agreement on which such denial is based; (iii) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary; - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 10 DEFERRED COMPENSATION PLAN 11 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ (iv) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (v) The time limits for requesting a review under subsection (c) and for review under subsection (d) hereof. (c) Request for Review. Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Secretary of the Corporation review the determination of the Corporation. Such request must be addressed to the Secretary of the Corporation, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Corporation. If the Claimant does not request a review of the Corporation's determination by the Secretary of the Corporation within such sixty (60) day period, he shall be barred and estopped from challenging the Corporation's determination. (d) Review of Decision. Within sixty (60) days after the Secretary's receipt of a request for review, he will review the Corporation's determination. After considering all materials presented by the Claimant, the Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review. 20. AMENDMENT. This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto, or their respective successors, and may not be otherwise terminated except as provided herein. 21. INUREMENT. This Agreement shall be binding upon and inure to the benefit of the Corporation and its successors and assigns, and the Employee, his/her successors, heirs, executors, administrators and beneficiaries. - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 11 DEFERRED COMPENSATION PLAN 12 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ 22. NOTICE. Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party's last known address as shown on the records of the Corporation. The date of such mailing shall be deemed the date of notice, consent or demand. Either party may change the address to which notice is to be sent by giving notice of the change of address in the manner aforesaid. 23. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Florida. 24. PARTIAL INVALIDITY. If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each illegal or invalid provision shall be fully severable and the Plan shall be construed and enforced as if such illegal or invalid provision had never been included herein. 25. RIGHT TO REDUCE DEFERRAL ELECTIONS. The Corporation has the right to reduce the deferral election of any Employee if, the deferral is in excess of the Maximum Annual Deferral Sum, as determined from time to time by the Plan Administrator. This reduction, if made, will be implemented before the end of the then current plan year. IN WITNESS WHEREOF, the parties have executed this Agreement, in duplicate, as of the day and year first above written. LAMALIE AMROP INTERNATIONAL By: --------------------------------- Title: ------------------------------ Corporation ------------------------------------ - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 12 DEFERRED COMPENSATION PLAN 13 ================================================================================ 1997 DEFERRED COMPENSATION PLAN AGREEMENT ================================================================================ Employee ATTEST: - ------------------------------------ - ----------------------------Secretary - -------------------------------------------------------------------------------- JUNE 3, 1997 *LAMALIE AMROP INTERNATIONAL* SECTION V PAGE 13 DEFERRED COMPENSATION PLAN EX-10.11 12 INDEMN. AGRMT. FOR DIRECTORS & CERTAIN OFFICERS 1 EXHIBIT 10.11 INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into EFFECTIVE as of the _____ day of ____ _________, 1997, by and between ________________________________________________ (the "Indemnitee"), and LAMALIE ASSOCIATES, INC., a Florida corporation (the "Corporation"). W I T N E S S E T H: WHEREAS, it is essential to the Corporation to retain and attract as Directors, officers and key employees the most capable persons available; and WHEREAS, the substantial increase in corporate litigation subjects directors and officers to expensive litigation risks at the same time that the availability of directors' and officers' liability insurance is severely limited; and WHEREAS, in addition, the indemnification provisions of the Florida Business Corporation Act (the "FBCA," as further defined below) expressly provide that such provisions are non-exclusive; and WHEREAS, the Indemnitee does not regard the protection available under the Articles of Incorporation and Bylaws of the Corporation and insurance, if any, as adequate in the present circumstances, and considers it necessary to condition the Indemnitee's agreement to serve as a Director and/or officer of the Corporation to have appropriate contractual rights to indemnification from the Corporation, and the Corporation desires the Indemnitee to serve in such capacity or capacities and to have such rights as set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement, it is hereby agreed as follows: 1. DEFINITIONS. For the purposes of this Agreement, the terms below shall have the indicated meanings except where the context in which such a term is used in this Agreement clearly indicates otherwise: a. Affiliate means, as to any Person (the "first Person"), any other Person that, either directly or indirectly, controls, is controlled by or is under common control with the first Person. b. Agreement of Indemnity means the agreement provided for by Section 3(e)(i) of this Agreement. c. Associate of a Person means a director, officer, employee, agent, consultant, independent contractor, stockholder or partner of such Person. 2 INDEMNIFICATION AGREEMENT PAGE 2 d. Board means the Board of Directors of the Corporation. e. Evaluation Date means, as to any Indemnification Notice, the date thirty (30) calendar days after the date of receipt by the Board of such Indemnification Notice. f. Expense means any cost or expense (other than a Liability), including but not limited to Legal Fees, and including interest on any of the foregoing, reasonably paid or required to be paid by the Indemnitee on account of or in connection with any Proceeding. g. Expense Advance Request means the request provided for by Section 3(d)(ii) of this Agreement. h. FBCA means a the Florida Business Corporation Act, Chapter 607, Florida Statutes, and any successor statute. i. Indemnification Notice means the notice provided for by Section 3(a) of this Agreement. j. Legal Fees means the fees and disbursements of legal counsel, legal assistants, experts, accountants, consultants and investigators, before and at trial, in appellate or bankruptcy proceedings and otherwise. k. Liability means any amount (other than an Expense), including any assessment, fine, penalty, excise or other tax, and including interest on any of the foregoing, paid or required to be paid by the Indemnitee on account of or in connection with any Proceeding. l. Nonindemnifiable Conduct means any act or omission to act of the Indemnitee material to a Proceeding as to which indemnification under this Agreement is sought, which act or omission is determined to involve: i. a violation of criminal law, unless the Indemnitee had reasonable cause to believe such conduct was lawful or had no reasonable cause to believe such conduct was unlawful; ii. a transaction from which the Indemnitee derived an improper personal benefit; iii. willful misconduct or a conscious disregard for the best interests of the Corporation (when indemnification is sought in a Proceeding by or in the right of the Corporation to procure a judgment in favor of the Corporation or when indemnification is sought in a Proceeding by or in the right of a stockholder); or iv. conduct as to which then applicable law prohibits indemnification. 3 INDEMNIFICATION AGREEMENT PAGE 3 m. Person means any natural person or individual, or any artificial person, including any corporation, association, unincorporated organization, partnership, joint venture, firm, company, business, trust, business trust, limited liability company, government, public body or authority, governmental agency or department, and any other entity. n. Proceeding means any threatened, pending or completed claim, demand, inquiry, investigation, action, suit or proceeding, whether formal or informal, or whether brought by or in the right of the Corporation, whether brought by a governmental body, agency or representative or by any other Person, and whether of a civil, criminal, administrative or investigative nature, and includes any Third Party Proceeding. o. Third Party Proceeding means any Proceeding against the Indemnitee by, or any Proceeding by the Indemnitee against, any third party. 2. GRANT OF INDEMNITY. The Corporation shall indemnify and hold harmless the Indemnitee in respect of: a. any and all Liabilities that may be incurred or suffered by the Indemnitee as a result of or arising out of or in connection with prosecuting, defending, settling or investigating any Proceeding in which the Indemnitee may be or may have been involved as a party or otherwise, arising out of the fact that the Indemnitee is or was an Associate of the Corporation or any of its Affiliates, or served as an Associate in or for any Person at the request of the Corporation (including without limitation service as a trustee or in any fiduciary or similar capacity for or in connection with any employee benefit plan maintained by the Corporation or for the benefit of any of the employees of the Corporation or any of its Affiliates, or service on any trade association, civic, religious, educational or charitable boards or committees); b. any and all Liabilities that may be incurred or suffered by the Indemnitee as a result of or arising out of or in connection with any attempt (regardless of its success) by any Person to charge or cause the Indemnitee to be charged with wrongdoing or with financial responsibility for damages arising out of or incurred in connection with the matters indemnified against in this Agreement; and c. any and all Expenses that may be incurred or suffered by the Indemnitee as a result of or arising out of or in connection with any matter referred to in the preceding two paragraphs. 4 INDEMNIFICATION AGREEMENT PAGE 4 3. CLAIMS FOR INDEMNIFICATION; PROCEDURES a. Submission of Claims. Whenever any Proceeding shall occur as to which indemnification under this Agreement may be sought by the Indemnitee, the Indemnitee shall give the Corporation written notice thereof as promptly as reasonably practicable after the Indemnitee has actual knowledge of such Proceeding (an "Indemnification Notice"). The Indemnification Notice shall specify in reasonable detail the facts known to the Indemnitee giving rise to such Proceeding, the positions and allegations of the parties to such Proceeding and the factual bases therefor, and the amount or an estimate of the amount of Liabilities and Expenses reasonably expected to arise therefrom. A delay by the Indemnitee in providing such notice shall not relieve the Corporation from its obligations under this Agreement unless and only to the extent that the Corporation is materially and adversely affected by the delay. If the Indemnitee desires to personally retain the services of an attorney in connection with any Proceeding, the Indemnitee shall notify the Corporation of such desire in Indemnification Notice relating thereto, and such notice shall identify the counsel to be retained. b. Presumption of Right to Indemnification. Upon submission of an Indemnification Notice to the Corporation, the Board shall review such Notice and endeavor to determine whether the Indemnitee is entitled to indemnification under this Agreement with respect to the matters described therein. As of the Evaluation Date, unless the Board has reasonably determined that the Indemnitee is not entitled to indemnification under this Agreement with respect to the matters described in such Indemnification Notice, there shall be created a presumption that the Indemnitee is entitled to such indemnification. Such presumption shall continue, and indemnification and payment shall be provided under this Agreement, unless and such time as the Board shall reasonably determine that the Indemnitee is not entitled to indemnification under this Agreement. This paragraph is procedural only and shall not affect the right of the Indemnitee to indemnification under this Agreement. Any determination by the Board that the Indemnitee is not entitled to indemnification under this Agreement and any failure to make any payments requested in an Indemnification Notice or otherwise shall be subject to judicial review. c. Limitation on Adverse Determinations by the Board. Subject to applicable law, no determination by the Board that the Indemnitee is not entitled to indemnification or payment under this Agreement shall be given effect under this Agreement unless (i) such determination is based upon clear and convincing evidence, (ii) such determination is made by a vote of a majority of the Corporation's Directors at a meeting at which a quorum is present, and (iii) the Indemnitee is given written notice of such meeting at least ten days in advance of such meeting and given a meaningful opportunity to present at such meeting information in support of the claim for indemnification or payment. 5 INDEMNIFICATION AGREEMENT PAGE 5 d. Expenses. i. With respect to any Proceeding as to which the Indemnitee is entitled (or presumed entitled) to indemnification under this Agreement, Expenses incurred or required to be incurred by the Indemnitee in connection with such Proceeding, but prior to the final disposition of such Proceeding, shall be paid or caused to be paid by the Corporation to or on behalf of the Indemnitee notwithstanding that there has been no final disposition of such Proceeding, to the extent provided in the following paragraph. ii. For purposes of determining whether to authorize advancement of Expenses pursuant to the preceding paragraph, the Indemnitee shall from time to time submit to the Board a statement requesting advancement of Expenses (an "Expense Advance Request." Each Expense Advance Request shall set forth (i) in reasonable detail, all Expenses already incurred or required to be incurred by the Indemnitee and the reason therefor, and (ii) an undertaking by the Indemnitee, in form and substance reasonably satisfactory to the Corporation, to repay all the Expenses set forth therein if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified with respect to such Proceeding by the Corporation under this Agreement or otherwise. Upon receipt of an Expense Advance Request satisfying the foregoing requirements, as to each Expense set forth therein, unless the Board reasonably determines that the Indemnitee is not entitled to payment of such Expense, the Corporation shall, within 10 business days thereafter (or, if later as to any Expense yet to be incurred by the Indemnitee, on or before the date three business days prior to the date such Expense is required to be paid by the Indemnitee), pay or cause to be paid by the Corporation the amount of such Expense to or on behalf of the Indemnitee. No security shall be required in connection with any Expense Advance Request, and the ability or inability of the Indemnitee to make repayment shall not be considered in any evaluation of an Expense Advance Request. e. Rights to Defend or Settle; Third Party Proceedings, etc. i. If the Corporation at any time provides the Indemnitee with an agreement in writing, in form and substance reasonably satisfactory to the Indemnitee and the Indemnitee's counsel, agreeing to indemnify, defend or prosecute and hold the Indemnitee harmless from all Liabilities and Expenses arising from any Third Party Proceeding (an "Agreement of Indemnity"), and demonstrating to the reasonable satisfaction of the Indemnitee the Corporation's financial wherewithal to accomplish such indemnification, the Corporation may thereafter at its own expense undertake full responsibility for and control of the defense or prosecution of such Third Party Proceeding. The Corporation may contest or settle any such Third Party Proceeding for money damages on such terms and conditions as it deems appropriate but shall be 6 INDEMNIFICATION AGREEMENT PAGE 6 obligated to consult in good faith with the Indemnitee and not to contest or settle any Third Party Proceeding involving injunctive or equitable relief against or affecting the Indemnitee or the Indemnitee's properties or assets without the prior written consent of the Indemnitee, such consent not to be unreasonably withheld. The Indemnitee may participate at the Indemnitee's own expense and with the Indemnitee's own counsel in defense or prosecution of a Third Party Proceeding controlled by the Corporation. Such participation shall not relieve the Corporation of its obligation to indemnify the Indemnitee with respect to such Third Party Proceeding under this Agreement. ii. If, as of ten (10) business days after the receipt by the Board of an Indemnification Notice, the Corporation has not delivered to the Indemnitee a reasonably satisfactory Agreement of Indemnity and evidence of financial wherewithal as contemplated by the preceding paragraph, the Indemnitee may contest or settle the Third Party Proceeding on such terms as it sees fit but shall not reach a settlement with respect to the payment of money damages without consulting in good faith with the Corporation. As to any Third Party Proceeding as to which the Indemnitee is entitled (or presumed entitled) to indemnification under this Agreement, unless and until such time as the Corporation at its own expense undertakes full responsibility for and control of the defense or prosecution of such Third Party Proceeding, the Indemnitee shall be entitled to indemnification under this Agreement with respect any Expenses of the Indemnitee, including Legal Fees, relating to such Third Party Proceeding. Notwithstanding the foregoing, the Corporation may at any time deliver to the Indemnitee a reasonably satisfactory Agreement of Indemnity and evidence of financial wherewithal as contemplated by the preceding paragraph, and thereafter at its own expense undertake full responsibility for and control of the defense or prosecution of such Third Party Proceeding. iii. All Expenses incurred in defending or prosecuting any Third Party Proceeding shall be paid in accordance with the procedure set forth in Section 3(d) of this Agreement. iv. If, by reason of any Third Party Proceeding as to which the Indemnitee is entitled (or presumed entitled) to indemnification under this Agreement, a lien, attachment, garnishment or execution is placed upon any of the property or assets of the Indemnitee, the Corporation shall promptly furnish a reasonably satisfactory indemnity bond to obtain the prompt release of such lien, attachment, garnishment or execution. v. The Corporation may participate at its own expense and with its own counsel in defense or prosecution of any Third Party Proceeding, but any such participation shall not relieve the Corporation of its obligations to indemnify the Indemnitee under 7 INDEMNIFICATION AGREEMENT PAGE 7 this Agreement. Any election by the Corporation to at its own expense undertake full responsibility for and control of the defense or prosecution of a Third Party Proceeding shall not affect the entitlement of the Indemnitee to indemnification under this Agreement. vi. The Indemnitee shall cooperate in the defense or prosecution of any Third Party Proceeding controlled by the Corporation. vii. The parties shall cooperate in good faith and use reasonable efforts to mitigate and minimize any Expense or Liability. f. Choice of Counsel. In all matters as to which indemnification is or may be available to the Indemnitee under this Agreement, the Indemnitee shall be free to choose and retain counsel of the Indemnitee's choice, provided that the Indemnitee shall secure the prior written consent of the Corporation as to such selection, which consent shall not be unreasonably withheld. g. Repayment. Notwithstanding anything to the contrary, if the Corporation has paid or advanced any Liability or Expense under this Agreement (including pursuant to an Expense Advance Request) to, on behalf of or for the benefit of the Indemnitee and it is determined by a court of competent jurisdiction, in a decision which the Indemnitee does not properly appeal or which decision is affirmed on appeal, that the Indemnitee's actions or omissions constitute Nonindemnifiable Conduct or that the Indemnitee otherwise is not or was not entitled to such payment or advance or that the Indemnitee is required to reimburse or repay the Corporation for the amount thereof, the Indemnitee shall and does hereby undertake in such circumstances to reimburse and repay the Corporation for any and all such amounts paid, which thereupon shall be deemed and shall be and become the legal, valid and enforceable debt and obligation of the Indemnitee to the Corporation. h. Representations and Agreements of the Corporation. i. Authority. The Corporation represents, covenants and agrees that it has the corporate power and authority to enter into this Agreement and to carry out its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by the Board. This Agreement is a valid and binding obligation of the Corporation and is enforceable against the Corporation in accordance with its terms. ii. Noncontestability. The Corporation represents, covenants and agrees that it will not initiate, and will use its best efforts to cause each of its Affiliates not to 8 INDEMNIFICATION AGREEMENT PAGE 8 initiate, any action, suit or proceeding challenging the validity or enforceability of this Agreement. iii. Good Faith Judgment. The Corporation represents, covenants and agrees that it will exercise good faith and its best reasonable judgment in determining the entitlement of the Indemnitee to indemnification under this Agreement. 4. RELATIONSHIP OF THIS AGREEMENT TO OTHER INDEMNITIES. a. Nonexclusivity. i. This Agreement and all rights granted to the Indemnitee under this Agreement are in addition to and are not deemed to be exclusive with or of any other rights that may be available to the Indemnitee under any Articles of Incorporation, bylaw, statute, agreement, or otherwise. ii. The rights, duties and obligations of the Corporation and the Indemnitee under this Agreement do not limit, diminish or supersede the rights, duties and obligations of the Corporation and the Indemnitee with respect to the indemnification afforded to the Indemnitee under any liability insurance, the FBCA, or under the Bylaws or the Articles of Incorporation of the Corporation. In addition, the Indemnitee's rights under this Agreement will not be limited or diminished in any respect by any amendment to the Bylaws or the Articles of Incorporation of the Corporation. b. Availability, Contribution, Etc. i. The availability or nonavailability of indemnification by way of insurance policy, Articles of Incorporation, bylaw, vote of stockholders, or otherwise from the Corporation to the Indemnitee shall not affect the right of the Indemnitee to indemnification under this Agreement, provided that all rights under this Agreement shall be subject to applicable statutory provisions in effect from time to time. ii. Any funds actually received by the Indemnitee by way of indemnification or payment from any source other than from the Corporation under this Agreement shall reduce any amount otherwise payable to the Indemnitee under this Agreement. iii. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some Liabilities or Expenses but not as to others, or for some or a portion thereof actually incurred by the Indemnitee or amounts actually paid in settlement by the Indemnitee in the investigation, defense, appeal or settlement of any Proceeding for which indemnification is sought under this 9 INDEMNIFICATION AGREEMENT PAGE 9 Agreement but not for the total amount thereof, the Corporation shall indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled. iv. If for any it is determined by a court of competent jurisdiction, in a decision which neither party to this Agreement properly appeals or which decision is affirmed on appeal, that the indemnity provided under this Agreement is unavailable, or if for any reason the indemnity under this Agreement is insufficient to hold the Indemnitee harmless as provided in this Agreement, then, in any such event, the Corporation shall contribute to the amounts paid or payable by the Indemnitee in such proportion as equitably reflects the relative benefits received by, and fault of, the Indemnitee and the Corporation and its Affiliates and its and their respective Associates. c. Coordination With Insurance. The obligation of the Corporation under this Agreement is not conditioned in any way on any attempt, whether or not successful, by the Indemnitee or the Corporation to collect from an insurer any amount under any insurance policy. 5. LIMITATIONS. In no case shall any indemnification or payment be provided or made under this Agreement to or on behalf of or for the direct or indirect benefit of the Indemnitee by the Corporation: a. except as set forth in Section 6(g) of this Agreement, in any Proceeding brought by or in the name or interest of the Indemnitee against the Corporation; b. except as set forth in Section 6(g) of this Agreement, in any Proceeding brought by the Corporation against the Indemnitee, which action is initiated at the direction of the Board; or c. for any Nonindemnifiable Conduct. 6. MISCELLANEOUS. a. Cooperation. The parties to this Agreement shall execute such powers of attorney as may be necessary or appropriate to permit participation of counsel selected by any party hereto and, as may be reasonably related to any such claim or action, shall provide to the counsel, accountants and other representatives of each party access during normal business hours to all properties, personnel, books, records, contracts, commitments and all other business records of such other party and will furnish to such other party copies of all such documents as may be reasonably requested (certified, if requested). 10 INDEMNIFICATION AGREEMENT PAGE 10 b. Further Assurances. The parties to this Agreement will execute and deliver, or cause to be executed and delivered, such additional or further documents, agreements or instruments and shall cooperate with one another in all respects for the purpose of carrying out the transactions contemplated by this Agreement. c. Notices. Any notice, request, demand or other communication required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been duly given: upon receipt if personally delivered; upon successful completion of transmission if transmitted by telecopy, electronic telephone line facsimile transmission or other similar electronic or digital transmission method; at the close of business on the next business day after it is sent, if sent by recognized overnight delivery service with all fees payable by the sender; or at the close of business on the fifth business day after it is sent, if mailed, first class mail, postage prepaid. In each case such notice, request, demand or other communication shall be sent to: if to the Indemnitee: if to the Corporation: With a copy to: or to such other address as either party may have specified in writing to the other using the procedures specified above in this Section 6(c). d. Governing Law. This Agreement shall be construed pursuant to and governed by the substantive laws of the State of Florida (but any provision of Florida law shall not apply if the application of such provision would result in the application of the law of a state or jurisdiction other than Florida). e. Severability. Any provision of this Agreement that is determined by a court of competent jurisdiction to be prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability 11 INDEMNIFICATION AGREEMENT PAGE 11 or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. In any such case, such determination shall not affect any other provision of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect. If any provision or term of this Agreement is susceptible to two or more constructions or interpretations, one or more of which would render the provision or term void or unenforceable, the parties agree that a construction or interpretation which renders the term or provision valid shall be favored. f. Specific Enforcement; Presumption. i. The parties agree and acknowledge that, in the event of a breach by the Corporation of its obligation promptly to indemnify the Indemnitee as provided in this Agreement, or breach of any other material provision of this Agreement, damages at law will be an insufficient remedy to the Indemnitee. Accordingly, the parties agree that, in addition to any other remedies or rights that may be available to the Indemnitee, the Indemnitee shall also be entitled, upon application to a court of competent jurisdiction, to obtain temporary or permanent injunctions to compel specific performance of the obligations of the Corporation under this Agreement. ii. There shall exist in any action to enforce the rights of the Indemnitee under this Agreement a rebuttable presumption that the Indemnitee has met the applicable standard(s) of conduct and is therefore entitled to indemnification pursuant to this Agreement, and the burden of proving that the relevant standards have not been met by the Indemnitee shall be on the Corporation. Neither the failure of the Corporation (including the Board or independent legal counsel) prior to the commencement of such action to have made a determination that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation (including the Board or independent legal counsel) that the Indemnitee has not met such applicable standard of conduct, shall (X) constitute a defense to the action, (Y) create a presumption that the Indemnitee has not met the applicable standard of conduct, or (Z) otherwise alter the presumption in favor of the Indemnitee referred to in the preceding sentence. g. Cost of Enforcement; Interest. i. If either party to this Agreement engages the services of an attorney or any other third party or in any way initiates legal action to enforce the party's rights under this Agreement, including but not limited to the collection of monies due, the prevailing party in such action shall be entitled to recover all Expenses incurred in connection therewith. Should the Indemnitee prevail, such Expenses shall be in addition to monies otherwise due the Indemnitee under this Agreement. 12 INDEMNIFICATION AGREEMENT PAGE 12 ii. If any amount shall be due or payable under this Agreement (including under an Expense Advance Request) and shall not be paid within 30 days from the date as of which the obligation to make such payment arises, interest shall accrue on such unpaid amount from the date when due until it is paid in full at the rate of 2% per annum in excess of the prime rate published from time to time in The Wall Street Journal in its "Money Rates" column or any similar or successor column or feature, or such lower rate as may be required to comply with applicable law. h. No Assignment. Any claim, right, title, benefit, remedy or interest of the Indemnitee in, to or under or arising out of or in connection with this Agreement is personal and may not be sold, assigned, transferred, pledged or hypothecated, but the provisions of this Agreement shall survive the death, disability or incapacity of the Indemnitee or the termination of the Indemnitee's service as a Director or officer of the Corporation and shall inure to the benefit of the Indemnitee's heirs, executors and administrators. This Agreement shall inure to the benefit of and shall be binding upon the successors in interest and assigns of the Corporation, including any successor corporation resulting from a merger, consolidation, recapitalization, reorganization, sale of all or substantially all of the assets of the Corporation, or any other transaction resulting in the successor corporation assuming the liabilities of the Corporation under this Agreement (by operation of law or otherwise). i. No Third Party Beneficiaries. This Agreement is not intended to benefit or entered into for the benefit of any third parties and, other than as set forth in the preceding paragraph as to heirs, assignees and successors, nothing in this Agreement, whether express or implied, is intended or should be construed to confer upon, or to grant to, any person, except the Corporation and the Indemnitee, any claim, right, benefit or remedy under or because of this Agreement or any provision set forth in this Agreement. j. Construction. As used in this Agreement, (1) the word "including" is always without limitation, and (2) words in the singular number include words of the plural number and vice versa. k. Venue; Process. The parties to this Agreement agree that jurisdiction and venue in any action brought pursuant to this Agreement to enforce its terms or otherwise with respect to the relationships between the parties shall properly lie in and only in the Circuit Court of the Sixth Judicial Circuit of the State of Florida in and for Pinellas County (the "Circuit Court") and the parties agree that jurisdiction shall not properly lie in any other jurisdiction provided, however, if jurisdiction does not properly lie with the Circuit Court, the parties agree that jurisdiction and venue shall properly lie in and only in the United States District Court for the Middle District of Florida, Tampa Division. The parties hereby waive any objections which they may now or hereafter have based on venue and/or forum non conveniens and irrevocably submit to the jurisdiction of any such court in any legal suit, action or proceeding arising out of or relating to this Agreement. The parties further agree that the 13 INDEMNIFICATION AGREEMENT PAGE 13 mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by statute or rule of court. l. Waiver and Delay. No waiver or delay in enforcing the terms of this Agreement or in taking any action with respect to any breach of this Agreement shall be construed as a waiver of any subsequent breach. No action taken by the Indemnitee shall constitute a waiver of the Indemnitee's rights under this Agreement. m. Modification. This Agreement contains the entire agreement of the parties, and supersedes any prior written or oral agreement of the parties, with respect to the subject matter hereof. This Agreement may be modified only by an instrument in writing signed by both parties hereto. n. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. o. Headings. The headings of the various sections in this Agreement are inserted for the convenience of the parties and shall not affect the meaning, construction or interpretation of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement EFFECTIVE as of the date first above written. INDEMNITEE - ------------------------------------------------------------- Signature Date LAMALIE ASSOCIATES, INC. By: --------------------------------------------------------- Date EX-10.12 13 DIRECTORS' DEFERRAL PLAN 1 EXHBIBIT 10.12 LAMALIE ASSOCIATES, INC. DIRECTORS' DEFERRAL PLAN ARTICLE 1 ESTABLISHMENT AND PURPOSE 1.1 ESTABLISHMENT. Lamalie Associates, Inc. (the "Company") hereby enters into this Agreement and establishes a deferred compensation plan for Directors of the Company, which plan shall be known as the Lamalie Associates, Inc. Directors' Deferral Plan (the "Plan"). 1.2 PURPOSE. The purpose of the Plan is to provide Directors with the ability to defer some or all of their directors' fees. It is intended that the Plan will assist in attracting and retaining qualified individuals to serve as Directors. ARTICLE 2 DEFINITION OF TERMS The following words and terms as used herein shall have that meaning set forth therefor in this Article 2 unless a different meaning is clearly required by the context. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. 2.1 "BENEFICIARY" shall mean the person or persons designated or deemed to be designated by the Participant pursuant to Article 7 to receive benefits payable under the Plan in the event of the Participant's death. 2.2 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. 2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute. Reference to a specific section of the Code shall include a reference to any successor provision. 2.4 "COMMITTEE" is defined in Section 9.1. 2.5 "COMMON STOCK" shall mean the common stock of the Company. 2.6 "COMPANY" shall mean Lamalie Associates, Inc. and its successors. 2 2.7 "COMPENSATION" shall mean the annual retainers and meeting fees that are payable to a Director for his or her services as a member of the Board or any committee thereof. 2.8 "DEFERRAL BENEFIT" shall mean the benefit payable to a Participant or his or her Beneficiary pursuant to Article 7 hereof. 2.9 "DEFERRED ACCOUNT" shall mean the account maintained on the books of the Company for each Participant pursuant to Article V hereof. 2.10 "DEFERRED COMPENSATION AGREEMENT" shall mean the agreement filed by a Participant, in the form prescribed by the Committee, pursuant to Section 3.2 hereof. 2.11 "DIRECTOR" shall mean a member of the Board. 2.12 "FAIR MARKET VALUE"of the shares of Common Stock shall mean the closing price on the date in question (or, if no shares are traded on such day, on the next preceding day on which shares were traded), of the Common Stock as reported on the Composite Tape, or if not reported thereon, then such price as reported in the trading reports of the principal securities exchange in the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the mean between the dealer closing "bid" and "ask" prices on the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Board in good faith and based on all relevant factors. 2.13 "PARTICIPANT" shall mean any Director who meets the eligibility requirements of Section 3.1, and who elects to participate by filing a Deferred Compensation Agreement as provided in Section 3.2 hereof. 2.14 "PLAN" shall mean the Lamalie Associates, Inc. Directors' Deferral Plan, as set forth herein and as amended from time to time. 2.15 "PLAN YEAR" shall mean the 12-month period ending on each December 31. 2.16 "RATE OF RETURN" shall mean the interest rate payable on one-year United States Treasury Bills issued on the specified date or, if not then issued, on the next date of issue, or such other rate as may from time to time be established by the Committee; provided, however, that in no event shall the Rate of Return be more than five percentage points higher than the rate payable on such Bills. 2.17 "UNIT" shall mean an accounting unit equal in value to one share of Common Stock. The number of Units included in any Deferred Account shall be adjusted as appropriate to reflect any stock dividend, stock split, recapitalization, merger or other similar event affecting the Common Stock. 2. 3 ARTICLE 3 ELIGIBILITY AND PARTICIPATION 3.1 ELIGIBILITY. Eligibility to participate in the Plan is limited to those Directors who are not employees of the Company or any of its subsidiaries. 3.2 PARTICIPATION. Participation in the Plan shall be limited to eligible Directors who elect to participate in the Plan by filing a Deferred Compensation Agreement with the Committee. A properly completed and executed Deferred Compensation Agreement must be filed on or prior to the December 31 immediately preceding the Plan Year in which the Participant's participation in the Plan will commence, and the election to participate shall be effective on the first day of the Plan Year following receipt by the Company of the Deferred Compensation Agreement. In the event that a Director first becomes eligible to participate during the course of a Plan Year, such Deferred Compensation Agreement must be filed no later than 30 days following election or appointment to the Board and such Deferred Compensation Agreement shall be effective only with regard to Compensation earned or payable following the filing of the Deferred Compensation Agreement with the Committee. 3.3 TERMINATION OF PARTICIPATION. A Participant may elect to terminate participation in the Plan by filing a written notice thereof with the Committee, which termination shall be effective at any time specified by the Participant in the notice, but not earlier that the first day of the Plan Year immediately succeeding the Plan Year in which such notice is filed with the Committee. Amounts credited to such Participant's Deferred Account with respect to periods prior to the effective date of such termination shall continue to be payable pursuant to, and otherwise governed by, the terms of the Plan. ARTICLE 4 DEFERRAL OF COMPENSATION 4.1 DEFERRAL. A Participant may elect to defer all, or a specified percentage of his or her Compensation for the applicable Plan Year, and a Participant may elect to have his or her deferred Compensation credited to such Participant's Deferred Account either in dollar amounts or Units. A Participant may not change the percentage of his or her Compensation to be deferred, or the form in which Compensation is to be credited. 4.2 CREDITING OF DEFERRED COMPENSATION. Deferred Compensation that a Participant elects to have credited in dollar amounts shall be credited to the Participant's Deferred Account as it becomes payable to the Director. Deferred Compensation payable to a Director during a Plan Year 3. 4 that a Participant elects to have credited in Units, plus an amount of Units equal to 25% of such Deferred Compensation for such Plan Year, shall be credited to the Participant's Deferred Account annually after the end of such Plan Year on the basis of the average of the Fair Market Values of the Common Stock on the last trading day in each calendar month during such Plan Year. ARTICLE 5 DEFERRED ACCOUNTS 5.1 DETERMINATION OF ACCOUNT. On any particular date, a Participant's Deferred Account shall consist of the aggregate amount of dollars and Units credited thereto pursuant to Section 4.2, plus any interest credited pursuant to Section 5.2, plus any dividend equivalents credited pursuant to Section 5.3, minus the aggregate amount of distributions, if any, made from such Deferred Account. 5.2 CREDITING OF INTEREST. As of the last day of each Plan Year, each Deferred Account to which Compensation has been credited in dollar amounts shall be increased by the amount of interest earned during the Plan Year. Interest shall be credited at the Rate of Return as of the last day of the Plan Year based on the average daily balance of the Participant's Deferred Account since the beginning of the Plan Year, but after the Deferred Account has been adjusted for any contributions or distributions to be credited or deducted for such period. Until a Participant or his or her Beneficiary receives his or her entire Deferred Account, the unpaid balance thereof credited in dollar amounts shall bear interest as provided in this Section 5.2. 5.3 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Account to which Compensation has been credited in Units shall be credited annually after the end of each Plan Year with additional Units equal in value to the amount of cash dividends paid by the Company during such Plan Year on Common Stock equivalent to the average daily balance of Units in such Deferred Account during such Plan Year. Such dividend equivalents shall be valued on the basis of the average Fair Market Value computed pursuant to Section 4.2. Until a Participant or his or her Beneficiary receives his or her entire Deferred Account, the unpaid balance thereof credited in Units shall earn dividend equivalents as provided in this Section 5.3. 5.4 STATEMENT OF BENEFITS. The Committee shall provide to each Participant, within 120 days after the close of each Plan Year, a statement setting forth the balance of such Participant's Deferred Account as of the last day of the preceding Plan Year and showing all adjustments made thereto during such Plan Year. ARTICLE 6 VESTING A Participant shall be 100% vested in his or her Deferred Account at all times. 4. 5 ARTICLE 7 PAYMENT OF BENEFITS 7.1 TERMINATION OF SERVICE AS A DIRECTOR OR DEATH. A Participant may elect in his or her Deferred Compensation Agreement to receive payment his or her Deferral Benefit in an amount equal to the balance of his or her Deferred Account, less any amounts previously distributed, upon either: (a) the Participant's termination of service as a Director of the Company for any reason, or (b) the Participant's death. 7.2 FORM OF PAYMENT. Amounts credited to the Deferred Account of a Participant in dollars and amounts credited in Units shall be paid in cash. The amount of payment from the Units shall be valued based on the Fair Market Value of the Common Stock on the last business day of the calendar quarter immediately prior to the date of distribution. The Deferral Benefit shall be paid in one of the following forms, as elected by the Participant in his or her Deferred Compensation Agreement: (a) equal annual installments over a period of five years (together, in the case of deferred Compensation credited in dollar amounts, with interest on the unpaid balance credited after the payment commencement date pursuant to Section 5.2 and, in the case of deferred Compensation credited in Units, with dividend equivalents on the unpaid balance credited after the payment commencement date pursuant to Section 5.3); (b) a lump sum; or (c) a combination of (a) and (b) above. The Participant shall designate the percentage payable under each option. 7.3 TIME OF PAYMENT. Commencement of payments under Section 7.1 shall begin within 60 days following receipt of notice by the Committee of an event that entitles a Participant (or a Beneficiary) to payments under the Plan, or at such earlier date as may be determined by the Committee. 7.4 PAYMENTS TO MINORS AND INCOMPETENTS. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such person as the Committee may designate for the benefit of such Participant or Beneficiary. Such 5. 6 payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan. 7.5 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED. The Committee shall make all reasonable attempts to determine the identity and/or whereabouts of a Participant or a Participant's Beneficiary entitled to benefits under the Plan, including the mailing by certified mail of a notice to the last known address shown on the Company's or the Committee's records. If the Committee is unable to locate such a person entitled to benefits hereunder, or if there has been no claim made for such benefits, the Company shall continue to hold the benefit due such person, subject to any applicable statute of escheats. ARTICLE 8 BENEFICIARY DESIGNATION 8.1 BENEFICIARY DESIGNATION. Each Participant shall have the right, at any time, to designate any person or persons as his or her Beneficiary to whom payment under the Plan shall be made in the event of his or her death prior to complete distribution to the Participant of his or her Deferral Benefit. Any Beneficiary designation shall be made in written instrument filed with the Committee and shall be effective only when received in writing by the Committee. 8.2 AMENDMENTS. Any Beneficiary designation may be changed by a Participant by the filing of a new Beneficiary designation, which will cancel all Beneficiary designations previously filed. 8.3 NO DESIGNATION. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then the Participant's designated Beneficiary shall be deemed to be the Participant's estate. 8.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary (or, upon the death of a Beneficiary, to his or her estate) shall completely discharge the Company's obligations under the Plan. ARTICLE 9 ADMINISTRATION 9.1 COMMITTEE. The Administrative Committee for the Plan (the "Committee") shall consist of the Chairman of the Board (provided he or she is not a non-employee Director) and two Company officers or Directors who are not non-employee Directors who shall be appointed by the Chairman of the Board. 9.2 DUTIES AND RESPONSIBILITIES. The Committee shall have the following duties and responsibilities: 6. 7 (a) The Committee shall be responsible for the fulfillment of all relevant reporting and disclosure requirements set forth in the Plan and the Code, the distribution thereof to Participants and their Beneficiaries, and the filing thereof with the appropriate governmental officials and agencies. (b) The Committee shall maintain and retain necessary records regarding its administration of the Plan and matters upon which disclosure is required under the Plan and the Code. (c) The Committee shall make any elections for the Plan required to be made by it under the Plan and the Code. (d) The Committee is empowered to settle claims against the Plan and to make such equitable adjustments in a Participant's or Beneficiary's rights or entitlements under the Plan as it deems appropriate in the event an error or omission is discovered or claimed in the operation or administration of the Plan. (e) The Committee may construe the Plan, correct defects, supply omissions or reconcile inconsistencies to the extent necessary to effectuate the Plan, and such action shall be conclusive. 9.3 POWER AND AUTHORITY. The Committee is hereby vested with all the power and authority necessary in order to carry out its duties and responsibilities imposed hereunder in connection with the administration of the Plan. For such purpose, the Committee shall have the power to adopt rules and regulations consistent with the terms of the Plan. 9.4 DELEGATION OF AUTHORITY. The Committee may appoint an individual, who may be an employee of the Company, to be the Committee's agent with respect to the day-to-day administration of the Plan. In addition, the Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 9.5 BINDING EFFECT OF DECISIONS. Any decision or action of the Committee with respect to any questions arising out of or in connection with the administration, interpretation and application of the Plan shall be final and binding upon all persons having any interest in the Plan. 9.6 INDEMNIFICATION. To the fullest extent permitted by law, each person who is or shall have been a member of the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided that the person shall give the Company an 7. 8 opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE 10 AMENDMENT OR TERMINATION OF THE PLAN The Board may at any time amend, suspend, terminate or reinstate any or all of the provisions of the Plan, provided that no such amendment, suspension or termination shall operate to decrease a Participant's Deferred Account as it existed as of the effective date of such amendment, suspension or termination without such Participant's consent. ARTICLE XI MISCELLANEOUS 11.1 FUNDING. Neither Participants, nor their Beneficiaries, nor their heirs, successors or assigns, shall have any secured interest or claim in any property or assets of the Company. The Company's obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future. It is the intention of the Company that the Plan be unfunded for tax purposes and for purposes of Title I or ERISA. The Company may create a Rabbi Trust or similar trust to hold funds, Common Stock or other securities to be used in payment of its obligation under the Plan; provided, however, that any funds contained therein shall remain liable for the claims of the Company's general creditors. 11.2 NONTRANSFERABILITY. (a) No right or interest under the Plan of a Participant or his or her Beneficiary (or any person claiming through or under any of them), shall be (i) assignable or transferable in any manner, (ii) subject to alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal powers or (iii) in any manner liable for or subject to the debts or liabilities of the Participant or Beneficiary. If any Participant or Beneficiary (other than the surviving spouse of any deceased Participant) shall attempt to or shall transfer, assign, alienate, anticipate, sell, pledge or otherwise encumber his or her benefits hereunder or any part thereof, or if by reason of his or her bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him or her, then the Committee, in its discretion, may terminate his or her interest in any such benefit to the extent the Committee considers necessary or advisable to prevent or limit the effects of such occurrence. Termination shall be effected by filing a written "termination declaration" with 8. 9 the Secretary of the Company and making reasonable efforts to deliver a copy to the Participant or Beneficiary whose interest is adversely affected (the "Terminated Participant"). (b) As long as the Terminated Participant is alive, any benefits affected by the termination shall be retained by the Company and, in the Committee's sole and absolute judgment, may be paid to or expended for the benefit of the Terminated Participant, his or her spouse, his or her children or any other person or persons in fact dependent upon him or her in such a manner as the Committee shall deem proper. Upon the death of the Terminated Participant, all benefits withheld from him or her and not paid to others in accordance with the preceding sentence shall be disposed of according to the provisions of the Plan that would apply if he or she died prior to the time that all benefits to which he or she was entitled were paid to him or her. 11.3 HEADINGS FOR CONVENIENCE. The headings contained herein are for convenience only and shall not control or affect the meaning or construction hereof. 11.4 GOVERNING LAW. The provisions of the Plan shall be administered, construed, interpreted and enforced in accordance with the laws of the State of Florida, except to the extent such laws have been expressly preempted by federal law. 11.5 COMPANY SUCCESSORS. The provision of the Plan shall bind and inure to the benefit of the Company and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company and successors of any such corporation or other business entity. 11.6 GENDER; SINGULAR AND PLURAL REFERENCES. Throughout this Plan, and wherever appropriate, the masculine gender shall be deemed to include the feminine and neuter; the singular, the plural; and visa versa. 11.7 NO IMPLIED RIGHTS TO DIRECTORS. Nothing contained herein shall be construed to confer upon any Director the right to be retained as a Director of the Company or in any other capacity. 11.8 WITHHOLDING. Payments under the Plan shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 11.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the effective date of the Plan being the date that the last such condition is satisfied: (a) the adoption of the Plan by the Board of Directors; and (b) the closing of the initial public offering of the Common Stock. 9. EX-23.2 14 CONSENT 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent certified public accountants, we hereby consent to the use of our reports (and to all references to our Firm) included in or made a part of this registration statement. ARTHUR ANDERSEN LLP Tampa, Florida June 3, 1997 EX-23.3 15 CONSENT 1 EXHIBIT 23.3 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification in that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ Joe D. Goodwin ------------------ Joe D. Goodwin As of April 28, 1997 EX-23.4 16 CONSENT 1 EXHIBIT 23.4 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification in that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ Roderick C. Gow ------------------- Roderick C. Gow As of April 28, 1997 EX-23.5 17 CONSENT 1 EXHIBIT 23.5 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ John S. Rothschild ---------------------- John S. Rothschild As of April 28, 1997 EX-23.6 18 CONSENT 1 EXHIBIT 23.6 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification in that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ Ray J. Groves ----------------- Ray J. Groves As of April 28, 1997 EX-23.7 19 CONSENT 1 EXHIBIT 23.7 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification in that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ Richard W. Pogue -------------------- Richard W. Pogue As of April 28, 1997 EX-23.8 20 CONSENT 1 EXHBITI 23.8 CONSENT OF PERSON ABOUT TO BECOME A DIRECTOR As a person named in this registration statement as being about to become a director of Lamalie Associates, Inc., I hereby consent to my identification in that capacity and to all references to me and information about me included in or made a part of this registration statement. /s/ John C. Pope ---------------- John C. Pope As of April 28, 1997 -----END PRIVACY-ENHANCED MESSAGE-----