SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement") made as of October
31, 1995, by and between LABOR READY, INC., a Washington
corporation (the "Company"), and GLENN A. WELSTAD, JOHN R.
COGHLAN and COGHLAN FAMILY CORPORATION, a Washington corporation
(individually and collectively, the "Shareholder" or the
"Shareholders"), SEACOAST CAPITAL PARTNERS LIMITED PARTNERSHIP, a
Delaware limited partnership ("Seacoast"), and ALLIED INVESTMENT
CORPORATION, a Maryland corporation, and ALLIED INVESTMENT
CORPORATION II, a Maryland corporation and ALLIED CAPITAL
CORPORATION II (collectively, the "Allied Investors") (Seacoast
and the Allied Investors are collectively referred to herein as
the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company has entered into a Note Purchase
Agreement (the "Note Agreement") dated of even date with this
Agreement with the Purchaser;
WHEREAS, the Company has entered into a Warrant Purchase
Agreement (the "Warrant Agreement") dated of even date with this
Agreement with the Purchaser;
WHEREAS, the Purchaser is willing to enter into and
consummate the transactions contemplated by the Note Agreement
and the Warrant Agreement only if, among other things, the
Company and the Shareholders enter into, and perform under, this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Purchaser, the Shareholders, and the
Company, intending to be legally bound, agree as follows:
Article I
Definitions
Act. The Small Business Investment Act of 1958, as amended and
in effect from time to time, and the regulations promulgated
thereunder.
Affiliate. With respect to any Person, (a) a Person that,
directly or indirectly or through one or more intermediaries,
controls, is controlled by, or is under common control with,
such Person; (b) any Person of which such Person or such
Person's spouse is an officer, director, security holder,
partner, or, in the case of a trust, the beneficiary or trustee,
and (c) any Person that is an officer, director, security
holder, partner, or, in the case of a trust, the beneficiary or
trustee of such Person. The term "control" as used with respect
to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
Agreement. This term is defined in the preamble.
Allied Investors. This term is defined in the preamble.
Buyer. This term is defined in Section 2.02(a)(ii).
Capital Stock. As to any Person, its common stock and any other
capital stock of such Person authorized from time to time, and
any other shares, options, interests, participations, or other
equivalents (however designated) of or in such Person, whether
voting or nonvoting, including, without limitation, common
stock, options, warrants, preferred stock, phantom stock, stock
appreciation rights, preferred stock, convertible notes or
debentures, stock purchase rights, and all agreements,
instruments, documents, and securities convertible, exercisable,
or exchangeable, in whole or in part, into any one or more of
the foregoing.
Closing Date. October 31, 1995.
Coghlan Shareholders. Collectively, John R. Coghlan and Coghlan
Family Corporation, a Washington corporation.
Commission. The Securities and Exchange Commission and any
successor federal agency having similar powers.
Common Stock. The common stock, no par value, of the Company.
Company. Labor Ready, Inc. and any successor or assign, and,
unless the context requires otherwise, the term Company includes
any Subsidiary.
Company Sale. The consummation of a single transaction or
series of related transactions, wherein one or more "independent
third parties" (i.e., persons who, prior to the consummation of
the transaction in question, did not own more than five percent
(5%) of any class of the Capital Stock of the Company), either
directly or indirectly, (i) acquire (whether by merger,
consolidation, transfer or issuance of Capital Stock or
otherwise) Capital Stock of the Company (or any such surviving
or resulting corporation or entity) possessing the voting power
to elect a majority of the Board of Directors of such
corporation (or such surviving or resulting corporation or
entity) or (ii) acquire assets constituting all or any
substantial part of the assets of the Company (that is, twenty
percent (20%) or more).
Co-Sell Shares. This term is defined in Section 2.02(c).
Co-Sellers. This term is defined in Section 2.02(c).
Election Notice. This term is defined in Section 2.02(b).
Exchange Act. The Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
Fair Market Value. This term is defined in the Warrant
Agreement.
Holders. The Purchaser, and all Persons holding Registrable
Securities, except that neither the Company nor any Shareholder
nor any Affiliate of the Company or any Shareholder will at any
time be a Holder. Unless otherwise provided in this Agreement,
in each instance that the either of the Purchasers is required
to request or consent to an action, such Purchaser will be
deemed to have requested or consented to such action if (a) with
respect to Seacoast, the Holders of a majority in interest of
the Registrable Securities initially issued to Seacoast on the
date hereof so requests or consents and (b) with respect to the
Allied Investors, the Holders of a majority in interest of the
Registrable Securities initially issued to the Allied Investors
on the date hereof so requests or consents.
Indemnified Party. This term is defined in Section 7.01.
Initial Holders. Seacoast, the Allied Investors and any
Affiliate of Seacoast or the Allied Investors to which any of
the Warrants or any part of or interest in the Warrants is
assigned.
Issuable Warrant Shares. Shares of Common Stock or Other
Securities issuable on exercise of the Warrants.
Issued Warrant Shares. Shares of Common Stock or Other
Securities issued on exercise of the Warrants.
Kemper Agreement. That certain agreement between the Company and
Everen Securities, Inc., formerly known as Kemper Securities,
Inc., dated as of February 21, 1995, as amended on October 3,
1995, providing for the payment by the Company to Everen
Securities, Inc. of a private placement fee and for the issuance
by the Company to Everen Securities, Inc. of warrants to
purchase 40,000 shares of Common Stock pursuant to the terms and
conditions thereof.
Material Adverse Effect. (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial
or otherwise) of the Company taken as a whole or (b) the
impairment of the ability of the Company to perform its
obligations under this Agreement. In determining whether any
individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have
occurred if such event and all other then existing events would
result in a Material Adverse Effect.
Non-Compete Agreements. Collectively, (a) those certain
Employment and Non-Compete Agreements dated as of October 31,
1995, by and between the Company and each of Glenn A. Welstad
and Scott Sabo, (b) that certain Consulting and Non-Compete
Agreement dated on or about the Closing Date, by and between the
Company and John R. Coghlan, and (c) any other non-compete
agreement hereinafter entered into by and between the Company
and any other officer, employee or consultant of the Company,
and all renewals, modifications, amendments and supplements
thereto.
Note Agreement. This term is defined in the preamble and
includes the Note Purchase Agreement of even date with this
Agreement between the Company and the Purchaser and all
documents evidencing indebtedness thereunder or otherwise
related to the Note Agreement as the same may be amended from
time to time, and any refinancing, refunding, or replacements of
the indebtedness under the Note Agreement.
Notice of Sale. This term is defined in Section 2.02(a).
Other Securities. Any stock, other securities, property, or
other property or rights (other than Common Stock) that the
Holders become entitled to receive upon exercise of the
Warrants.
Permitted Sales. (a) With respect to Glenn A. Welstad, the sale
of up to twenty thousand (20,000) shares of Common Stock in any
calendar quarter, not to exceed one hundred sixty thousand
(160,000) shares of Common Stock in the aggregate, and (b) with
respect to the Coghlan Shareholders, the sale of up to one
hundred fifty thousand (150,000) shares of Common Stock in the
aggregate.
Permitted Stock. Common Stock or options or warrants to acquire
Common Stock issued or reserved for issuance to (a) Everen
Securities, Inc. pursuant to the terms of the Kemper Agreement,
and (b) present and future key management of the Company
pursuant to a management incentive program, constituting, in the
aggregate, ten percent (10%) or less of the outstanding Common
Stock. In no event will (a) the number of shares of Permitted
Stock issued or reserved for issuance, in the aggregate, exceed
the lesser of the number of shares constituting ten percent
(10%) of the outstanding Common Stock on (i) the date of this
Agreement or (ii) the date issued, (b) the number of shares of
Permitted Stock issued or reserved for issuance to any present
and future key management of the Company during any calendar
year exceed, in the aggregate, the lesser of the number of
shares constituting two percent (2%) of the outstanding Common
Stock on (i) the date of this Agreement or (ii) the date issued
and (c) any shares of Permitted Stock issued to present and
future key management of the Company be exercisable for a per
share consideration less than eighty-five percent (85%) of the
Fair Market Value per share of the Common Stock determined as of
the date of issuance of such Permitted Stock.
Person. This term will be interpreted broadly to include any
individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation,
company, institution, entity, party, or government (whether
national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentality, division,
agency, body, or department of any of the foregoing).
Purchaser. This term is defined in the preamble.
Registrable Securities. (a) the Issuable Warrant Shares and (b)
the Issued Warrant Shares that have not been previously sold to
the public.
Related Party. (a) An entity wholly owned by a Selling
Shareholder or one or more Related Parties, (b) a trust all of
the beneficiaries of which are a parent, sibling, spouse or
lineal issue of a Selling Shareholder that is an individual and
(c) a parent, sibling, spouse, or lineal issue, as well as, the
heirs, devisees, executors, administrators and testamentary
trustees of a Selling Shareholder that is an individual.
Selling Shareholder. This term is defined in Section 2.02.
Securities Act. The Securities Act of 1933, as amended, and the
rules and regulations thereunder.
Shareholders. This term is defined in the preamble.
Subsidiary. Each Person of which or in which the Company or its
other Subsidiaries own directly or indirectly fifty-one percent
(51%) or more of (i) the combined voting power of all classes of
stock having general voting power under ordinary circumstances
to elect a majority of the board of directors or equivalent body
of such Person, if it is a corporation or similar person; (ii)
the capital interest or profits interest of such Person, if it
is a partnership, joint venture, or similar entity; or (iii) the
beneficial interest of such Person, if it is a trust,
association, or other unincorporated organization.
Warrant Purchase Agreement. The Warrant Purchase Agreement
dated as of the Closing Date by and between the Company and
Purchaser.
Warrant Shares. This term is defined in Article I of the
Warrant Purchase Agreement.
Warrants. The Warrants issued to the Initial Holders referred
to in Section 2.01 of the Warrant Purchase Agreement and all
Warrants issued upon the transfer or division of, or in
substitution for, such Warrants.
Article II
Co-Sale Rights; and Unlocking Rights
2.01 Rights of Co-Sale. In the event that any
Shareholder intends to sell or transfer, directly or indirectly,
any shares of any class of Capital Stock held by it to any Person
other than a Related Party, each Holder will have the right to
participate in such sale or transfer on the terms set forth in
this Article II; provided, however, none of the provisions of
this Article II will apply to (a) any sale by the Shareholders of
shares of Capital Stock in a bona fide underwritten public
offering under the Securities Act, so long as all Holders have
had an opportunity to participate in such offering pursuant to
the registration rights under this Agreement, or (b) Permitted
Sales, so long as such sales are consummated in compliance with
Rule 144 under the Securities Act and with respect to which the
provisions of paragraphs (e), (f), and (g) of such Rule 144
apply.
2.02 Method of Electing Sale; Allocation of Sales. No
sale or transfer by any Shareholder of any shares of Capital
Stock will be valid unless the transferee of such Capital Stock
first agrees in writing to be bound by the same terms and
conditions that apply to such Shareholder under this Agreement.
In addition, before any shares of Capital Stock held, directly or
indirectly, by any Shareholder may be sold or transferred to a
Person other than a Related Party, the Shareholder (as such, the
"Selling Shareholder") will comply with the following provisions:
(a) The Selling Shareholder will deliver or cause
to be delivered a written notice (the "Notice of Sale") to each
Holder at least fifteen (15) days prior to making any such sale
or transfer. The Company agrees to provide the Selling
Shareholder with a list of the names and addresses of each such
Holder for such purpose. The Notice of Sale will include (i) a
statement of the Selling Shareholder's bona fide intention to
sell or transfer; (ii) the name of the and address of the
prospective transferee (the "Buyer"); (iii) the number of shares
of Capital Stock of the Company to be sold or transferred; (iv)
the terms and conditions of the contemplated sale or transfer;
(v) the purchase price that the Buyer will pay for such shares of
Capital Stock; (vi) the expected closing date of the transaction;
and (vii) such other information as the Holders may reasonably
request to facilitate their decision as to whether or not to
exercise the rights granted by this Article II.
(b) Any Holder receiving the Notice of Sale may
elect to participate in the contemplated sale or transfer by
exercising its right to co-sell its Capital Stock pursuant to
Section 2.02(c). Such rights may be exercised in the sole
discretion of the Holder by delivering a written notice (an
"Election Notice") to the Company and the Selling Shareholder
within fifteen (15) days after receipt of such Notice of Sale
stating the election of the Holder to exercise its right of
co-sale pursuant to Section 2.02(c).
(c) Each Holder may elect to sell or transfer in
the contemplated transaction up to the total of the number of
shares of Capital Stock then held by it (including the Issuable
Warrant Shares). Promptly after the receipt of an Election
Notice exercising such right, the Selling Shareholder will use
its best efforts to cause the Buyer to amend its offer so as to
provide for the Buyer's purchase, upon the same terms and
conditions as those contained in the Notice of Sale, of all of
the shares of Capital Stock (including the Issuable Warrant
Shares) elected to be sold (the "Co-Sell Shares") in such
Election Notices. In the event that the Buyer is unwilling to
amend its offer to purchase all of the Co-Sell Shares in addition
to the shares of Capital Stock described in the related Notice of
Sale, if the Selling Shareholder desires to proceed with the
sale, the total number of shares that such Buyer is willing to
purchase will be allocated to the Selling Shareholder and each
Holder having given an Election Notice exercising its right
pursuant to this Section 2.02(c) (the "Co-Sellers") in proportion
to the aggregate number of shares of Capital Stock (including
Issuable Warrant Shares) held by each such Person; provided,
however, that no such Person will be so allocated a number of
shares greater than the number of shares that it has sought to
sell to such Buyer in the related Notice of Sale or Election
Notice. All Capital Stock sold or transferred by the Selling
Shareholder and the Co-Sellers with respect to a single Notice of
Sale under Section 2.02(b) will be sold or transferred to the
Buyer in a single closing on the terms described in such Notice
of Sale, and each such share will receive the same per share
consideration. In the event that the Buyer for whatever reason,
declines to purchase any shares from any Holder delivering an
Election Notice, then the Selling Shareholder will not be
permitted to sell or transfer any shares of Capital Stock to such
Buyer.
2.03 Sales to Related Parties. No sale or transfer of
shares of Capital Stock by any Shareholder to a Related Party
will be subject to the provisions of Section 2.02; provided,
however, that such Related Party first agrees to assume the
obligations of such Shareholder (without relieving such
Shareholder of any obligations under this Agreement) under this
Agreement with respect to the shares of Capital Stock thereby
acquired by it and to be bound by the same terms and conditions
that apply to the Shareholders under this Agreement in a written
instrument in a form and substance satisfactory to the Holders.
2.04 Unlocking Rights. If at any time the Company or
its shareholders (other than the Holders) receive an offer to
consummate a transaction that would constitute a Company Sale,
then the party receiving such offer (hereinafter, the offeree)
shall submit a copy of the offer, together with such information
pertinent thereto as the offeree may have, to the Holders (in
their capacity as equity holders) within three (3) days of
receipt of said offer. Within ten (10) days of receipt of said
copy, each Holder will indicate in writing to the offeree whether
it approves or disapproves of the offer. If a Holder approves the
offer, than the offeree shall within twenty (20) days thereafter
(or such shorter time if provided in the offer) accept or reject
the offer. If the offeree desires to accept such offer after
approval by a Holder, then such Holder shall have the right to
participate in such sale proportionately based on the terms of
the offer (that is, the Holder shall receive a proportionate
amount of the net proceeds received (or which would be received
by the Company's shareholders) from the Company Sale equal to
such Holder's proportionate interest in the Company). If the
offeree desires to reject the offer after approval of the offer
by a Holder, then simultaneously with such rejection the offeree
shall be bound to purchase, or cause the Company to purchase if
the offeree is not the Company, the approving Holder's Warrants
or resulting stock in the Company on the same terms and
conditions that such Holder would have received under the offer.
If a Holder disapproves the offer, then the offeree shall reject
the offer. If a Holder fails to communicate approval or
disapproval within such ten (10) day period, the Company may
construe such failure as disapproval.
Article III
Registration Rights and Forced Exercise Agreements
3.01 Registration Holdback Agreements.
(a) If any registration pursuant to Section 9.02 of
the Warrant Purchase Agreement is in connection with an
underwritten public offering, each Holder of Registrable
Securities agrees, if so required by the managing underwriter,
not to effect any public sale or distribution of Registrable
Securities (other than as part of such underwritten public
offering) during the period beginning seven (7) days prior to the
effective date of such registration statement and ending on the
one hundred eightieth (180th) day after the effective date of
such registration statement; provided, however, that the
Shareholders and each Person that is an officer, director, or
beneficial owner of five percent (5%) or more of the outstanding
shares of any class of Capital Stock enters into such an
agreement.
(b) The Shareholders agree (i) not to effect any
public sale or distribution during the period seven (7) days (or
such longer period as may be prescribed by Rule 10b-6 under the
Exchange Act) prior to the effective date of the registration
statement employed in any underwritten public offering and ending
on the one hundred eightieth (180th) day after any such
registration statement contemplated by Sections 9.01 or 9.03 of
the Warrant Purchase Agreement has become effective, except as
part of such underwritten public offering pursuant to such
registration statement and except pursuant to securities
registered on Forms S-4 or S-8 of the Commission or any successor
forms, and (ii) use their best efforts to cause each holder of
its equity securities or any securities convertible into or
exchangeable or exercisable for any of such securities, in each
case purchased from the Company at any time after the date of
this Agreement (other than in a public offering), to agree not to
effect any such public sale or distribution of such securities
during such period.
3.02 No Impairment of Registration Rights. The
Shareholders will not avoid or seek to avoid the observance or
performance of any of the terms of Article IX of the Warrant
Purchase Agreement or this Article III, but will at all times in
good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate
in order to protect the rights of the Holders under Article IX of
the Warrant Purchase Agreement or this Article III from dilution
or impairment.
3.03 Forced Exercise Holdback Agreement. The
Shareholders agree (i) not to effect any public sale or
distribution during the period thirty (30) days prior to the
Forced Exercise Date (as defined in the Warrant Agreement) and
ending on the sixtieth (60th) day after the Forced Exercise Date,
and (ii) to use their best efforts to cause each holder of the
Company's equity securities or any securities convertible into or
exchangeable or exercisable for any of such securities, in each
case purchased from the Company at any time after the date of
this Agreement (other than in a public offering), to agree not to
effect any such public sale or distribution of such securities
during such period.
Article IV
Directors
4.01 Voting Agreement. To ensure compliance with this
Article IV, the Shareholders hereby irrevocably covenant and
agree to vote, or give or withhold consent with respect to, all
shares of Capital Stock now owned or later acquired by it, all in
accordance with the terms of this Article IV. The agreement to
vote contained in this Article IV will expire on the earlier to
occur of (a) the day prior to maximum period permitted under
applicable law or (b) the date that Purchaser is no longer
entitled to designate a Person to serve on the Company's board of
directors in accordance with the terms and conditions of the
Warrant Agreement. A counterpart of this Agreement will be
deposited with the Company at its principal place of business or
registered office and will be subject to the same right of
examination by a shareholder of the Company, in person or by
agent or attorney, as are the books and records of the Company.
4.02 Board of Directors. So long as either the Note
Agreement or the agreement to vote set forth in Section 4.01
remains in effect, each Shareholder will, at the request of the
each Purchaser, vote, or give or withhold consent with respect
to, all shares of Capital Stock now owned or later acquired by
such Shareholder so that at all times the individuals designated
as directors by the Purchaser or its respective designee in
accordance with the terms and conditions of the Warrant Agreement
and Note Agreement will be directors of the Company; provided,
however, that the Purchaser will not have any obligation to
designate or cause any individual to serve on the board of
directors of the Company. No director designated by the
Purchaser or its designee may be removed without the consent of
the Purchaser unless such designee breaches its/his/her fiduciary
duties to the Company and/or the Company's shareholders under
applicable law, and in any such case, such designee may be
removed only if the Company shall have appointed another
individual designated by the Purchaser to serve on the Company's
board of directors. The Purchaser may, at any time, terminate
its rights under this Article IV by providing written notice of
such termination to the Company.
Article V
Representations, Warranties and Covenants
5.01 Representations and Warranties of the Shareholders.
Each Shareholder, severally and not jointly, represents and
warrants to the Purchaser with respect to itself and not with
respect to any other Shareholder:
(a) If such Shareholder is a corporation or partnership,
it is duly organized and existing and in good standing under the
laws of its state of organization and is qualified or licensed to
do business in all other countries, states, and jurisdictions the
laws of which require it to be so qualified or licensed and where
the failure to be so qualified or licensed would have a Material
Adverse Effect. Each Shareholder owns the equity interest of the
Company set forth on Schedule I, free and clear of all liens,
claims, and encumbrances, and, to the knowledge of such
Shareholder, no Person has any rights, whether granted by the
Company or any other Person, to acquire any portion of the equity
interest of the Company or the assets of the Company except
pursuant to this Agreement, the Warrant Agreement or the
agreements described on Schedule II which grant warrants or
options to Persons other than Purchaser.
(b) Such Shareholder has, and at all times that
this Agreement is in force will have, the right and power, and is
duly authorized, to enter into, execute, deliver, and perform
this Agreement. This Agreement has been duly and validly
executed, issued, and delivered and constitutes a legal, valid,
and binding obligation of such Shareholder, enforceable in
accordance with its terms.
(c) The execution, delivery, and performance of
this Agreement will not, by the lapse of time, the giving of
notice, or otherwise, constitute a violation of any applicable
provision contained in the charter, bylaws, or organizational
documents of such Shareholder, if any, or contained in any
agreement, instrument, or document to which it is a party or by
which it is bound.
(d) There is not now, and at no time during the
term of this Agreement will there be, any agreement, arrangement,
or understanding involving such Shareholder, other than this
Agreement and the documents contemplated hereby and thereby,
modifying, restricting, or in any way affecting the rights of
such Shareholder to vote securities of the Company.
(e) None of the documents, instruments, or other
information furnished to the Purchaser, contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make any statements made therein not
misleading. No representation, warranty, or statement made by
such Shareholder in this Agreement or in any document,
certificate, exhibit or schedule attached hereto or thereto or
delivered in connection herewith or therewith, contains or will
contain any untrue statement of a material fact, or omits or will
omit to state a material fact necessary to make any such
statements made herein or therein not misleading. To the
knowledge of such Shareholder, in its capacity as such, there is
no fact that materially and adversely affects the condition
(financial or otherwise), results of operations, business,
properties, or prospects of the Company or any of its
Subsidiaries that has not been disclosed in the documents
provided by such Shareholder to the Purchaser.
5.02 Covenants of the Shareholders. Without the prior
written consent of the Holders, which consent may be withheld in
the sole discretion of the Holders, the Shareholders will not
permit the Company to:
(a) permit to occur any amendment, alteration, or
modification of the Articles of Incorporation or Bylaws of the
Company, as constituted on the date of this Agreement, the effect
of which, in the sole judgment of the Holders, would be to alter,
impair, or affect adversely, either the rights and benefits of
the Holders or the duties and obligations of Company or the
Shareholders under this Agreement or the Warrants;
(b) redeem, retire, purchase, or otherwise acquire,
directly or indirectly, any of the Capital Stock or capital stock
or securities of any Affiliate of the Company, or any securities
convertible or exchangeable into Capital Stock or capital stock
or securities of any Affiliate of the Company;
(c) dissolve or liquidate, or effect any
consolidation or merger involving the Company or any Subsidiary
(other than a merger in which the Company or its Subsidiary, as
the case may be, is the surviving entity and the holders of each
class of voting securities of the Company continue to hold a
majority of each class of voting securities of the Company);
(d) except for the issuance of Permitted Stock,
enter into any transaction or transactions with any director,
officer, employee, or shareholder of the Company, or any
Affiliate or relative of the foregoing except upon terms that are
fair and reasonable and that are, in any event, at least as
favorable as would result in a comparable arm's-length
transaction with a Person not a director, officer, employee,
shareholder, or Affiliate of the Company or any Affiliate or
related party of the foregoing, or advance any monies to any such
Persons, except for travel advances in the ordinary course of
business;
(e) materially modify or amend, or terminate or
waive any provision of the Non-Compete Agreements or require
Glenn A. Welstad to cease to perform the functions of chief
executive office of the Company, for reasons other than cause or
permanent disability;
(f) allow the aggregate par value of the Capital
Stock subject to the Warrants from time to time to exceed the
price payable upon exercise of the Warrants, as adjusted from
time to time; or
(g) obligate themselves or otherwise agree to take,
permit or enter into any of the events described in subsections
(a) through (f) above.
Article VI
Conditions
The obligations of the Purchaser to effect the transactions
contemplated by this Agreement will be subject to the following
conditions:
6.01 Note Agreement and Warrant Agreement Conditions.
All of the conditions precedent to the obligations of the
Purchaser under the Note Agreement and the Warrant Agreement will
have been satisfied in full or waived.
6.02 Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, will be
reasonably satisfactory in form and substance to the Purchaser
and its counsel, and the Purchaser and its counsel will have
received copies (executed or certified as may be appropriate) of
all documents, instruments, and agreements that the Purchaser or
its counsel may request in connection with the consummation of
such transactions.
Article VII
Miscellaneous
7.01 Indemnification. In addition to any other rights
or remedies to which the Purchaser and the Holders may be
entitled, the Shareholder agree to and will indemnify and hold
harmless the Purchaser, the Holders, and their Affiliates and
their respective successors, assigns, officers, directors,
employees, attorneys, and agents (individually and collectively,
an "Indemnified Party") from and against any and all losses,
claims, obligations, liabilities, deficiencies, diminutions in
value, penalties, causes of action, damages, out-of-pocket costs,
reasonable attorneys' fees, and expenses (including, without
limitation, costs of investigation and defense, attorneys' fees,
and expenses) including, without limitation, those arising out of
the sole or contributory negligence of any Indemnified Party (but
excluding those arising out of the gross negligence or willful
misconduct of any Indemnified Party), that the Indemnified Party
may suffer, incur, or be responsible for, arising or resulting
from any misrepresentation, breach of warranty, or nonfulfillment
of any agreement on the part of the Shareholders under this
Agreement, or the Company under this Agreement, the Warrant
Agreement, or under any other agreement to which the Company or
the Shareholders are a party in connection with the transactions
contemplated by this transaction, or from any misrepresentation
in or omission from any certificate or other instrument furnished
or to be furnished by the Company to the Purchaser or the Holders
under this Agreement.
7.02 Default. It is agreed that a violation by any
party of the terms of this Agreement cannot be adequately
measured or compensated in money damages, and that any breach or
threatened breach of this Agreement by a party to this Agreement
would do irreparable injury to the nonbreaching party. It is,
therefore, agreed that in the event of any breach or threatened
breach by a party to this Agreement of the terms and conditions
set forth in this Agreement, the nondefaulting party will be
entitled, in addition to any and all other rights and remedies
that it may have in law or in equity, to apply for and obtain
injunctive relief requiring the defaulting party to be restrained
from any such breach, or threatened breach or to refrain from a
continuation of any actual breach.
7.03 Integration. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter
hereof and supersedes all previous written, and all previous or
contemporaneous oral, negotiations, understandings, arrangements,
and agreements. This Agreement may not be amended or
supplemented except by a writing signed by the Shareholders and
each Holder.
7.04 Headings. The headings in this Agreement are for
convenience and reference only and are not part of the substance
of this Agreement. References in this Agreement to Sections and
Articles are references to the Sections and Articles of this
Agreement unless otherwise specified.
7.05 Severability. The parties to this Agreement
expressly agree that it is not their intention to violate any
public policy, statutory or common law rules, regulations, or
decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such
policy, rule, regulation, or decision, the provision, section,
sentence, word, clause, or combination thereof causing such
violation will be inoperative (and in lieu thereof there will be
inserted such provision, sentence, word, clause, or combination
thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this
Agreement, as amended, will remain binding upon the parties to
this Agreement, unless the inoperative provision would cause
enforcement of the remainder of this Agreement to be inequitable
under the circumstances.
7.06 Notices. Whenever it is provided herein that any
notice, demand, request, consent, approval, declaration, or other
communication be given to or served upon any of the parties by
another, such notice, demand, request, consent, approval,
declaration, or other communication will be in writing and will
be deemed to have been validly served, given or delivered (and
"the date of such notice" or words of similar effect will mean
the date) five (5) days after deposit in the United States mails,
certified mail, return receipt requested, with proper postage
prepaid, or upon receipt thereof (whether by non-certified mail,
telecopy, telegram, express delivery, or otherwise), whichever is
earlier, and addressed to the party to be notified as follows:
If to the Purchaser, at: Seacoast Capital Partners
Limited Partnership
c/o Seacoast Capital Corporation
55 Ferncroft Road
Danvers, Massachusetts 01923
Attention: Thomas W. Gorman
Facsimile: (508) 750-1301
Allied Investment Corporation
1666 K Street, N.W.
Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
Allied Investment Corporation II
1666 K Street, N.W.
Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
Allied Capital Corporation II
1666 K Street, N.W.
Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
with courtesy copies to: Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
Facsimile: 214 939-6100
Dickstein Shapiro & Morin
2101 L Street, N.W.
Suite 800
Washington, D.C. 20037
Attn: David Parker
Facsimile: (202) 887-0689
If to the Company, at: Labor Ready, Inc.
2150 Pacific Avenue
Tacoma, Washington 98402
Attn: Glenn A. Welstad
Facsimile: (206) 383-9311
If to the Shareholders, at: Glenn A. Welstad
2156 Pacific Avenue South
Tacoma, Washington 98402
Facsimile: (206) 383-9311
John R. Coghlan
2156 Pacific Avenue South
Tacoma, Washington 98402
Facsimile: (206) 383-9311
Coghlan Family Corporation
2156 Pacific Avenue South
Tacoma, Washington 98402
Facsimile: (206) 383-9311
with courtesy copies to: Preston Gates & Ellis
701 5th Avenue, Suite 5000
Seattle, Washington 98104
Facsimile: (206) 623-7022
Attn: Mark Beatty
Brad E. Herr, P.S.
2150 North Pines, Suite 202
Spokane, Washington 99206
Facsimile: (509) 928-9338
or to such other address as each party may designate for itself
by like notice. Notice to any Holder other than the Purchaser
will be delivered as set forth above to the address shown on the
stock transfer books of the Company or the Warrant Register
unless such Holder has advised the Company in writing of a
different address to which notices are to be sent under this
Agreement.
Failure or delay in delivering courtesy copies of any
notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies
of the actual notice will in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration, or other communication.
No notice, demand, request, consent, approval, declaration
or other communication will be deemed to have been given or
received unless and until it sets forth all items of information
required to be set forth therein pursuant to the terms of this
Agreement.
7.07 Successors. This Agreement will be binding upon
and inure to the benefit of the parties and their respective
successors and permitted assigns, provided that the Purchaser
will have the right to assign its rights under this Agreement in
connection with any transfer of the Warrants or the Warrant
Shares to not more than twenty (20) Persons.
7.08 Remedies. The failure of any party to enforce any
right or remedy under this agreement, or to enforce any such
right or remedy promptly, will not constitute a waiver thereof,
nor give rise to any estoppel against such party, nor excuse any
other party from its obligations under this Agreement. Any
waiver of any such right or remedy by any party must be in
writing and signed by the party against which such waiver is
sought to be enforced.
7.09 Survival. All warranties, representations, and
covenants made by any party in this Agreement or in any
certificate or other instrument delivered by such party or on its
behalf under this Agreement will be considered to have been
relied upon by the party to which it is delivered and will
survive the Closing Date, regardless of any investigation made by
such party or on its behalf. All statements in any such
certificate or other instrument will constitute warranties and
representations under this Agreement. Notwithstanding anything
to the contrary contained in this Agreement (a) Seacoast shall
not be entitled to the benefits of this Agreement at such time
that it (i) no longer owns a Warrant and (ii) owns less than
twenty percent (20%) of the Warrant Shares owned by it on the
Closing Date, (b) no Allied Investor shall be entitled to the
benefits of this Agreement at such time that (i) no Allied
Investor holds a Warrant and (ii) the Allied Investors own, in
the aggregate, less than twenty percent (20%) of the Warrant
Shares owned by them, collectively, on the Closing Date, (c) a
Holder (other than Seacoast or the Allied Investors) shall not
be entitled to the benefits of this Agreement at such time that
it (i) no longer owns a Warrant and (ii) owns less than ten
percent (10%) of the Warrant Shares, (d) Glenn A. Welstad shall
no longer be bound by the terms of this Agreement if his
employment with the Company is terminated by the Company for
reasons other than cause (as defined in his Non-Compete Agreement
with the Company), and (e) John R. Coghlan shall no longer be
bound by the terms of this Agreement if his employment with the
Company (as a consultant) is terminated by the Company for
reasons other than cause (as defined in his Non-Compete Agreement
with the Company).
7.10 Fees. Subject to the second sentence of this
Section 7.10, any and all fees, costs, and expenses, of whatever
kind and nature, including attorneys' fees and expenses, incurred
by the Holders in connection with the defense or prosecution of
any actions or proceedings arising out of or in connection with
this Agreement will, to the extent provided in this Agreement, be
borne and paid by the Company within ten (10) days of demand by
the Holders. Notwithstanding anything to the contrary in this
Section 7.10, with respect to any actions or proceedings solely
between any Holder and the Company and/or Shareholders, the
prevailing party shall recover, within ten (10) days of demand,
any and all fees, costs, and expenses, of whatever kind and
nature, including attorneys' fees and expenses, reasonably
incurred in connection with the defense or prosecution of any
such actions or proceedings arising out of or in connection with
this Agreement.
7.11 Counterparts. This Agreement may be executed in
any number of counterparts, which will individually and
collectively constitute one agreement.
7.12 Other Business. It is understood and accepted that
the Purchaser, the Holders, and their Affiliates have interests
in other business ventures that may be in conflict with the
activities of the Company and that nothing in this Agreement will
limit the current or future business activities of such parties
whether or not such activities are competitive with those of the
Company. The Shareholders agree that all business opportunities
in any field substantially related to the business of the Company
will be pursued exclusively through the Company.
7.13 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED,
DELIVERED, AND ACCEPTED BY THE PARTIES IN THE COMMONWEALTH OF
MASSACHUSETTS, WILL BE DEEMED TO HAVE BEEN MADE IN THE
COMMONWEALTH OF MASSACHUSETTS, AND WILL BE INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE UNITED STATES APPLICABLE THERETO AND THE INTERNAL LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT
TO THE CHOICE-OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE THAT
COULD REQUIRE THE APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER
JURISDICTION.
7.14 Duties Among Holders. Each Holder agrees that no
other Holder will by virtue of this Agreement be under any
fiduciary or other duty to give or withhold any consent or
approval under this Agreement or to take any other action or omit
to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as
such other Holder may, in its discretion, elect.
7.15 Small Business Investment Act. This Agreement, the
other purchase documents executed in connection herewith, and all
transactions contemplated hereby and thereby are subject to the
provisions of the Act, and shall be governed thereby to the
extent of any conflict therewith.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
COMPANY:
LABOR READY, INC.
By:
Name: Glenn A. Welstad
Title: Chief Executive Officer
PURCHASER:
SEACOAST CAPITAL PARTNERS
LIMITED PARTNERSHIP
By: Seacoast Capital Corporation,
its general partner
By:
Name: Thomas W. Gorman
Title: Vice President
55 Ferncroft Road
Danvers, Massachusetts 01923
Attn: Thomas W. Gorman
Facsimile: (508) 750-1301
ALLIED INVESTMENT CORPORATION
By:
Name: George Stelljes III
Title: Senior Vice President
1666 K Street, N.W., Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
ALLIED INVESTMENT CORPORATION II
By:
Name: George Stelljes III
Title: Senior Vice President
1666 K Street, N.W., Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
ALLIED CAPITAL CORPORATION II
By:
Name: George Stelljes III
Title: Senior Vice President
1666 K Street, N.W., Suite 901
Washington D.C. 20006
Attn: George Stelljes III
Facsimile: (202) 659-2053
SHAREHOLDERS:
Glenn A. Welstad
John R. Coghlan
COGHLAN FAMILY CORPORATION
By:
Name: John R. Coghlan
Title:President