COMPANY AFFILIATE AGREEMENT
THIS COMPANY AFFILIATE AGREEMENT (this "AGREEMENT") is dated as of September
9, 1998, by and between FIRST CONSULTING GROUP, INC., a Delaware corporation
("PARENT"), INTEGRATED SYSTEMS CONSULTING GROUP, INC., a Pennsylvania
corporation ("COMPANY"), and the undersigned affiliate ("AFFILIATE").
RECITALS
WHEREAS, Affiliate is a stockholder of Company.
WHEREAS, Parent, Foxtrot Acquisition Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Company have entered into
an Agreement and Plan of Merger and Reorganization dated as of September 9, 1998
(the "MERGER AGREEMENT"), providing for the merger of Merger Sub with and into
Company (the "MERGER"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) the holders of the common stock of Company
("COMPANY COMMON STOCK") will receive shares of common stock of Parent ("PARENT
COMMON STOCK") in exchange for their shares of Company Common Stock and (ii)
Company will become a wholly-owned subsidiary of Parent. It is accordingly
contemplated that Affiliate will receive shares of Parent Common Stock in the
Merger.
WHEREAS, Affiliate understands that the Parent Common Stock being issued in
the Merger will be issued pursuant to a registration statement on Form S-4 and
that Affiliate may be deemed to be an "affiliate" of Company, as the term
"affiliate" is used (i) for purposes of paragraphs (c) and (d) of Rule 145
("RULE 145") of the General Rules and Regulations of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and (ii) in the SEC's Accounting Series Releases 130 and 135,
and, as such, Affiliate may only transfer, sell or dispose of such Parent Common
Stock in accordance with this Affiliate Agreement and Rule 145.
WHEREAS, it is a condition to the consummation of the Merger pursuant to the
Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and Company will have delivered the written
concurrences with the conclusions of management of Parent and Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
AGREEMENT
NOW, THEREFORE, in order to induce Parent and Company to consummate the
transactions contemplated by the Merger Agreement, and for other valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
Affiliate), Affiliate hereby covenants and agrees as follows:
1. REPRESENTATIONS AND WARRANTIES. Affiliate represents and warrants to
Parent as follows:
(A) Affiliate is the holder and "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of the number
of shares of Company Common Stock set forth under Affiliate's signature
below (the "COMPANY SHARES"), and Affiliate has good and valid title to
Company Shares, free and clear of any liens, pledges, security interests,
adverse claims, equities, options, proxies, charges, encumbrances or
restrictions of any nature.
(B) Affiliate has carefully read this Agreement, and has discussed with
Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or
otherwise dispose of the shares of Parent Common Stock that Affiliate is to
receive in the Merger (the "PARENT SHARES"). Affiliate fully understands the
limitations this Agreement places upon Affiliate's ability to sell, transfer
or otherwise dispose of the Parent Shares.
(C) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, Company, and their
respective affiliates, counsel and accounting firms for
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purposes of determining Parent's eligibility to account for the Merger as a
"pooling of interests," and that substantial losses and damages may be
incurred by these persons if Affiliate's representations, warranties or
covenants are breached.
2. PROHIBITION AGAINST TRANSFER. In addition to the restrictions set forth
elsewhere herein, Affiliate agrees that Affiliate shall not effect any sale,
transfer or other disposition of the Parent Shares unless:
(A) such sale, transfer or other disposition is made in conformity with
the volume and other requirements of Rule 145 under the Securities Act, as
evidenced by a broker's letter and a representation letter executed by
Affiliate (reasonably satisfactory in form and content to Parent), each
stating that such requirements have been met;
(B) counsel reasonably satisfactory to Parent shall have advised Parent
in a written opinion letter (reasonably satisfactory in form and content to
Parent), upon which Parent may rely, that such sale, transfer or other
disposition will be exempt from registration under the Securities Act;
(C) such sale, transfer or other disposition is effected pursuant to an
effective registration statement under the Securities Act; or
(D) an authorized representative of the SEC shall have rendered written
advice to Affiliate to the effect that the SEC would take no action, or that
the staff of the SEC would not recommend that the SEC take action, with
respect to such proposed sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the SEC shall
have been delivered to Parent.
3. STOP TRANSFER INSTRUCTIONS; LEGEND. Affiliate acknowledges and agrees
that (a) stop transfer instructions will be given to Parent's transfer agent
with respect to the Parent Shares, and (b) each certificate representing any of
such shares of Parent Common Stock or any substitutions thereof shall bear a
legend (together with any other legend or legends required by applicable state
securities laws or otherwise), stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH
RULE AND IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF
SEPTEMBER 9, 1998, BETWEEN THE REGISTERED HOLDER FIRST CONSULTING
GROUP, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF FIRST CONSULTING GROUP, INC.
4. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with SEC Staff
Accounting Bulletin No. 65 ("SAB 65"), during the period contemplated by SAB 65,
until the earlier of (i) Parent's public announcement of financial results
covering at least 30 days of combined operations of Parent and Company or (ii)
the Merger Agreement is terminated in accordance with its terms, Affiliate will
not sell, exchange, transfer, pledge, distribute, or otherwise dispose of or
grant any option, establish any "short" or put-equivalent position with respect
to or enter into any similar transaction (through derivatives or otherwise)
intended or having the effect, directly or indirectly, to reduce its risk
relative to: (i) any shares of Company Common Stock, except pursuant to and upon
the consummation of the Merger; or (ii) any shares of Parent Common Stock
received by Affiliate in the Merger or any shares of Parent Common Stock
received by Affiliate upon exercise of options assumed by Parent in connection
with the Merger. Parent may, at its discretion, cause a restrictive legend
covering the restrictions referred to in this Section 4 to be placed on Parent
Common Stock certificates issued to Affiliate in the Merger and place a stock
transfer notice consistent with the restrictions referred to in this Section 4
with its transfer agent with
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respect to such certificates, provided such restrictive legend shall be removed
and/or notice shall be countermanded promptly upon expiration of the necessity
therefor at the request of Affiliate.
5. PERMITTED TRANSFERS. Notwithstanding anything to the contrary contained
in this Agreement, Affiliate (i) may transfer Affiliate's PRO RATA portion (of
the total number of shares available under the "de minimis" exception referred
to in this clause (i) to all affiliates of Parent and Company) of the "de
minimis" number of shares of Company Common Stock and Parent Common Stock
available for sale in accordance with SEC Staff Accounting Bulletin No. 76 (the
"DE MINIMIS POOL") contingent upon confirmation and approval by legal counsel
for Company and independent auditors to Company and Parent that such transfer
qualifies as within Affiliate's pro rata portion of the De Minimis Pool and does
not otherwise adversely affect the Parent's ability to account for the Merger as
a "pooling of interests" (ii) may (with the written consent of Parent, not to be
unreasonably withheld): (A) transfer shares of Company Common Stock or Parent
Common Stock to Company in payment of the exercise price of options to purchase
Company Common Stock; (B) transfer shares of Parent Common Stock in payment of
the exercise price of options to purchase Parent Common Stock; (C) transfer
shares of Company Common Stock or Parent Common Stock to any organization
qualified under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, so long as such organization has traditionally been supported by
contributions from the general public (as opposed to being supported largely by
a specific donor); and (D) transfer shares of Company Common Stock or shares of
Parent Common Stock to a trust established for the benefit of Affiliate and/or
for the benefit of one or more members of Affiliate's family, or make a bona
fide gift of shares of Common Stock of Company or shares of Parent Common Stock
to one or more members of Affiliate's family, provided that in the case of a
transfer or gift pursuant to this clause (C) or (D), a transferee of such shares
agrees to be bound by the limitations set forth in this Agreement.
6. SPECIFIC PERFORMANCE. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and Company shall be entitled (in addition to any other remedy that may
be available to it, including monetary damages) to seek and obtain (a) a decree
or order of specific performance to enforce the observance and performance of
such covenant or obligation, and (b) an injunction restraining such breach or
threatened breach.
7. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of Affiliate
set forth in this Affiliate Agreement shall be construed as independent of any
other agreement or arrangement between Affiliate, on the one hand, and Company
or Parent, on the other. The existence of any claim or cause of action by
Affiliate against Company or Parent shall not constitute a defense to the
enforcement of any of such covenants or obligations against Affiliate.
8. NOTICES. Any notice or other communication required or permitted to be
delivered under this Agreement shall be in writing and shall be deemed properly
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile confirmation) to the address
or facsimile telephone number set forth beneath the name of such party below (or
to such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other party):
IF TO PARENT:
First Consulting Group, Inc.
000 X. Xxxxx Xxxxxxxxx- 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
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WITH A COPY TO:
Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
IF TO COMPANY:
Integrated Systems Consulting Group, Inc.
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
WITH A COPY TO:
Saul, Ewing, Xxxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
IF TO AFFILIATE:
at the address or facsimile phone number set forth below
Affiliate's signature on the signature page hereof.
WITH A COPY TO:
Saul, Ewing, Xxxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
9. SEVERABILITY. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
10. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
11. WAIVER. No failure on the part of Parent or Company to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of Parent or Company in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege or
remedy shall preclude any
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other or further exercise thereof or of any other power, right, privilege or
remedy. Neither Parent or Company shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of the party deemed to be charged; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
12. CAPTIONS. The captions contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
13. FURTHER ASSURANCES. Affiliate shall execute and/or cause to be
delivered to Parent or Company such instruments and other documents and shall
take such other actions as Parent or Company may reasonably request to
effectuate the intent and purposes of this Agreement.
14. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and any Voting
Agreement or Noncompetition Agreement between Affiliate and Parent or
Irrevocable Proxy executed by Affiliate in favor of Parent constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
15. NON-EXCLUSIVITY. The rights and remedies of Parent and Company
hereunder are not exclusive of or limited by any other rights or remedies which
Parent may have, whether at law, in equity, by contract or otherwise, all of
which shall be cumulative (and not alternative). Nothing in this Agreement shall
limit any of Affiliate's obligations, or the rights or remedies of Parent or
Company, under any Voting Agreement (including any Irrevocable Proxy contained
therein) or Noncompetition Agreement between Parent and Affiliate; and nothing
in any such Voting Agreement (including any Irrevocable Proxy) or Noncompetition
Agreement shall limit any of Affiliate's obligations, or any of the rights or
remedies of Parent, under this Agreement.
16. AMENDMENTS. This Agreement may not be amended, modified, altered, or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent, Company and Affiliate.
17. BINDING NATURE. This Agreement will be binding upon Affiliate and
Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of Company, Parent and
their respective successors and assigns.
18. ATTORNEYS' FEES AND EXPENSES. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Agreement is
brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
19. ASSIGNMENT. This Agreement and all obligations of Affiliate hereunder
are personal to Affiliate and may not be transferred or delegated by Affiliate
at any time. Company or Parent may freely assign any or all of its rights under
this Affiliate Agreement, in whole or in part, to any other person or entity
without obtaining the consent or approval of Affiliate.
20. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the
Merger.
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The undersigned have executed this Agreement as of the date first set forth
above.
FIRST CONSULTING GROUP, INC.
By: ------------------------------------
Printed Name: --------------------------
Title: ---------------------------------
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
By: ------------------------------------
Printed Name: --------------------------
Title: ---------------------------------
AFFILIATE:
By: ------------------------------------
Printed Name: --------------------------
Address:
---------------------------------------
-----------------------------------------
-----------------------------------------
Facsimile:
--------------------------------------
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
STOCK BENEFICIALLY OWNED BY AFFILIATE:
----------------------------------------- shares
of Common Stock
----------------------------------------- shares
of Common Stock issuable upon exercise of
outstanding options
AFFILIATE AGREEMENT SIGNATURE PAGE
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