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EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
Among
TEAM AMERICA CORPORATION
TEAM AMERICA ACQUISITIONS, INC.
and
WORKFORCE STRATEGIES, INC.
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Dated as of September 5, 1997
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of September 5, 1997, among TEAM AMERICA CORPORATION, an Ohio corporation
("Parent"), TEAM AMERICA ACQUISITIONS, INC., an Ohio corporation and a wholly
owned subsidiary of Parent ("ACQUISITION"), and WORKFORCE STRATEGIES, INC., a
Delaware corporation (the "COMPANY"). The Company and Acquisition are
hereinafter sometimes referred to as the "CONSTITUENT CORPORATIONS" and
Acquisition as the "SURVIVING CORPORATION."
WHEREAS, Parent, Acquisition and the Company desire that the Company
merge with and into the Company (the "MERGER"), upon the terms and conditions
set forth herein and in accordance with the Delaware General Corporation Law
(the "DELAWARE LAW") and the Ohio General Corporation Law (the "OHIO LAW") with
the result that Acquisition shall continue as the surviving corporation and the
separate existence of the Company (except as it may be continued by operation of
law) shall cease; and
WHEREAS, Parent, Acquisition and the Company desire that at the
Effective Time (as hereinafter defined) all outstanding shares of the capital
stock of the Company (excluding Dissenting Shares (as hereinafter defined)) be
converted into the right to receive a combination of cash, fully paid and
nonassessable shares of common stock, without par value, of Parent ("PARENT
COMMON STOCK"), and options to purchase Parent Common Stock, as hereinafter
provided; and
WHEREAS, Parent, Acquisition and the Company desire that, immediately
after the Effective Time and solely as a result of the Merger, Parent will own
all the issued and outstanding shares of the capital stock of the Surviving
Corporation; and
WHEREAS, the respective Boards of Directors of Parent, Acquisition and
the Company have approved the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement, the
Delaware Law, and the Ohio Law, the Company shall be merged with and into
Acquisition, the separate existence of the Company (except as it may be
continued by operation of law) shall cease, and Acquisition shall continue as
the Surviving Corporation under the corporate name of "TEAM America of
California, Inc."
SECTION 1.02 EFFECT OF THE MERGER. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed to, and assume all the rights
and obligations of, the Company and Acquisition in accordance with the Delaware
Law and the Ohio Law and the Merger shall otherwise have the effects set forth
in Section 252 of the Delaware Law and Section 1701.79 of the Ohio Law.
SECTION 1.03 CONSUMMATION OF THE MERGER. As soon as practicable on
September 8, 1997 after the satisfaction or waiver of the conditions to the
obligations of the parties to effect the Merger set forth herein, provided that
this Agreement has not been terminated previously, the parties hereto will cause
the Merger to be consummated by filing with the Secretary of State of the State
of Delaware and the Secretary of State of the State of Ohio a properly executed
certificate of merger in accordance with the Delaware Law and the Ohio Law,
respectively. The Merger shall be effective as of October 1, 1997 (the
"EFFECTIVE TIME").
SECTION 1.04 ARTICLES OF INCORPORATION; CODE OF REGULATIONS; DIRECTORS
AND OFFICERS. The Articles of Incorporation of the Surviving Corporation from
and after the Effective Time shall be the Articles of Incorporation of
Acquisition as in effect immediately prior to the Effective Time, until
thereafter amended in accordance with the provisions thereof and as provided by
the Ohio Law. The Code of Regulations of the Surviving Corporation from and
after the Effective Time shall be the Code of Regulations of Acquisition as in
effect immediately prior to the Effective Time, continuing until thereafter
amended in accordance with the provisions thereof and the Articles of
Incorporation of the Surviving Corporation and as provided by the Ohio Law. The
initial directors and officers of the Surviving Corporation shall be the
directors and officers, respectively, of Acquisition immediately prior to the
Effective Time.
SECTION 1.05 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporation, all such other acts
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and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 CONVERSION OF SECURITIES OF THE COMPANY. By virtue of the
Merger and without any action on the part of the holders of the capital stock of
the Company, at the Effective Time, all outstanding shares of the capital stock
of the Company (excluding shares held in the treasury of the Company, which
shall be cancelled as provided in paragraph (c) below, and Dissenting Shares (as
hereinafter defined) and subject to Section 2.04(c) hereof) shall be converted
into the right to receive cash, fully paid and nonassessable shares of Parent
Common Stock, and options to purchase Parent Common Stock on the following
basis:
(a) "EMPLOYEE/INSIDER" SHAREHOLDERS. Those holders of shares
of Company Common Stock issued and outstanding immediately prior to the
Effective Time as set forth on SCHEDULE 2.01A attached hereto and incorporated
herein by reference shall be converted into the right to receive that (i) amount
of cash, (ii) number of shares of Parent Common Stock, and (iii) that number of
options to purchase Parent Common Stock as set forth on SCHEDULE 2.01A.
(b) NON-EMPLOYEE SHAREHOLDERS. Those holders of shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time as set forth on SCHEDULE 2.01B attached hereto and incorporated herein by
reference shall be converted into the right to receive that (i) amount of cash
and (ii) number of shares of Parent Common Stock as set forth on SCHEDULE 2.01B.
(c) TREASURY STOCK. Each share of capital stock that is held
in the treasury of the Company shall be cancelled and retired and no capital
stock of Parent, cash or other consideration shall be paid or delivered in
exchange therefor.
SECTION 2.02 CONVERSION OF ACQUISITION COMMON STOCK. At the Effective
Time, each share of Common Stock, without par value, of Acquisition issued and
outstanding immediately prior to the Effective Time shall remain outstanding
and, by virtue of the Merger, automatically and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and nonassessable share of Common Stock of the Surviving Corporation.
SECTION 2.03 APPRAISAL RIGHTS/DISSENTING SHARES. Notwithstanding
anything in this Agreement to the contrary, shares of capital stock of the
Company that are outstanding immediately prior to the Effective Time and that
are held by stockholders who have not voted such shares in favor of the approval
and adoption of this Agreement and who shall have delivered a written demand for
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appraisal of such shares in the manner provided in Section 262 of the Delaware
Law ("DISSENTING SHARES") shall not be converted into or be exchangeable for the
right to receive the consideration provided in Section 2.01 of this Agreement,
but the holders of such shares shall be entitled to payment of the appraised
value of such shares in accordance with the provisions of Section 262 of the
Delaware Law; PROVIDED, HOWEVER, that (i) if any holder fails to perfect or
loses his appraisal rights as provided in Section 262 of the Delaware Law, or
(ii) if any holder of Dissenting Shares fails to demand payment within the time
period provided in Section 262 of the Delaware Law, such holder shall forfeit
the right to appraisal of such shares and such shares shall thereupon be deemed
to have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the consideration provided in Section 2.01
of this Agreement, without any interest thereon. Parent shall pay any amounts
payable to dissenters hereunder if required to do so to maintain the tax free
nature of the Merger. Xxxxxxxxx shall provide the proper notice to stockholders
pursuant to Sections 228 and 262 of the Delaware Law as soon as practical after
the execution of this Agreement.
SECTION 2.04 Surrender and Exchange of Shares.
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(a) At the Effective Time, each holder of an outstanding
certificate or certificates that prior thereto represented shares of the capital
stock of the Company shall surrender the same to Parent or its agent, and each
such holder shall be entitled upon such surrender to receive in exchange
therefor, without cost to it, cash, fully paid and nonassessable shares of
Parent Common Stock, and options to purchase Parent Common Stock as provided in
Section 2.01 hereof, and the certificate or certificates so surrendered in
exchange for such consideration shall forthwith be cancelled by Parent.
(b) If a certificate representing shares of the capital stock
of the Company has been lost, stolen or destroyed, the holder of such
certificate shall submit an affidavit describing the lost, stolen or destroyed
certificate, the number of shares evidenced thereby and affirming the status of
that certificate in lieu of surrendering such certificate to Parent, which shall
deem such certificate cancelled; provided that Parent may require the holder of
such certificate to provide Parent with a bond in such amount as Parent may
direct as a condition to paying any consideration hereunder. Until so
surrendered, the outstanding certificates that, prior to the Effective Time,
represented shares of the capital stock of the Company that shall have been
converted as aforesaid shall be deemed for all corporate purposes, except as
hereinafter provided, to evidence the ownership of the consideration into which
such shares have been so converted.
(c) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
certificates held by stockholders of the Company, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent. Each holder of shares of the capital stock of the Company
who would otherwise have been entitled to receive in the merger a fraction of a
share of Parent Common Stock (after taking into account all certificates
surrendered by such holder) shall be entitled to receive from Parent at the
Effective Time, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Parent Common Stock multiplied by $8.50 per
share. It is understood
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(i) that the payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration; and (ii) that no holder of shares of Company capital stock will
receive cash in lieu of fractional shares of Parent Common Stock in an amount
greater than the value of one full share of Parent Common Stock.
SECTION 2.05 DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE. Dissenting
Shares, if any, after payments of fair value in respect thereto have been made
to dissenting stockholders of the Company pursuant to the Delaware Law, shall be
cancelled.
SECTION 2.06 CLOSING OF STOCK TRANSFER BOOKS. On and after the
Effective Time, there shall be no transfers on the stock transfer books of the
Company or Parent of shares of capital stock of the Company that were issued and
outstanding immediately prior to the Effective Time.
SECTION 2.07 CLOSING. The closing (the "CLOSING") shall be scheduled to
occur on September 8, 1997 at the offices of the Company as soon as practicable
after the satisfaction or waiver of the conditions to the obligations of the
parties to effect the Merger set forth herein. The Closing, and all transactions
to occur at the Closing, shall be deemed to have taken place at, and as of, the
close of business on the date of closing (the "CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MAJORITY
STOCKHOLDER OF THE COMPANY. The Company and Xxxxxx Xxxx Xxxxxxxxx ("Xxxxxxxxx")
(the Company and Xxxxxxxxx shall collectively be referred to as the "SELLERS"),
jointly and severally, represent and warrant to Parent and Acquisition as
follows:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its business
as it is now being conducted. Except as set forth on Schedule 3.01(a), the
Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction in which the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse effect on the properties, assets, financial condition, operating results
or business of the Company (a "COMPANY MATERIAL ADVERSE EFFECT").
(b) SUBSIDIARIES. Schedule 3.01(b) includes a complete and
accurate list of each subsidiary of the Company, indicating the jurisdiction of
incorporation and the nature and level of ownership in such subsidiary by the
Company, any subsidiary of the Company and any other person.
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Complete and correct copies of the Certificate of Incorporation and Bylaws of
the Company and of each subsidiary of the Company have previously been delivered
to the Parent. Except as set forth on Schedule 3.01(b) hereto, neither the
Company nor any of its subsidiaries owns of record or beneficially, directly or
indirectly, (i) any shares of outstanding capital stock or securities
convertible into capital stock of any other corporation or (ii) any
participating interest in any partnership, joint venture or other noncorporate
business enterprise. Each subsidiary of the Company is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to own or lease and operate its properties and assets and to
carry on its business as it is now being conducted. Each subsidiary of the
Company is duly qualified as a foreign corporation or a foreign limited
liability company to do business, and is in good standing, in each jurisdiction
in which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Company Material Adverse Effect. All the outstanding
shares of capital stock of the Company's subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and, except as set forth on
Schedule 3.01(b), are owned by the Company or by a wholly owned subsidiary of
the Company free and clear of any Claims, and there are no proxies or voting or
transfer agreements or understandings outstanding with respect to any such
shares.
For purposes of this Agreement, the term "SUBSIDIARY," when
used with respect to the Company shall mean any corporation or other business
entity a majority of whose outstanding equity securities is at the time owned,
directly or indirectly, by the Company and/or one or more other subsidiaries of
the Company. The term "Workforce Company" shall mean, collectively, the Company
and all of its subsidiaries.
(c) CAPITALIZATION. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
blank check preferred stock (the "Preferred Stock"). As of the date of this
Agreement, 3,610,500 shares of Company Common Stock are issued and outstanding,
all of which were duly authorized and validly issued and are fully paid and
nonassessable, an no shares of Preferred Stock are issued and outstanding. The
Company does not have any subscription, warrant, option, convertible security,
stock appreciation or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of the Company authorized or
outstanding and there is not any commitment of the Company to issue any shares,
warrants, options or other such rights or to distribute to holders of any class
of its capital stock any evidences of indebtedness or assets. Except as set
forth on Schedule 3.01(c), the Company does not have any obligation (contingent
or other) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Schedule 3.01(c) sets forth a complete and
correct list of the holders of record of the Company Common Stock.
(d) AUTHORITY RELATIVE TO AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the consummation
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by it of the transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and have been authorized and approved, pursuant to
Section 11 of the Bylaws and Section 228 of the Delaware Law, by a consent in
writing of the majority stockholder of the Company. No other corporate approvals
or proceedings on the part of the Company are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms. The Company's Board of Directors has by the requisite vote of
all directors present at a meeting duly called for such purpose determined that
this Agreement and the Merger is advisable and fair and in the best interests of
the Company and its stockholders.
(e) NON-CONTRAVENTION. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of the Company or (ii) to the best of
Sellers' knowledge, except as set forth on Schedule 3.01(e) hereof, result in
any violation of, conflict with, or default (or an event which with notice or
lapse of time or both would constitute a default) or loss of a benefit under, or
permit the termination of or the acceleration of any obligation under, any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the business conducted by the Company (the
"BUSINESS") or to the Company or its properties, or (iii) result in the creation
or imposition of any Claim in favor of any third person or entity upon any of
the assets of the Company or the Business, other than any such violation,
conflict, default, loss, termination or acceleration that would not have a
Company Material Adverse Effect.
(f) CONSENTS. To the best of Sellers' knowledge, except as set
forth on Schedule 3.01(f), no consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
governmental or regulatory authority is required to be made or obtained by the
Company in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) the filing of a certificate of merger with the Secretary
of State of the State of Delaware and the Secretary of State of the State of
Ohio in accordance with the Delaware Law and the Ohio Law, respectively, and
(ii) such consents, approvals, orders or authorizations which if not obtained,
or registrations, declarations or filings which if not made, would not have a
Company Material Adverse Effect or materially adversely affect the ability of
the Company to consummate the transactions contemplated hereby or the ability of
the Surviving Corporation to conduct the Business after the Effective Time.
(g) FINANCIAL STATEMENTS, ETC. Prior to Closing, the Company
will furnish to Parent: (i) the audited balance sheets of the Workforce Company
as of December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the two years ended December 31,
1996 and 1995, certified by Xxxxx Xxxxxxxxx, the independent certified public
accountants retained by the Company for such years, (ii) the unaudited balance
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sheet of the Workforce Company as of June 30, 1997, and the related statements
of operations and cash flows for the six months then ended, certified by the
principal financial officer of the Company, and (iii) the unaudited statement of
revenues for the two months ended August 31, 1997, certified by the principal
financial officer of the Workforce Company. The foregoing financial statements
shall be collectively referred to as the "FINANCIAL STATEMENTS." All such
Financial Statements (including any related schedules and/or notes, if any) have
been prepared in accordance with GAAP consistently applied and consistent with
prior periods, except that such interim statements are subject to year end
adjustments (which consist of normal recurring accruals) and do not contain
certain footnote disclosures. Such balance sheets fairly present in all material
respects the financial position of the Workforce Company as of their respective
dates, and such statements of operations, stockholders' equity and cash flows
fairly present in all material respects the results of operations of the
Workforce Company for the respective periods then ended, subject, in the case of
unaudited financial statements, to normal year-end adjustments and the absence
of certain footnote disclosures.
Except as and to the extent (i) reflected on the
audited balance sheet of the Workforce Company as of December 31, 1996 referred
to above, (ii) incurred since December 31, 1996 in the ordinary course of
business consistent with past practice, (iii) reflected in the unaudited balance
sheet of the Workforce Company as of August 31, 1997, or (iv) set forth on
Schedule 3.01(g) hereto, the Workforce Company does not have any liabilities or
obligations of any kind or nature, whether known or unknown or secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due) that would be required to be reflected on a balance sheet, or
the notes thereto, prepared in accordance with GAAP. Since December 31, 1996,
the Workforce Company has not suffered any Company Material Adverse Effect.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 3.01(h) hereto, or as otherwise disclosed in the financial
statements of the Workforce Company as of and for the two months ended August
31, 1997 referred to above, since December 31, 1996, the Workforce Company has
not (i) issued any stock, bonds or other corporate securities, (ii) borrowed or
refinanced any amount or incurred any liabilities (absolute or contingent) in
excess of $25,000, other than payables incurred in the ordinary course of
business consistent with past practice, (iii) discharged or satisfied any claim
in excess of $25,000 or incurred or paid any obligation or liability (absolute
or contingent) other than current liabilities shown on the balance sheet of the
Workforce Company as of December 31, 1996 and current liabilities incurred since
the date of such balance sheet in the ordinary course of business consistent
with past practice, (iv) declared or made any payment or distribution to
stockholders or purchased or redeemed any shares of its capital stock or other
securities, (v) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, other than liens for current real property taxes not yet
due and payable, (vi) sold, assigned or transferred any of its tangible assets,
or cancelled any debts or claims, except in the ordinary course of business
consistent with past practice or as otherwise contemplated hereby, (vii) sold,
assigned or transferred any Intellectual Property Rights (as hereinafter
defined) or other intangible assets, (viii) waived any rights of substantial
value, whether or not in the ordinary course of business, (ix) entered into,
adopted, amended or terminated any bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement,
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deferred compensation, employment, severance or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit of any director,
officer or employee, or increased in any manner the compensation or fringe
benefits of any director or officer, or increased the compensation or fringe
benefits of any executive officer other than in the ordinary course of business
consistent with past practices, or made any payment of a cash bonus to any
director or officer or to any employee of, or consultant or agent to, any
Workforce Company or made any other material change in the terms or conditions
of employment, (x) announced any plan or legally binding commitment to create
any employee benefit plan, program or arrangement or to amend or modify in any
material respect any existing employee benefit plan, program or arrangement,
(xi) eliminated the vesting conditions or otherwise accelerated the payment of
any compensation, including any stock options, (xii) suffered any damage,
destruction or loss to any of its assets or properties, (xiii) made any change
in its accounting systems, policies, principles or practices, (xiv) made any
loans to any person, or (xv) to the extent not otherwise set forth herein, taken
any action described in Section 4.01 hereof.
(i) ACTIONS PENDING. Except as set forth on Schedule 3.01(i)
hereto, (i) there is no action, suit, dispute, investigation, proceeding or
claim pending or, to the best knowledge of the Sellers, threatened against or
affecting the Workforce Company, its properties or rights, or the Business,
before any court, administrative agency, governmental body, arbitrator, mediator
or other dispute resolution body, and the Sellers are not aware of any facts or
circumstances which may give rise to any such action, suit, dispute,
investigation, proceeding or claim, (ii) the Workforce Company is not subject to
any order, judgment, decree, injunction, stipulation, or consent order of or
with any court or other governmental agency, and (iii) the Workforce Company has
not entered into any agreement to settle or compromise any proceeding pending or
threatened against it which has involved any obligation other than the payment
of money or for which the Workforce Company has any continuing obligation, which
(in the case of each of clauses (i), (ii) and (iii) of this Section 3.01(i))
would have a Company Material Adverse Effect or would affect the ability of the
Company to consummate the transactions contemplated hereby, or the ability of
Parent to conduct the Business after the Effective Time.
(j) TITLE TO PROPERTIES. The Workforce Company has good title
to the properties and assets reflected on the balance sheet of the Workforce
Company as of December 31, 1996 other than non-material properties and assets
disposed of in the ordinary course of business consistent with past practice
since the date of such balance sheet, and all such properties and assets are
free and clear of any liens, claims, charges, restrictions, rights of others,
security interests, prior assignments or other encumbrances (collectively "
Claims"), except (i) as described on Schedule 3.01(j) hereto, (ii) liens for
current taxes not yet due and (iii) minor imperfections of title, if any, not
material in amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or proposed
operations of the Workforce Company (collectively, "PERMITTED LIENS"). Such
properties and assets constitute all of the assets necessary to conduct the
Business substantially in the same manner as it has been conducted prior to the
date hereof.
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(k) REAL PROPERTY INTERESTS. Schedule 3.01(k) hereto sets
forth a complete and accurate list of (i) the real properties owned by the
Workforce Company (the "FEE PROPERTIES") and (ii) the real properties leased by
the Workforce Company (the "LEASED PROPERTIES"). The Workforce Company has good
and marketable fee simple title to the Fee Properties and good leasehold title
to the Leased Properties, in each case listed below its name on Schedule
3.01(k), free and clear of all Claims, tenants and occupants except for
Permitted Liens. Complete and accurate copies of all leases or other agreements
relating to the Leased Properties have been delivered to Parent and there have
been no material changes or amendments to such leases or agreements since such
delivery. The Workforce Company are the lawful owners of all improvements and
fixtures located on the Fee Properties or the Leased Properties, free and clear
of all Claims except for Permitted Liens. Each lease or other agreement relating
to the Leased Properties is a valid and binding agreement, without any material
default of the Workforce Company thereunder and, to the best knowledge of the
Sellers, without any material default thereunder of the other party thereto, and
such leases and agreements give the Company (or a subsidiary) the right to use
or occupy, as the case may be, all real properties as are sufficient and
adequate to operate the Business as it is currently being conducted. Except as
set forth on Schedule 3.01(k), the Workforce's possession of such property has
not been disturbed nor, to the best knowledge of the Sellers, has any claim been
asserted against the Workforce Company that would have a Company Material
Adverse Effect.
(l) INTELLECTUAL PROPERTY RIGHTS. The patents, trademarks and
trade names, trademark and trade name registrations, servicemark, brandmark and
brand name registrations and copyrights, the applications therefor and the
licenses with respect thereto (collectively, "INTELLECTUAL PROPERTY RIGHTS")
listed on Schedule 3.01(l) hereto constitute all material proprietary rights
owned or held by the Workforce Company that are reasonably necessary to the
conduct of the Business. Except as set forth on Schedule 3.01(l), (i) the
Workforce Company conducts the Business without infringement or claim of
infringement of any Intellectual Property Right of others and the conduct by the
Surviving Corporation after the Effective Time of the Business, as it is
currently conducted, will not infringe or misappropriate or otherwise violate
the Intellectual Property Rights of any other person or constitute a breach or
violation of any agreement relating to the Intellectual Property Rights listed
on Schedule 3.01(l) (other than as a result of agreements to which Parent or any
of its affiliates is a party); (ii) the Workforce Company is, and after the
consummation of the Merger the Surviving Corporation will be, the sole and
exclusive owner of each Intellectual Property Right listed on Schedule 3.01(l),
in each case free and clear of any Claims (other than Permitted Liens) and, to
the best knowledge of the Sellers, no person is challenging, infringing,
misappropriating or otherwise violating any such Intellectual Property Rights or
claiming that the conduct of the Business, infringes, misappropriates or
otherwise violates the Intellectual Property Rights of any third party; (iii)
Sellers are not aware of any impediment to the registration of any trademark
that is the subject of any application for registration listed on Schedule
3.01(l) that would have a Company Material Adverse Effect; (iv) none of the
Intellectual Property Rights listed on Schedule 3.01(l) is the subject of any
outstanding order, ruling, decree, judgment or stipulation; (v) to the best
knowledge of the Sellers, none of the activities of any employee of the
Workforce Company on behalf thereof violates any obligations of such employee to
third parties, including, without limitation, confidentiality or non-competition
obligations under agreements with a former employer;
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(vi) Sellers are not aware of any use by a third party of any computer software
programs or applications that the Workforce Company considers to be a trade
secret belonging to the Workforce Company; and (vii) the Workforce Company has
taken and is taking reasonable precautions to protect all material trade secrets
and other confidential information relating to its proprietary computer software
programs and applications or included in the Intellectual Property Rights that
are material to the conduct of the Business.
(m) LABOR MATTERS. The Workforce Company is not and has not
been a party to any collective bargaining or union agreement, and no such
agreement is or has been applicable to any employees of the Workforce Company.
There are not any controversies between the Workforce Company and any of such
employees that might reasonably be expected to materially adversely affect the
conduct of the Business, or any unresolved labor union grievances or unfair
labor practice or labor arbitration proceedings pending, or, to the best
knowledge of the Sellers, threatened relating to the Business. To the best
knowledge of the Sellers, there are no labor unions or other organizations
representing or purporting to represent any employees of the Workforce Company
and there are not any organizational efforts currently being made or threatened
involving any of such employees. Except as set forth on Schedule 3.01(m) hereto,
the Workforce Company is in compliance in all material respects with all laws
and regulations or other legal or contractual requirements regarding the terms
and conditions of employment of employees, former employees or prospective
employees or other labor related matters, including, without limitation, laws,
rules, regulations, orders, rulings, conciliation agreements, decrees, judgments
and awards relating to wages, hours, the payment of social security and similar
taxes, equal employment opportunity, employment discrimination, fair labor
standards and occupational health and safety, wrongful discharge or violation of
the personal rights of employees, former employees or prospective employees,
except where failure to comply would not have a Company Material Adverse Effect.
The Workforce Company is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing, except where failure
to comply would not have a Company Material Adverse Effect.
(n) SEVERANCE ARRANGEMENTS. Except as set forth on Schedule
3.01(n) hereto or in Section 4.07 hereof, the Workforce Company is not a party
to any agreement with any employee (i) the benefits of which (including, without
limitation, severance benefits) are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Workforce
Company of the nature of any of the transactions contemplated by this Agreement
or (ii) providing severance benefits in excess of those generally available
under the Workforce Company's severance policies (which are described on
Schedule 3.01(n)), or which are conditioned upon a change of control, after the
termination of employment of such employees regardless of the reason for such
termination of employment, and the Workforce Company is not a party to any
employment agreement or compensation guarantee extending for a period longer
than one year. Schedule 3.01(n) sets forth all employment agreements and
compensation guarantees, regardless of duration, to which the Workforce Company
is a party. Except as a result of actions taken by Parent or the Surviving
Corporation, no amounts will be due or payable to any employee of the Workforce
Company under
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any such severance arrangement or otherwise by virtue of the refusal of such
employee to accept the offer of employment of the Surviving Corporation as
provided in Section 4.07 hereof.
(o) Taxes.
------
(i) Except as set forth on Schedule 3.01(o) hereto,
the Workforce Company has (A) timely filed all Federal and all material
state, local and foreign returns, declarations, reports, estimates,
information returns and statements ("RETURNS") required to be filed by
it in respect of any Taxes (as hereinafter defined), (B) timely paid
all Taxes that are due and payable with respect to the periods covered
by the Tax Returns referred to in clause (A) without regard to whether
such Taxes have been assessed (except for audit adjustments not
material in the aggregate or to the extent that liability therefor is
reserved for in the Workforce Company's most recent audited financial
statements), (C) established reserves that are adequate for the payment
of all Taxes not yet due and payable with respect to the results of
operations of the Workforce Company, and (D) complied in all material
respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all material respects
timely withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and
paid over.
(ii) Schedule 3.01(o) sets forth the last taxable
period through which the Federal income Tax Returns of the Workforce
Company have been examined by the Internal Revenue Service or otherwise
closed. All deficiencies asserted as a result of such examinations and
any examination by any applicable state, local or foreign taxing
authority which have not been or will not be appealed or contested in a
timely manner have been paid, fully settled or adequately provided for
in the Workforce Company's most recent audited financial statements.
Except as set forth on Schedule 3.01(o), no Federal, state, local or
foreign Tax audits or other administrative proceedings or court
proceedings are currently pending with regard to any Federal or
material state, local or foreign Taxes for which the Workforce Company
would be liable, and no deficiency for any such Taxes has been
proposed, asserted or assessed or, to the best knowledge of the
Sellers, threatened pursuant to such examination of the Workforce
Company by such Federal, state, local or foreign taxing authority with
respect to any period.
(iii) Except as set forth on Schedule 3.01(o), the
Workforce Company has not executed or entered into (or prior to the
Effective Time will execute or enter into) with the Internal Revenue
Service or any taxing authority (A) any agreement or other document
extending or having the effect of extending the period for assessments
or collection of any Federal, state, local or foreign Taxes for which
the Workforce Company would be liable or (B) a closing agreement
pursuant to Section 7121 of the Internal Revenue Code, or any
predecessor provision thereof or any similar provision of state, local
or foreign income tax law that relates to the assets or operations of
the Workforce Company.
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(iv) Except as set forth on Schedule 3.01(o), the
Workforce Company is not a party to any agreement providing for the
allocation or sharing of liability for any Taxes.
(v) The Workforce Company has made available to
Parent complete and accurate copies of all income and franchise Tax
Returns and all material other Tax Returns filed by or on behalf of the
Workforce Company for the taxable years ending December 31, 1990
through December 31, 1996.
(vi) Either (i) the Workforce Company is not and has
not been at any time during the last five years a "U.S. real property
holding corporation" (as defined in Section 897(c)(2) of the Internal
Revenue Code) or (ii) neither the Workforce Company nor any stockholder
of the Workforce Company is a non-resident alien individual, foreign
corporation, foreign partnership, or foreign trust.
For purposes of this Agreement, "TAXES" shall mean
all Federal, state, local, foreign or other taxing authority income, franchise,
sales, use, ad valorem, property, payroll, social security, unemployment,
assets, value added, withholding, excise, severance, transfer, employment,
alternative or add-on minimum and other taxes, charges, fees, levies, imposts,
duties, licenses or other assessments, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority.
(p) COMPLIANCE WITH LAW; PERMITS. The Workforce Company is not
in default in any material respect under any order or decree of any court,
governmental authority, arbitrator or arbitration board or tribunal or under any
laws, ordinances, governmental rules or regulations to which the Workforce
Company or any of its properties or assets is subject, except where such default
would not have a Company Material Adverse Effect. Schedule 3.01(p) hereto sets
forth a list of all material permits, authorizations, approvals, registrations,
variances and licenses ("PERMITS") issued to or used by the Workforce Company in
connection with the conduct of the Business; such Permits constitute all Permits
necessary for the Workforce Company to own, use and maintain its properties and
assets or required for the conduct of the Business in substantially the same
manner as it is currently conducted. Each Permit listed on Schedule 3.01(p) is
in full force and effect and no proceeding is pending, or, to the best knowledge
of the Sellers, threatened, to modify, suspend, revoke or otherwise limit any of
such Permits and no administrative or governmental actions have been taken or,
to the best knowledge of the Sellers, threatened, in connection with the
expiration or renewal of any of such Permits. To the best knowledge of the
Sellers, except as set forth on Schedule 3.01(p), the Workforce Company will not
be required, as a result of the consummation of the transactions contemplated
hereby, to obtain or renew any Permits.
(q) Employee Benefit Plans.
-----------------------
(i) Schedule 3.01(q) hereto sets forth a complete and
accurate list of each plan, program, arrangement, agreement or
commitment that is an employment, consulting or deferred compensation
agreement, or an executive compensation, incentive bonus or other
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bonus, employee pension, profit-sharing, savings, retirement, stock
option, stock purchase, severance pay, life, health, disability or
accident insurance plan, or vacation or other employee benefit plan,
program, arrangement, agreement or commitment ("PLANS"), including,
without limitation, each employee benefit plan (as defined under
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") maintained by the Workforce Company or any trade or
business (whether or not incorporated) which, together with such
persons, would be treated as a single employer under Title IV of ERISA
or Section 414 of the Internal Revenue Code (collectively, the "ERISA
AFFILIATES") or to which any ERISA Affiliate contributes or has any
obligation to contribute to, or has or may have any liability
(including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement). Each
Plan is identified on Schedule 3.01(q), to the extent applicable, as
one or more of the following: an "employee pension plan" (as defined in
Section 3(2)(A) of ERISA), an "employee welfare plan" (as defined in
Section 3(1) of ERISA), or as a plan intended to be qualified under
Section 401 of the Internal Revenue Code.
(ii) The Workforce Company has complied, and
currently is in compliance, in all material respects, with all laws and
regulations applicable to the Plans, including, without limitation,
ERISA and the Internal Revenue Code.
(iii) Except as set forth on Schedule 3.01(q), no
ERISA Affiliate has maintained, adopted or established, contributed to
or been required to contribute to, or otherwise participated in or been
required to participate in, any employee benefit plan or other program
or arrangement subject to Title IV of ERISA (including, without
limitation, a "multi-employer plan" (as defined in Section 3(37) of
ERISA), a multiple employer plan (as defined in Section 210 of ERISA)
and a defined benefit plan (as defined in Section 3(35) of ERISA)).
(iv) Except as set forth on Schedule 3.01(q), the
Workforce Company does not provide or may not be required to provide
and no Plan, other than a Plan that is an employee pension benefit plan
(within the meaning of Section 3(2)(A) of ERISA), provides or may be
required to provide benefits, including, without limitation, death,
health or medical benefits (whether or not insured), with respect to
current or former employees of the Workforce Company beyond their
retirement or other termination of service with the Workforce Company
(other than (A) coverage mandated by applicable law, (B) deferred
compensation benefits accrued as liabilities on the books of the
Workforce Company, or (C) benefits the full cost of which is borne by
the current or former employee (or his or her beneficiary)). No ERISA
Affiliate maintains any Plan under which any employee or former
employee of any of the ERISA Affiliates may receive medical benefits
which cannot be modified or terminated by the ERISA Affiliates at any
time without the consent of any person, and no employees or former
employees of the ERISA Affiliates will have any claim in respect of
such benefits as of the Effective Time.
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(v) The transactions contemplated hereby will not
result in (i) any portion of any amount paid or payable by the
Workforce Company to a "disqualified individual" (within the meaning of
Section 280G(c) of the Internal Revenue Code and the regulations
promulgated thereunder), whether paid or payable in cash, securities of
the Workforce Company or otherwise and whether considered alone or in
conjunction with any other amount paid or payable to such a
"disqualified individual," being an "excess parachute payment" within
the meaning of Section 280G(b)(1) of the Internal Revenue Code and the
regulations promulgated thereunder, (ii) except as provided in Section
4.07 hereof, any employee of the Workforce Company being entitled to
severance pay, unemployment compensation, or any other payment, (iii)
an acceleration of the time of payment or vesting, or an increase in
the amount of compensation due to any such employee or former employee
or (iv) any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code for which an exemption is not
available.
(vi) No ERISA Affiliates have incurred any material
liability with respect to any Plan under ERISA (including, without
limitation, Title I or Title IV thereof, other than liability for
premiums due to the Pension Benefit Guaranty Corporation), the Internal
Revenue Code or other applicable law, which has not been satisfied in
full or been accrued on the balance sheet of the Workforce Company as
of December 31, 1996 pending full satisfaction, and no event has
occurred, and there exists no condition or set of circumstances, which
could result in the imposition of any material liability under ERISA,
the Internal Revenue Code or other applicable law with respect to any
Plan.
(vii) With respect to each Plan that is funded wholly
or partially through an insurance policy, all premiums required to have
been paid to date under the insurance policy have been paid, and,
except as set forth on Schedule 3.01(q), as of the Effective Time there
will be no liability of any of the ERISA Affiliates under any such
insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or
partially out of events occurring prior to the Effective Time.
(viii) None of the ERISA Affiliates has made any
contribution to any Plan that may be subject to any excise tax under
Section 4972 of the Internal Revenue Code.
(r) ENVIRONMENTAL MATTERS. The Workforce Company is in
compliance in all material respects with all Federal, state or local statutes,
ordinances, orders, judgments, rulings or regulations relating to environmental
pollution or to environmental regulation or control. Except as set forth on
Schedule 3.01(r) hereto, neither the Workforce Company nor, to the best
knowledge of the Sellers, any of the Workforce Company's officers, employees,
representatives or agents or any other person, have treated, stored, processed,
discharged, spilled or otherwise disposed of any substance defined as hazardous
or toxic by any applicable Federal, state or local law, rule, regulation, order
or directive, or any waste or by-product thereof, at any real property or any
other facility owned, leased or used by the Workforce Company, in violation of
any applicable statutes,
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regulations, ordinances or directives of any governmental authority or court,
which violations may result in any material liability to the Workforce Company.
To the best knowledge of the Sellers, no employee or other person has ever made
a claim or demand against the Workforce Company based on alleged damage to
health caused by any such hazardous or toxic substance or by any waste or
by-product thereof. Except as set forth on Schedule 3.01(r), the Workforce
Company has not been charged by any governmental authority with improperly
using, handling, storing, discharging or disposing of any such hazardous or
toxic substance or waste or by-product thereof or with causing or permitting any
pollution of any body of water. Except as set forth on Schedule 3.01(r), the Fee
or Leased Properties and the Business are not subject to any pending or, to the
best knowledge of the Sellers, threatened administrative or judicial proceeding
under any environmental law and there are no known facts or circumstances which
may give rise to any proceeding. Except as set forth on Schedule 3.01(r), to the
best knowledge of the Sellers, there are no inactive, closed, or abandoned
storage or disposal areas or facilities or underground storage tanks on the Fee
or Leased Properties.
(s) PERSONAL PROPERTY. The Workforce Company has provided
Parent lists of (i) all of the tangible personal property used by the Workforce
Company in its business having an original acquisition cost of $50,000 or more,
and (ii) all leases of personal property binding upon the Workforce Company
having an annual rental in excess of $25,000. All of such tangible personal
property is presently utilized by the Workforce Company in the ordinary course
of its business and is in good repair, ordinary wear and tear excepted.
(t) CONTRACTS. Schedule 3.01(t) lists all contracts and
arrangements of the following types to which the Workforce Company is a party or
by which it is bound and which are material to the conduct of the Business or to
the financial condition or results of operations of the Workforce Company,
including without limitation the following:
(i) any contract or arrangement with a sales
representative, distributor, dealer, broker, sales agency, advertising
agency or other person engaged in sales, distribution or promotional
activities, or any contract to act as one of the foregoing on behalf of
any person, which is not terminable by the Workforce Company on 30 or
fewer days notice;
(ii) any contract or arrangement of any nature which
involves the payment or receipt of cash or other property, an
unperformed commitment, or goods or services, having a value in excess
of $25,000;
(iii) any contract or arrangement pursuant to which
the Workforce Company has made or will make loans or advances, or has
or will have incurred indebtedness for borrowed money or become a
guarantor or surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another (except for the
negotiation or collection of negotiable instruments in transactions in
the ordinary course of business) in excess of $25,000;
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(iv) any indenture, credit agreement, loan agreement,
note, mortgage, security agreement, lease of real property or personal
property, loan commitment or other contract or arrangement relating to
the borrowing of funds, an extension of credit or financing;
(v) any contract or arrangement involving a
partnership, joint venture or other cooperative undertaking;
(vi) any contract or arrangement involving any
restrictions with respect to the geographical area of operations or
scope or type of business of the Workforce Company;
(vii) any power of attorney or agency agreement or
arrangement with any person pursuant to which such person is granted
the authority to act for or on behalf of the Workforce Company, or the
Workforce Company is granted the authority to act for or on behalf of
any person;
(viii) any contract not fully performed and relating
to any acquisition or disposition of the Workforce Company or any
predecessor in interest of the Workforce Company, or any acquisition or
disposition of any subsidiary, division, line of business, or real
property; and
(ix) any contract not specified above that is
material to the Workforce Company.
The Workforce Company has delivered to Parent complete and accurate copies of
the contracts and agreements set forth on Schedule 3.01(t), and each such
contract or agreement is a valid and binding agreement, without any material
default of the Workforce Company thereunder and, to the best knowledge of the
Sellers, without any material default thereunder of the other party thereto.
Except as set forth on Schedule 3.01(t), the Workforce Company has not received
notice of any cancellation or termination of, or of any threat to cancel or
terminate, any such contracts or agreements where such cancellation or
termination would have a Company Material Adverse Effect. Except as disclosed on
Schedule 3.01(t), each such contract or arrangement (i) when entered into, was
on terms no less favorable to the Workforce Company than the terms which could
have been obtained at the date thereof from an unrelated third party, and (ii)
if cancelled at any time by the other party, would not, individually, have a
Company Material Adverse Effect.
(u) Insurance.
----------
(i) All policies of fire, liability, workers'
compensation and other forms of insurance providing insurance coverage
to or for the Workforce Company for events or occurrences arising or
taking place in the case of occurrence type insurance, and for claims
made and/or suits commenced in the case of claims-made type insurance,
between the date
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of this Agreement and the Effective Time, are listed on Schedule
3.01(u) hereto, and, except as set forth on Schedule 3.01(u), all
premiums with respect thereto have been paid, and no notice of
cancellation or termination has been received with respect to any such
policy. All such policies are in full force and effect, and, except as
set forth on Schedule 3.01(u), provide insurance in such amounts and
against such risks as is customary for companies engaged in similar
businesses to protect the employees, properties, assets, businesses and
operations of the Workforce Company. To the best of Sellers' knowledge,
all such policies will remain in full force and effect and will not in
any way be affected by, or terminate or lapse by reason of, any of the
transactions contemplated hereby, except by reason of an insurer's
assessment of Parent or the conduct of the Business after the Effective
Time.
(ii) The Workforce Company has provided Parent
information concerning all claims, which (including related claims
which in the aggregate) exceed $25,000 and which have been made by the
Workforce Company in the last two years under any workers'
compensation, general liability, property, directors' and officers'
liability or other insurance policy applicable to the Workforce Company
or any of its properties. Except as set forth in written materials
provided by the Workforce Company to Parent, to the knowledge of the
Sellers there are no pending or threatened claims under any insurance
policy, the outcome of which would have a Company Material Adverse
Effect.
(v) PENDING TRANSACTIONS. Except for this Agreement and the
transactions contemplated hereby, the Workforce Company is not a party to or
bound by any agreement, negotiation, discussion, commitment or undertaking with
respect to a merger or consolidation with, or an acquisition of all or
substantially all of the property and assets of, any other corporation or person
or the sale, lease or exchange of all or substantially all of its properties and
assets to any other person.
(w) CLAIMS AGAINST OFFICERS AND DIRECTORS. To the best
knowledge of the Sellers, there are no pending or threatened claims against any
director, officer, employee or agent of the Workforce Company or any other
person which could give rise to any claim for indemnification against the
Workforce Company.
(x) CUSTOMERS. The Workforce Company has provided Parent
information concerning the ten largest clients/customers of the Workforce
Company in terms of revenue to the Company ("MAJOR CUSTOMERS") during the fiscal
year ended December 31, 1996. Except to the extent set forth in Schedule
3.01(x), since December 31, 1996, there has not been any adverse change in the
business relationship, and there has been no material dispute, between the
Company and any Major Customer and there are no indications that any Major
Customer intends to reduce its purchase of services from the Workforce Company.
(y) IMPROPER AND OTHER PAYMENTS. To the best of the Sellers'
knowledge, except as set forth on Schedule 3.01(y), neither the Workforce
Company nor any director, officer, employee, agent or representative of the
Workforce Company, nor any person acting on behalf of
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any of them, has (i) made, paid or received any bribes, kickbacks or other
similar payments to or from any person, whether lawful or unlawful, (ii) made
any unlawful contributions, directly or indirectly, to a domestic or foreign
political party or candidate, or (iii) made any improper foreign payment (as
defined in the Foreign Corrupt Practices Act).
(z) BROKERS. Except as set forth on Schedule 3.01(z), the
Workforce Company has not used any broker or finder in connection with the
transactions contemplated hereby, and the Workforce Company shall not be liable
for or otherwise suffer or incur any loss as a result of or in connection with
any brokerage or finder's fee or other commission of any person retained by the
Workforce Company or any of the stockholders of the Workforce Company in
connection with any of the transactions contemplated by this Agreement.
(aa) ACCOUNTS RECEIVABLE AND ADVANCES. Except as disclosed on
Schedule 3.01(aa), (i) each account receivable of the Workforce Company
(collectively, the "ACCOUNTS RECEIVABLE") represents a sale made in the ordinary
course of business other than to affiliates and which arose pursuant to an
enforceable contract for a bona fide sale of goods or for services performed,
and the Workforce Company has performed all of its obligations to produce the
goods or perform the services to which such Accounts Receivable relates, and
(ii) to the best of knowledge of the Workforce Company, no Accounts Receivable
is subject to any claim for reduction, counterclaim, set-off, recoupment or
other claim for credit, allowances or adjustments by the obligor thereof, in an
amount individually or in the aggregate that would have a Company Material
Adverse Effect.
(bb) ACCURACY OF STATEMENTS. Neither this Agreement nor any
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of the Workforce Company to Parent
in connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
SECTION 3.02 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to the Company as follows:
(a) ORGANIZATION AND QUALIFICATION. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio and has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted. Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the financial condition, operating results or
business of Parent and its subsidiaries, taken as a whole (a "PARENT MATERIAL
ADVERSE EFFECT"). Parent owns beneficially and of record all the issued and
outstanding capital stock of Acquisition, free and clear of all Claims.
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(b) SUBSIDIARIES. Schedule 3.02(b) includes a complete and
accurate list of each subsidiary of the Parent, indicating the jurisdiction of
incorporation and the nature and level of ownership in such subsidiary by the
Parent, any subsidiary of the Parent and any other person. Complete and correct
copies of the Articles of Incorporation and Code of Regulations of the Parent
and of each subsidiary of the Parent have previously been delivered to the
Company. Except as set forth on Schedule 3.02(b) hereto, neither the Parent nor
any of its subsidiaries owns of record or beneficially, directly or indirectly,
(i) any shares of outstanding capital stock or securities convertible into
capital stock of any other corporation or (ii) any participating interest in any
partnership, joint venture or other noncorporate business enterprise. Each
subsidiary of the Parent is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own or lease and operate its
properties and assets and to carry on its business as it is now being conducted.
Each subsidiary of the Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a Parent Material Adverse Effect. All the outstanding shares of capital
stock of the Parent's subsidiaries are duly authorized, validly issued, fully
paid and nonassessable and, except as set forth on Schedule 3.02(b), are owned
by the Parent or by a wholly owned subsidiary of the Parent free and clear of
any Claims, and there are no proxies or voting or transfer agreements or
understandings outstanding with respect to any such shares.
For purposes of this Agreement, the term
"SUBSIDIARY," when used with respect to the Parent shall mean any corporation or
other business entity a majority of whose outstanding equity securities is at
the time owned, directly or indirectly, by the Parent and/or one or more other
subsidiaries of the Parent.
(c) CAPITALIZATION. The authorized capital stock of Parent
consists of 10,000,000 shares of Parent Common Stock and 500,000 shares of
Parent Preferred Stock, and, as of September 5, 1997, 3,375,703 shares of Parent
Common Stock were issued and outstanding, all of which were duly authorized and
validly issued and are fully paid and nonassessable, and no shares of Parent
Preferred Stock were issued and outstanding. Except as described in the Parent
SEC Filings (as hereinafter defined), no subscription, warrant, option,
convertible security, stock appreciation or other right (contingent or other) to
purchase or acquire any shares of any class of capital stock of Parent is
authorized or outstanding and there is not any commitment of Parent to issue any
shares, warrants, options or other such rights or to distribute to holders of
any class of its capital stock any evidences of indebtedness or assets. Except
as described in said Parent SEC Filings, Parent does not have any obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(d) AUTHORITY RELATIVE TO AGREEMENTS. Parent has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Parent
and the consummation by Parent of the transactions
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22
contemplated hereby have been duly authorized by the Board of Directors of
Parent, no other corporate approvals or proceedings on the part of Parent are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and constitutes
the legal, valid and binding obligation of Parent, enforceable against Parent in
accordance with its terms. The Parent's Board of Directors has by the unanimous
written consent of all directors determined that this Agreement and the Merger
is advisable and fair and in the best interests of the Parent and its
stockholders.
(e) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby will not (i) violate or conflict with any provision of the
Articles of Incorporation or Code of Regulations of Parent, (ii) result in any
violation of, conflict with, or default (or an event which with notice or lapse
of time or both would constitute a default) or loss of a benefit under, or
permit the termination of or the acceleration of any obligation under, any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent or any of its subsidiaries or their
respective properties, or (iii) result in the creation or imposition of any
Claim in favor of any third person or entity upon the assets of Parent or any of
its subsidiaries, other than any such violation, conflict, default, loss,
termination or acceleration that would not have a Parent Material Adverse Effect
or materially adversely affect the ability of Parent to consummate the
transactions contemplated hereby or to conduct the Business after the Effective
Time.
(f) CONSENTS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state, local or
foreign governmental or regulatory authority is required to be made or obtained
by Parent in connection with the execution and delivery of this Agreement by
Parent or the consummation by Parent of the transactions contemplated hereby,
except for (i) to the best of Sellers' knowledge, any necessary filings pursuant
to Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations promulgated by the SEC thereunder, (ii) the filing of a certificate
of merger with the Secretary of State of the State of Delaware and the Secretary
of State of the State of Ohio in accordance with the Delaware Law and the Ohio
Law, respectively, (iii) any consents, licenses, permits, franchises or other
governmental authorizations pertaining to the Business that are required as a
result of the consummation of the transactions contemplated hereby, and (iv)
such consents, approvals, orders or authorizations which if not obtained, or
registrations, declarations or filings which if not made, would not have a
Parent Material Adverse Effect or materially adversely affect the ability of
Parent to consummate the transactions contemplated hereby or to conduct the
Business after the Effective Time.
(g) SEC FILINGS. Parent has filed all forms, reports and
documents required to be filed with the SEC since December 9, 1996, and, prior
to Closing, Parent has made available to the Company, as filed with the SEC,
complete and accurate copies of (i) the Annual Report of Parent on Form 10-K for
the year ended December 31, 1996, and (ii) all other reports, statements and
registration statements (including Current Reports on Form 8-K) filed by Parent
with the SEC since December 9, 1996, in each case including all amendments and
supplements (collectively, the "PARENT
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23
SEC FILINGS"). The Parent SEC Filings (including, without limitation, any
financial statements or schedules included therein) (i) were prepared in
compliance with the requirements of the Securities Act, or the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations thereunder, as the case may be, and (ii) did not at the time of
filing (or if amended, supplemented or superseded by a filing prior to the date
hereof, on the date of that filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
The financial statements of Parent included in the Parent SEC Filings
have been prepared in accordance with GAAP consistently applied and consistent
with prior periods indicated and fairly present the consolidated financial
position of Parent and its consolidated subsidiaries as at the dates thereof and
the consolidated results of operations and cash flows of Parent and its
consolidated subsidiaries for the periods then ended. Since December 31, 1996,
there has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Parent or any of its
subsidiaries. Except for liabilities or obligations that are accrued or reserved
against in Parent's financial statements included in the Parent SEC Reports
neither of Parent or its subsidiaries has any liabilities or obligations
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due) that would be required by GAAP to be reflected on a consolidated
balance sheet, or the notes thereto, or which would have a Parent Material
Adverse Affect.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Parent SEC Filings made through the date hereof, (i) Parent has not
conducted its business and operations other than in the ordinary course of
business and consistent with past practices and (ii) there has not been any
fact, event, circumstance or change affecting or relating to Parent and its
subsidiaries that has had or is reasonably likely to have a Parent Material
Adverse Effect.
(i) ACTIONS PENDING. There is no action, suit, dispute,
investigation, proceeding or claim pending or, to the best knowledge of Parent,
threatened against or affecting Parent or any of its subsidiaries, or their
respective properties or rights, before any court, administrative agency,
governmental body, arbitrator, mediator or other dispute resolution body that
would have a Parent Material Adverse Effect or would affect the ability of
Parent or Acquisition to consummate the transactions contemplated hereby, or the
ability of Parent or the Surviving Corporation to conduct the Business after the
Effective Time, and Parent is not aware of any facts or circumstances which may
give rise to any of the foregoing. Parent is not subject to any order, judgment,
decree, injunction, stipulation, or consent order of or with any court or other
governmental agency. Parent has not entered into any agreement to settle or
compromise any proceeding pending or threatened against it which has involved
any obligation other than the payment of money or for which Parent has any
continuing obligation.
(j) COMPLIANCE WITH LAW; PERMITS. Neither Parent nor any of
its subsidiaries is in default in any material respect under any order or decree
of any court, governmental authority,
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arbitrator or arbitration board or tribunal or under any laws, ordinances,
governmental rules or regulations to which Parent or any of such subsidiaries or
any of their respective properties or assets is subject. Parent possesses all
Permits necessary for Parent or its subsidiaries to own, use and maintain their
properties and assets or required for the conduct of their businesses in
substantially the same manner as it is currently conducted. Each of such Permits
is in full force and effect and no proceeding is pending, or, to the best
knowledge of Parent, threatened, to modify, suspend, revoke or otherwise limit
any of such Permits and no administrative or governmental actions have been
taken or, to the best knowledge of Parent, threatened, in connection with the
expiration or renewal of any of such Permits. Neither Parent nor Acquisition
will be required, as a result of the consummation of the transactions
contemplated hereby, to obtain or renew any Permits.
(k) BROKERS. Neither Parent nor any of its subsidiaries has
used any broker or finder in connection with the transactions contemplated
hereby, and neither Parent nor any of its subsidiaries has or shall have any
liability or otherwise suffer or incur any loss as a result of or in connection
with any brokerage or finder's fee or other commission of any person retained by
Parent or any of its subsidiaries in connection with any of the transactions
contemplated by this Agreement.
(l) ACCURACY OF STATEMENTS. Neither this Agreement nor any
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of Parent to the Company in
connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
SECTION 3.03 REPRESENTATIONS AND WARRANTIES OF ACQUISITION. Acquisition
represents and warrants to the Company as follows:
(a) ORGANIZATION AND QUALIFICATION. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has all requisite corporate power and authority to own
or lease and operate its properties and assets and to carry on its business as
it is now being conducted. Acquisition is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the financial condition,
operating results or business of Acquisition.
(b) CAPITALIZATION. The authorized capital stock of
Acquisition consists of 850 shares of Common Stock, without par value. As of the
date hereof, 100 shares of Common Stock are issued and outstanding, all of which
were duly authorized and validly issued and are fully paid and nonassessable,
and all such shares are owned of record and beneficially by Parent, and no
shares of Common Stock are held in the treasury of Acquisition. Acquisition has
no commitments to issue or sell any shares of its capital stock or any
securities or obligations convertible into or exchangeable
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25
for, or giving any person any right to subscribe for or acquire from
Acquisition, any shares of its capital stock, and no securities or obligations
evidencing any such rights are outstanding.
(c) AUTHORITY RELATIVE TO AGREEMENT. Acquisition has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Acquisition and by Parent as its sole stockholder, and no other corporate
approvals or proceedings on the part of Acquisition are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Acquisition and constitutes the legal, valid and
binding obligation of Acquisition, enforceable against Acquisition in accordance
with its terms.
(d) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby will not (i) violate or conflict with any provision of the
Articles of Incorporation or Code of Regulations of Acquisition or (ii) result
in any violation of, conflict with, or default (or an event which with notice or
lapse of time or both would constitute a default) or loss of a benefit under, or
permit the termination of or the acceleration of any obligation under, any
mortgage, indenture, lease, agreement, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Acquisition or its
properties, other than any such violation, conflict, default, loss, termination
or acceleration that would not materially adversely affect the ability of
Acquisition to consummate the transactions contemplated hereby.
(e) CONSENTS. To the best of Acquisition's knowledge, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state, local or foreign governmental or regulatory
authority is required to be made or obtained by Acquisition in connection with
the execution and delivery of this Agreement by Acquisition or the consummation
by Acquisition of the transactions contemplated hereby, except for (i) the
filing of a certificate of merger with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Ohio in accordance with the
Delaware Law and the Ohio Law, respectively, (ii) any consents, licenses,
permits, franchises or other governmental authorizations pertaining to the
Business that are required as a result of the consummation of the transactions
contemplated hereby, as described in Schedule 3.03(e), and (iii) such consents,
approvals, orders or authorizations which if not obtained, or registrations,
declarations or filings which if not made, would not materially adversely affect
the ability of Acquisition to consummate the transactions contemplated hereby.
(f) OTHER MATTERS. Acquisition has been formed for the sole
purpose of effecting the Merger and, except as contemplated by this Agreement,
Acquisition has not conducted any business activities and does not have any
material liabilities or obligations.
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ARTICLE IV
COVENANTS
SECTION 4.01 CONDUCT OF THE COMPANY'S BUSINESS. The Company covenants
and agrees that, prior to the Effective Time, unless Parent shall otherwise
consent in writing or as otherwise expressly contemplated by this Agreement:
(a) the business of the Workforce Company shall be conducted
only in, and the Workforce Company shall not take any action except in,
the ordinary course of business consistent with past practice and the
Workforce Company shall use its best efforts to preserve intact its
present business organization, keep available the services of its
current officers and employees, maintain its assets (other than those
permitted to be disposed of hereunder) in good repair and condition,
maintain its books of account and records in the usual, regular and
ordinary manner, except as contemplated by Section 3.01(g) hereof, and
preserve its goodwill and ongoing business;
(b) the Workforce Company shall not directly or indirectly do
any of the following: (i) sell, pledge, dispose of or encumber any
property or assets (including Intellectual Property Rights) of the
Workforce Company, except inventory and immaterial assets in the
ordinary course of business consistent with past practice; (ii) amend
or propose to amend its Certificate of Incorporation or Bylaws; (iii)
split, combine or reclassify any outstanding shares of its capital
stock, or declare, set aside or pay any dividend payable in cash,
stock, property or otherwise with respect to such shares except for the
payment of dividends or distributions not to exceed the amount shown on
Schedule 4.01; (iv) redeem, purchase, acquire or offer to acquire any
shares of its capital stock; or (v) enter into any contract, agreement,
commitment or arrangement with respect to any of the matters set forth
in this subsection (b);
(c) the Workforce Company shall not (i) issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or
any options, warrants or rights of any kind to acquire any shares of,
its capital stock of any class or other property or assets, or modify
the terms or any outstanding options, warrants or rights to acquire the
Company's capital stock; (ii) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other
business organization or division thereof (except an existing wholly
owned subsidiary) or any material amount of assets; (iii) incur or
guarantee any indebtedness for borrowed money other than in the
ordinary course of business and consistent with past practices, or
refinance any such indebtedness or issue or sell any debt securities;
(iv) enter into or modify any material contract, lease, agreement or
commitment, or permit or perform any act that would cause a material
breach of any such contract, lease, agreement or commitment; (v)
terminate, modify, assign, waive, release or relinquish any material
contract rights or amend any material rights or claims; (vi) discharge
or satisfy any material Claim or settle or compromise any material
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claim, action, suit or proceeding pending or threatened against the
Workforce Company or, if the Workforce Company may be liable or
obligated to provide indemnification, against the Workforce Company's
directors or officers, before any court, governmental agency or
arbitrator; (vii) make any loans, advances or capital contributions to
or investments in, any other person, except as may be required under
agreements in effect as of and identified on Schedule 3.01(t) hereto
and upon prior notice to Parent; (viii) alter through merger,
liquidation, reorganization, restructuring or in any other manner the
corporate structure or ownership of the Workforce Company; (ix) violate
or fail to perform, in any material respect, any obligation imposed
upon the Workforce Company by any applicable laws, orders or decrees,
ordinances, government rules or regulations or conciliation agreements
where such violation or failure would have a Company Material Adverse
Effect; or (x) to the extent not described herein, take any action
described in Section 3.01(h) hereof;
(d) the Workforce Company shall not grant any increase in the
salary or other compensation of its directors, officers or employees,
except, in the case of employees who are not directors or executive
officers of the Workforce Company, reasonable salary increases in the
ordinary course of business consistent with past practice, or grant any
bonus to any employee except as set forth on Schedule 4.01 or enter
into any employment agreement or make any loan to or enter into any
material transaction of any other nature with any employee of the
Workforce Company;
(e) except as contemplated by Section 4.07, the Workforce
Company shall not take any action to institute any new severance or
termination pay practices with respect to any directors, officers or
employees of the Workforce Company or to increase the benefits payable
under its severance or termination pay practices;
(f) the Workforce Company shall not adopt or amend, in any
material respect, any plan for the benefit or welfare of any directors,
officers or employees, except as contemplated hereby or as may be
required by applicable law or regulation; and
(g) the Workforce Company shall use its best efforts, to the
extent not prohibited by the foregoing provisions of this Section 4.01,
to maintain its relationships with its suppliers and customers,
clients, and others having business dealings with it, and if and as
requested by Parent or Acquisition, (i) the Workforce Company shall use
its best efforts to make reasonable arrangements for representatives of
Parent or Acquisition to meet with customers and suppliers of the
Workforce Company, and (ii) the Workforce Company shall schedule, and
the management of the Workforce Company shall participate in, meetings
of representatives of Parent or Acquisition with employees of the
Workforce Company.
SECTION 4.02 STOCKHOLDER APPROVAL; ETC. The Company shall take all
action necessary, subject to and in accordance with the Delaware Law and its
Certificate of Incorporation and Bylaws, to fully comply with Sections 228 and
252 of the Delaware Law and shall take such other actions
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as may be required by applicable law with respect to the requisite approval and
adoption of this Agreement and the Merger by the Company's stockholders.
SECTION 4.03 Access to Information.
---------------------
(a) Each of Parent and the Company shall, and shall cause its
respective subsidiaries, officers, directors, employees, representatives,
advisors and agents to, afford, from the date hereof to the Effective Time, the
officers, employees, representatives, advisors and agents of the other party
complete access at all reasonable times to its officers, employees, agents,
properties, books, records and workpapers, and shall furnish each other party
all financial, operating and other information and data as Parent or Company,
through its officers, employees or agents, may reasonably request and shall
promptly furnish to the other monthly operating and financial reports in such
form as Parent or the Company shall reasonably request.
(b) The Company, at least three business days prior to the
Effective Date, shall deliver to Parent a list setting forth the names and
locations of each bank or other financial institution at which the Company has
an account (giving the account numbers) or safe deposit box and the names of all
persons authorized to draw thereon or have access thereto, and the names of all
persons, if any, now holding powers of attorney or comparable delegation of
authority from the Company and a summary statement thereof.
(c) Each of Parent and the Company shall, and shall cause its
respective officers, directors, employees, representatives, advisors and agents
to, afford the officers, employees, representatives, advisors and agents of the
other party with access to such information concerning Parent or the Company as
may be necessary for each party to ascertain the accuracy and completeness of
the information supplied by Parent or the Company.
(d) If this Agreement is terminated, each of the parties
hereto shall, and shall cause its officers, employees, representatives, advisors
and agents to, destroy or deliver to the other party all confidential documents,
work papers and other materials, and all copies thereof, obtained by it or on
its behalf from such other party as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution and delivery hereof.
(e) Each of the parties hereto and its officers and employees
shall not disclose or use any information so obtained, except as required by
applicable law or legal process or by any applicable rules or regulations of a
national securities exchange or the NASD upon the advice of counsel, without the
prior written consent of the other party; PROVIDED that any such information may
be disclosed to a party's financial advisors, accountants, counsel and other
representatives, as may be appropriate or required in connection with the
transactions contemplated hereby, but only if such persons shall be specifically
informed by such party of the confidential nature of such information and agree
to comply with the restrictions contained herein. The agreements contained in
this Section 4.03(e) do not apply to information that (i) is or becomes
generally available to the public other than as a result of a disclosure by a
receiving party or its representatives, (ii) was known to the receiving
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party on a non-confidential basis prior to its receipt, (iii) becomes available
to a party on a non-confidential basis from a source not bound by any duty of
confidentiality to the other party or (iv) is independently developed by a
receiving party without reference to any confidential information.
(f) No investigation pursuant to this Section 4.03 shall
affect, add to, or subtract from any representations or warranties of the
parties hereto or the conditions to the obligations of the parties hereto to
effect the Merger.
SECTION 4.04 FURTHER ASSURANCES. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, using all reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings; PROVIDED that the foregoing shall not require Parent
to agree to make, or to permit the Company to make, any divestiture of a
significant asset in order to obtain any waiver, consent or approval.
SECTION 4.05 INQUIRIES AND NEGOTIATIONS. Neither the Company nor any of
its affiliates, directors, officers, employees, representatives, advisors or
agents, shall, directly or indirectly, encourage, solicit or initiate any
discussions, submissions of proposals or offers or negotiations with, or,
participate in any negotiations or discussions with, or provide any information
or data of any nature whatsoever to, or otherwise cooperate in any other way
with, or assist or participate in, facilitate or encourage any effort or attempt
by, any person, other than Parent and its affiliates, representatives and
agents, concerning any merger, consolidation, sale of substantial assets, sale
of shares of capital stock or other equity securities, recapitalization, debt
restructuring or similar transaction involving the Company or any division of
the Company (such transactions being hereinafter referred to as "ALTERNATIVE
TRANSACTIONS"). The Company shall immediately notify Parent if any proposal,
offer, inquiry or other contact is received by, any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, the Company in respect of an Alternative Transaction, and shall, in any
such notice to Parent, indicate the identity of the offeror and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall keep Parent informed of the status and terms of
any such proposals or offers and the status of any such discussions or
negotiations. The Company shall not release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
is a party.
SECTION 4.06 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (i) the occurrence, or failure to occur, of any
event that such party believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time and (ii) any material failure of the Company, Parent or
Acquisition, as the case may be, or any officer, director, employee or
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agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that failure
to give such notice shall not constitute a waiver of any defense that may be
validly asserted.
SECTION 4.07 EMPLOYEE MATTERS. Workforce understands and acknowledges
that nothing in this Agreement shall be deemed to create any employment status
other than employment at will for any employee of Workforce. Employees who
continue as employees of the Surviving Corporation shall be entitled to
participate in all employee benefit plans maintained by Parent or the Surviving
Corporation for employees of the Surviving Corporation generally. It being
understood and agreed, however, that nothing in this Section 4.07 shall require
Parent (i) to provide or continue for the benefit of any employees any Plan
currently maintained by the Company, or (ii) to maintain the organizational
structure of the Business as in effect on the date hereof.
SECTION 4.08 CONDUCT OF PARENT'S BUSINESS. Parent covenants and agrees
that, prior to the Effective Time, unless the Company shall otherwise agree in
writing, or as otherwise expressly contemplated by this Agreement:
(a) the business of Parent and its subsidiaries shall be
conducted only in the ordinary course of business consistent with past practice;
(b) neither Parent nor Acquisition shall knowingly take any
action that would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 4.09 RESIGNATION OF OFFICERS AND DIRECTORS. Each officer and
member of the Board of Directors of, and each trustee or fiduciary of any plan
or arrangement involving employee benefits of, the Workforce Company, if so
requested by Parent, shall tender his or her resignation from such position
effective as of the Closing, except as otherwise provided in Section 1.04.
SECTION 4.10 TAX MATTERS. Each of the parties to this Agreement will
use all reasonable efforts to cause the Merger to qualify as a tax free
reorganization to the extent of the stock exchanged under the Internal Revenue
Code so as to permit the issuance of the opinion referred to in Section 5.02(d).
ARTICLE V
CONDITIONS TO THE MERGER
SECTION 5.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
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(a) this Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent of the stockholders of the Company;
(b) no preliminary or permanent injunction or other order,
decree or ruling issued by any court of competent jurisdiction nor any statute,
rule, regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority shall be in effect that would
prevent the consummation of the Merger as contemplated hereby.
SECTION 5.02 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Parent shall have performed and complied in all material
respects with all obligations and agreements required to be performed and
complied with by it under this Agreement at or prior to the Effective Time;
(b) the representations and warranties of Parent contained in
this Agreement that are qualified as to materiality shall be true and correct
and all such representations and warranties that are not so qualified shall be
true and correct in all material respects, in each case, as of the date hereof
and at and as of the Effective Time as if made at and as of such date, except to
the extent any such representation or warranty is expressly made as of the date
hereof or as of a specified date prior to the date hereof, in which case such
representation or warranty shall have been true and correct as of such date;
(c) the Company shall have received a certificate from the
Chief Executive Officer of Parent, dated as of the Effective Time, to the effect
that the conditions set forth in paragraphs (a) and (b) above have been
satisfied;
(d) the Company shall have received the opinion of Xxxxx,
XxXxxxxx & Xxxxx, counsel to the Company, or such other law firm as is
reasonably acceptable to the Company and Parent, in form and in substance
reasonably satisfactory to the Company and Parent, substantially to the effect
that for Federal income tax purposes (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) Parent, Acquisition and the Company will each be a party to the
reorganization within the meaning of the Internal Revenue Code, (iii) no gain or
loss will be recognized by Parent, Acquisition or the Company as a result of the
Merger and (iv) no gain or loss will be recognized by stockholders of the
Company upon the conversion and exchange of their shares of Company common stock
for shares of Parent Common Stock pursuant to the Merger, except to the extent
of any proceeds received by a Company stockholder (i) in lieu of fractional
shares of Parent Common Stock or (ii) in payment of dissenters' rights of
appraisal; however, no opinion will be expressed with respect to the Federal
income tax consequences of the conversion and exchange of any shares of Company
capital stock in the Merger that were acquired by the holder thereof pursuant to
(a) any employee stock option, employee stock purchase plan or otherwise as
compensation, or (b) the exercise of any outstanding warrants to
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purchase shares of Company capital stock. In rendering its opinion, Xxxxx,
XxXxxxxx & Xxxxx may require and rely upon representations contained in
certificates of officers of Parent, Acquisition, the Company, certain direct and
indirect stockholders of the Company, and others; and
The condition set forth in Section 5.02(d) shall not be waivable by the
Company.
SECTION 5.03 CONDITIONS TO THE OBLIGATION OF PARENT AND ACQUISITION TO
EFFECT THE MERGER. The obligation of Parent and Acquisition to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) the Company shall have performed and complied in all
material respects with all obligations and agreements required to be performed
and complied with by it under this Agreement at or prior to the Effective Time;
(b) the representations and warranties of the Company
contained in this Agreement that are qualified as to materiality shall be true
and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, as
of the date hereof and at and as of the Effective Time as if made at and as of
such date, except to the extent any such representation or warranty is expressly
made as of the date hereof or as of a specified date prior to the date hereof,
in which case such representation or warranty shall have been true and correct
as of such date;
(c) Parent shall have received a certificate from the Chief
Executive Officer and the Chief Financial Officer of the Company, dated as of
the Effective Time, to the effect that the conditions set forth in paragraphs
(a) and (b) above have been satisfied;
(d) Parent shall have received any consents required by
Section 3.02(f);
(e) Parent shall have received from the Company the Financial
Statements, in form and in substance reasonably satisfactory to Parent;
(f) Parent shall have completed its financial due diligence
review of all the assets, liabilities, net worth, revenues, expenses,
profitability and financial condition of the Company. This condition shall be
deemed to have been satisfied on the close of business on the day which is 10
business days after the date of the receipt of the last of the Financial
Statements, unless, prior to such time, Parent has notified the Company that it
is not satisfied with the results of its financial due diligence review because
such review disclosed one or more conditions with respect to the assets,
liabilities, net worth, revenues, expenses, profitability or financial condition
of the Company which, taken as a whole, is materially different than the same
were previously represented to Parent. If Parent so notifies the Company, the
Company shall have an additional period of five business days to permit it to
cure the defect, if it is so curable, to the reasonable satisfaction of Parent.
If the Company cures such defect within such period and Parent acknowledges its
satisfaction in writing, this condition shall be deemed to have been satisfied;
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(g) Parent shall have received agreements reasonably
satisfactory to Parent and its counsel in which each stockholder of the Company
represents, warrants and agrees as follows:
(i) that the Parent Common Stock being issued and
delivered to the Company's stockholders hereunder is being acquired by such
stockholder for the stockholder's own account for investment and not with a view
to any resale or distribution thereof;
(ii) if such stockholder of the Company decides to
dispose of the Parent Common Stock, which he or she does not now contemplate,
that he or she can do so only in accordance and in compliance with the
Securities Act and Rule 144 thereunder, as then in effect or through an
effective Registration Statement;
(iii) that (A) such stockholder of the Company has
had ready access to any and all documents which he deems relevant to the
acquisition of the Parent Common Stock; (B) to such stockholder's knowledge, no
requested information, oral or written, has been withheld from him by Parent;
(C) Parent has made available to the stockholder, during the course of the
transaction and prior to the issuance of the Parent Common Stock the opportunity
to ask questions of, and receive answers from, Parent and its officers
concerning Parent, and to obtain any additional information, to the extent
Parent possessed such information or could acquire it without unreasonable
effort or expense, necessary to verify the accuracy of information contained in
the written materials delivered to the stockholder by Parent and concerning
Parent; and (D) the stockholder has been given access to Parent's prospectus
dated December 9, 1996 in connection with Parent's registered initial public
offering and all documents filed publicly of record with the Securities and
Exchange Commission in connection therewith or subsequently;
(iv) that the stockholder of the Company understands
and agrees that (A) in reliance upon its representations, the Parent Common
Stock has not been registered under the Securities Act in reliance upon Section
4(2) of the Securities Act and Regulation D thereunder; (B) because the Parent
Common Stock is not so registered, the stockholder must bear the economic risk
of holding the Parent Common Stock for an indefinite period of time unless the
Parent Common Stock is subsequently registered under the Securities Act or an
exemption from such registration is available with respect thereto; (C) Rule 144
under the Securities Act may or may not be available for resales of the Parent
Common Stock in the future; and (D) while there is presently a trading market
for the Parent Common Stock, there is no assurance that such market will be in
existence in the future;
(v) that the documents evidencing the Parent Common
Stock shall bear a legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE, AND HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FROM
REGISTRATION THAT DEPEND IN PART ON THE INTENT OF THE PURCHASER TO
ACQUIRE FOR
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INVESTMENT AND WITHOUT A VIEW TOWARDS DISTRIBUTION. THEREFORE, SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON REGISTRATION OR UPON
DELIVERY TO THE COMPANY OF COMMUNICATIONS FROM THE SECURITIES AND
EXCHANGE COMMISSION AND ANY STATE REGULATORY AUTHORITIES CONCERNED, OR
AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER.
(vi) that such stockholder of the Company will not
sell or otherwise transfer the shares of Parent Common Stock in a public market
transaction until the holding period for restricted securities set forth in Rule
144(d)(1), as it may be amended from time to time, has been satisfied or
pursuant to an effective Registration Statement;
ARTICLE VI
TERMINATION AND ABANDONMENT
SECTION 6.01 TERMINATION AND ABANDONMENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the stockholders of Parent and the
Company:
(a) by mutual action of the Boards of Directors of Parent and
the Company;
(b) by the Company, if the conditions set forth in Sections
5.01 and 5.02 shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by Parent and Acquisition on or before
October 31, 1997; or
(c) by Parent or Acquisition, if the conditions set forth in
Sections 5.01 and 5.03 shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Company on or before October
31, 1997; or
(d) by Parent or the Company (i) if there has been a material
breach of a representation or warranty made by the other party the effect of
which is a Company Material Adverse Effect or a Parent Material Adverse Effect,
as the case may be, or (ii) if there has been a breach by the other party in any
material respect of the covenants set forth in this Agreement which by its
nature cannot be cured or eliminated.
SECTION 6.02 EFFECT OF TERMINATION. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 6.01, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to any other party hereto or its stockholders or
directors or officers in respect thereof, and each party shall be responsible
for its own
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expenses, except as follows: (i) the obligations imposed by Sections 4.03(d),
4.03(e) and 6.03 hereof shall survive the termination, and (ii) nothing herein
shall relieve any party from liability for any willful breach hereof.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 Indemnification.
----------------
(a) The Company and Xxxxxxxxx, jointly and severally, agree to
indemnify Parent and Acquisition against, and agrees to hold each of them
harmless from, any and all losses, costs, claims, damages (including
consequential damages), penalties and expenses (including attorneys' fees) (the
"LOSSES"), incurred or suffered by them relating to or arising out of or in
connection with any of the following:
(i) any breach of or any inaccuracy in any representation or
warranty made by the Sellers in this Agreement or any document delivered by the
Company or Xxxxxxxxx at the Closing; or
(ii) any breach of or failure by Sellers, notice of which is
given on or before the first anniversary of the Closing Date, to perform any
covenant or obligation of such party set out or contemplated in this Agreement
or any document delivered at the Closing.
(b) Parent agrees to indemnify the Company against, and agrees to hold
it harmless from, any and all Losses, incurred or suffered by it relating to or
arising out of or in connection with any breach of or any inaccuracy in any
representation or warranty made by Parent or Acquisition in this Agreement or
any document delivered by Parent or Acquisition at the Closing.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise specified, the representations and warranties of the Sellers and
Parent contained herein shall survive the Closing for a period expiring at the
close of business on the first anniversary of the Closing Date (the "SURVIVAL
DATE") except that (i) the representations and warranties set forth in Sections
3.01(o) and (q) hereof (the "TAX WARRANTIES") shall survive until one (1) year
after the expiration of the applicable statute of limitations with respect to
Taxes, including any extensions thereof (the "TAX STATUTE OF LIMITATIONS DATE"),
and (ii) the representations and warranties set forth in Sections 3.01(c), (d),
(k), and (l) hereof (the "TITLE AND AUTHORIZATION WARRANTIES") shall survive
forever. The
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representations and warranties of Parent and Acquisition contained herein shall
survive the Closing for a period expiring at the close of business on the
Survival Date, except that the representations and warranties set forth in
Sections 3.02(c) and (d) and Sections 3.03(b) and (c) shall survive forever.
SECTION 8.02 EXPENSES, ETC. Whether or not the transactions
contemplated by this Agreement are consummated, neither the Company, on the one
hand, and Parent and Acquisition, on the other hand, shall have any obligation
to pay any of the fees and expenses of the other incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses of
counsel, accountants, investment bankers and other experts and Parent shall pay
all such fees and expenses incurred by Acquisition. The Company, on the one
hand, and Parent and Acquisition, on the other hand, shall indemnify the other
and hold it harmless from and against any claims for finders' fees or brokerage
commissions in relation to or in connection with such transactions as a result
of any agreement or understanding between such indemnifying party and any third
party.
SECTION 8.03 PUBLICITY; CONFIDENTIALITY. The Company and Parent agree
that this Agreement and the exchange of information pursuant thereto is
confidential and they will not disclose or issue any press release or make any
other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior consent of the other party, except that
the Company or Parent may make such public disclosure that it believes in good
faith to be required by law or any applicable rules and regulations of a
national securities exchange or the NASD (in which event such party shall
consult with the other prior to making such disclosure).
SECTION 8.04 EXECUTION IN COUNTERPARTS. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 8.05 NOTICES. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by telecopy or mailed by registered or
certified mail, postage prepaid, and shall be deemed given upon receipt, as
follows:
If to Parent or Acquisition to:
TEAM AMERICA CORPORATION
000 X. Xxxxxx Xxxxxx Xx.
Xxxxxxxxxxx, Xxxx 00000
Fax Number: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, Chairman, President and Chief
Executive Officer
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with a copy to:
Porter, Wright, Xxxxxx & Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Fax Number: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company, to:
WORKFORCE STRATEGIES, INC.
c/o S. Cash Xxxxxxxxx
0000 Xx. Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax Number : 000-000-0000
Attention: Xxxxxx Xxxx Xxxxxxxxx
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 8.06 WAIVERS. The Company, on the one hand, and Parent and
Acquisition, on the other hand, may, by written notice to the other, (i) extend
the time for the performance of any of the obligations or other actions of the
other under this Agreement; (ii) waive any inaccuracies in the representations
or warranties of the other contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive compliance with any of the
conditions of the other contained in this Agreement; or (iv) waive performance
of any of the obligations of the other under this Agreement. Except as provided
in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
SECTION 8.07 AMENDMENTS, SUPPLEMENTS, ETC. At any time, this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by all of the parties
hereto.
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SECTION 8.08 ENTIRE AGREEMENT. This Agreement and its schedules and
exhibits, and the documents to be executed or delivered at the Effective Time in
connection herewith, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party that is not embodied in this
Agreement or such other documents, and none of the parties shall be bound by, or
be liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein. As used herein, the "best
knowledge" or "awareness" as to the Company shall refer to the actual knowledge
of each director and executive officer of the Company after due inquiry and as
to Xxxxxxxxx shall refer to his actual knowledge after due inquiry.
SECTION 8.09 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
conflict of laws principles.
SECTION 8.10 BINDING EFFECT, BENEFITS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 8.11 ASSIGNABILITY. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 8.12 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
SECTION 8.13 VARIATION AND AMENDMENT. This Agreement may be varied or
amended at any time before or after the approval and adoption of this Agreement
by the stockholders of the Company by action of the respective Boards of
Directors of the Company, Parent and Acquisition, without action by the
stockholders thereof, provided that after approval and adoption of this
Agreement by the Company's stockholders no such variance or amendment shall,
without consent of such stockholders, reduce the consideration that the holders
of the capital stock of the Company shall be entitled to receive upon the
Effective Time pursuant to Section 2.01 hereof.
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39
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
TEAM AMERICA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
TEAM AMERICA ACQUISITIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, President
WORKFORCE STRATEGIES, INC.
By: /s/ Xxxxxx Xxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxx Xxxxxxxxx, President
AGREED TO WITH RESPECT
TO ARTICLES II, III, VII AND VIII:
/s/ Xxxxxx Xxxx Xxxxxxxxx
------------------------------------
Xxxxxx Xxxx Xxxxxxxxx
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Schedule 2.01 A and B
Option
Employee/Insider Shareholders Shares Cash Stock Shares
Total 3,470,900 3,598,555 461,674 176,037
Non Employee/Insider Shareholders
Total 139,600 279,200 32,847
Grand Total 3,610,500 3,877,755 494,521 176,037
* All Shares are being issued and all Options are being granted based on a
share price of $8.50 per share of TEAM American Common Stock.
