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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
STAFFMARK ACQUISITION CORPORATION FOUR and STAFFMARK, INC.
and
XXXXX XXXXXX, TRUSTEE OF THE XXXXX XXXXXX
CHARITABLE REMAINDER UNITRUST, dated February 28, 1997,
XXXXXXX X. XXXXXX, TRUSTEE OF THE XXXXXXX XXXXXX CHARITABLE
REMAINDER UNITRUST, dated February 28, 1997,
XXXXX XXXXXX, XXXXXXX X. XXXXXX and XXXX XXXXXX
and
GLOBAL DYNAMICS, INC.
Dated: April 4, 1997
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TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Xxxxxx Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Global Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Global Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lock-Up and Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Material Adverse Effect or Materially Adversely Affect . . . . . . . . . . . . . . . . . . . 3
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Related Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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SAC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Sharps Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Stockholders' Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
StaffMark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
StaffMark Closing Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
StaffMark Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
StaffMark's Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
StaffMark SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Tax or Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Taxing Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. REORGANIZATION AND MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Actions at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Conversion of the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Exchange of Global Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS INDIVIDUALLY . . . . . . . . . . . . . . . . . . . 7
4.1 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Common Stock of StaffMark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND THE CORPORATION . . . . . . . . . . . . . . . . . 10
5.1 Existence of Corporation; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Shares of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Financial Statements and No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Leases and Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Validity; Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.13 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.14 Compliance with Laws; Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 No Changes Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.17 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.18 Significant Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.19 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.20 Proprietary Information of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.21 Employment Contracts and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.22 Trade Names, Trademarks, and Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.23 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.24 Certain Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.25 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. REPRESENTATIONS AND WARRANTIES OF STAFFMARK AND SAC . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Existence of StaffMark; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 StaffMark Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Exclusive Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Review of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.6 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.7 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.8 Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.9 Employee Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.10 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.11 Preparation and Filing of Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.12 Employee Bonuses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8. CONDITIONS TO STAFFMARK'S AND SAC'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Stockholders' and Corporation's Organizational Approval . . . . . . . . . . . . . . . . . . . 24
8.2 Governmental and Third Party Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.3 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Opinion of Stockholders' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.6 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.7 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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8.8 Resignation of the Corporation's Directors and Officers . . . . . . . . . . . . . . . . . . . 25
8.9 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.10 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.11 Delivery of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.12 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.13 Affiliate's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.14 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.15 Lock-Up and Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9. CONDITIONS TO STOCKHOLDERS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 StaffMark's Organizational Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Good Standing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Opinion of StaffMark's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.5 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.6 Performance of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.7 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Delivery of Shares and Cash; Closing Documents . . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.10 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.11 Affiliate's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.12 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.13 Lock-Up and Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 Delivery by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Delivery by StaffMark and SAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. SURVIVAL OF REPRESENTATIONS; INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Indemnification by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Notice to Stockholder, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Indemnification by Staffmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Notice to StaffMark, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Survival of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.7 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 Knowledge of Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.2 Knowledge of StaffMark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.4 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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12.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.13 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.14 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 4, 1997,
is entered into by and among STAFFMARK ACQUISITION CORPORATION FOUR ("SAC"), a
Delaware corporation and a wholly-owned subsidiary of STAFFMARK, INC., a
Delaware corporation ("StaffMark"); XXXXX XXXXXX, TRUSTEE OF THE XXXXX XXXXXX
CHARITABLE REMAINDER UNITRUST, DATED FEBRUARY 28, 1997 (THE "XXXXX XXXXXX
CRT"), XXXXXXX X. XXXXXX, TRUSTEE OF THE XXXXXXX X. XXXXXX CHARITABLE REMAINDER
UNITRUST, DATED FEBRUARY 28, 1997 (THE "XXXXXXX XXXXXX CRT"), XXXXX XXXXXX AND
XXXXXXX X. XXXXXX, INDIVIDUALLY (COLLECTIVELY WITH THE XXXXX XXXXXX CRT AND THE
XXXXXXX XXXXXX CRT, THE "BUTLERS"), AND XXXX XXXXXX, INDIVIDUALLY (each
individually a "Stockholder" and collectively as "Stockholders"); and GLOBAL
DYNAMICS, INC., a Delaware corporation (the "Corporation").
RECITALS:
A. Stockholders have represented that they own all of the
outstanding capital stock of the Corporation. The Board of Directors of each
of SAC, the Corporation and the Stockholders of the Corporation have approved
the merger of the Corporation with and into SAC pursuant to this Agreement, the
Certificate of Merger set forth in Exhibit A hereto and the transactions
contemplated hereby, in accordance with the applicable provisions of the
statutes of the State of Delaware, which permits such Merger.
B. For federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
C. Each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions thereto.
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have the
respective meanings set forth below or set forth in the Section of the
Agreement following such term:
ACCOUNTS RECEIVABLE shall have the meaning set forth in Section 5.19.
AGREEMENT means this Agreement and Plan of Reorganization among
StaffMark, SAC, Stockholders and the Corporation, dated April 4, 1997, as the
same may be amended from time to time, together with all schedules and exhibits
thereto.
BALANCE SHEET shall have the meaning set forth in Section 5.4.
BALANCE SHEET DATE shall have the meaning set forth in Section 5.4.
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XXXXXX SHARES shall have the meaning set forth in Section 3.1.
CODE shall mean the Internal Revenue Code of 1986, as amended.
CERTIFICATE OF MERGER shall have the meaning set forth in Section 2.1.
CERTIFICATES shall have the meaning set forth in Section 3.4.
CLAIMS shall mean the creation of any claims, charges, liens,
contracts, rights, options, security interests, mortgages, encumbrances or
restrictions whatsoever.
CLOSING shall have the meaning set forth in Section 2.4
CLOSING DATE means the date on which the Closing actually occurs, which
shall be on April 4, 1997, unless otherwise agreed by the parties, but shall
not in any event be prior to the satisfaction or waiver of and the conditions
to Closing set forth in Sections 8 and 9 herein.
CONDITIONS PRECEDENT shall have the meaning set forth in Sections 8 and
9.
CORPORATION means Global Dynamics, Inc., a Delaware corporation.
DAMAGES shall have the meaning set forth in Section 11.2.
DELAWARE ACT means the Delaware General Corporation Law.
DISCLOSURE SCHEDULES shall have the meaning set forth in Section 5.
DOCUMENTS shall have the meaning set forth in Section 4.2.
EFFECTIVE DATE shall have the meaning set forth in Section 2.4.
EMPLOYEE PLAN shall have the meaning set forth in Section 5.2.
EMPLOYMENT AGREEMENTS shall have the meaning set forth in Section 8.9.
EFFECTIVE TIME shall have the meaning set forth in Section 2.2.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
ESCROW AGREEMENT shall have the meaning set forth in Section 3.3.
ESCROW SHARES shall have the meaning set forth in Section 3.3.
FINANCIAL STATEMENTS shall have the meaning set forth in Section 5.4.
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GLOBAL COMMON STOCK means the Common Stock, par value $.01 per share,
of the Corporation.
GLOBAL STOCK means all issued and outstanding shares of Global Common
Stock.
HSR ACT means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
LIEN means any mortgage, pledge, claim, lien, charge, encumbrance,
security interest or defect in title of any kind or nature, other than
Permitted Liens.
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT shall have the meaning set
forth in Section 3.1.
MATERIAL CHANGE shall have the meaning set forth in Section 5.4.
MATERIAL ADVERSE EFFECT OR MATERIALLY ADVERSELY AFFECT means any
individual occurrence or event, or to cause any such occurrence or event, which
results in loss or damage to the Corporation in excess of $50,000.
MERGER means the merger of the Corporation with and into SAC, pursuant
to the Delaware Act.
OPTION shall have the meaning set forth in Section 6.6.
OPTION SHARES shall have the meaning set forth in Section 6.6.
PERMITTED LIENS shall have the meaning set forth in Section 5.6.
PERSON means an individual, sole proprietorship, partnership,
corporation, trust, joint venture, unincorporated organization, or a government
or agency or political subdivision thereof.
REGISTRATION RIGHTS AGREEMENT shall have the meaning set forth in
Section 3.1.
REGISTRATION STATEMENT means StaffMark's registration statement filed
with the SEC (No. 333-05713) in connection with its initial public offering of
its common stock.
RELATED PERSON shall have the meaning set forth in Section 5.20.
RETURNS means any returns and reports (including any information
returns) required to be filed for purposes of a particular Tax.
SAC means StaffMark Acquisition Corporation Four, a Delaware
corporation.
SAC COMMON STOCK means the Common Stock, par value $.01 per share, of
SAC.
SEC means the Securities and Exchange Commission.
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SEC DOCUMENTS shall have the meaning set forth in Section 6.4.
SEC REPORTS means the Registration Statement, the Form 10-Q for
StaffMark for the quarter ended September 30, 1996, StaffMark's Annual Report
on Form 10-K/A for the year ended December 31, 1996 and all current reports on
Form 8-K which have been filed by StaffMark with the SEC prior to Closing.
SECURITIES ACT means the Securities Act of 1933, as amended.
SHARES shall have the meaning set forth in Section 3.1.
SHARPS SHARES shall have the meaning set forth in Section 3.1
STOCKHOLDERS' INDEMNITEES shall have the meaning set forth in Section
11.2.
STAFFMARK means StaffMark, Inc., a Delaware corporation.
STAFFMARK CLOSING STOCK PRICE means the average of the daily closing
price of a share of StaffMark Common Stock as published in The Wall Street
Journal on the ten (10) consecutive trading days ending the day before the
execution of this Agreement; provided, however, such price shall not exceed
$14.00 and shall be no less than $13.50.
STAFFMARK COMMON STOCK means the Common Stock, par value $.01 per
share, of StaffMark.
STAFFMARK'S INDEMNITEES shall have the meaning set forth in Section
11.4.
STAFFMARK SEC REPORTS means all forms, reports, schedules, registration
statements, definitive proxy statements and other documents filed by StaffMark
with the SEC.
SURVIVING CORPORATION shall have the meaning set forth in Section 2.1.
TAX OR TAXES means all federal, state, local or foreign taxes and
assessments, including net or gross income, gross receipts, net proceeds,
sales, use, ad valorem, value added, franchise, occupancy, withholding,
payroll, employment, excise, sales, use, property, alternative or add-on
minimum, or environmental or taxes, whether disputed or not, together with any
interest and penalties, with respect thereto.
TAXING AUTHORITY means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Xxx.
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0. XXXXXXXXXXXXXX AND MERGER
2.1 PLAN OF REORGANIZATION. On the terms and subject to the
conditions set forth in this Agreement, the Corporation will merge with and
into SAC pursuant to Section 251 of the Delaware Act by filing a Certificate of
Merger in substantially the form attached hereto as Exhibit A (the "Certificate
of Merger"). SAC and the Corporation shall cause this Agreement to be executed
in accordance with the applicable provisions of the Delaware Act. SAC shall be
the surviving corporation in the Merger ("Surviving Corporation").
The Merger shall be effected pursuant to this Agreement. As promptly
as practicable, but in no event sooner than the time that all conditions
contained herein are satisfied or waived, and in no event more than two (2)
business days following the satisfaction or waiver of all of the conditions
contained herein, SAC and the Corporation shall cause a Certificate of Merger
(the "Certificate of Merger") to be filed with the Secretary of State of the
State of Delaware in accordance with Section 251 of the Delaware Act. The
Merger shall become effective at the time ("Effective Time") that SAC and the
Corporation file the Certificate of Merger with the Secretary of State of the
Sate of Delaware.
2.2 EFFECT OF THE MERGER.
(a) GENERAL. The Merger shall have the effect set forth in
Section 251 of the Delaware Act.
(b) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of SAC in effect at and as of the Effective Time will be
the Certificate of Incorporation of the Surviving Corporation with the
following amendment to Article One: The name of the Corporation is
GLOBAL DYNAMICS, INC.
(c) BYLAWS. The Bylaws of SAC in effect at and as of the
Effective Time shall become the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger.
(d) DIRECTORS AND OFFICERS. The directors and officers of
SAC in office at and as of the Effective Time shall become the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office).
(f) TAX CONSEQUENCES. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368 of the
Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
2.4 THE CLOSING. The closing of the transaction contemplated by
this Agreement (the "Closing") shall take place at 9:00 a.m. local time at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 755 Page Mill Road, Palo Alto, California,
on April 4, 1997, or any other date specified by the parties, but shall be no
later than the fifth business day following the satisfaction or waiver of all
conditions to the obligations of the parties to consummate the transactions
contemplated hereby, other than conditions with respect to actions the
respective parties will take at the Closing itself (the "Closing Date"). For
accounting purposes, the transaction shall be effective as of April 1, 1997
(the "Effective Date").
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2.5 ACTIONS AT THE CLOSING. At the Closing, (i) the Corporation and
the Stockholders will deliver to SAC the various certificates, instruments and
documents referred to in Section 10.1 below and (ii) SAC and Staffmark will
deliver to the Corporation the various certificates, instruments and documents
referred to in Section 10.2 below.
3. CONVERSION OF SHARES
3.1 CONVERSION OF THE STOCK.
(a) GENERAL. The manner of converting the shares of (i)
Global Stock and (ii) SAC Common Stock, issued and outstanding
immediately prior to the Effective Time of the Merger, respectively,
into shares of (x) StaffMark Common Stock and (y) common stock of the
Surviving Corporation, respectively, shall be as follows, subject to
Sections 3.2 and 3.3:
At of the Effective Time of the Merger:
(i) all of the shares of Global Common Stock held by the
Butlers issued and outstanding immediately prior to the Effective Time
of the Merger, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be deemed to represent
(1) that number of shares of StaffMark Common Stock set forth on Annex
I hereto (the "Xxxxxx Shares") and (2) the right to receive the amount
of cash set forth on Annex I hereto (the "Cash").
(ii) all of the shares of Global Common Stock held by Xxxx
Xxxxxx issued and outstanding immediately prior to the Effective Time
of the Merger, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be deemed to represent
that number of shares of StaffMark set forth in Annex I hereto (the
"Sharps Shares," collectively with the Xxxxxx Shares, the "Shares").
(iii) all shares of Global Common Stock that are held by the
Corporation as treasury stock shall be cancelled and retired and no
shares of StaffMark Common Stock or other consideration shall be
delivered or paid in exchange therefor; and
(iv) A portion of the Xxxxxx Shares and the Sharps shares to
be issued under subparagraphs (i) and (ii) above shall be delivered
into escrow as set forth in Section 3.3 hereof.
(b) REGISTRATION RIGHTS. The Xxxxxx Shares shall not be
registered under the Securities Act or the securities laws of any state
and shall be subject to the Registration Rights Agreement (the
"Registration Rights Agreement") in substantially the form as Exhibit
B.
(c) LOCK-UP AND REGISTRATION RIGHTS AGREEMENT. The Sharps
Shares shall not be registered under the Securities Act or the
securities laws of any state and shall be subject to the Lock-Up and
Registration Rights Agreement (the "Lock-Up and Registration Rights
Agreement") in substantially the form as Exhibit C.
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3.2 FRACTIONAL SHARES. No fractional share of StaffMark Common
Stock shall be issued in the Merger. In lieu thereof, each Stockholder who
would otherwise be entitled to receive a fractional share shall receive an
amount in cash equal to the product (rounded to the nearest hundredth) obtained
by multiplying (a) the StaffMark Closing Stock Price by (b) the fraction of the
share of StaffMark Common Stock to which such holder would otherwise be
entitled. No such holder shall be entitled to dividends or any other rights in
respect of any such fraction.
3.3 ESCROW. Prior to or at the Closing, each of StaffMark and the
Stockholders shall execute an Escrow Agreement (the "Escrow Agreement"),
substantially in the form attached as Exhibit D hereto, and shall cause the
Escrow Agent, as such term is defined in the Escrow Agreement, to execute the
Escrow Agreement, and at the Effective Time, the number of Shares representing
an aggregate 81,482 shares of StaffMark Common Stock which is equal to
$1,100,007, based on the StaffMark Closing Stock Price, which the Stockholders
are entitled to receive pursuant to Section 3.1 hereof (the "Escrow Shares"),
shall instead be delivered on behalf of Stockholders to the Escrow Agent to be
held and disbursed pursuant to such Escrow Agreement or otherwise as set forth
in this Agreement. In order to deposit the Escrow Shares with Escrow Agent,
StaffMark shall deliver to the Escrow Agent with copies to the Stockholders
certificates registered in the name of each Stockholder for the respective
number of shares listed opposite each Stockholder's name on Annex II hereto,
together with stock powers endorsed in blank. The Escrow Agreement shall be
for a six (6) month term and shall include provisions permitting substitution
of cash or cash equivalent for the Escrow Shares at the Stockholders option.
3.4 EXCHANGE OF GLOBAL STOCK.
(a) DELIVERY OF SHARES. At the Effective Time of the Merger
and on the Closing Date, subject to Section 3.3 hereof, the
Stockholders, each of the holders of all outstanding certificates
representing shares of Global Common Stock, shall, upon surrender of
such certificates, receive (i) the respective number of shares of
StaffMark Common Stock set forth on Annex I and (ii) the amount of cash
set forth on Annex I hereto, subject to reductions in such amount as
set forth in Section 3.1(i), said cash to be payable by certified check
or wire transfer at the election of the Stockholders.
(b) DELIVERY OF STOCKHOLDER CERTIFICATES. The Stockholders
shall deliver to StaffMark at the Closing the certificates representing
Global Stock, duly endorsed in blank by the Stockholders, or
accompanied by blank stock powers.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS INDIVIDUALLY
As an inducement to StaffMark to enter into this Agreement and to
consummate the transactions contemplated hereby, each Stockholder individually
represents and warrants to StaffMark as follows:
4.1 OWNERSHIP OF SHARES.
(a) Xxxxx Xxxxxx, individually, represents and warrants that
prior to March 1, 1997 he owned 183.5 shares of Global Common Stock and
on March 1, 1997, he transferred such 183.5 shares
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of Global Common Stock to the Xxxxx Xxxxxx CRT. Xxxxxxx Xxxxxx,
individually, represents and warrants that prior to March 1, 1997 she
owned 183.5 shares of Global Common Stock and on March 1, 1997, she
transferred such 183.5 shares of Global Common Stock to the Xxxxxxx
Xxxxxx CRT;
(b) The Xxxxx Xxxxxx CRT represents and warrants that it
owns 183.5 shares of Global Common Stock received by it on March 1,
1997. The Xxxxxxx Xxxxxx CRT represents and warrants that it owns
183.5 shares of Global Common Stock received by it on March 1, 1997;
(c) Xxxxx Xxxxxx and Xxxxxxx Xxxxxx represent and warrant
that they own 266 shares of Global Common Stock and hold the same as
community property;
(d) Xxxx Xxxxxx represents and warrants that he owns 79
shares of Global Common Stock; and
(e) Each Stockholder represents and warrants there are no
other shares of Global Common Stock outstanding. Each Stockholder
represents and warrants as to himself that he owns his portion of the
Global Common Stock free and clear of all pledges, security, interests,
liens, charges, encumbrances, equities, claims, options or limitations
of every kind and has the full power to transfer his shares to
StaffMark without obtaining the consent or approval of any other person
or governmental authority.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each Stockholder
represents and warrants as to himself (a) that such Stockholder has full legal
power, capacity and authority to execute and deliver this Agreement, the
Exhibits and Schedules (the "Documents") hereto, and the other documents
executed in connection herewith and to consummate the transactions contemplated
hereby and thereby, and (b) that this Agreement and the Documents have been
duly and validly executed and delivered by such Stockholder and constitutes a
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with their terms.
4.3 COMMON STOCK OF STAFFMARK. In order to induce StaffMark to
issue the Shares pursuant to Section 3.1 hereof, each of Xxxxx Xxxxxx and
Xxxxxxx Xxxxxx, individually and as trustees of their respective trusts, and
Xxxx Xxxxxx hereby represent and warrant to StaffMark as follows:
(a) The Stockholder has received and reviewed the StaffMark
SEC Reports.
(b) The Stockholder has had a reasonable opportunity to ask
questions of and receive answers from StaffMark concerning StaffMark
and such questions, if any, have been answered to the satisfaction of
the Stockholder; the Stockholder has received the information he or she
considers necessary to appropriate for deciding whether to enter this
Agreement and acquire the StaffMark Common Stock;
(c) The Stockholder has such knowledge and expertise in
financial and business matters that the Stockholder is capable of
evaluating the merits and risks involved in an investment in the
StaffMark Common Stock and the Stockholder is able presently to afford
a loss of this investment;
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(d) Except as set forth in this Agreement, no
representations or warranties have been made to the Stockholders by
StaffMark, or any agent, employee or affiliate of StaffMark; and in
entering into this transaction the Stockholder is not relying upon any
information other than that contained in the StaffMark SEC Reports, any
filed SEC document, this Agreement and the exhibits and Schedules
hereto and the results of independent investigations, if any, by the
Stockholder;
(e) The Stockholder is acquiring the Shares for investment
purposes only, solely for the account of the Stockholder (and not as a
nominee or agent), and not with a view towards the resale or
distribution of any part thereof and the Stockholder has no present
intention of selling the same;
(f) The Stockholder is familiar with Rule 144 of the
Securities Act and understands the resale limitations imposed thereby;
the Stockholder understands that (i) the Shares have not been
registered under the Securities Act or the securities laws of any
state, based upon an exemption from such registration requirements for
nonpublic offerings pursuant to the Securities Act and applicable state
securities laws; (ii) the Shares are and will be "restricted
securities" as said term is defined in Rule 144 of the Securities Act;
(iii) the Shares may not be sold or otherwise transferred unless they
have been first registered under the Securities Act and all applicable
state securities laws, or unless exemptions from such registration
provisions are available with respect to said resale or transfer; (iv)
StaffMark is under no obligation to register the Shares under the
Securities Act or any state securities laws, or to take any action to
make any exemption from any such registration provisions available
except as set forth in the Registration Rights Agreement; (v) the
certificates for the Shares will bear a legend to the effect that the
transfer of the securities represented thereby is subject to the
provisions hereof; and (f) stop transfer instructions will be placed
with the transfer agent, if any, for the Shares;
(g) The Stockholder will not sell or otherwise transfer any
of the Shares unless and until (i) said Shares shall have first been
registered under the Securities Act and all applicable state securities
laws; or (ii) StaffMark or the Stockholder shall have received a
written opinion of counsel (which counsel and opinion, in form and
substance, shall be reasonably satisfactory to StaffMark), to the
effect that the proposed sale or transfer is exempt from the
registration provisions of the Securities Act and, if the StaffMark
Common Stock is not then listed on a national exchange or the Nasdaq
National Market, all applicable state securities laws;
(h) It is understood that the certificates evidencing the
Xxxxxx Shares may bear one or all of the following legends:
(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE
145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
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(ii) Any legend required by the laws of the State of
Delaware or applicable state securities laws.
(i) It is understood that the certificates evidencing the
Sharps Shares may bear one or all of the following legends:
(i) THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE
SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE
ACT AND APPLICABLE SECURITIES LAW.
(ii) EXCEPT FOR TRANSFERS PURSUANT TO THE LOCK-UP AND
REGISTRATION RIGHTS AGREEMENT DATED APRIL 4, 1997 (THE "AGREEMENT") BY
AND AMONG STAFFMARK, INC. AND XXXX XXXXXX ("STOCKHOLDER") OR FOR
TRANSFERS TO AN IMMEDIATE FAMILY MEMBERS OF STOCKHOLDER WHO AGREE TO BE
BOUND BY THE RESTRICTIONS OF THE AGREEMENT (OR TRUSTS FOR THE BENEFIT
OF THE STOCKHOLDER OR FAMILY MEMBERS, THE TRUSTEES OF WHICH SO AGREE TO
BE BOUND BY THE RESTRICTIONS OF THE AGREEMENT, OR TO FAMILY LIMITED
PARTNERSHIP), THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, DISTRIBUTED, APPOINTED, OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED SALE, EXCHANGE, TRANSFER, OR OTHER DISPOSITION
PRIOR TO APRIL 4, 1999. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND
ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED
ABOVE OR AFTER SUCH DATE THAT THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE REGISTERED UNDER THE ACT. A COPY OF THE AGREEMENT IS
ON FILE WITH THE COMPANY.
(iii) Any legend required by the laws of the State of
Delaware or applicable state securities laws.
(j) The Stockholder has full power and authority to execute,
deliver and to perform the obligations of this Agreement and this
Agreement constitutes a legally binding obligation of the Stockholder,
enforceable in accordance with its terms except as limited by
applicable laws relating to bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application
relating to or affecting creditors' rights.;
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(k) The Stockholder by reason of his/her business or
financial experience, or business or financial experience of his/her
professional advisors who are unaffiliated with StaffMark, could
reasonably be assumed to have the capacity to protect his/her own
interest in connection with the transaction contemplated by this
Agreement.
(l) For a period ending on the first anniversary of the
Closing Date, any Stockholder wishing to dispose of any of the
StaffMark Common Stock received pursuant to this Agreement shall
provide written notice to StaffMark, not less than five business days
prior to the intended date of disposition, specifying the number of
shares the Stockholder proposes to transfer.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND THE CORPORATION.
Except as set forth on the schedules delivered to StaffMark with this
Agreement (the "Disclosure Schedules") as an additional inducement to StaffMark
to enter into this Agreement and to consummate the transactions contemplated
hereby, each Stockholder and the Corporation represent and warrant to StaffMark
as follows:
5.1 EXISTENCE OF CORPORATION; AUTHORITY. The Corporation is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Corporation has the power to own its
property and to carry on its business as now being conducted. The Corporation
is qualified to do business as a foreign corporation in each jurisdiction in
which the character of its business and the location of its properties makes
such qualification necessary. The Corporation has full power and authority to
make, execute, deliver and perform this Agreement, and this Agreement has been
duly authorized and approved by all required corporate or other action of the
Corporation. No further action by the Corporation or approvals of any third
party, other than as contemplated in this Agreement or otherwise listed in the
Disclosure Schedules, will be required to make this Agreement valid and binding
in accordance with its terms, and when executed and delivered, the Agreement
and all instruments executed pursuant hereto will constitute valid and binding
obligations of the Corporation, enforceable in accordance with their terms
except as limited by applicable laws relating to bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application relating to or affecting creditors' rights.
5.2 SHARES OF THE CORPORATION. The Corporation has an authorized
capitalization consisting of 10,000 shares of common stock, having a par value
of $0.01 per share, of which 712 shares are issued and outstanding and no
shares are held as treasury stock. All Shares have been duly authorized and
validly issued and are fully paid and nonassessable, and such Shares have been
so issued in full compliance with all federal and state securities laws. None
of the Shares have been issued in violation of any preemptive right. The
Corporation has no other shares of capital stock or other evidence of ownership
outstanding other than those possessed by Stockholders. Except as set forth on
Schedule 5.2, there are no outstanding subscriptions, options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements of any character providing for the purchase, issuance,
transfer or sale of any of the capital stock in the Corporation or other equity
interests in the Corporation, other than this Agreement.
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5.3 SUBSIDIARIES AND INVESTMENTS. The Corporation has no
subsidiaries and does not own or hold any capital stock or equity interest in
any corporation or other entity.
5.4 FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. The Corporation
has previously furnished to StaffMark and SAC, and attached hereto as Schedule
5.4 are, the balance sheet of the Corporation as at December 31, 1996, the
related statements of income and expenses for the fiscal year then ended, and
the balance sheet of the Corporation (the "Balance Sheet") as at February 28,
1997 (the "Balance Sheet Date") and the related statements of income and the
expenses for the two months then ended. All such financial statements (the
"Financial Statements") have been prepared on a consistent basis and were
prepared from the books and records of the Corporation. Except as provided in
Schedule 5.4, such books and records are complete and correct in all material
respects and have been made available to StaffMark and SAC for examination.
Except as provided in Schedule 5.4, the Financial Statements fairly present the
financial position of the Corporation as of the dates thereof and the results
of its operations for the periods ended on the dates thereof. Since the
Balance Sheet Date (i) there has been no Material Change in the assets,
liabilities or financial condition of the assets of the Corporation from that
reflected in its Balance Sheet and (ii) none of the business, prospects,
financial condition, operations, property or affairs of the Corporation has
been materially adversely affected by any occurrence or development,
individually or in the aggregate, whether or not insured against. For purposes
of this Section 5.4, "Material Change" shall mean an adverse change in excess
of $50,000 in the aggregate of any line items on the Corporation's Balance
Sheet incurred or changed outside the ordinary course of business.
5.5 BOOKS AND RECORDS. Except as set forth in Schedule 5.5, the
minute books of the Corporation contain accurate records of all meetings of and
corporate actions or written consents by the board of directors of the
Corporation.
5.6 TITLE TO PROPERTIES; ENCUMBRANCES. The Corporation has good,
valid and marketable title to (a) all its material personal and tangible
properties and assets, including, without limitation, all the properties and
assets reflected in the Balance Sheet, and (b) all the properties and assets
purchased by the Corporation since the Balance Sheet Date, in each case subject
to no encumbrance, lien, charge or other restriction of any kind or character,
except with respect to properties and assets reflected in the Corporation's
Balance Sheet or acquired since the Balance Sheet Date which have been sold or
otherwise disposed of in the ordinary course of business, and except for (i)
liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or impair
the use of, such property by the Corporation in the operation of its business,
(ii) liens for current taxes, assessments or governmental charges of levies on
property not yet due and delinquent, and (iii) liens set forth in Schedule 5.6
hereto (collectively, "Permitted Liens"). The Corporation has delivered to
StaffMark and SAC an accurate list (Schedule 5.6.1) of (x) all personal
property included (or that will be included) in "Equipment and Furnishings,"
less accumulated depreciation, on the Balance Sheet, and (y) all other personal
property owned by the Corporation with a value in excess of $2,500 as of the
Balance Sheet Date and acquired since the Balance Sheet Date.
5.7 REAL PROPERTY. The Corporation owns no real property.
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5.8 LEASES AND MATERIAL CONTRACTS. Except as set forth in Schedule
5.8 hereto, the Corporation has no, nor is it bound by any, (a) lease for real
property or material personal property, (b) agreement, contract or commitment
relating to capital expenditures in excess of $5,000, (c) loan or advance from
or to, or investment by or in, any other Person or any agreement, contract or
commitment relating to the making of any such loan, advance or investment
except advances to employees for unreimbursed business expenses in the ordinary
course of business, (d) guarantee or other contingent liability in respect of
any indebtedness or obligation of any other Person (other than the endorsement
of negotiable instruments for collection in the ordinary course of business),
(e) management service, consulting or any other similar type contract for
"active" customers, consultants, and clients for whom services were performed
by the Corporation or customers, consultants, and clients who performed
services for the Corporation in February, 1997 or for which there are currently
outstanding accounts receivables or payables, (f) agreement, contract or
commitment limiting the freedom of the Corporation to engage in any line of
business or to compete with any other Person which would have a material
adverse effect on the Corporation, (g) agreement, contract or commitment not
entered into in the ordinary course of business which involves $25,000 or more
and is not cancelable without penalty upon 30 days notice or (h) agreement,
contract or commitment which might reasonably be expected to have a potential
adverse impact on the business or operations of the Corporation. Each contract
or agreement set forth in Schedule 5.8 is in full force and effect and the
Corporation is not in default, and to the Corporation's knowledge, there exists
no default or event of default or event, occurrence, condition or act
(including the purchase and transfer of the Shares hereunder) which, with the
giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder. The
Corporation has not violated any of the terms or conditions of any contract or
agreement set forth in Schedule 5.8 (or required to be set forth in Schedule
5.8) in any material respect, and, to the knowledge of the Stockholders and the
Corporation, all of the covenants to be performed by any other party thereto
have been fully performed.
5.9 VALIDITY; CONSENTS. Except as set forth on Schedule 5.9,
neither the execution and delivery by the Corporation and the Stockholders of
this Agreement and the other documents executed in connection with the
Agreement, the consummation by the Corporation and the Stockholders of the
transactions contemplated hereby or thereby, nor the performance by the
Corporation or the Stockholders of this Agreement and such other agreements in
compliance with the terms and conditions hereof and thereof will (i) violate,
conflict with or result in any breach of the Corporation's certificate of
incorporation or bylaws, (ii) to the Stockholders' knowledge, violate, conflict
with or result in a breach, default or termination (or give rise to any right
of termination, cancellation or acceleration) under any law, rule or regulation
or any judgment, governmental permit, license or order to which the Corporation
or any Stockholder is a party or bound, (iii) violate any order, writ,
injunction or decree applicable to the Corporation or the Stockholders; (iv)
result in any conflict with, breach of, violation of, or default, termination
or forfeiture under any terms or provisions of any material contract or
agreement, the breach, violation, default, termination or forfeiture of which
would materially impair the ability of the Corporation to consummate the
transactions contemplated by this Agreement, or (v) require the consent,
waiver, authorization or approval of any Person, entity or organization under
any material contract or agreement.
5.10 LITIGATION. Except as set forth on Schedule 5.10, there is no
(i) action, suit, claim, proceeding or investigation pending or, to the best
knowledge of the Corporation, threatened against or affecting the Corporation
(whether or not the Corporation is a party or prospective party thereto), at
law or in equity, or
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before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding pending relating to the Corporation or (iii)
governmental inquiry pending or to the knowledge of the Corporation and the
Stockholders threatened against or involving the Corporation, and the
Corporation knows of no basis for any of the foregoing. Within the last twelve
(12) months, the Corporation has not sought and received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability or disadvantage which may be material
to the business, prospects, financial condition, operations, property or
affairs of the Corporation. There are no outstanding orders, writs, judgments,
injunctions or decrees served upon the Corporation by any court, governmental
agency or arbitration tribunal against the Corporation. To the knowledge of
the Corporation, there are no facts or circumstances which are reasonably
anticipated to result in institution of any action, suit, claim or legal
administrative or arbitration proceeding or investigation against or adversely
affecting the Corporation or the transactions contemplated hereby. The
Corporation is not in default with respect to any order, writ, injunction or
decree known to be served upon it from any court or of any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign. Except as disclosed on Schedule 5.10,
there is no action or suit by the Corporation pending or threatened against
others.
5.11 ENVIRONMENTAL MATTERS. To the knowledge of the Corporation, the
Corporation and all leased parcels, are in substantial compliance with all
applicable laws, rules, regulations, orders, ordinances, judgments and decrees
of all governmental authorities with respect to all environmental statutes,
rules and regulations. Except as set forth on Schedule 5.11, the Corporation
has not received notice of, nor does the Corporation have knowledge of, any
past or present events, conditions, circumstances, activities, practices,
incidents, actions or plans of the Corporation, which may materially interfere
with or prevent continued compliance with, or which may give rise to any common
law or legal liability or otherwise form the basis of any claim, action, suit,
proceeding, hearing, or investigation, based on or related to the disposal,
storage, handling, manufacture, processing, distribution, use, treatment or
transport, or the emission, discharge, release or threatened release into the
environment, of any Substance. As used in this Section 5.11, the term
"Substance" or "Substances" shall mean any pollutant, hazardous substance,
hazardous material, hazardous waste or toxic waste, as defined in any presently
enacted federal, state or local statute or any regulation that has been
promulgated pursuant thereto. To the Corporation's knowledge, no part of any
of the leased parcels has been listed or proposed for listing on the National
Priorities List established by the United States Environmental Protection
Agency, or any other such list by any federal, state or local authorities.
5.12 TAXES. Except as set forth in Schedule 5.12, the Corporation
has filed or caused to be filed, within the times and within the manner
prescribed by law, all Returns, by, or with respect to, the Corporation which
are required to be filed with any Taxing Authority. Except as set forth in
Schedule 5.12, such Returns and reports reflect accurately all liability for
Taxes of the Corporation for the periods covered thereby. Except as set forth
in Schedule 5.12, all Taxes payable by, or due from, the Corporation have been
fully paid or adequately disclosed and fully provided for in the books and
financial statements of the Corporation. The Corporation has no Tax liability
in excess of that shown on the Balance Sheet. No examination by any Taxing
Authority of any Return of the Corporation is currently in progress. There are
no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Return of the Corporation.
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5.13 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 5.13 or Schedule 5.16:
(a) The Corporation does not have any outstanding claims,
liabilities or indebtedness, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, except as set forth in the Balance
Sheet, other than liabilities incurred subsequent to the Balance Sheet Date in
the ordinary course of business.
(b) The Corporation is not bound by any agreement, or subject to any
charter or other corporate restriction or any legal requirement primarily
affecting the Corporation, which has, or in the future can reasonably be
expected to have, a Material Adverse Effect on the business or prospects of the
Corporation.
(c) The Corporation maintains worker's compensation reserve on its
Balance Sheet or has adequate coverage under a full-premium policy and that to
the Stockholder's knowledge there is no unrecorded liability for worker's
compensation claims or premiums as of the date of the Balance Sheet. All
referral fees and commissions due to employees for all periods ending prior to
the Closing Date have been properly paid or accrued on the Balance Sheet,
provided that the parties acknowledge that certain accruals are based on the
parties' good faith estimates of referral fees and commissions payable.
5.14 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. To the
Stockholders' knowledge, the Corporation is in compliance in all material
respects with all applicable laws, ordinances, regulations, orders, judgments
and decrees. To the Stockholders' knowledge there is no existing law, rule,
regulation or order, and Stockholders are not aware of any proposed law, rule,
regulation or order, whether federal, state or local, which would prohibit or
materially restrict StaffMark from, or otherwise Materially Adversely Affect
StaffMark in, conducting business in the manner heretofore conducted by the
Corporation in any jurisdiction in which such business is now conducted. The
Corporation possesses all franchises, permits, licenses, certificates and
consents required from any governmental or regulatory authority in order for
the Corporation to carry on its business as currently conducted and to own and
operate its properties and assets as now owned and operated except where the
lack thereof would not have a Material Adverse Effect on the Corporation's
business and such licenses and permits are set forth on Schedule 5.14 and shall
be provided to StaffMark at Closing.
5.15 EMPLOYEES. Except as set forth in Schedule 5.15, to the
Stockholders' knowledge, the Corporation is in substantial compliance with all
Federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and has not
and is not engaged, nor has been alleged to have engaged, in any unfair labor
practice.
5.16 NO CHANGES PRIOR TO CLOSING DATE. During the period from the
Balance Sheet Date to and including the date of this Agreement except as set
forth on Schedule 5.16, the Corporation has not:
(a) Cancelled any indebtedness owing to it or waived any
material claims that it might have possessed, waived any material
rights of substantial value;
(b) Sold, leased, transferred, or assigned any of its
assets, tangible or intangible, of the Corporation except in the
ordinary course of business;
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(c) Entered into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases and licenses) with
respect to the Corporation involving more than $5,000 or outside the
ordinary course of business;
(d) Accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) to which the Corporation
is a party or by which it is bound involving more than $5,000 or
outside the ordinary course of business;
(e) Allowed any Claims to be imposed upon any of its assets,
tangible or intangible outside the ordinary course of business other
than Permitted Liens;
(f) Made any capital expenditure (or series of related
capital expenditures) either involving more than $5,000 or outside the
ordinary course of business;
(g) Made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) either
involving more than $10,000 or outside the ordinary course of business;
(h) Issued, or agreed to issue, any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $1,000 or outside the ordinary course of business;
(i) Delayed or postponed the payment of accounts payable and
other liabilities outside the ordinary course of business;
(j) Canceled, compromised, waived, or released any right or
claim (or series of related rights and claims) either involving more
than $5,000 or outside the ordinary course of business;
(k) Granted any license or sublicense of any rights under or
with respect to patents, trademarks or copyrights;
(l) Accelerated collection of accounts receivables through
special inducements or outside the ordinary course of business;
(m) Except for the shares issued to Xxxx Xxxxxx, issued,
sold or otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital stock;
(n) Declared, set aside, or paid any dividend or made any
distribution with respect to its stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;
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(o) Experienced any damage, destruction, or loss (whether or
not covered by insurance) to its material assets;
(p) Made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees outside the
ordinary course of business;
(q) Entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(r) Granted any increase in the base compensation of any of
its directors, officers, and employees outside the ordinary course of
business;
(s) Adopted, amended, modified or terminated any bonus,
profit sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Plan);
(t) Made any other change in employment terms for any of its
directors, officers, and employees outside the ordinary course of
business; or
(u) Agreed to do any of the foregoing.
5.17 BROKER'S OR FINDER'S FEES. Except as set forth on Schedule
5.17, no agent, broker, Person or firm acting on behalf of Stockholders or the
Corporation is, or will be, entitled to any commission or broker's or finder's
fees from any of the parties hereto, or from any Person controlling, controlled
by or under common control with any of the parties hereto, in connection with
any of the transactions contemplated herein.
5.18 SIGNIFICANT CUSTOMERS. Set forth on Schedule 5.18 is a list of
the Corporation's ten largest customers for the twelve month period ending
December 31, 1996, together with the amount of services attributable to such
customers expressed in dollars and as a percentage of total sales and services,
as the case may be.
5.19 ACCOUNTS RECEIVABLE. All accounts receivable of the Corporation
that are reflected on the Balance Sheet or on the accounting records of the
Corporation as being due the Corporation as of the Closing Date (collectively,
the "Accounts Receivable") represent or will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business. Unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
a two and one-half percent (2 1/2%) reserve for uncollectable accounts.
Subject to such 2 1/2% reserve, each of the Accounts Receivable either has been
or will be collected in full, without any set-off, within one hundred twenty
(120) days after the day on which it first becomes due and payable. After such
120 day period, StaffMark or SAC shall re-assign any uncollectable account to
the Stockholders for collection and SAC and StaffMark shall have the right to
make a claim in accordance with the Escrow Agreement for the amount of such
uncollectable accounts; however, the Stockholders shall not have a right to
dispute such claim, provided that the claim is in the amount of the uncollected
accounts assigned to the Stockholders. There is no contest,
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claim, or right of set-off, other than returns in the ordinary course of
business, under any contract with any obligor of any Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
5.20 PROPRIETARY INFORMATION OF THIRD PARTIES. To the Stockholders'
knowledge, no third party has claimed or has reason to claim that any Person
employed by or consulting with the Corporation ("Related Person") has (i)
violated or is violating any of the terms or conditions of such person's
employment, non-competition or nondisclosure agreement with a third party, (ii)
disclosed or utilized any trade secret or proprietary information or
documentation of a third party, or (iii) interfered or interfering in the
employment relationship between a third party and any of its present or former
employees. No third party has requested information from the Corporation which
suggests that such a claim might be contemplated. To the Stockholders'
knowledge, no Related Person has employed or proposes to employ any trade
secret or any information or documentation proprietary to any former employer
and, no Related Person has violated any confidential relationship which such
person may have had with any third party, in connection with the sale of any
service of the Corporation.
5.21 EMPLOYMENT CONTRACTS AND BENEFITS.
(a) Set forth on Schedule 5.21 is a list of all pension, profit
sharing, retirement, deferred compensation, stock purchase, stock option,
incentive, bonus, vacation, severance, disability, hospitalization, medical
insurance, life insurance, fringe benefit, welfare and other employee benefit
plans, programs or arrangements pursuant to which the Corporation or its ERISA
Affiliates provides (directly or indirectly, individually or jointly through
others) benefits or compensation to or on behalf of employees or former
employees of the Corporation or its ERISA Affiliates, whether formal or
informal, whether or not written ("Employee Plan") and a list of all
independent contractors and employees of the Corporation. On request by
StaffMark or SAC, the Corporation shall furnish a copy of each Employee Plan,
employment contract and a copy of any related materials. The Stockholders will
cause the Corporation to maintain the benefits listed on Schedule 5.21 in full
force and effect through the Closing. Except as set forth on Schedule 5.21 or
obligations incurred in the ordinary course of business (other than bonuses,
commissions and employee loans) reflected on the books and records of the
Corporation, StaffMark and SAC shall not have any obligation or liability of
any kind or nature for any compensation or benefits of any kind or nature to
the employees or consultants of the Corporation for services rendered prior to
the Effective Date.
(b) Each Employee Plan covering any present or former employee of
the Corporation which is subject to the continuation health coverage
requirements of Section 4980B of the Code or Section 601 of ERISA or any
applicable state law has complied in all material respects with all such
requirements for continuation coverage.
(c) Except as set forth on Schedule 5.21, to the Corporation's
knowledge, there are no actions, suits or claims pending (other than routine
claims for benefits) or threatened against or with respect to any Employee Plan
or the assets of any Employee Plan.
(d) Each Employee Plan (and the related trust or funding vehicle, if
any) has been administered and maintained in material compliance with its terms
and with applicable law. Except as set forth on Schedule 5.21, each Employee
Plan which is intended to be qualified under Section 401 of the Code and each
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amendment to such plan is subject to a favorable determination letter from the
Internal Revenue Service and each such plan has at all times been maintained,
by its terms and in operation, in accordance with Section 401 of the Code. The
assets of each Employee Plan which is not funded through the general assets of
the Corporation are at least equal to the liabilities under such Employee Plan,
and all assets of each Employee Plan are shown on the books and records of such
Employee Plan at fair market value. No Employee Plan has unfunded liabilities
that as of the Closing Date are not accurately and fully reflected on the
Corporation's Balance Sheet.
(e) Neither the Corporation nor any of its ERISA Affiliates is or
has been a participant in, or is or has been obligated to maintain or to make
contributions to, a multi-employer plan (within the meaning of ERISA Section
3(37) and ERISA Section 40001(a)(3)) or an Employee Plan which is subject to
Title IV of ERISA. Neither the Corporation nor any ERISA Affiliate has
sponsored, contributed to or been obligated under Title I or IV of ERISA to
contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
The Corporation is not obligated to provide post-retirement medical benefits or
any other unfunded post-retirement welfare benefits to or on behalf of any
persons whatsoever (except the benefits pursuant to the continuation health
coverage requirements under Section 4980B of the Code, ERISA Section 601, or
applicable state law).
(f) Except as set forth in Schedule 5.21, the execution or
performance of the transactions contemplated by this Agreement will not create,
accelerate or increase any obligations under the Employee Plans, including any
obligation to make any payment which would not be deductible as an excess
golden parachute payment under Section 280G of the Code.
(g) To the Corporation's knowledge, all contributions to or under
each Employee Plan and all expenses of each Employee Plan are fully deductible
for income tax purposes for the taxable year for which such contributions are
made or such expenses are paid. To the Corporation's knowledge, all
contributions to or under each Employee Plan have been made when due under the
terms of such Employee Plan in accordance with applicable law.
(h) Neither the Corporation nor its ERISA Affiliates have entered
into any contract, agreement or arrangement (whether oral or written) with its
clients under which the Corporation or its ERISA Affiliates have assumed any
liability relating to its clients' retirement plans.
(i) Neither the Corporation nor its ERISA Affiliates has engaged in
employee leasing as defined in this Section 5.21(k). Employee leasing is
defined solely for purposes of this Section 5.21(k) to mean the placement by an
employer (customer) of all or most of its existing work force onto the payroll
of an employee leasing firm and an explicit co-employment relationship
following the termination-lease back.
(j) For purposes of this Section 5.21, the term "ERISA" shall mean
the Employee Retirement Income Security Act of 1974, as amended, and the term
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Corporation is treated as a single
employer under Section 414(b), (c), (m), (o) or (t) of the Code.
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(k) All obligations of the Corporation to employees under each
Employee Plan for all periods ending prior to the Closing Date have been
properly paid or accrued on the balance sheet.
5.22 TRADE NAMES, TRADEMARKS, AND COPYRIGHTS. Schedule 5.22 to this
Agreement is a schedule of all trade names, trademarks, service marks, and
copyrights and their registrations, owned by the Corporation or in which it has
any licenses, together with a brief description of each. Stockholders have no
knowledge of any infringement by others of any trade name, trademark, service
xxxx, or copyright. To the Corporation's knowledge, the Corporation has not
infringed, and is not now infringing, on any trade name, trademark, service
xxxx, or copyright belonging to any other person, firm, or corporation. Except
as set forth in Schedule 5.22, the Corporation is not a party to any license,
agreement, or arrangement, whether as licensor, licensee, franchisor,
franchisee, or otherwise, with respect to any trademarks, service marks, trade
names, or applications for them, or any copyrights. The Corporation owns, or
holds adequate licenses or other rights to use, all trademarks, service marks,
trade names, and copyrights necessary for its businesses as now conducted by it
(including without limitation those listed in Schedule 5.22), and to the
Corporation's knowledge, that use does not conflict with, infringe on, or
otherwise violate any rights of others. The Corporation has the right to sell
or assign to StaffMark all trademarks, trade names, service marks, and all such
licenses and other rights listed in Schedule 5.22.
5.23 GOVERNMENTAL APPROVALS. Except the filings contemplated by this
Agreement, no registration or filing with, or consent or approval of or other
action by, any Federal, state or other governmental agency or instrumentality
is or will be necessary for the valid execution, delivery and performance by
the Corporation of this Agreement.
5.24 CERTAIN PRACTICES. Neither the Corporation, nor to the
knowledge of the Corporation, any of its officers, directors or stockholders on
behalf of the Corporation have, directly or indirectly, used any of the
Corporation's funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of the Corporation or any
subsidiary; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; given any favor or gift which is not deductible for
federal income tax purposes.
5.25 INSURANCE. Schedule 5.25 lists the insurance coverage carried
by the Corporation, which insurance will remain in full force and effect
through the Closing Date. Except as set forth on Schedule 5.25, the
Corporation (i) has not failed to give any notice or present any claim under
any such policy or binder in timely fashion which failure would have a Material
Adverse Effect, (ii) has not received notice of cancellation or non-renewal of
any such policy or binder, (iii) is not aware of any threatened or proposed
cancellation or non-renewal of any such policy or binder, (iv) has not received
notice of any insurance premiums which will be materially increased in the
future, and (v) is not aware of any insurance premiums which will be materially
increased in the future. There are no outstanding claims under any such policy
which have gone unpaid for more than 60 days, or, to the Corporation's
knowledge, as to which the insurer has disclaimed liability.
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6. REPRESENTATIONS AND WARRANTIES OF STAFFMARK AND SAC
As an inducement to the Stockholders to enter into this Agreement and
to consummate the transactions contemplated hereby, StaffMark and SAC, jointly
and severally, represent and warrant to Stockholders and the Corporation as
follows:
6.1 EXISTENCE OF STAFFMARK; AUTHORITY. StaffMark and SAC are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware. StaffMark and SAC have corporate power and
authority to make, execute, deliver and perform this Agreement, and this
Agreement has been duly authorized and approved by all required corporate
action of StaffMark and SAC. No further action by StaffMark or SAC or
approvals of any third party, other than as contemplated in this Agreement,
will be required to make this Agreement valid and binding in accordance with
its terms, and when executed and delivered, the Agreement and all instruments
executed pursuant hereto will constitute valid and binding obligations of
StaffMark and SAC, enforceable in accordance with their terms except as limited
by applicable laws relating to bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application relating
to or affecting creditors' rights.
6.2 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm
acting on behalf of StaffMark or SAC is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
6.3 VALIDITY. Neither the execution and delivery by StaffMark or
SAC of this Agreement and the other documents executed in connection with the
Agreement, the consummation by StaffMark and SAC of the transactions
contemplated hereby or thereby, nor the performance by StaffMark or SAC of this
Agreement and such other agreements in compliance with the terms and conditions
hereof and thereof will (i) violate, conflict with or result in any breach of
StaffMark or SAC's certificate of incorporation or bylaws, (ii) to StaffMark's
and SAC's knowledge, violate, conflict with or result in a breach, default or
termination (or give rise to any right of termination, cancellation or
acceleration) under any law, rule or regulation or any judgment, governmental
permit, license or order to which StaffMark or SAC is a party or bound, (iii)
violate any order, writ, injunction or decree applicable to StaffMark or SAC;
(iv) result in any conflict with, breach of, violation of, or default,
termination or forfeiture under any terms or provisions of any material
contract or agreement filed as an exhibit to the SEC Documents, the breach,
violation, default, termination or forfeiture of which would materially impair
the ability of StaffMark or SAC to consummate the transactions contemplated by
this Agreement. For the purposes of this Section 6.3 only, "SEC Documents"
means all of StaffMark's filings with the Securities and Exchange Commission
since July, 1996.
6.4 GOVERNMENTAL APPROVALS. No registration or filing with, or
consent or approval of or other action by, any federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery or performance by the StaffMark of this Agreement, except
for such consents, approvals, registrations and filings as may be required
under applicable federal and state securities laws.
6.5 STAFFMARK STOCK. At the time of issuance thereof, the Shares to
be delivered to the Stockholders pursuant to this Agreement and the shares of
common stock of StaffMark to be issued pursuant
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to the Options (defined below) (the "Option Shares") will be duly authorized,
validly issued, fully paid, nonassessable, free of any liens or encumbrances
and not subject to any preemptive rights or rights of first refusal created by
statute or the Certificate of Incorporation or Bylaws of StaffMark or any
contract or agreement filed as an exhibit to the SEC Documents. The Shares and
the Options Shares will be issued in compliance with all applicable federal and
state securities laws. Notwithstanding the foregoing, the Shares shall not be
registered under the Securities Act or any state securities laws and shall be
subject to the limitations and restrictions in the Registration Rights
Agreement and the Lock-Up and Registration Rights Agreement. StaffMark has all
requisite corporate authority to issue the Shares to the Stockholders, to grant
the options to employees as described in Section 7.9 (the "Options") and to
issue the Option Shares. The issuance of the Shares and the Option Shares and
the grant of the Options will not result in any conflict with, breach of,
violation of, or default, termination or forfeiture under any terms or
provisions of its Certificate of Incorporation or Bylaws or any contract or
agreement filed as an exhibit to the SEC Documents. No consent, waiver,
approval, order or authorization of, or registration, declaring or filing with,
any governmental entity is required by or with respect to StaffMark in
connection with the issuance of the Shares and Option Shares and the grant of
the Options, except for such consents, approvals, registrations, and filings as
may be required under applicable federal and state securities laws.
7. COVENANTS AND AGREEMENTS
7.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement to the Closing Date, Stockholders shall cause the Corporation to, and
the Corporation shall, carry on its business and activities diligently and in
substantially the same manner as it has previously been carried out, without
any significant reduction or change of service, and Stockholders shall not
permit the Corporation to, nor shall the Corporation, take actions outside of
the ordinary course of its business.
7.2 EXCLUSIVE DEALING. During the period from the date of this
Agreement to the Closing Date, Stockholders shall not, and shall cause the
Corporation to refrain from taking any action to, directly or indirectly,
encourage, initiate or engage in discussions or negotiations with, or provide
any information to any Person, other than StaffMark, concerning any transfer of
the Shares or any merger, sale or lease of any assets (outside the ordinary
course of business) or similar transaction involving the Corporation.
7.3 COOPERATION. Each of the parties hereto shall use commercially
reasonable efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder to the end that the
transactions contemplated hereby will be fully and timely consummated.
7.4 COMMERCIALLY REASONABLE EFFORTS. The Stockholders, the
Corporation, StaffMark and SAC shall each use its commercially reasonable
efforts to procure upon reasonable terms and conditions all consents and
approvals, completion of all filings, all registrations and certificates, and
satisfaction of all other requirements prescribed by law which are necessary
for the consummation of the transactions contemplated by this Agreement and
StaffMark's ownership and operation of the Corporation after the Closing Date.
Prior to the Closing Date, the Stockholders and the Corporation will use
commercially reasonable efforts to preserve its relationships with its
employees, customers and others having business relationships with the
Corporation.
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7.5 REVIEW OF THE CORPORATION. StaffMark may, from the date hereof
until the Closing Date, through its representatives, review the properties,
books and records of the Corporation and its financial and legal condition as
they deem necessary or advisable to familiarize themselves with such properties
and other matters, and have certain financial representatives continuously
monitor the financial activities of the Corporation; such review shall not,
however, affect the representations and warranties made by Stockholders
hereunder. Stockholders shall cause the Corporation to, and the Corporation
shall, permit StaffMark and its representatives to have, after the date of
execution hereof, reasonable full access to all properties of the Corporation
and to all the books and records of the Corporation and cause the officers of
the Corporation to furnish StaffMark with such financial and operating data and
other information with respect to the business and properties of the
Corporation as StaffMark shall from time to time reasonably request. In the
event of termination of this Agreement prior to Closing, StaffMark shall keep
confidential and not disclose any material information obtained from
Stockholders or the Corporation concerning the Corporation's properties,
operations and business (unless readily ascertainable from public or published
information or trade sources) until the same ceases to be material (or becomes
so ascertainable) and shall promptly return to the Corporation all originals
and copies of any schedules, statements, documents or other written information
and all other information of the Corporation obtained under this Section 7.5 on
whatever medium obtained in connection therewith. Stockholders shall deliver
or cause to be delivered on the Closing Date, and at such other times and
places as shall be reasonably agreed upon, such additional instruments as
StaffMark may reasonably request for the purpose of carrying out this
Agreement. The review of the Corporation under this Section 7.5 is subject to
and in accordance with the terms of that certain Confidentiality Agreement
dated March 11, 1997 between StaffMark and the Corporation.
7.6 GOVERNMENTAL FILINGS. During the period from the date of this
Agreement to the Closing, Stockholders and the Corporation shall assist in such
ways as StaffMark shall reasonably request in the filing of any notification
required under the HSR Act and in the making of any other filings required as a
condition to the consummation of the transactions contemplated in this
Agreement.
7.7 DISTRIBUTIONS. During the period from the date of this
Agreement to the Closing, the Corporation shall pay no dividends,
distributions, consulting fees or management fees to Stockholders except as
permitted by Section 5.16(n). The Corporation shall not increase management
compensation policies or plans, and shall conduct no transactions with, or
transfer anything of value, directly or indirectly, to Stockholders, except as
permitted by Section 5.16(n).
7.8 CORPORATE MATTERS. During the period from the date of this
Agreement to the Closing, the Corporation will not (1) amend its articles of
incorporation or by laws; (2) issue any shares of its capital stock; (3) issue
or create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments under which any additional shares of its
capital stock of any class might be directly or indirectly authorized, issued
or transferred from treasury; or (4) agree to do any of the acts listed above.
7.9 EMPLOYEE STOCK OPTIONS. Within thirty (30) days of Closing,
StaffMark shall grant employees of the Corporation, other than Xxxxx Xxxxxx and
Xxxxxxx Xxxxxx, an aggregate of 35,000 options to purchase StaffMark Common
Stock to the employee and in the amounts as set forth in Schedule 7.9 hereto,
at a price per share equal to $13.125. The options shall be granted pursuant
to StaffMark's 1996 Stock Option Plan and shall vest no less than 20% per year.
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7.10 REORGANIZATION. It is the mutual intent and desire of the
parties that the Merger shall qualify as a reorganization under Section 368 of
the Code. StaffMark and SAC each agree to exercise its best efforts in order
to cause the Merger to qualify as a reorganization under Section 368 of the
Code. In connection therewith, StaffMark and SAC further covenant and agree as
follows: (a) that they intend to treat the acquisition of the Corporation as
an acquisition which constitutes a reorganization within the meaning of Section
Section 368(a)(1)(A) and 368(a)(2)(D) of the Code, and will not take any
action which is inconsistent with that treatment unless required to do so by
any court, federal or state governmental department, commission, bureau or
agency or other public body or authority; (b) that they plan and intend to
maintain the corporate existence of SAC and do not plan or intend to cause or
allow the transfer or disposition of any significant portion of the assets
which were in the Corporation except (i) in the ordinary course of business or
in accordance with an order of a court having jurisdiction over StaffMark or
SAC or (ii) for the transfer of such assets to another StaffMark subsidiary as
permitted under Section 368(a)(2)(C) of the Code in which case such assets of
the Corporation shall be operated in accordance with subsection (c) of this
Section 7.9 ; (c) that they plan and intend to continue the operation of the
Corporation's "historic" business activities in the same fashion as they were
conducted before the Merger and with substantially the same or increased
assets; and (d) that they plan and intend to maintain direct ownership of stock
of SAC sufficient in quality and quantity so that StaffMark will remain "in
control" of SAC within the meaning of Section 368(c) of the Code. StaffMark
and SAC acknowledge that the Corporation has not paid or provided for payment
of any corporate level tax which may result from the failure of the Merger to
qualify as a reorganization under Section 368 of the Code. Stockholders and
StaffMark agree that any corporate level tax resulting from failure of the
Merger to constitute a reorganization under Section 368 of the Code, shall be
the responsibility of Stockholders and shall be grounds for a claim for
indemnification by StaffMark or SAC pursuant to Section 11 or any other
provision of this Agreement, unless the failure of the Merger to constitute a
reorganization under Section 368 of the Code is due to (x) StaffMark's breach
of their covenants herein, (y) factual misrepresentations in StaffMark's
Certificate furnished to the Corporation's counsel, Xxxxxxxx & Xxxxxxxx LLP, on
the date of this Agreement (the "Certificate"), or (z) actions taken by
StaffMark which cause the statements in such Certificate to be untrue.
7.11 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall file or cause to be filed all Returns of
the Corporation for all taxable periods that end on or before the Effective
Date. Each Stockholder shall pay or cause to be paid all Tax liabilities in
connection with the conversion from a "Subchapter S Corporation" to a "C
Corporation," including Tax as a "C Corporation" for the period ending on or
before the Effective Date.
(b) StaffMark and SAC shall file or cause to be filed all Returns of
the Corporation for all taxable periods ending after the Effective Date.
(c) Each party hereto shall provide to each of the other parties
hereto such cooperation and information as any of them reasonably may request
in filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Returns, together
with relevant accompanying schedules and relevant work papers, relevant
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documents relating to rulings or other determinations by Taxing Authorities and
relevant records concerning the ownership and Tax basis of property, which such
party may possess. Each party shall make its employees reasonably available on
a mutually convenient basis at its cost to provide explanation of any documents
or information so provided. Subject to the preceding sentence, each party
required to file Returns pursuant to this Agreement shall bear all costs of
filing such Returns.
8. CONDITIONS TO STAFFMARK'S AND SAC'S OBLIGATIONS
The obligations of StaffMark and SAC to consummate the transactions
contemplated by this Agreement are conditioned upon receipt by StaffMark or
SAC, prior to or at Closing, of the documents listed in this Section and the
satisfaction or waiver by StaffMark or SAC of the other conditions set forth in
this Section.
8.1 STOCKHOLDERS' AND CORPORATION'S ORGANIZATIONAL APPROVAL.
(a) APPROVAL. Stockholders and the Board of Directors of
the Corporation shall have approved the Merger and have authorized the
execution and delivery of this Agreement, the Agreement of Merger and
the acts contemplated hereunder.
(b) CERTIFICATES. Stockholders shall have delivered to
StaffMark (i) copies of the Corporation's Certificate of Incorporation,
including all amendments thereto, certified by the Secretary of State
of Delaware as of a date not more than 10 days prior to the Closing
Date, (ii) certificates, dated not more than 10 days prior to the
Closing Date, from the Secretary of State of Delaware to the effect
that the Corporation is in good standing or subsisting in such
jurisdiction and listing all charter documents of the Corporation on
file, and (iii) evidence that all franchise taxes due and owing by the
Corporation in Delaware have been paid.
8.2 GOVERNMENTAL AND THIRD PARTY APPROVAL. Favorable orders,
consents and approvals in the form required to consummate the transfer of the
Shares shall have been received (if required) from governmental agencies and
third parties. If applicable, the waiting period prescribed under the HSR Act
shall have expired without an objection to the transfer of the Shares having
been made by the U.S. Department of Justice or the Federal Trade Commission
thereunder or an early termination of such waiting period shall have been
granted.
8.3 ABSENCE OF LITIGATION. At the Closing Date, there shall not be
(i) any effective injunction, writ, or temporary restraining order or any other
order of any nature issued by a court or governmental agency of competent
jurisdiction directing that the proposed transfer of the Shares not be
consummated or (ii) any action, suit, or proceeding pending or threatened by or
before any court or governmental body in which it is or may be sought to
prohibit, substantially delay, or rescind the transfer of the Shares, or limit
in any material way StaffMark's rights as contemplated herein, or obtain an
award of damages in connection with the transfer of the Shares.
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8.4 OPINION OF STOCKHOLDERS' COUNSEL. Stockholders shall have
furnished StaffMark with an opinion, dated the Closing Date, of Stockholders'
counsel in a form reasonably satisfactory to StaffMark.
8.5 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Stockholders and the Corporation contained in this Agreement
or in any schedule, including the Disclosure Schedules, or exhibit delivered
pursuant hereto shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Stockholders shall have
delivered to StaffMark on the Closing Date a certificate, dated the Closing
Date and signed by the Stockholders, to such effect.
8.6 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of
Stockholders and the Corporation to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed in all material
respects and Stockholders shall have delivered to StaffMark a certificate,
dated the Closing Date and signed by the Stockholders, to such effect.
8.7 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to StaffMark and its
counsel, and StaffMark shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transaction and the taking of all
proceedings in connection therewith.
8.8 RESIGNATION OF THE CORPORATION'S DIRECTORS AND OFFICERS. The
Corporation's directors shall have resigned, in writing, from the Corporation's
Board of Directors at the time of the Closing and Stockholders shall have
resigned, in writing, from their respective offices with the Corporation at the
time of the Closing and such officers shall have delivered to StaffMark a
certificate, dated the Closing Date, stating that compensation for services to
the Corporation is fully paid and shall cease as of the Closing Date and
forfeiting any accrued but unpaid bonuses. The resignations contemplated
herein shall in no way affect such director's or officer's authority to execute
this Agreement and shall be effective only upon consummation of the
transactions contemplated herein.
8.9 EMPLOYMENT AGREEMENTS. Xxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxx
Xxxxxx shall have entered into a Employment/Noncompetition Agreement with
StaffMark and the Corporation in substantially the form attached hereto as
Exhibit E (the "Employment Agreements").
8.10 NO MATERIAL ADVERSE CHANGE. During the period from the Balance
Sheet Date to the Closing Date, there shall not have been any material adverse
change in the financial condition or the results of operations of the
Corporation, and the Corporation shall not have sustained any material loss or
damage to its assets, whether or not insured, that materially affects its
ability to conduct a material part of its business.
8.11 DELIVERY OF SHARES. Stockholders shall have delivered the
Global Stock and Stockholders and the Corporation shall have delivered all of
the Schedules, resolutions, certificates, documents and instruments required by
this Agreement to be delivered by the Corporation or the Stockholders.
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8.12 ESCROW AGREEMENT. The Stockholders and the Corporation shall
have delivered an executed Escrow Agreement.
8.13 AFFILIATE'S CERTIFICATE. The Stockholders and the Corporation
shall have delivered an executed Affiliate's Certificate.
8.14 REGISTRATION RIGHTS AGREEMENT. The Stockholders, other than
Xxxx Xxxxxx, shall have delivered an executed Registration Rights Agreement.
8.15 LOCK-UP AND REGISTRATION RIGHTS AGREEMENT. Xxxx Xxxxxx shall
have delivered an executed Lock-Up and Registration Rights Agreement.
9. CONDITIONS TO STOCKHOLDERS' OBLIGATIONS
The sale and transfer of the Global Stock by the Stockholders on the
Closing Date and the obligations of the Stockholders to consummate the
transactions contemplated by this Agreement, are conditioned upon receipt by
Stockholders, prior to or at the Closing, of the documents listed in this
Section and the satisfaction or waiver by Stockholders of the other conditions
set forth in this Section.
9.1 STAFFMARK'S ORGANIZATIONAL APPROVAL. The Board of Directors of
StaffMark and SAC shall have approved the Merger and have authorized the
execution and delivery of this Agreement, the Agreement of Merger and the acts
contemplated hereunder.
9.2 GOOD STANDING CERTIFICATE. StaffMark and SAC shall have
delivered to Stockholders a certificate, dated not more than 10 days prior to
the Closing Date, from the Secretary of State of Delaware to the effect that
StaffMark and SAC are in good standing in such state.
9.3 OPINION OF STAFFMARK'S COUNSEL. StaffMark and SAC shall have
furnished Stockholders with an opinion, dated the Closing Date, of StaffMark's
counsel in a form reasonably satisfactory to Stockholders.
9.4 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of StaffMark and SAC contained in this Agreement or in any
Schedule or exhibit delivered pursuant hereto shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, and
StaffMark and SAC shall have delivered to Stockholders on the Closing Date a
certificate, dated the Closing Date and signed by an authorized officer of
StaffMark and SAC, to such effect.
9.5 GOVERNMENTAL APPROVAL. All governmental consents and approvals,
if any, necessary to permit the consummation of the transactions contemplated
by this Agreement shall have been received.
9.6 PERFORMANCE OF AGREEMENT. Each and all of the agreements of
StaffMark to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed, and StaffMark shall
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have delivered to Stockholders a certificate, dated the Closing Date and signed
by an authorized officer of StaffMark, to such effect.
9.7 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Stockholders and its
counsel, and Stockholders shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transaction and the taking of all
proceedings in connection therewith.
9.8 DELIVERY OF SHARES AND CASH; CLOSING DOCUMENTS. StaffMark shall
have paid the Cash Payment as set forth in Section 2 and delivered the Shares
and all of the Schedules, resolutions, certificates, documents and instruments
required by this Agreement.
9.9 EMPLOYMENT AGREEMENTS. StaffMark and SAC shall have delivered
executed Employment Agreements.
9.10 ESCROW AGREEMENT. StaffMark and SAC shall have delivered an
executed Escrow Agreement.
9.11 AFFILIATE'S CERTIFICATE. StaffMark and SAC shall have delivered
an executed Affiliate's Certificate.
9.12 REGISTRATION RIGHTS AGREEMENT. StaffMark and SAC shall have
delivered an executed Registration Rights Agreement.
9.13 LOCK-UP AND REGISTRATION RIGHTS AGREEMENT. StaffMark shall have
delivered an executed Lock-Up and Registration Rights Agreement.
10. CLOSING
10.1 DELIVERY BY STOCKHOLDERS. At or prior to the Closing,
Stockholders shall deliver to StaffMark or SAC the following instruments:
(a) Stock certificates representing the Global Stock,
accompanied by stock powers duly executed in favor of SAC or duly
executed instruments of transfer and any other documents that are
necessary to transfer to SAC good and marketable title to the Shares;
(b) The stock books, stock ledgers, minute books, corporate
seal and other corporate books and records of the Corporation;
(c) The Balance Sheet and Financial Statements, as provided
in Section 5.4;
(d) The Certificate of Merger, as provided in Exhibit A;
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(e) The opinion of counsel to Stockholders, as provided in
Section 8.4;
(f) The certificates of Stockholders, as provided in
Sections 8.1, 8.5 and 8.6;
(g) Resignations and certificate dated as of Closing of all
of the directors and certain officers of the Corporation, as provided
in Section 8.8;
(h) The Employment Agreements, as provided in Section 8.9;
(i) The Escrow Agreement;
(j) The Registration Rights Agreement;
(k) The Lock-Up and Registration Rights Agreement; and
(l) The Affiliate's Certificate; and
(m) All other documents, instruments and writings required
to be delivered by the Stockholders at or prior to Closing pursuant to
this Agreement or otherwise required in connection herewith.
10.2 DELIVERY BY STAFFMARK AND SAC. At or prior to the Closing,
StaffMark and SAC shall deliver to Stockholders the following instruments:
(a) The Cash Payment, as provided in Section 3;
(b) The StaffMark Common Stock, as provided in Section 3.1;
(c) The certificates of StaffMark, as provided in Section
9.2, 9.4 and 9.6;
(d) The Certificate of Merger, as provided in Exhibit A;
(e) The Employment Agreements;
(f) The opinion of counsel to StaffMark, as provided in
Section 9.3; and
(g) The Registration Rights Agreement;
(h) The Lock-Up and Registration Rights Agreement;
(i) The Affiliate's Certificate;
(j) The Escrow Agreement;
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(k) SEC Reports;
(l) The StaffMark 1996 Stock Option Plan and form of Stock
Option Agreement; and
(m) All other documents, instruments and writings required
to be delivered by StaffMark and SAC at or prior to Closing pursuant to
this Agreement or otherwise required in connection herewith.
11. SURVIVAL OF REPRESENTATIONS; INDEMNITY
11.1 SURVIVAL. All representations and warranties in this Agreement
and the Documents shall survive the Closing and any investigation at any time
made by or on behalf of any party for a period of eighteen (18) months and all
such representations and warranties shall expire on eighteen months after the
Effective Date, except that (a) claims, if any, asserted in writing prior to
such time identified as a claim for indemnification pursuant to this Section 11
shall survive until finally resolved and satisfied in full, (b) environmental
or tax claims arising from a breach of Sections 5.11 and 5.12, respectively,
shall survive for the full period of the applicable statute of limitations, and
until finally resolved and satisfied in full if a written claim is asserted on
or prior to the expiration of any such period and (c) the Corporation's
representations and warranties terminate upon the Closing. The representations
and warranties shall not be affected or otherwise diminished by any
investigation at any time representations and warranties were made.
11.2 INDEMNIFICATION BY STOCKHOLDERS. Subject to the terms herein,
the Stockholders, shall indemnify, defend, and hold StaffMark and SAC and its
officers, directors, and employees, and their respective successors and assigns
(the "Stockholders' Indemnitees") harmless from, against and with respect to
any claim, liability, obligation, loss, damage, assessment, judgment, cost and
expense of any kind or character, including reasonable attorney's and paralegal
fees, individually in excess of $5,000 (the "Damages"), exceeding in the
aggregate $50,000 (the "Indemnification Basket") and arising out of or in any
manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of any
warranty of the Stockholders or the Corporation
contained in this Agreement; or
(b) Any failure by Stockholders or the Corporation to
perform or observe, or to have performed or observed, in
full, any covenant, agreement or condition to be
performed or observed by it under this Agreement.
Notwithstanding the foregoing: (i) Xxxxx Xxxxxx and Xxxxxxx Xxxxxx,
jointly and severally (and not the remaining Stockholders), shall indemnify
StaffMark and SAC for any tax liability relating to the Corporation's
conversion from the cash to accrual tax basis or conversion from an "S
Corporation" to a "C Corporation" prior to Effective Date; (ii) the
Indemnification Basket shall not apply to indemnification for breaches of
Sections 5.4(i) and 5.19 of this Agreement; and (iii) the Stockholders shall
not be liable to indemnify for any damages which arise due to breach of Section
7.10 by StaffMark.
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11.3 NOTICE TO STOCKHOLDER, ETC. If any of the matters as to which
the Stockholders' Indemnitees are entitled to receive indemnification under
Section 11.2 should entail litigation with or claims asserted by parties other
than the Stockholders or the Corporation, the Stockholders shall be given
prompt notice thereof and shall have the right, at their expense, to control
such claim or litigation upon prompt notice to StaffMark of his election to do
so. To the extent requested by the Stockholders, StaffMark shall cooperate
with and assist the Stockholders or Corporation, in connection with such claim
or litigation. StaffMark shall have the right to appoint single counsel, at
StaffMark's expense, to consult with and remain advised by the Stockholders in
connection with such claim or litigation. The Stockholders shall have final
authority to determine all matters in connection with such claim or litigation;
provided, however, that the Stockholders shall not settle any third party claim
without the consent of StaffMark, which shall not be unreasonably denied or
delayed.
11.4 INDEMNIFICATION BY STAFFMARK. StaffMark shall indemnify,
defend, and hold the Stockholders and their respective successors and assigns
("StaffMark's Indemnitees") harmless from, against and with respect to any
claim, liability, obligation, loss, damage, assessment, judgment, cost and
expense of any kind or character, including reasonable attorney's and paralegal
fees (the "Damages"), exceeding in the aggregate $50,000 and arising out of or
in any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of
warranty of SAC or StaffMark contained in this
Agreement;
(b) Any failure by SAC or StaffMark to perform or observe,
or to have performed or observed, in full, any covenant,
agreement or condition to be performed or observed by it
under this Agreement;
(c) The operations of the Corporation by StaffMark
subsequent to the Closing Date, including liabilities or
obligations of, or claims against, the Stockholders
(whether absolute, accrued, contingent or otherwise)
relating to or arising out of, the operation of the
Corporation subsequent to the Closing Date.
11.5 NOTICE TO STAFFMARK, ETC. If any of the matters as to which
StaffMark's Indemnitees are entitled to receive indemnification under Section
11.4 should entail litigation with or claims asserted by parties other than
StaffMark, StaffMark the shall be given prompt notice thereof and shall have
the right, at its expense, to control such claim or litigation upon prompt
notice to Stockholder of its election to do so. To the extent requested by
StaffMark, the Stockholder shall cooperate with and assist StaffMark, in
connection with such claim or litigation. Stockholders shall have the right to
appoint single counsel, at Stockholder's expense, to consult with and remain
advised by StaffMark in connection with such claim or litigation. StaffMark
shall have final authority to determine all matters in connection with such
claim or litigation; provided, however, that StaffMark shall not settle any
third party claim without the consent of the Stockholders, which shall not be
unreasonably denied or delayed.
11.6 SURVIVAL OF INDEMNIFICATION. The obligations to indemnify and
hold harmless pursuant to this Section 11 shall survive the Closing of the
purchase of the Shares contemplated hereby for a period of
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eighteen (18) months from the Effective Date, notwithstanding any investigation
at any time made by or on behalf of any party, except that (a) claims, if any,
asserted in writing prior to such 18 month anniversary identified as a claim
for indemnification pursuant to this Section 11 shall survive until finally
resolved and satisfied in full, and (b) environmental or tax claims arising
from a breach of Sections 5.11 and 5.12, respectively, and claims for a breach
of Section 7.10 shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if asserted on or
prior to the expiration of any such period.
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11.7 LIMITATIONS.
(a) In determining the amount of any indemnity, there shall be taken
into account any tax benefit, insurance proceeds or other similar recovery or
offset realized, directly or indirectly, by the party to be indemnified.
(b) Notwithstanding anything to the contrary herein and except as
set forth in Section 11.7(d), each Stockholder shall, severally and not
jointly, be liable for Damages and the liability with respect to any claim for
Damages from any Stockholder shall be limited to such Stockholder's pro rata
portion of such Damages which is equal to the Damages multiplied by such
Stockholder's proportion equity interest in the Corporation immediately prior
to the Closing as set forth in Annex III hereto.
(c) StaffMark and SAC each acknowledges and agrees that it shall
have no right pursuant to this Section 11 with respect to any breach or failure
by a Stockholder to fully perform his or her obligations under such
Stockholder's respective noncompetition agreement, employment agreement, and/or
similar agreement, as applicable, and that any cause of action arising as a
result of such breach or failure to perform shall be asserted only in a
separate action by StaffMark and SAC that is independent of this Section 11.
(d) Xxxxx Xxxxxx, individually, shall be liable for any breaches of
the representations and warranties made by the Xxxxx Xxxxxx CRT under Section
4.1 and Section 5.12. Xxxxxxx Xxxxxx, individually, shall be liable for any
breaches of the representations and warranties made by the Xxxxxxx Xxxxxx CRT
under Section 4.1 and Section 5.12. In addition, in the event that StaffMark
and SAC are unable to collect Damages from either the Xxxxx Xxxxxx CRT or the
Xxxxxxx Xxxxxx CRT pursuant to Section 11.7(b), then Xxxxx Xxxxxx and Xxxxxxx
Xxxxxx shall jointly and severally be liable for the Xxxxx Xxxxxx CRT and/or
Xxxxxxx Xxxxxx CRT's proportionate share of the Damages, to the extent of the
consideration received by Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, individually, under
this Agreement.
(e) In no event shall the liability for Damages of any Stockholder
exceed the consideration received by such Stockholder pursuant to this
Agreement.
12. MISCELLANEOUS
12.1 KNOWLEDGE OF CORPORATION. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the
knowledge of the Corporation, the Corporation or the Stockholders, such term
shall mean the "actual" knowledge of the Corporation's officers and directors,
or in the case of the knowledge of the Stockholders, the "actual" knowledge of
the stockholders as to matters that are the subject of such representations and
warranties.
12.2 KNOWLEDGE OF STAFFMARK. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the best of
knowledge, information and belief of StaffMark, StaffMark confirms that it has
made due and diligent inquiry of its officers and directors as to the matters
that are the subject of such representations and warranties.
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12.3 EXPENSES. Stockholders and StaffMark shall pay all of their own
expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective
counsel and financial advisers. Except as set forth on Schedule 12.3, no
expenses shall be paid by the Corporation.
12.4 CAPTIONS. The article and section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
12.6 PUBLICITY. Unless agreed by the parties in writing, the detail
of the Merger contemplated by this Agreement and any information or documents
exchanged between the parties pursuant to this Agreement shall be and remain
confidential and shall not be disclosed to any third party, other than
attorneys, accountants, agents and other advisors employed by a party with
respect to the Merger. The parties hereto and their affiliates shall not make
any public announcements regarding the Merger (except that necessary to comply
with any governmental requirements) unless both parties have agreed in writing
to such announcements. If such announcement is made, the Stockholders shall
have the option to price the Shares ten (10) days before such announcement or
ten (10) days before this Agreement was signed.
12.7 NOTICES. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telex or by registered or certified mail, postage prepaid, addressed as
follows:
(a) If to StaffMark: StaffMark, Inc. (Attn: Xxxxx X. Xxxxxxx)
000 Xxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
with a copy to: Xxxxxx, Xxxxxxx & Xxxxxxxx
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx III
(b) If to Stockholders: Xxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
with a copy to: Xxxxxxxx & Xxxxxxxx LLP
Attn: Xxxx X. Lion III/Xxxxxxx Xxxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
(c) If to the Corporation Global Dynamics, Inc.
(prior to Closing) 0000 Xxxxx Xxxx. Xxx. 000
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx
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(subsequent to Closing): StaffMark, Inc. (Attn: Xxxxx X. Xxxxxxx)
000 Xxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
with a copy to: Xxxxxx, Xxxxxxx & Xxxxxxxx
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx III
or such other address as shall be furnished in writing by any such party, and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent by telex or mailed.
12.8 ASSIGNMENT. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, without the prior written consent
of the other parties hereto. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
12.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
12.10 ENTIRE AGREEMENT. This Agreement, including the other documents
referred to herein which form a part hereof, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter, including without
limitation that certain letter of intent between the parties dated March 7,
1997.
12.11 AMENDMENTS. This Agreement may not be amended orally, but only
by an agreement in writing signed by StaffMark, Stockholders and the
Corporation.
12.12 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
12.13 SCHEDULES. Any disclosure included on any schedule pursuant to
this Agreement shall be considered to be made for purposes of all schedules to
this Agreement. All schedules are incorporated herein by this reference.
12.14 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
12.15 GOVERNING LAW. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE, EXCEPT THE EMPLOYMENT AGREEMENTS AND OPTION AGREEMENTS
WHICH SHALL BE GOVERNED BY THE LAWS OF CALIFORNIA.
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IN WITNESS WHEREOF, StaffMark, SAC, Stockholders and the Corporation
have caused their corporate name to be hereunto subscribed by their officers
thereunto duly authorized, all as of the day and year first above written.
STOCKHOLDERS: CORPORATION:
By: /s/ Xxxxx Xxxxxx GLOBAL DYNAMICS, INC.
--------------------------------------
Xxxxx Xxxxxx, Trustee of the Xxxxx
Xxxxxx Charitable Remainder Unitrust,
dated February 28, 1997 By: /s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx, President
By: /s/ Xxxxxxx Xxxxxx STAFFMARK ACQUISITION
-------------------------------------- CORPORATION FOUR
Xxxxxxx X. Xxxxxx, Trustee of the
Xxxxxxx Xxxxxx Charitable Remainder
Unitrust, dated February 28, 1997
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx, Vice President
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx, Individually
STAFFMARK, INC.
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------- --------------------------------------
Xxxxxxx Xxxxxx, Individually Xxxxx X. Xxxxxxx, Chief Financial Officer
By: /s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx, Individually
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EXHIBITS AND SCHEDULES
ANNEX I
[Merger Consideration]
ANNEX II
[Escrow Share Allocation]
ANNEX III
[Equity Interest in Corporation]
EXHIBIT A
[Certificate of Merger]
EXHIBIT B
[Registration Rights Agreement]
EXHIBIT C
[Lock-Up and Registration Rights Agreement]
EXHIBIT D
[Escrow Agreement]
EXHIBIT E
[Employment Agreement]
SCHEDULE 5.4
[Financial Statements]
SCHEDULE 5.5
[Books and Records]
SCHEDULE 5.6
[Listing of liens on the Corporation's assets]
SCHEDULE 5.6.1
[Listing of Personal Property]
SCHEDULE 5.8
[List of the Corporation's leases and material contracts]
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SCHEDULE 5.9
[List of restrictive documents/Consents]
SCHEDULE 5.10
[Pending or threatened litigation]
SCHEDULE 5.11
[Environmental Matters]
SCHEDULE 5.14
[Licenses/Permits]
SCHEDULE 5.15
[Employees]
SCHEDULE 5.16
[Changes Prior to Closing Date]
SCHEDULE 5.17
[Commission or Broker's Fees]
SCHEDULE 5.18
[Significant Customers]
SCHEDULE 5.21
[Employment Agreements, Benefit Plans, etc.]
SCHEDULE 5.22
[Trade Names, Trademarks, Service Marks
& Copyrights, Licenses, Agreements, etc.]
SCHEDULE 5.25
[Insurance]
SCHEDULE 7.9
[Options]
2
