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Exhibit 2.05
STOCK PURCHASE AGREEMENT
Dated as of _____________, 1998
between
PURCHASER:
Corporate Staffing Resources, Inc.
AND
SELLERS:
XXXXXX X. XXXX
XXXXXX X. XXXXXXX, XX.
XXXXXX X. XXXXXX
XXXXXXX X. XXXXX
XXXXXXX X. XXXXXXXX
C. XXXX XXXXXX
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STOCK AND ASSET PURCHASE AGREEMENT
THIS STOCK AND ASSET PURCHASE AGREEMENT dated as of May 1, 1998 (this
"Agreement"), is by and among Corporate Staffing Resources, Inc., a Delaware
corporation ("CSR"), Corporate Staffing Resources of Indiana, Inc. an Indiana
corporation ("CSR Indiana" and "Stock Purchaser), CMS Management Services LLC,
an Indiana limited liability company ("CMS LLC" and "Asset Purchaser"), CMS
Management Services, Co., an Indiana corporation, TemPro Resources, Inc. an
Indiana corporation, CMS Services Inc., an Indiana corporation, CMS/TemPro
Resources of Nashville LLC, a Tennessee limited liability company (individually
a "Subject Company" and "Asset Seller" and collectively with CMS/TemPro
Resources of Indianapolis, Inc., the "Subject Companies"), CMS/TemPro Resources
of Indianapolis, Inc. an Indiana corporation (a "Subject Company") and Xxxxxx X.
Xxxx, Xxxxxx X. Xxxxxxx, Xx., Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxx
(individually, a "Shareholder" and Stock Seller," and collectively with Xxxxxxx
X. Xxxxx and C. Xxxx Xxxxxx, the "Shareholders"), Xxxxxxx X. Xxxxx (a
"Shareholder") and C. Xxxx Xxxxxx (a "Shareholder").
RECITALS
A. The Stock Purchaser desires to purchase from the Stock Sellers and
the Stock Sellers desire to sell to the Stock Purchaser all of the issued and
outstanding capital stock of CMS/TemPro Resources of Indianapolis, Inc., upon
the terms and subject to the conditions contained herein (the "Stock
Acquisition").
B. The Asset Purchaser desires to purchase from each of the Asset
Sellers and each of the Asset Sellers desires to sell to the Asset Purchaser
certain of the assets of the respective Asset Sellers, upon the terms and
subject to the conditions contained herein (each, an "Asset Acquisition" and
together with the Stock Acquisition, the "Acquisitions").
C. In connection with the Acquisitions, the parties desire to set forth
certain agreements, representations, warranties and covenants made by one or
more parties to the other or others as an inducement to the consummation of the
Acquisitions, upon the terms and subject to the conditions contained herein.
D. The board of directors or managing member of each of the Asset
Sellers has determined that the Asset Acquisition is in the best interest of the
respective Asset Seller.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
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1.1 Defined Terms. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Accounts Receivable" shall have the meaning set forth in Section 5.8.
"Acquisitions" shall have the meaning set forth in recital B to this
Agreement.
"Adjusted Working Capital" shall have the meaning set forth in Section
2.7.
"Adjusted Working Capital Deficiency" shall have the meaning set forth
in Section 2.7.
"Advisors" shall have the meaning set forth in Section 7.1.
"Affiliate" shall have the meaning set forth in the Exchange Act.
Without limiting the foregoing, all directors and officers of a Person that is a
corporation and all managing members of a Person that is a limited liability
company, shall be deemed Affiliates of such Person for all purposes hereunder.
"Agreement" shall mean this Stock and Asset Purchase Agreement.
"Applicable Contract" shall mean any Contract (a) under which any
Subject Company has or may acquire any rights, (b) under which any Subject
Company has or may become subject to any obligation or liability, or (c) by
which any Subject Company or any of the assets owned or used by it is or may
become bound.
"Asset Acquisition" shall have the meaning set forth in Recital B of
this Agreement.
"Asset Purchaser" shall mean CMS LLC as provided in the first paragraph
of this Agreement.
"Asset Sellers" shall mean each of CMS Management Services Co., TemPro
Resources, Inc., CMS Services, Inc. and CMS/TemPro Resources of Nashville LLC,
as provided in the first paragraphs of this Agreement.
"Assumed Liabilities" shall have the meaning set forth in Section
2.2(b).
"Balance Sheet" shall have the meaning set forth in Section 5.4.
"Best Efforts" shall mean the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not
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require the Person subject to that obligation to take actions that would result
in a Material Adverse Change in the benefits to such Person of this Agreement
and the Transactions.
"Breach" shall mean and a breach of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any Transaction
Documents will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision.
"Cash and Cash Equivalents" shall have the meaning attributed to such
term under GAAP.
"CERCLA" shall mean the United States Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et. seq., as amended.
"Claim" shall have the meaning set forth in Section 10.2(d).
"Claim Notice" shall have the meaning set forth in Section 10.2(d).
"Cleanup" shall mean any investigation, cleanup, removal, containment
or other remediation or response actions.
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
2.7.
"Closing Cash Payment" shall have the meaning set forth in Section 2.4.
"Closing Date" shall have the meaning set forth in Section 11.l(d).
"CMS LLC" shall mean CMS Management Services LLC, an Indiana limited
liability company, as provided in the first paragraph of this Agreement.
"Confidential Information" shall have the meaning set forth in Section
12.10(b).
"Consent" shall mean any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"Consideration" shall have the meaning set forth in Section 2.3.
"Contingent Amounts" shall have the meaning set forth in Section 2.6.
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"Contract" shall mean any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights" shall have the meaning set forth in Section 5.20(a).
"Covenant Payments" shall have the meaning set forth in Section 3.1.
"CSR" shall mean Corporate Staffing Resources, Inc., a Delaware
corporation, as provided in the first paragraph of this Agreement.
"CSR Indiana" shall mean Corporate Staffing Resources of Indiana, Inc.,
an Indiana corporation, as provided in the first paragraph of this Agreement.
"Damages" shall have the meaning set forth in Section 10.2(a).
"Disclosure Schedules" shall mean the schedules prepared and delivered
by the Shareholders for and to the Purchasers and dated as of the date hereof,
which set forth the exceptions to the representations and warranties contained
herein and certain other information called for by this Agreement, and all
referenced attachments thereto. Unless otherwise specified, each reference in
this Agreement to any numbered schedule is a reference to that numbered schedule
which is included in the Disclosure Schedules.
"EBITDA" shall mean earnings before interest, taxes, depreciation and
amortization.
"Employment Agreements" shall have the meaning set forth in Section
4.3(a).
"Encumbrance" shall mean any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
"Environment" shall mean soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwater, drinking water supply, stream
sediments, ambient air, plant and animal life and any other environmental medium
or natural resource.
"Environmental. Health and Safety Liabilities" shall mean any cost,
damage, expense, Liability, obligation or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health and regulation of chemical substances or products);
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(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial or inspection costs and expenses
arising under any Environmental Law or Occupational Safety and Health
Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any Cleanup required by applicable Environmental Law
or Occupational Safety and Health Law (whether or not such Cleanup has
been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative or
remedial measures required under any Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types
of activities covered by CERCLA.
"Environmental Law" shall mean all federal, state, district, local and
foreign laws, all rules or regulations promulgated thereunder and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the Environment, including without limitation (i) laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, materials, wastes or other substances into the Environment and (ii)
laws relating to the identification, generation, manufacture, processing,
distribution, use, treatment, storage, disposal, recovery, transport or other
handling of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances. Environmental Laws shall include, without limitation, CERCLA,
the Toxic Substances Control Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Clean Water Act, as amended, the Safe Drinking
Water Act, as amended, the Clean Air Act, as amended, and all analogous laws
promulgated or issued by any state or other governmental authority.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"ERISA Affiliate" shall mean any other Person that, together with the
Subject Companies, is or was required to be treated as a single employer under
IRC Section 414(b) or (c), and solely for the purposes of potential liability
under ERISA Section 302(c)(ii) and IRC Section 412(c)(ii) and the lien created
under ERISA Section 302(f) and IRC Section 412(n), under IRC Section 414(m) or
(o).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Extended Companies" shall have the meaning set forth in Section 2.6.
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"Facilities" shall mean any real property, leaseholds or other
interests currently or formerly owned or operated by any Subject Company and any
buildings, plants, structures or equipment (including motor vehicles, tank cars
and rolling stock) currently or formerly owned or operated by any Subject
Company.
"Family" shall mean, with respect to any individual (i) the individual,
and (ii) the individual's spouse.
"Financial Statements" shall have the meaning set forth in Section
5.4(a).
"Fixed Amount" shall have the meaning set forth in Section 2.3.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorization" shall mean any approval, Consent, license,
permit, waiver or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or
entity and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Hazardous Activity" shall mean the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about or from the Facilities or any part thereof into the Environment.
"Hazardous Materials" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive or toxic or a pollutant or a contaminant subject to
regulation, control or remediation under any Environmental Law (whether solids,
liquids or gases), including any mixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor, polychlorinated biphenyls and asbestos or asbestos-containing
materials.
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"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Intellectual Property Assets" shall have the meaning set forth in
Section 5.20(a).
"IRC" shall mean the Internal Revenue Code of 1986, as amended, or any
successor law
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"Knowledge" shall mean and an individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) such individual would be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive review of documents or files available to such
individual.
A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving as a
director, officer, partner, executor or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter.
"Knowledge of the Shareholder" or other similar phrases shall mean the
Knowledge of the particular Shareholder. "Knowledge of the Shareholders" with
respect to a Subject Company shall mean the Knowledge of any one or more of the
Shareholders who is a shareholder or member of that Subject Company.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Liability" shall mean any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether known, unknown, accrued, absolute,
contingent, matured or unmatured.
"Marks" shall have the meaning set forth in Section 5.20(a).
"Material Adverse Effect" or "Material Adverse Change" shall mean any
significant and substantial effect or change that is materially adverse to the
condition (financial or other), business, results of operations, liabilities or
operations and/or assets of any party taken as a whole
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or any significant and substantial adverse effect or change on the ability of a
party or its stockholders or members, as the case may be, to consummate the
Transactions, or any event or condition which would, with the passage of time,
be reasonably expected to constitute a "Material Adverse Effect" or "Material
Adverse Change."
"Material Interest" shall mean direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least 10% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 10%
of the outstanding equity securities or equity interests in a Person.
"Multiemployer Plan" shall have the meaning set forth in ERISA
Section 3(37)(A).
"Net Cash" shall mean the excess of (a) Cash and Cash Equivalents of
the Subject Companies over (b) all Liabilities of the Subject Companies for
borrowed money, in each case as of the Closing Date.
"Net Debt" shall mean the excess of (a) all Liabilities of the Subject
Companies for borrowed money over (b) Cash and Cash Equivalents of the Subject
Companies, in each case as of the Closing Date.
"Noncompetition Period" shall have the meaning set forth in Section
3.4.
"Notes" shall have the meaning set forth in Section 2.5.
"Occupational Safety and Health Law" shall mean any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.
"Order" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" shall describe any action taken by a
Person if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(b) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be authorized by
the parent company (if any) of such Person.
"Organizational Documents" shall mean (a) the articles or certificate
of incorporation, all certificates of determination and designation, and the
bylaws of a corporation; (b)
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the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate or
articles of limited partnership of a limited partnership; (d) the operating
agreement, limited liability company agreement and the certificate or articles
of organization or formation of a limited liability company; (e) any charter or
similar document adopted or filed in connection with the creation, formation or
organization of a Person; and (f) any amendment to any of the foregoing.
"Other Benefit Obligations" shall mean all obligations, arrangements or
material practices to provide benefits, other than salary, as compensation for
services rendered, to present or former directors, employees or agents, other
than obligations, arrangements and practices that are Plans. Other Benefit
Obligations include consulting agreements under which the compensation paid does
not depend upon the amount of service rendered, sabbatical policies, severance
payment policies and fringe benefits within the meaning of IRC Section 132.
"Patents" shall have the meaning set forth in Section 5.20(a).
"Pension Plan" shall have the meaning set forth in ERISA 3(2)(A).
"Permitted Encumbrance" shall mean any Encumbrance (i) for taxes not
yet due and payable or being contested in good faith, (ii) arising in connection
with any bills of lading, warehouse receipts and other documents of title in the
ordinary course of business, (iii) relating to mechanics, materialmens, and
other similar liens arising in the ordinary course of business which will be
removed by the payment of the accounts payable or accrued liability to the
extent reflected on the Closing Balance Sheet; (iv) consisting of easements,
rights of way, restrictions and other similar encumbrances on any of the real
property leased by a party, or (v) relating to any replacements, extension,
modification or renewal of any Encumbrance described in Clauses (i) through (iv)
above.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Governmental Body.
"Plan" shall have the meaning set forth in ERISA Section 3(3).
"Plan Sponsor" shall have the meaning set forth in ERISA Section
3(16)(B).
"Post-Closing Partial Period" shall have the meaning set forth in
Section 10.3(b).
"Pre-Closing Partial Period" shall have the meaning set forth in
Section 10.3(a).
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced,
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brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Proposed Acquisition Transaction" shall have the meaning set forth in
Section 7.6.
"Purchased Assets" shall have the meaning set forth in Section 2.2(a).
"Purchasers" shall mean the Asset Purchaser and the Stock Purchaser.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 10.2(b).
"Qualified Plan" shall mean any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"Related Person" shall mean with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity);
and
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(f) any Related Person of any individual described in clause
(b) or (c).
"Release" shall mean any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping or other releasing into the Environment,
whether intentional or unintentional.
"Representative" shall mean any officer, director, principal, attorney,
agent, employee or other representative.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Sellers" shall mean the Stock Sellers and the Asset Sellers.
"Sellers' Accountant" shall have the meaning set forth in Section
2.6(c).
"Sellers' Closing Documents" shall have the meaning set forth in
Section 5.2(a).
"Shareholder Indemnified Party" shall have the meaning set forth in
Section 10.2(a).
"Shareholders" shall mean Xxxxxx X. Xxxx, Xxxxxx X. Xxxxxxx, Xx.,
Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxx and C. Xxxx Xxxxxx, as
provided in the first paragraph of this Agreement. "Shareholder" shall refer to
any one of the Shareholders.
"Staffing Services Business" shall have the meaning set forth in
Section 3.4.
"Stock Acquisition" shall have the meaning set forth in Recital A of
this Agreement.
"Stock Purchaser" shall mean CSR Indiana as provided in the first
paragraph of this Agreement.
"Stock Sellers" shall mean Xxxxxx X. Xxxx, Xxxxxx X. Xxxxxxx, Xx.,
Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxxx, as provided in the first paragraph of
this Agreement.
"Subject Companies" shall have the meaning set forth in the first
paragraph of this Agreement. "Subject Company" shall refer to any one of the
Subject Companies.
"Subsidiary" shall mean, with respect to any Person (for the purposes
of this definition, the "Owner"), any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred) are
held by the Owner or one or more of its Subsidiaries .
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"Tax" or "Taxes" shall mean any federal, state, local, foreign or other
tax, levy, impost, fee, assessment or other governmental charge, including
without limitation income, estimated income, gross receipts, business,
occupation, franchise, property, payroll, personal property, sales, transfer,
use, employment, commercial rent, occupancy, franchise or withholding taxes, and
any premium, including without limitation, interest, penalties and additions in
connection therewith.
"Tax Return" shall mean any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of, or compliance with, any Legal Requirement relating to any
Tax.
"Territory" shall have the meaning set forth in Section 3.4.
"Threatened" shall describe any claim, Proceeding, dispute, action or
other matter if (i) any demand or statement has been made (orally or in writing)
with respect to such claim, Proceeding, dispute, action or other matter, (ii)
any notice has been given (orally or in writing) with respect thereto or (iii)
any other event has occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute, action or
other matter is likely to be asserted, commenced, taken or otherwise pursued in
the future.
"Threshold" shall have the meaning set forth in Section 10.2(f).
"Title IV Plans" shall mean all Pension Plans that are subject to
regulation under Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multiemployer Plans.
"Trade Secrets" shall have the meaning set forth in Section 5.20(a).
"Transaction Documents" shall mean this Agreement, the Employment
Agreements, the Notes, and all instruments executed, filed or otherwise
prepared, exchanged or delivered pursuant to the requirements of this Agreement.
"Transactions" shall mean the Acquisitions and the other transactions
contemplated by the Transaction Documents.
"Welfare Plan" shall have the meaning given in ERISA Section 3(1).
ARTICLE II
PURCHASE AND SALE OF STOCK AND ASSETS
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2.1 Purchase and Sale of Stock. Upon the terms and subject to the
conditions set forth herein, on the Closing Date each of the Stock Sellers shall
sell, convey, transfer, assign and deliver to the Stock Purchaser, and the Stock
Purchaser shall purchase from the Stock Sellers, all of the outstanding shares
of capital stock of, CMS/TemPro Resources of Indianapolis, Inc. (the "Stock"),
which Stock is owned by each of the Stock Sellers in the amounts set forth next
to the name of each such Stock Seller in Schedule 2.1.
2.2 Purchase and Sale of Purchased Assets; Assumption of Assumed
Liabilities.
(a) Upon the terms and subject to the conditions set forth
herein, on the Closing Date each of the Asset Sellers shall sell,
convey, transfer, assign and deliver to the Asset Purchaser, and the
Asset Purchaser shall purchase from each of the Asset Sellers, all of
the Assets of the Asset Seller of every kind and nature except: (a) Tax
refunds; (b) all interests of the Asset Seller of every kind and nature
in the CMS/TemPro Resources of Nashville, LLC Savings and Retirement
Plan ("Nashville 401(k) Plan") and the CMS Management Services 401(k)
Plan ("CMS 401(k) Plan"); (c) the corporate and limited liability
company minute books and stock and membership records of the Asset
Sellers; and (d) any Account Receivable to the extent that it has not
been collected in full within 180 days after the day on which it first
becomes due and payable (the "Purchased Assets").
(b) On the Closing Date, subject to the Shareholders'
indemnification obligations pursuant to Article X, the Asset Purchaser
shall assume, pay, perform and discharge all Liabilities of the Asset
Sellers of every kind, character and description, whether accrued,
absolute, contingent or otherwise, arising on or before the Closing
Date, except Liabilities arising under or with respect to the Nashville
401(k) Plan or the CMS 401(k) Plan (the "Assumed Liabilities").
2.3 Consideration. Upon the terms and subject to the conditions set
forth herein, in consideration for the transfer of the Stock pursuant to Section
2.1 and the transfer of the Purchased Assets subject to the assumption of the
Assumed Liabilities pursuant to Section 2.2 , the Purchasers shall pay to the
Sellers, at the times hereafter set forth, the Closing Cash Payment pursuant to
Section 2.4, as adjusted pursuant to Section 2.7, the Notes pursuant to Section
2.5 and the Contingent Amounts pursuant to Section 2.6. The Closing Cash Payment
as adjusted pursuant to Section 2.7 and the Notes are referred to herein
collectively as the "Fixed Amount" and together with the Contingent Amounts,
collectively referred to as the "Consideration." The Consideration shall be
allocated among the Sellers as set forth in Schedule 2.3 hereto; except that the
Net Debt or Net Cash shall be allocated among the Sellers as set forth in the
Sellers' Certificate of Net Debt or Net Cash.
2.4 Closing Cash Payment. On the Closing Date, the Purchasers shall pay
to the Sellers an aggregate amount of Ten Million Two Hundred Forty Thousand
Dollars ($10,240,000) plus Net Cash or less Net Debt in cash by wire transfer of
immediately available funds to the account
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or accounts designated by the respective Sellers to the Purchasers at least two
(2) business days prior to the Closing (the "Closing Cash Payment").
2.5 Notes. On the Closing Date, the Purchaser shall issue to the
Sellers promissory notes in the form of Exhibit A hereto in the aggregate amount
of Five Million Dollars ($5,000,000) (the "Notes").
2.6 Contingent Amounts.
(a) On or before the times hereinafter set forth, the
Purchaser shall pay to the Sellers the additional cash amounts
hereinafter described (the "Contingent Amounts"):
(i) An amount equal to the sum of (A) $37,083 for
each full $10,000 of 1998 Adjusted EBITDA between $2,600,000
and $2,900,000 and (B) 55.63% of the 1998 Adjusted EBITDA
between $2,900,000 and $3,100,000; plus
(ii) An amount equal to the sum of (A) $22,250 for
each full $10,000 of 1999 Adjusted EBITDA between $3,200,000
and $3,700,000 and (B) 55.63% of 1999 Adjusted EBITDA between
$3,700,000 and $4,300,000; plus
(iii) An amount equal to the sum of (A) $11,125 for
each full $10,000 of 2000 Adjusted EBITDA between $3,800,000
and $4,800,000 and (B) 55.63% of 2000 Adjusted EBITDA between
$4,800,000 and $6,000,000.
(b) "Adjusted EBITDA" as used in determining 1998 Adjusted
EBITDA and 1999 Adjusted EBITDA shall mean EBITDA of the Extended
Companies for such period adjusted as provided in Schedule 2.6 hereto
and Adjusted EBITDA as used in determining 2000 Adjusted EBITDA shall
mean the highest EBITDA of the Extended Companies for any 12 month
trailing period during the 16 month period beginning January 1, 2000
and ending April 30, 2001 adjusted as provided in Schedule 2.6 hereto.
"Extended Companies" shall mean (i) the Subject Companies for the
period from January 1, 1998 through the date immediately preceding the
Closing Date, (ii) CMS LLC on and after the Closing Date and (iii) all
additional divisions or Affiliates of CSR (whether currently existing
or subsequently created or acquired) in which any of the Shareholders
or any of the employees of the Subject Companies or CMS LLC establish
accounting or information technology Staffing Services Business in
accordance with recommendations of the Shareholders to CSR and CSR's
approval of such recommendations, which approval shall not be
unreasonably withheld.
(c) Within sixty (60) days after the end of each of the
calendar years 1998 and 1999 and within sixty (60) days after April 30,
2001, CSR shall cause the Extended Companies to prepare and deliver to
the Sellers an Adjusted EBITDA statement for the respective calendar
year (the "Adjusted EBITDA Report"). Each Adjusted EBITDA Report shall
include an income statement prepared in accordance with GAAP, a listing
by item and
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amount of each adjustment to EBITDA in accordance with Schedule 2.6
hereof and CSR's determination of the amount of the Adjusted EBITDA for
the applicable period. Each Adjusted EBITDA Report shall be accompanied
by a certificate of the Chief Financial Officer of CSR to the effect
that the Adjusted EBITDA Report presents fairly in accordance and
consistent with the method utilized by the parties for calculating
EBITDA as of December 31, 1997 (as set forth on Schedule 2.6) the
EBITDA of the Extended Companies for the period covered thereby and
properly and fully reflects each adjustment required to determine
Adjusted EBITDA in accordance with Schedule 2.6 hereto. The Sellers and
a firm of independent public accountants designated by the Sellers (the
"Sellers' Accountant") will be entitled to reasonable access during
normal business hours to the relevant records and working papers of the
Extended Companies and their accountants to aid in their review of the
Adjusted EBITDA Report. The Sellers will be solely responsible for all
costs of the Sellers' Accountants. Each Adjusted EBITDA Report shall be
deemed to be accepted by and shall be conclusive for the purposes of
determining the applicable Contingent Amount except to the extent, if
any, that the Sellers or the Sellers' Accountant shall have delivered
within thirty (30) days after the date on which the Adjusted EBITDA
Report is delivered to Sellers, a written notice to CSR stating each
and every item to which the Sellers take exception as not being in
accordance with GAAP or Schedule 2.6 hereto or the definition of
Extended Companies or as having computational errors, specifying in
reasonable detail the nature and extent of any such exception (it being
understood that any amounts not disputed shall be paid promptly). If a
change proposed by the Sellers is disputed by CSR, then CSR and the
Sellers shall negotiate in good faith to resolve such dispute. If,
after a period of twenty (20) days following the date on which the
Sellers give CSR notice of any such proposed change, any such proposed
change still remains disputed, then CSR and the Sellers shall together
choose an independent firm of public accountants of nationally
recognized standing (the "Accounting Firm") to resolve any remaining
disputes. The Accounting Firm shall act as an arbitrator to determine,
based solely on presentations by the Sellers and CSR, and not by
independent review, only those issues still in dispute. The decision of
the Accounting Firm shall be final and binding and shall be in
accordance with the provisions of this Section 2.6. All of the fees and
expenses of the Accounting Firm shall be paid by CSR and the Sellers
based on the Accounting Firm's Adjusted EBITDA determination in
relation to the Adjusted EBITDA proposals submitted by the parties. For
purposes of illustration, if CSR's submitted Adjusted EBITDA is
$3,000,000, the Sellers' submitted Adjusted EBITDA is $4,000,000 and
the Accounting Firm's determined Adjusted EBITDA is $3,750,000, CSR
shall pay 75% and the Sellers shall pay 25%.
(d) Subject to the provisions of Section 2.6(f), all payments
of Contingent Amounts shall be made within thirty (30) days following
the applicable Adjusted EBITDA Report Delivery Date. The term "Adjusted
EBITDA Report Delivery Date" shall mean the date by which the Adjusted
EBITDA Report is to be delivered as provided in Section 2.6(c);
provided, however, if any change to the Adjusted EBITDA Report is
agreed to by CSR and the Shareholders in accordance with this Section
2.6, then the date on which CSR and the Shareholders agree in writing
to such change shall be the Adjusted EBITDA Report Delivery
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Date; and, provided, further, that if any dispute with respect to the
Adjusted EBITDA Report is resolved in accordance with this Section 2.6,
then the date on which the Accounting Firm delivers its decision with
respect to such dispute shall be the Adjusted EBITDA Report Delivery
Date; provided, however, that any amounts not disputed shall be paid
promptly on March 31st.
(e) Any portion of any Contingent Amounts not paid by March 31
(or July 31, 2001, with respect to 2000 Adjusted EBITDA) shall be
payable with interest at the rate of eight percent (8%) per annum
accruing from such date of the year in which the Adjusted EBITDA Report
is to be delivered to the date of payment.
(f) Subordination. Each of the Sellers and the Shareholders
acknowledges, covenants and agrees that the Contingent Amounts shall be
subordinated upon and pursuant to the following terms and provisions
set forth in this Section 2.6(f) (collectively the "Subordination
Provisions").
(1) As used in these Subordination Provisions, the
following terms shall have the following meanings:
"Administrative Agent" shall mean ING (U.S.)
Capital Corporation or any subsequent administrative agent or
trustee for the holders of indebtedness outstanding under a
Debt Agreement.
"Debt Agreement" shall mean (A) that certain
Loan Agreement (as at any time amended) dated as of December
4, 1997 among Corporate Staffing Resources, Inc. ("CSR"), as
Borrower, ING (U.S.) Capital Corporation, a Delaware
corporation, and Creditanstalt Corporate Finance, Inc., a
Delaware corporation, as Co-Agents and as initial Lenders, and
ING (U.S.) Capital Corporation, as Administrative Agent for
the Lenders under the Loan Agreement, or (B) any loan or
similar credit agreement hereafter entered into by CSR, as
Borrower, evidencing a refinancing of the credit facilities of
CSR presently provided by the Loan Agreement described in
subsection (A) above or (C) any other instrument, indenture or
agreement evidencing or setting forth the terms and conditions
of any present or future indebtedness of CSR for borrowed
money or evidenced by notes, debentures or other debt
securities.
"Default" means any event or condition
which, after satisfaction of any requirement expressly set
forth in the Debt Agreement for the giving of notice or the
lapse of time, or both, would become an Event of Default.
"Event of Default" means (i) any event upon
the occurrence of which Senior Creditors may accelerate the
maturity of any Senior Obligations and (ii) failure to pay any
Senior Obligations at maturity.
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"Senior Creditors" shall mean the holders of
indebtedness outstanding under a Debt Agreement and each
Administrative Agent.
"Senior Obligations" shall mean all
obligations and liabilities of CSR under each Debt Agreement,
whether for principal, interest, premium, fees, costs, taxes,
indemnification or otherwise.
(2) Each of the Sellers and the Shareholders hereby
absolutely and irrevocably subordinates the payment and performance of
the Contingent Amounts to the Senior Obligations, provided that unless
and until the Administrative Agent has given written notice to the
Sellers or the Shareholders that a Default or Event of Default has
occurred and is continuing, the Sellers and/or the Shareholders shall
be entitled to receive and retain (and the Purchasers shall pay) the
Contingent Amounts as and when they become due under the terms of this
Agreement (but not any prepayments). This subordination shall be
continuing in nature, and shall not be affected by any bankruptcy or
insolvency of CSR or any of its subsidiaries. The Sellers and the
Shareholders agree that any written notice of a Default or an Event of
Default which is delivered to the Sellers or the Shareholders by the
Administrative Agent shall be conclusive as to the existence thereof in
the absence of a contrary determination by a court of competent
jurisdiction. Upon written notice from the Administrative Agent to the
Sellers or the Shareholders that such Default or Event of Default has
been cured or waived in accordance with the applicable provisions of
the Debt Agreement, the Sellers and/or the Shareholders may again
receive payments of the Contingent Amounts as and when they become due,
including Contingent Amounts the payment of which was previously
suspended (but not prepayments).
(3) In the event CSR or any of its subsidiaries
become debtors in any voluntary or involuntary bankruptcy proceeding,
the Sellers and the Shareholders shall have the following rights:
(A) The Sellers and/or the Shareholders may
file one or more proofs of claim in such bankruptcy with
respect to the Contingent Amounts, provided that the Sellers
and the Shareholders shall not be entitled to receive payment
of their claims prior to payment in full of the Senior
Obligations, and, in the event of any distribution to the
Sellers and/or the Shareholders with respect to the Contingent
Amounts at a time when any Senior Obligations remain unpaid,
the Sellers and the Shareholders shall pay over such
distribution to the Senior Creditors to be applied by the
Senior Creditors in reduction of the Senior Obligations, and
the Sellers and/or the Shareholders shall become subrogated to
the Senior Creditors' claims to the extent of any such
payments made at such time, if any, as the Senior Obligations
due the Senior Creditors are fully and finally satisfied, but
not sooner.
(B) The Sellers and/or the Shareholders may
appear and be heard on any matter relating to their claim in
any bankruptcy proceeding, but shall not seek to assert rights
contrary to these Subordination Provisions.
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If the Sellers and/or the Shareholders should fail to
file a proof of claim within 30 days prior to the expiration of the
time period within which creditors must file their proofs of claim or
take any other action advisable to preserve their claims against the
Purchasers within 30 days prior to the relevant bar date or other time
limit, the Administrative Agent may file such claim or take such action
as the attorney in fact for the Sellers and/or the Shareholders. In the
event of any financing of CSR or any of its subsidiaries by the Senior
Creditors during any bankruptcy, arrangement or reorganization
proceeding with respect to CSR or any of its subsidiaries, the Sellers
and the Shareholders agree that the Contingent Amounts shall be and
continue to remain subordinate and subject to the subordination
provided herein, and the Sellers and the Shareholders agree to take all
such actions in such proceedings as may be required in order to further
effectuate and continue such subordination.
(4) The Sellers and the Shareholders represent and
warrant to the Senior Creditors that they have not assigned or
transferred the Contingent Amounts to any third party, nor do they
have, or shall they assert the benefit of, (A) any lien or security
interest in the property or assets of CSR or any of its subsidiaries,
(B) any agreement prohibiting the granting of any lien or security
interest in the property or assets of CSR or its subsidiaries or (C)
any guaranty or other suretyship arrangement by any affiliate of CSR in
their favor. Except for an assignment by an Asset Seller to one or more
of the shareholders of the Asset Seller in connection with the
liquidation of the Asset Seller, no Seller or Shareholder may assign or
transfer any interest in the Contingent Amounts unless the assignee or
transferee has first assumed the obligations of the Sellers under these
Subordination Provisions in a writing in form and substance acceptable
to the Administrative Agent. Each Shareholder of an Asset Seller to
whom an Asset Seller assigns an interest in the Contingent Amounts
hereby confirms to the Administrative Agent that it assumes and is
bound to all of the obligations of that Asset Seller under these
Subordination Provisions.
(5) The Sellers and the Shareholders agree that the
Senior Creditors may at any time and from time to time, without the
Sellers' or Shareholders' consent, and without notice, do any one or
more of the following in the Senior Creditors' sole and absolute
discretion, and without affecting the subordination provided hereby:
(A) renew, accelerate, extend the time for payment of, or increase the
Senior Obligations and any or all of the obligations of CSR and its
Subsidiaries, of any guarantors of the obligations of CSR or any of its
Subsidiaries, or of any other party at any time directly or
contingently liable for the payment of any of the Senior Obligations;
(B) grant any other indulgence to CSR or any other person in respect of
any or all of the Senior Obligations or any other matter; (C) amend,
alter or change in any respect whatsoever any term or provision
relating to any or all of the Senior Obligations, including the rate of
interest thereon; (D) substitute or add, or take any action or omit to
take any action which results in the release of any one or more
endorsers or guarantors of all or any part of the Senior Obligations;
(E) apply any sums received from CSR, any guarantor, endorser, or
cosigner, or from the disposition of any collateral to any
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indebtedness whatsoever owing from such person or secured by such
collateral in such manner and order as the Senior Creditors determine
in their sole discretion, and regardless of whether such indebtedness
is part of the Senior Obligations, is secured, or is due and payable;
(F) permit CSR and its Subsidiaries to use proceeds of the collateral
for any purpose; (G) make loans or advances or other credit
accommodations to CSR and its Subsidiaries secured in whole or in part
by the collateral or refrain from making any such loans or advances or
credit accommodations; (H) accept partial payments of, compromise or
settle, refuse to enforce, or release all or any parties to, any or all
of the Senior Obligations; (I) settle, release (by operation of law or
otherwise), compound, compromise, collect or liquidate any of the
Senior Obligations or the collateral in any manner permitted by
applicable law; (J) accept, release, waive, surrender, enforce,
exchange, modify, impair, or extend the time for the performance,
discharge, or payment of, any and all property of any kind securing any
or all of the Senior Obligations or any guaranty of any or all of the
Senior Obligations, or on which the Administrative Agent or any of the
Senior Creditors at any time may have a lien, or refuse to enforce its
rights or make any compromise or settlement or agreement therefor in
respect of any or all of such property, and/or (K) fail to perfect,
subordinate or terminate any lien in favor of the Senior Creditors. The
Senior Creditors are not under and shall not hereafter be under any
obligation to marshal any assets in favor of the Sellers or
Shareholders or against or in payment of any or all of the Senior
Obligations, and may proceed against any of the collateral in such
order and manner as it elects.
(6) Unless and until the Senior Obligations have been
paid and discharged in full, Sellers and Shareholders shall not,
without the giving of ten (10) days prior written notice to the Senior
Creditors, directly or indirectly take any of the following actions:
(A) Commence any lawsuit or legal proceeding
against the Purchasers to collect the Contingent Amounts or
attempt to collect, levy upon or foreclose upon any property
or assets of CSR or its subsidiaries;
(B) Seek to attach any asset of CSR or any
of its subsidiaries, or seek the appointment of a liquidator,
trustee, conservator, receiver, keeper or custodian for CSR,
any of its subsidiaries or any of its assets;
(C) Commence any involuntary bankruptcy or
insolvency proceedings against CSR or any of its subsidiaries;
or
(D) Take any other enforcement action
against CSR or any of its subsidiaries with respect to the
Contingent Amounts:
provided, however, that, notwithstanding the foregoing, if a Default or
an Event of Default shall occur, the Administrative Agent may, by
written notice to Sellers or Shareholders, suspend Sellers' and
Shareholders' right to take any of the actions listed in clauses (A) -
(D)
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above for a period of not greater than 180 days after the
Administrative Agent gives Sellers written notice that such Default or
Event of Default shall have occurred and be continuing (each, a
"Blockage Period"); provided, further, however, that the Administrative
Agent's right to suspend Sellers' and Shareholders' right to take such
actions as a result of a specific event or circumstance that gave rise
to the Default or Event of Default shall be limited to 180 days during
any consecutive 360 days. The foregoing shall not, however, limit or
restrict the Administrative Agent's right to suspend the taking of such
actions with respect to a Default or an Event of Default that is
created by the occurrence of a different event or circumstance. Any
Blockage Period shall immediately terminate in the event the
Administrative Agent waives in writing, the Default or Event of Default
that gives rise thereto. Notwithstanding any other provisions contained
in this Subsection 6, Sellers and Shareholders shall have no right to
take any of the actions listed in clauses (A) - (D) above if the Senior
Creditors shall have elected to accelerate the maturity of the Senior
Obligations until the Senior Obligations have been paid and discharged
in full.
(7) These Subordination Provisions shall be binding
upon and inure to the benefit of the Sellers, the Shareholders and the
Senior Creditors and their successors and assigns. Without limiting the
generality of the foregoing, the Sellers and Shareholders acknowledge
that the Senior Creditors may freely assign their interests in the
Senior Obligations, or sell participations therein. The Sellers and
Shareholders agree that "Senior Creditor" shall refer also to any
assignees or participants of any of the Senior Creditors party to any
Debt Agreement. These Subordination Provisions (i) are for the sole
benefit of the Senior Creditors, the Sellers and the Shareholders, and
their respective successors in interest, (ii) shall be enforceable by
the Senior Creditors as third party beneficiaries hereof, and (iii) may
not be amended or waived as to any Secured Creditor except with the
written consent of that Senior Creditor. No other person or entity
shall have any rights hereunder or is a third party beneficiary.
(8) In the event that any payment of all or any
portion of the Senior Obligations is avoided or required to be returned
pursuant to any of Sections 544, 545, 547, 548 or 549 of the Bankruptcy
Code or for any other reason, these Subordination Provisions shall be
revived and reinstated, and all such avoided or returned Senior
Obligations shall be entitled to the benefits of these Subordination
Provisions, and the Contingent Amounts shall be subordinated to all
such avoided or returned Senior Obligations.
(9) In the event of any action based upon or arising
out of these Subordination Provisions, the prevailing party shall be
entitled to recover from the non-prevailing party all out-of-pocket
costs, fees and reasonable expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees.
(10) All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly given and
effective upon delivery, if personally delivered or sent by telegram,
telex, or telecopy, or effective three (3) business days after mailing
if
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sent by express, certified or registered mail, to the Sellers or
Shareholders at the address set forth in Section 12.2..
(g) In the event CMS LLC terminates the employment of a
Shareholder pursuant to Section 5(a)(i) of the Shareholder's Employment
Agreement and the reason for termination is any of the reasons set
forth in subsections (A) or (B) of Section 5(a)(i) of the Shareholder's
Employment Agreement, then all right of the terminated Shareholder to
receive his portion of Contingent Amounts with respect to the year in
which employment is terminated and each subsequent year shall terminate
and the Purchasers shall be obligated to pay the terminated
Shareholder's portion of any Contingent Amounts with respect to such
years to the other Shareholders in accordance with the written
directions of the other Shareholders.
2.6(h) An Asset Seller may assign and transfer its rights to
Contingent Amounts to one or more of the Shareholders of the Asset
Seller in connection with a liquidation of the Asset Seller upon ten
(10) days prior written notice to CSR and the Purchasers.
2.7 Post-Closing Adjustment
(a) As promptly as practicable after the Closing Date (but in
no event more than sixty (60) days after the Closing Date), CSR shall
cause the Subject Companies to prepare and deliver to the Sellers a
combined balance sheet of the Subject Companies as of the close of
business on the day immediately preceding the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet will be prepared in
accordance with GAAP, applied on a basis consistent with the Balance
Sheet. The Sellers and Sellers' Accountant will be entitled to
reasonable access during normal business hours to the relevant records
and working papers of the Subject Companies to aid in the review of the
Closing Balance Sheet. The Sellers will be solely responsible for all
costs of the Sellers' Accountant. The Closing Balance Sheet shall be
deemed to be accepted by and shall be conclusive for the purposes of
the adjustment described in Section 2.7(b) hereof with respect to the
Subject Companies except to the extent, if any, that the Sellers shall
have delivered, within thirty (30) days after the date on which the
Closing Balance Sheet is delivered to the Sellers, a written notice to
CSR stating each and every item to which the Sellers take exception as
not being in accordance with GAAP applied on a basis consistent with
the Balance Sheet or as having computational errors, specifying in
reasonable detail the nature and extent of any such exception (it being
understood that any amounts not disputed shall be paid promptly). If a
change proposed by the Sellers is disputed by CSR then CSR and the
Sellers shall negotiate in good faith to resolve such dispute. If,
after a period of twenty (20) days following the date on which the
Sellers give CSR notice of any such proposed change, any such proposed
change still remains disputed, then CSR and the Shareholders shall
together choose an independent firm of public accountants of nationally
recognized standing (the "Accounting Firm") to resolve any remaining
disputes. The Accounting Firm shall act as an arbitrator to determine,
based solely on presentations by the Sellers and CSR and not by
independent review, only those issues still in dispute. The decision of
the Accounting Firm shall be final
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and binding and shall be in accordance with the provisions of this
Section 2.7(a). All of the fees and expenses of the Accounting Firm, if
any, shall be paid by CSR and the Sellers in the proportions that the
Accounting Firm's determination of Adjusted Working Capital Deficiency
bears to the Adjusted Working Capital Deficiency proposals submitted by
the parties to the Accounting Firm; provided, however, that, if the
Accounting Firm determines that either party's position is totally
correct, then the other party shall pay one hundred percent (100%) of
the costs and expenses incurred by the Accounting Firm in connection
with any such determination.
(b) In the event that there is an Adjusted Working Capital
Deficiency (as defined below), the Sellers shall pay to the Purchasers,
as an adjustment to the Consideration, an amount equal to the Adjusted
Working Capital Deficiency. Any payments required to be made by the
Sellers pursuant to this Section 2.7(b) shall be made within ten (10)
days after the amount of the Adjusted Working Capital Deficiency has
been determined pursuant to Section 2.7(a) by wire transfer of
immediately available funds to an account designated by the Purchaser.
(c) The term "Adjusted Working Capital Deficiency" shall mean
with respect to the Subject Companies (i) the amount, if any, by which
the Adjusted Working Capital is less than $720,000.00.
(d) The term "Adjusted Working Capital" shall mean, with
respect to the Subject Companies, the amount by which (i) current
assets of the Subject Companies exclusive of cash and cash equivalents
exceeds (ii) current liabilities of the Subject Companies exclusive of
the current portion of indebtedness for borrowed money, all determined
in accordance with GAAP, in each case as set forth on the Closing
Balance Sheet; provided, however, that if any change to the Closing
Balance Sheet is agreed to by CSR and the Shareholders in accordance
with Section 2.7(a), or any dispute between CSR and the Shareholders
with respect to the Closing Balance Sheet is resolved in accordance
with Section 2.7(a), then "Adjusted Working Capital" shall be
calculated after giving effect to any such change or resolution.
(f) All payments required to be made pursuant to this Section
2.7 shall be paid with interest thereon at the rate of eight percent
(8%) per annum and accruing from the Closing Date to the date of
payment.
ARTICLE III
SHAREHOLDERS' AGREEMENTS RESPECTING
POST-CLOSING COMPETITION
3.1 Reasons For Agreements. The Purchasers are making a
substantial investment pursuant to this Agreement in reliance upon the fact that
the knowledge and expertise developed by the Shareholders in their management of
the business and affairs of the Subject Companies will be
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preserved and will not be used in competition with the Purchasers, the Subject
Companies or their Affiliates. It is necessary for the protection of the
Purchasers, the Subject Companies and their Affiliates that the Shareholders
provide the agreements and assurances set forth in this Article III and the
Shareholders do so in consideration of the additional payment by the Purchasers
to each of the Shareholders other than C. Xxxx Xxxxxx of Fifty Thousand Dollars
($50,000) and to C. Xxxx Xxxxxx of Ten Thousand Dollars ($10,000) (the "Covenant
Payments").
3.2 The Shareholders' Agreements. Each Shareholder
individually agrees that the Shareholder will not, directly or indirectly,
except for the benefit of the Purchasers or their Affiliates or with the consent
of the Purchasers, which consent may be granted or withheld at the Purchasers'
sole discretion:
(a) during the Noncompetition Period (as defined in Section
3.4 thereof), become a stockholder, partner, member, manager,
associate, employee, owner, agent, creditor, independent contractor,
co-venturer, a consultant or otherwise, or encourage, counsel, advise
or financially assist or support a spouse of a Shareholder or any other
member of the immediate family that resides with him to be or become,
or a Shareholder to himself be, or be interested in or associated with
any other Person, firm or business engaged in the Staffing Services
Business in the Territory (as defined in Section 3.4 hereof), or in any
Staffing Services Business directly competitive with that of the
Purchasers, as then constituted, or himself engage in such business;
provided, however, that nothing herein shall be construed to prohibit
owning not more than five percent (5%) of any class of securities
issued by an entity in the Staffing Services Business which is subject
to the reporting requirements of the Exchange Act or traded in the
over-the-counter market; or
(b) during the Noncompetition Period, in the Territory,
solicit, cause or authorize, directly or indirectly, to be solicited
for or on behalf of such Shareholder or third parties, from parties who
were customers of the Subject Companies, the Extended Companies or the
Purchasers, any Staffing Services Business transacted by or with such
customer by the Subject Companies, the Extended Companies or the
Purchasers; or
(c) during the Noncompetition Period, in the Territory, accept
or cause or authorize, directly or indirectly, to be accepted for or on
behalf of such Shareholder or for third parties, any such Staffing
Services Business from any such customers of the Subject Companies, the
Extended Companies or the Purchasers; or
(d) during the Noncompetition Period, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used by the
Purchasers or by the Subject Companies or the Extended Companies
relating to the business or the operations, employees or customers of
the Subject Companies, the Extended Companies, or the Purchasers which
constitutes proprietary or confidential information of the Subject
Companies, or the Extended Companies or the Purchasers ("Confidential
Information"), including without limitation any Confidential
Information
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contained in any customer lists, mailing lists and sources thereof,
statistical data and compilations, patents, copyrights, trademarks,
trade names, inventions, formulae, methods, processes, agreements,
contracts, manuals or any other documents, and (2) from and after the
date hereof, use, publish, disseminate or otherwise disclose, directly
or indirectly, any information heretofore or hereafter acquired,
developed or used by the Purchasers which constitutes Confidential
Information, but excluding any Confidential Information which has
become part of common knowledge or understanding in the Staffing
Services Business industry or otherwise in the public domain (other
than from disclosure by Shareholder in violation of this Agreement);
provided, however, that this Section shall not be applicable to the
extent that the Shareholder is required to testify in a judicial or
regulatory proceeding pursuant to the order of a judge or
administrative law judge after such Shareholder requests that the
confidentiality of such Confidential Information be preserved, and in
the event that the Shareholder receives a subpoena or other order to
produce or testify as to Confidential Information, the Shareholder
shall notify the Purchasers in order to provide the Purchasers with an
opportunity to quash at the Purchasers' expense; or
(e) during the noncompetition Period, in the Territory,
(1) solicit, entice, persuade or induce, directly or
indirectly, any employee (or person who within the preceding
three hundred and sixty (360) days was an employee) of the
Subject Companies, the Extended Companies or of the Purchasers
or any other person who is under contract with or rendering
services to the Subject Companies, the Extended Companies or
the Purchasers, to terminate his or her employment, by, or
contractual relationship with, such Person or to refrain from
extending or renewing the same (upon the same or new terms) or
to refrain from rendering services to or for such Person or to
become employed by or to enter into contractual relations with
any Persons other than such Person or to enter into a
relationship with a competitor of the Subject Companies, the
Extended Companies or the Purchasers,
(2) approach any such employee or other person for
any of the foregoing purposes, or
(3) authorize or approve or assist in the taking of
any such actions by any person other than the Subject
Companies, the Extended Companies or the Purchasers.
3.3 Interpretation and Remedies.
(a) The invalidity or non-enforceability of Section 3.2 in any
respect shall not affect the validity or enforceability of Section 3.2
in any other respect or of any other provisions of this Article III. In
the event that any provision of Section 3.2 shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the
geographic or business scope or the duration thereof, such invalidity
or unenforceability shall attach only
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to the scope or duration of such provision and shall not affect or
render invalid or unenforceable any other provision of Section 3.2 and,
to the fullest extent permitted by law, this Section 3.2 shall be
construed as if the geographic or business scope or the duration of
such provision had been more narrowly drafted so as not to be invalid
or unenforceable and further, to the extent permitted by law, such
geographic or business scope or the duration thereof may be re-written
by a court of competent jurisdiction to make such sufficiently limited
to be enforceable.
(b) Each Shareholder acknowledges that the Purchasers' remedy
at law for any breach of the provisions of Section 3.2 is and will be
insufficient and inadequate and that the Purchasers shall be entitled
to equitable relief, including by way of temporary restraining order,
temporary injunction, and permanent injunction, in addition to any
remedies the Purchasers may have at law. If either party files suit to
enforce or to enjoin the enforcement of any of the provisions of this
Section 3.2, the prevailing party shall be entitled to recover, in
addition to all other damages or remedies provided for herein, all of
its costs incurred in prosecuting or defending such suit, including
reasonable attorneys' fees.
3.4 Definitions. " Noncompetition Period" shall mean the period
commencing on the Closing Date and ending five (5) years after the Closing Date,
provided, however, that if a Shareholder violates any of the provisions of
Section 3.2, the term of the Noncompetition Period for such Shareholder shall be
automatically extended for a like period of time from the date on which the
Shareholder permanently ceases such violation or from the date of the entry by a
court of competent jurisdiction of a final order of judgment enforcing such
provision, whichever period is later.
"Staffing Services Business" shall mean recruiting, training
and/or testing employees and assigning them to clients (a) to provide staffing
help services for such client to support or supplement the client's work force
in work situations such as employee absences, temporary skill shortages,
seasonal workloads and special assignments and projects, (b) to provide staffing
help services for such client for short-term and long-term temporary placement
and temporary to permanent arrangements for the client to eventually hire the
service provider as its own employee, and (c) to provide permanent individual
employees for permanent employment placement fees.
"Territory" shall mean the States of Indiana, Michigan and
Tennessee, and outside such state, within a radius of fifty (50) miles from any
office (including any client location where employees provide staffing services
on site) operated during the Noncompetition Period by the Subject Companies or
the Extended Companies.
3.5 Termination of Shareholders' Agreements. If the Purchasers
fail to pay to the Shareholders any of the Contingent Amounts within ninety (90)
days following the date provided in Section 2.6(d) or if the Purchasers fail to
pay to the Shareholders any installment payment of principal or interest on the
Notes within one hundred eighty (180) days following the scheduled payment date
of the installment, then in either event, all of the agreements of the
Shareholders set
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forth in this Article III and all of the agreements of the Shareholders set
forth in Section 6 of their respective Employment Agreements shall terminate and
be of no further force or effect.
ARTICLE IV
CLOSING
4.1 Closing. Upon the terms and subject to the conditions set
forth herein, the closing of the Transactions (the "Closing") shall be held at
10:00 a.m. local time on the Closing Date at the offices of CSR, 000 Xxxxxxxx
Xxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxxxx 00000, unless the
parties hereto otherwise agree.
4.2 Deliveries at Closing.
(a) Closing Payment. The Purchasers will deliver the Closing
Payment (allocated among the Sellers as set forth in Schedule 2.3) to
each of the Sellers.
(b) Covenant Payment. The Purchasers will deliver the Covenant
Payments to the Shareholders.
(c) Notes. The Purchasers will deliver to the Sellers the
Notes in the respective principal amounts as set forth in Schedule 2.3.
(d) Payment of Funded Debt. The Purchaser will pay to the
respective obligees thereof the amount of indebtedness for borrowed
money in the amounts and to the obligees set forth in the Sellers'
certificate delivered pursuant to Section 4.2(i)(iv) hereof.
(e) Bills of Sale. At the Closing, each of the Asset Sellers
will execute and deliver to the Asset Purchaser a xxxx of sale for all
of the Purchased Assets of the respective Asset Seller.
(f) Assumption of Assumed Liabilities. At the Closing, the
Asset Purchaser will execute and deliver to each of the Asset Sellers
an undertaking to assume, pay and perform all of the Assumed
Liabilities of the Asset Seller.
(g) Stock Certificates. At the Closing, the Stock Sellers will
deliver to the Stock Purchaser certificates evidencing the Stock (duly
endorsed in blank for transfer or accompanied by stock powers duly
executed in blank).
(h) Purchasers Certificates. The Purchasers and CSR will
furnish the Sellers with such certificates of its officers and others
to evidence compliance with the conditions set forth in this Agreement
as may be reasonably requested by the Sellers, which shall include,
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but not be limited to a certificate executed by the Secretary or an
Assistant Secretary of each of CSR and the Purchasers, certifying, as
of the Closing Date, (A) a true and complete copy of the Organizational
Documents of CSR and the Purchasers, including its certificate of
incorporation or organization certified as of a recent date by the
appropriate Secretary of State, (B) a true and complete copy of the
resolutions of its board of directors or managers, authorizing the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby and (C) incumbency
matters.
(i) Sellers' Certificates. The Sellers will furnish the
Purchasers with such certificates of the Sellers and the officers of
the Subject Companies and others to evidence compliance with the
conditions set forth in this Agreement as may be reasonably requested
by the Purchaser, which shall include, but not be limited to:
(i) A certificate executed by the Secretary or an
Assistant Secretary of each Subject Company certifying as of
the Closing Date (A) a true and complete copy of the
Organizational Documents of such Subject Company, including
its articles of incorporation or organization certified as of
a recent date by the appropriate Secretary of State, (B)
incumbency matters, and (C) for each Subject Company that is
an Asset Seller, a true and complete copy of the resolutions
of the board of directors or managers and of the Shareholders
or members authorizing and approving the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby.
(ii) A certificate of the appropriate Secretary of
State certifying the good standing of each Subject Company in
its state of incorporation and all states in which it is
qualified to do business;
(iii) A certificate of each of the Sellers'
non-foreign status, pursuant to Treasury Regulation section
1.1445-2(b)(2); and
(iv) A certificate of the Sellers' certifying the
amount of each amount required in the computation of Net Debt
or Net Cash the obligees of the indebtedness for borrowed
money and the allocation of Net Debt or Net Cash.
4.3 Other Closing Transactions.
(a) Employment Agreements. At the Closing, CMS LLC shall enter
into an employment agreement with each of the Shareholders in the form
of Exhibit B (the "Employment Agreements").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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Each of the Shareholders hereby represents and warrants to CSR
and the Purchaser that the following representations and warranties are, as of
the date hereof, and will be, as of the Closing Date, true and correct as to
each Subject Company of which the respective Shareholder is a shareholder or
member:
5.1 Organization and Good Standing.
(a) The Subject Company is duly organized, validly existing,
and in good standing under the laws of its jurisdiction of formation,
with full power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
Contracts to which it is a party. Except as set forth in Schedule 5.1,
the Subject Company is duly qualified to do business and is in good
standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or
the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material Adverse
Effect on such Subject Company. Schedule 5.1 contains a complete and
accurate list of jurisdictions in which the Subject Company is
authorized to do business.
(b) Subsidiaries. The Subject Company has no Subsidiaries and,
except as otherwise set forth on Schedule 5.1, the Subject Company has
no direct or indirect stock or other equity or ownership interest
(whether controlling or not) in any corporation, association,
partnership, joint venture or other entity.
5.2 Authority; No Conflict.
(a) This Agreement and the other Transaction Documents to
which the Shareholder or the Subject Company is a party (the "Sellers'
Closing Documents") have been duly authorized, executed and delivered
by the Shareholder and the Subject Company, to the extent that they are
a party thereto, and constitute the legal, valid, and binding
obligations of the Shareholder and/or the Subject Company, as the case
may be, enforceable against the Shareholder and/or the Subject Company
in accordance with their respective terms, in each case except as such
enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors'
rights generally and (ii) the general principles of equity, regardless
of whether asserted in a proceeding in equity or at law. The
Shareholder and the Subject Company have all requisite power, authority
and capacity to execute and deliver this Agreement and the Sellers'
Closing Documents and to perform their respective obligations under
this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Schedule 5.2, neither the execution
and delivery of this Agreement and the Sellers' Closing Documents nor
the consummation or performance of any of the Transactions will,
directly or indirectly (with or without notice or lapse of time):
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(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents
of the Subject Company or (B) any resolution adopted by the
board of directors of the Subject Company or the shareholders
or other equity owners of the Subject Company;
(ii) to the Knowledge of the Shareholders,
contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge
any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which
the Subject Company or any of the assets owned or used by the
Subject Companies, may be subject;
(iii) to the Knowledge of the Shareholders,
contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by the
Subject Company or that otherwise relates to the business of,
or any of the assets owned or used by, the Subject Company;
(iv) to the Knowledge of the Shareholders,
contravene, conflict with or result in a violation or breach
of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify,
any Applicable Contract; or
(v) result in the imposition or creation of any
Encumbrance (other than a Permitted Encumbrance) upon or with
respect to any of the assets owned or used by the Subject
Company,
except in the case of each of clauses (ii) through (v) above, for such
contraventions, conflicts, violations, Liabilities, reassessments, revaluations,
breaches or creations of Encumbrances which, individually and in the aggregate,
would not have a Material Adverse Effect on the Subject Companies.
To the Knowledge of the Shareholders, except as set forth in
Schedule 5.2, the Subject Company is not, nor will be, required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Transactions.
5.3 Capitalization. Schedule 5.3 contains a complete and
accurate description of the capitalization of the Subject Company (including the
identity of each shareholder (or holder of other equity interest) of the Subject
Company and the number of shares (or other equity interests) held by each such
Person). The Shareholder has, or will have at Closing, title to all of the
shares or membership interest shown as owned by the Shareholder on Schedule 5.3,
in each case, free and
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clear of all Encumbrances. All of the Stock Seller's Stock is and will be, as of
the Closing Date, duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on Schedule 5.3, there are no outstanding
subscriptions, calls, commitments, warrants or options for the purchase of
shares of any capital stock or other securities of the Subject Company or any
securities convertible into or exchangeable for shares of capital stock or other
securities issued by the Subject Company, or any other commitments of any kind
for the issuance of additional shares of capital stock or other securities
issued by the Subject Company. None of the outstanding capital stock or equity
interests or other securities of the Subject Company was issued in violation of
the Securities Act.
5.4 Financial Statements. The Subject Companies have delivered
to CSR (a) internally prepared balance sheets of the Subject Companies as of
December 31 for each of the years 1995 and 1996 and the related statements of
income, for each of the years then ended, (b) an audited combined balance sheet
of the Subject Companies as of December 31, 1997 (including the notes thereto,
the "Balance Sheet"), and the related combined statements of income, changes in
shareholders' equity, and cash flow for the 12-month period then ended, together
with the report thereon of McGladrey & Xxxxxx, LLP, independent certified public
accountants (including the notes thereto), and (c) an internally prepared
combined Statement of normalized EBITDA for each month of 1997 (collectively,
clauses (a), (b) and (c) above are referred to herein as the "Financial
Statements"). The Financial Statements described in clause (b) above fairly and
accurately present the financial condition and the results of operations,
income, expenses, assets, liabilities, changes in stockholders' equity, and cash
flow of the Subject Companies as of the respective dates of, and for the periods
referred to in, the Financial Statements, all in accordance with GAAP; the
Financial Statements described in clause (b) above reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than the Subject Companies are required
by GAAP to be included in the Financial Statements. The Financial Statements
described in clause (a) above were prepared in accordance with the books and
records of the Subject Companies and in accordance with the past practices of
the Subject Companies. Except as set forth in Schedule 5.4, the Balance Sheet
and the income statement contain adequate accruals for, and pro rated
anticipated expenses for, periodic and annual bonuses, incentive compensation,
vacation, "flex time" and other similar benefits (based on then existing
compensation arrangements and past practices).
5.5 Books and Records. The books of account, minute books,
stock record books, and other records of the Subject Company, all of which have
been made available to the Purchaser, are complete and correct in all material
respects and, in all material respects, have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls, and, with respect to the books of account, fairly reflect the
income, expenses, assets and liabilities of the Subject Company subject to year
end adjustments. The minute books of the Subject Company contain, in all
material respects, accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the board of directors, and
committees of the board of directors of the Subject Company. At the Closing, all
of those books and records will be in the possession of the Subject Company.
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5.6 Title to Properties: Encumbrances. The Subject Company
does not own, and since its inception has not owned, any real property or any
interest, other than a leasehold interest, in any real property. Schedule 5.6
contains a complete and accurate list of all leasehold interests in real
property owned by the Subject Company. Schedule 5.6 lists and describes all real
property leased by the Subject Company. The Subject Company has delivered a copy
of all such leases to CSR or the Purchasers and all such leases are legal,
valid, binding, enforceable and in full force and effect. There are no disputes,
oral agreements or forbearances in effect as to any such leases. The Subject
Company owns all the properties and assets (whether real, personal or mixed and
whether tangible or intangible) that it purports to own, including all of the
properties and assets reflected in the Balance Sheet (except for personal
property sold since the date of the Balance Sheet in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Subject Company since the date of the Balance Sheet, which subsequently
purchased or acquired properties and assets, other than personal property
acquired in the Ordinary Course of Business, are listed in Schedule 5.6. Except
as set forth in Schedule 5.6, all material properties and assets of the Subject
Company reflected in the Balance Sheet are free and clear of all Encumbrances
other than Permitted Encumbrances.
5.7 Condition and Sufficiency of Assets. The buildings,
plants, structures and equipment which comprise the office space of the Subject
Company is in reasonable working order and adequate for its intended use, except
where failure to be in such condition would not have a Material Adverse Effect
on such Subject Company. The building, plants, structures and equipment which
comprise the office space of the Subject Company is adequate for the uses to
which they are being put, and none of such buildings, plants, structures or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures and equipment which comprise the office space of the Subject
Company are sufficient for the continued conduct of the business of the Subject
Company after the Closing in substantially the same manner as conducted prior to
the Closing.
5.8 Accounts Receivable. All accounts receivable of the
Subject Company that are reflected on the accounting records of the Subject
Company as of the Closing and, unless paid prior to Closing, all accounts
receivable of the Subject Company that are reflected on the Balance Sheet
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Except as set forth in Schedule 5.8, unless
paid prior to the Closing, the Accounts Receivable are or will be as of the
Closing current and collectible net of the respective reserves shown on the
Balance Sheet or on the accounting records of the Subject Company as of the
Closing (which reserves are adequate and calculated consistent with past
practice and, in the case of the reserves as of the Closing, will not represent
a greater percentage of the Accounts Receivable as of the Closing than the
reserve reflected in the Balance Sheet and will not represent a Material Adverse
Change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, except as set forth in Schedule 5.8, each of the
Accounts Receivable either has been or will be collected in full, without any
setoff, within one hundred eighty days after the day on which it first becomes
due and payable. There is no contest, claim or right of set-off, other than
returns in the Ordinary Course of Business,
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under any Contract with any obligor of an Accounts Receivable relating to the
amount or validity of such Accounts Receivable.
5.9 No Undisclosed Liabilities. Except as set forth in
Schedule 5.9, the Subject Company has no Liabilities required to be disclosed
under GAAP except for Liabilities reflected or reserved against in the Balance
Sheet (including the notes thereto) and current Liabilities incurred in the
Ordinary Course of Business since the date thereof.
5.10 Taxes.
(a) Except as set forth in Schedule 5.10, there have been
properly completed and filed on a timely basis and in correct form all
Tax Returns required to be filed by the Subject Company on or prior to
the date hereof. As of the time of filing, the foregoing Tax Returns
correctly reflected in all material respects the facts regarding the
income, business, assets, operations, activities, status or other
matters of the applicable entity or any other information required to
be shown thereon. In particular, the foregoing returns are not subject
to penalties under Section 6662 of the IRC, relating to
accuracy-related penalties (or any corresponding provision of the
state, local or foreign Tax law) or any predecessor provision of law.
Except as set forth in Schedule 5.10, an extension of time within which
to file any Tax Return that has not been filed has not been requested
or granted.
(b) With respect to all amounts in respect of Taxes imposed on
the Subject Company or for which the Subject Company is or could be
liable, whether to taxing authorities (as, for example, under law) or
to other Persons or entities (as, for example, under Tax allocation
agreements), with respect to all taxable periods or portions of periods
ending on or before the Closing, all applicable Tax laws and agreements
have been complied with in all material respects, and all such amounts
required to be paid by the Subject Company to taxing authorities or
others on or before the date hereof have been paid.
(c) No material issues have been raised (and are currently
pending) by any taxing authority in connection with any of the Tax
Returns of the Subject Company. No waiver of statute of limitation with
respect to any Tax Return has been given by or requested from the
Subject Company. Schedule 5.10 sets forth (i) the taxable years of the
Subject Company as to which the respective statutes of limitations with
respect to Taxes have not expired, and (ii) with respect to such
taxable years, (A) those years for which examinations have been
completed, (B) those years for which examinations are presently being
conducted, (C) those years for which examinations have not been
initiated, and (D) those years for which required Tax Returns have not
yet been filed. Except to the extent shown in Schedule 5.10, all
deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are fully reflected as a
liability in the Financial Statements, or are being contested and an
adequate reserve therefor has been established and is fully reflected
in the Financial Statements.
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(d) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on the assets of the Subject Company.
(e) The Subject Company is not a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement.
(f) Except as set forth in Schedule 5.10, the Subject Company
has never been a member of an affiliated group of corporations, within
the meaning of Section 1504 of the IRC.
(g) The Subject Company has not filed a consent pursuant to
the collapsible corporation provisions of Section 341(f) of the IRC (or
any corresponding provision of state, local or foreign income Tax law)
or agreed to have Section 341(f)(2) of the IRC (or any corresponding
provision of state, local or foreign income Tax law) apply to any
disposition of any asset owned by it.
(h) None of the assets of the Subject Company is property that
the Subject Company is required to treat as being owned by any other
Person pursuant to the "safe harbor lease" provisions of former Section
168(f)(8) of the IRC.
(i) None of the assets of the Subject Company directly or
indirectly secures any debt, the interest on which is Tax-exempt under
Section 103(a) of the IRC.
(j) None of the assets of the Subject Company is "tax-exempt
use property" within the meaning of Section 168(h) of the IRC.
(k) Except as set forth in Schedule 5.10, the Subject Company
has not agreed to make nor is the Subject Company required to make any
adjustment under Section 481(a) of the IRC by reason of a change in
accounting method or otherwise.
(l) The Subject Company is not a party to any agreement,
Contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the IRC.
(m) Neither the Subject Company nor the Shareholders is a
Person other than a United States Person within the meaning of the IRC.
(n) CSM/TemPro Resources of Nashville, LLC (the "LLC") has at
all times during its existence properly been treated as a partnership
for federal and applicable state income Tax purposes. Except for the
LLC and except as set forth in Schedule 5.10, none of the Subject
Companies is a party to any joint venture, partnership or other
arrangement or contract that could be treated as a partnership for
federal and applicable state income Tax purposes.
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(o) The unpaid Taxes of the Subject Company do not exceed the
reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
set forth or included in the Balance Sheet, as adjusted for the passage
of time through the Closing, in accordance with the past custom and
practice of the Subject Company.
(p) CMS Management Services, Co., TemPro Resources, Inc. and
CMS Services, Inc. have properly been treated as an S Corporation (as
defined in the IRC) for federal and applicable state income tax
purposes since the following respective dates: January 1, 1989, January
1, 1989 and September 23, 1997.
5.11 No Material Adverse Change. Since the date of the Balance
Sheet, there has not been any Material Adverse Change in the business,
operations, properties, assets or condition of the Subject Company, and, to the
Knowledge of the Shareholders, no event has occurred or circumstance exists that
may result in such a Material Adverse Change.
5.12 Employee Benefits.
(a) (i) Schedule 5.12 contains a complete and accurate list of
all currently existing Plans and Other Benefit Obligations of
the Subject Company, and identifies as such all Plans that are
Qualified Plans.
(ii) Schedule 5.12 contains a complete and accurate
list of (A) all ERISA Affiliates of the Subject Company, and
(B) all currently existing Plans of which any such ERISA
Affiliate is a Plan Sponsor, in which any such ERISA Affiliate
participates, or to which any such ERISA Affiliate
contributes.
(iii) Schedule 5.12 sets forth the approximate 1997
annual payment for all current obligations owed under any such
Plan of the Subject Company or Other Benefit Obligation of the
Subject Company that is not subject to the disclosure and
reporting requirements of ERISA.
(b) the Subject Company has delivered to CSR copies of:
(i) all documents that set forth the terms of each
currently existing Plan and Other Benefit Obligations of the
Subject Company and of any related trust, including (A) all
plan descriptions and summary plan descriptions of the Plans
of the Subject Company for which plan descriptions and summary
plan descriptions are required to be prepared, filed and
distributed and (B) all summaries and descriptions furnished
to participants and beneficiaries regarding the Plans and the
Other Benefit Obligations of the Subject Company for which a
plan description or summary plan description is not required;
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(ii) all currently existing personnel and employment
manuals and policies of the Subject Company;
(iii) a written description of any Plan or Other
Benefit Obligation of the Subject Company that is not
otherwise in writing;
(iv) all SEC registration statements filed with
respect to any Plan of the Subject Company;
(v) all currently existing insurance policies
purchased by or to provide benefits under any Plan of the
Subject Company;
(vi) all currently existing contracts with third
party administrators, actuaries, investment managers,
consultants and other independent contractors that relate to
any Plan or Other Benefit Obligation of the Subject Company;
(vii) all reports submitted within the three years
preceding the date of this Agreement by third party
administrators, actuaries, investment managers, consultants or
other independent contractors with respect to any Plan or
Other Benefit Obligation of the Subject Company;
(viii) all notifications to employees of the Subject
Company of their rights under ERISA Section 601 et seq. and
IRC Section 4980B given during the last two (2) years;
(ix) the Form 5500 filed with respect to each Plan of
the Subject Company for the most recent three plan years,
including all schedules thereto and the opinions of
independent accountants;
(x) all notices that were given by the Subject
Company or any ERISA Affiliate of the Subject Company or any
Plan of the Subject Companies to the IRS or any participant or
beneficiary, pursuant to statute, within the three years
preceding the date of this Agreement, including notices that
are expressly mentioned elsewhere in this Section 5.12;
(xi) all notices relating to a Plan or other Benefit
Obligation that were given by the IRS or the Department of
Labor to the Subject Company, any of its ERISA Affiliates or
any Plan of the Subject Company within the three years
preceding the date of this Agreement; and
(xii) the most recent IRS determination letter for
each Qualified Plan which is a Plan of the Subject Company.
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(c) Except as set forth in Schedule 5.12:
(i) The Subject Company has performed all of its
obligations under all the Plans and Other Benefit Obligation
of the Subject Company. The Subject Companies has made
appropriate entries in its financial records and statements
for all obligations and liabilities under such Plans and Other
Benefit Obligations that have accrued but are not due.
(ii) No statement, either written or, to the
Knowledge of the Shareholders, oral, has been made by the
Subject Company to any Person with regard to any Plan or Other
Benefit Obligation that was not in accordance with the Plan or
Other Benefit Obligation and that could have an adverse
economic consequence to any of the Subject Company.
(iii) The Subject Company, with respect to all the
Plans and the Other Benefit Obligations of the Subject
Company, is, and each Plan and Other Benefit Obligation of the
Subject Company is in full compliance in all material respects
with ERISA, the IRC, and other applicable Laws including the
provisions of such Laws expressly mentioned in this Section 5.
12.
(1) No transaction prohibited by ERISA 406
and no "prohibited transaction" under IRC 4975(c) has
occurred with respect to any Plan of the Subject
Company.
(2) The Subject Company has no liability to
the IRS with respect to any Plan, including any
liability imposed by Chapter 43 of the IRC.
(3) The Subject Company has no liability
under ERISA Section 502.
(4) All filings required by ERISA and the
IRC as to each Plan of the Subject Company have been
timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have
been timely provided.
(5) All contributions and payments made or
accrued by the Subject Company and the ERISA
Affiliates of the Subject Company with respect to all
the Plans and Other Benefit Obligations of the
Subject Company are or will be deductible under IRC
162 or 404 subject to the requirements and
limitations provided therein. No amount, nor any
asset of any Plan of the Subject Company is subject
to Tax as unrelated business taxable income.
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(iv) Neither the Subject Company nor any ERISA
Affiliate of the Subject Company sponsors or maintains,
previously sponsored or maintained, or has or had any
obligation to contribute to any Title IV Plan, Multiemployer
Plan or any Welfare Plan that provides or will provide
benefits described in Section 3(1) of ERISA to any former
employee or retiree of the Subject Company or any ERISA
Affiliate of the Subject Company, except as required under
Part 6 of Title I of ERISA and Section 4980B of the Code.
(v) To the Knowledge of the Shareholders, each Plan
of the Subject Company which is not a Multi-Employer Plan can
be terminated within thirty days, without payment of any
additional contribution or amount for any time periods after
termination of the Plan and without the vesting or
acceleration of any benefits promised by such Plan, other than
vesting of any accrued benefits under any Pension Plan.
(vi) To the Knowledge of the Shareholders, no event
has occurred or circumstance exists as of the Closing that
could result in a material increase in premium costs of the
Plans and Other Benefit Obligations of the Subject Company
that are insured or a material increase in benefit costs of
such Plans and Other Benefit Obligations that are
self-insured.
(vii) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal
proceeding involving, any Plan or Other Benefit Obligation of
the Subject Company is pending or, to the Knowledge of the
Shareholders, is Threatened.
(viii) Each Qualified Plan of the Subject Company is
qualified in form and operation under IRC Section 401(a); each
trust for each such Plan is exempt from federal income Tax
under IRC Section 501(a). No event has occurred or
circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan
or trust.
(ix) The Subject Company has complied with the
provisions of ERISA Section 601 et seq. and IRC Section 4980B.
(x) No payment that is owed or may become due to any
director, officer, employee or agent of any of the Subject
Company will be non-deductible to the Subject Company or
subject to Tax under IRC Section 280G or Section 4999; nor
will the Subject Company be required to "gross up" or
otherwise compensate any such Person because of the imposition
of any excise Tax on a payment to such Person.
5.13 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Schedule 5.13:
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(i) the Subject Company is, and at all times since
January 1, 1995 has been, in all material respects, in
compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
(ii) to the Knowledge of the Shareholders, no event
has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a
violation by the Subject Company of, or a failure on the part
of the Subject Company to comply with, any Legal Requirement
or (B) may give rise to any obligation on the part of the
Subject Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature; and
(iii) the Subject Company has not received, at any
time since January 1, 1995, any written or, to the Knowledge
of the Shareholders, other notice or other communication from
any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or (B) any
actual, alleged, possible or potential obligation on the part
of any of the Subject Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Schedule 5.13 contains a complete and accurate list of
each material Governmental Authorization that is held by the Subject
Company or that otherwise relates to the business of, or to any of the
assets owned or used by, the Subject Company. Each Governmental
Authorization is valid and in full force and effect. Except as set
forth in Schedule 5.13:
(i) the Subject Company is, and at all times since
January 1, 1995, has been, in all material respects, in full
compliance with all of the terms and requirements of each
Governmental Authorization;
(ii) to the Knowledge of the Shareholders, no event
has occurred or circumstance exists that (A) constitutes or
results directly or indirectly in a violation of or a failure
to comply with any term or requirement of any Governmental
Authorization or (B) results directly or indirectly in the
revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental
Authorization;
(iii) the Subject Company has not received, at any
time since January 1, 1995, any written or, to the Knowledge
of the Shareholders, other notice or communication from any
Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure
to comply with any term or requirement of any Governmental
Authorization or (B) any actual, proposed,
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possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any
Governmental Authorization; and
(iv) all material applications required to have been
filed for the renewal of the Governmental Authorizations have
been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other material filings required
to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 5.13
collectively constitute all of the material Governmental Authorizations
necessary to permit the Subject Company to lawfully conduct and operate its
business in the manner it currently conducts and operates such business and to
permit the Subject Company to own and use its assets in the manner in which it
currently owns and uses such assets.
5.14 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 5.14, there is no
pending Proceeding:
(i) that has been commenced by or, to the Knowledge
of the Shareholders or the Subject Company, against the
Subject Company or, to the Knowledge of the Shareholders, that
otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Subject Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering
with, any of the Transactions.
Except as set forth in Schedule 5.14, to the Knowledge of the
Shareholder, (1) no such Proceeding has been Threatened, and (2) no event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any such Proceeding. The Subject Company has delivered to
CSR or the Purchasers copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Schedule 5.14. The Proceedings
listed in Schedule 5.14 will not, individually or in the aggregate, have a
Material Adverse Effect on the business, operations, assets, condition or
prospects of the Subject Company.
(b) Except as set forth in Schedule 5.14:
(i) there is no Order to which the Subject
Company or any of the assets owned or used by the Subject
Company, is subject;
(ii) the Shareholder is not subject to any Order that
relates to the business of, or any of the assets owned or used
by, the Subject Company; and
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(iii) to the Knowledge of the Shareholders, no
officer, director, agent or employee of the Subject Company is
subject to any Order that prohibits such officer, director,
agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of the Subject
Company.
(c) Except as set forth in Schedule 5.14:
(i) the Subject Company is, and at all times since
January 1, 1995, has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of
the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which the Subject Company
or any of the assets owned or used by the Subject Company, is
subject; and
(iii) the Subject Company has not received, at any
time since January 1, 1995, any written or, to the Knowledge
of the Shareholders, other notice or communication from any
Governmental Body or any other Person regarding any actual,
alleged, possible or potential violation of, or failure to
comply with, any term or requirement of any Order to which the
Subject Company or any of the assets owned or used by the
Subject Company, is or has been subject.
5.15 Absence of Certain Changes and Events.
Except as set forth in Schedule 5.15, since the date of the
Balance Sheet, the Subject Company has conducted its business only in the
Ordinary Course of Business and there has not been any:
(a) change in authorized or issued capital stock of, or other
equity interests in, the Subject Company; grant of any stock option or
right to purchase shares of capital stock, of or other equity interests
in, the Subject Company; issuance of any security convertible into such
capital stock or other equity interests; grant of any registration
rights; purchase, redemption, retirement or other acquisition by the
Subject Company of any shares of any such capital stock or other equity
interests; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock or other
equity interests;
(b) amendment to the Organizational Documents of the Subject
Company;
(c) payment or increase by the Subject Company (except in the
Ordinary Course of Business) of any bonuses, salaries, or other
compensation to any stockholder, director, officer or employee or entry
into any employment, severance or similar Contract with any director,
officer or employee;
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(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any employees of the Subject Company;
(e) damage to or destruction or loss of any asset or property
of any of the Subject Companies, whether or not covered by insurance,
that would have a Material Adverse Effect on the Subject Company;
(f) entry into, termination or acceleration of, or receipt of
notice of termination of (i) any material license, distributorship,
dealer, sales representative, joint venture, credit or similar
agreement or (ii) any Contract or transaction involving a Liability by
or to the Subject Company of at least $25,000;
(g) sale (other than sales in the Ordinary Course of
Business), lease or other disposition of any material asset or property
of the Subject Company or mortgage, pledge or imposition of any lien or
other Encumbrance on any material asset or property of the Subject
Company, including the sale, lease or other disposition of any of the
Intellectual Property Assets;
(h) delay or failure to repay when due any obligation,
including without limitation, accounts payable and accrued expenses
(except in the Ordinary Course of Business);
(i) accrual of any expenses except for such accruals in the
Ordinary Course of Business;
(j) capital expenditures in excess of $25,000;
(k) cancellation or waiver of any claims or rights with a
value to the Subject Company in excess of $10,000;
(l) any payment, discharge or satisfaction of any Liability by
any Subject Company, other than the payment, discharge or satisfaction
of Liabilities, in the Ordinary Course of Business;
(m) incurrence of or increase in, any Liability, except in the
Ordinary Course of Business, or any deferred payment of or failure to
pay when due, any Liability;
(n) material change in the accounting methods used by the
Subject Company;
(o) material disagreement or dispute with any key employee
with respect to compensation, equity ownership, duties or authority; or
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(p) agreement, whether oral or written, by the Subject Company
to do any of the foregoing.
5.16 Contracts; No Defaults.
(a) Schedule 5.16 contains a complete and accurate list, and
the Subject Company has made available to CSR or the Purchasers true
and complete copies, of:
(i) each written Applicable Contract that involves
performance of services or delivery of goods by the Subject
Company for a fixed price in excess of $10,000 or a fixed
deliverable;
(ii) each written Applicable Contract that involves
performance of services or delivery of goods or materials to
the Subject Company for a fixed price in excess of $25,000;
(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves
expenditures of the Subject Company, individually or, for a
series of related Applicable Contracts, in the aggregate, in
excess of $10,000, or receipts of the Subject Company,
individually or, for a series of related Applicable Contracts,
in the aggregate, in excess of $20,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Applicable Contract of the Subject Company affecting the
ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real or personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of
less than $10,000 and with terms of less than one year);
(v) each licensing agreement or other Applicable
Contract of the Subject Company with respect to patents,
trademarks, copyrights or other intellectual property of the
Subject Company, except agreements with current or former
employees, regarding the appropriation or the non-disclosure
of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract of the Subject Company to or with any
labor union or other employee representative of a group of
employees and each other written employment or consulting
agreement with any employees or consultants, except for
written employment or consulting agreements with billable
employees or billable consultants;
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(vii) each joint venture, partnership and other
Applicable Contract of the Subject Company (however named)
involving a sharing of profits, losses, costs or liabilities
by the Subject Company with any other Person;
(viii) each Applicable Contract of the Subject
Company containing covenants that in any way purport to
restrict the business activity of any of the Subject Company
or any Affiliate of the Subject Company or limit the freedom
of the Subject Company or any Affiliate of the Subject Company
to engage in any line of business or to compete with any
Person;
(ix) each Applicable Contract of the Subject Company
providing for payments to or by any Person based on sales,
purchases or profits, other than direct payments for goods;
(x) each power of attorney that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides
for an express undertaking by the Subject Company to be
responsible for consequential damages;
(xii) each executory Applicable Contract of the
Subject Company for capital expenditures in excess of $10,000;
(xiii) each Applicable Contract which, to the
Knowledge of the Shareholders, will result in a material loss
to the Subject Company;
(xiv) each Applicable Contract between the Subject
Company and its former or current stockholders, directors,
officers and employees (other than standard employment
agreements previously furnished to or approved by the
Purchaser);
(xv) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by the Subject Company other than in the Ordinary
Course of Business; and
(xvi) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) Except as set forth in Schedule 5.16, no officer,
director, agent, employee, consultant or contractor of the Subject
Company is bound by any Contract that purports to limit the ability of
such officer, director, agent, employee, consultant or contractor to
engage in or continue any conduct, activity or practice relating to the
business of any of the Subject Company.
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(c) Except as set forth in Schedule 5.16, each Contract
identified or required to be identified in Schedule 5.16 is in full
force and effect and is valid and enforceable in accordance with its
terms except to the extent the invalidity or unenforceability of such
Contract would not have a Material Adverse Effect on the Subject
Company.
(d) Except as set forth in Schedule 5.16:
(i) the Subject Company is and to the Knowledge of
the Shareholders, at all times since January 1, 1995, has
been, in compliance with all material terms and requirements
of each material Contract under which the Subject Company has
any obligation or Liability or by which the Subject Company or
any of the assets owned or used by the Subject Company is or
was bound;
(ii) to the Knowledge of the Shareholders, each other
Person that has any obligation or Liability under any material
Contract under which the Subject Company has any rights is,
and at all times since January 1, 1995 has been, in compliance
with all material terms and requirements of such Contract;
(iii) to the Knowledge of the Shareholders, no event
has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Subject
Company or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any
Applicable Contract; and
(iv) the Subject Company has not given to or received
from any other Person, at any time since January 1, 1995, any
written or, to the Knowledge of the Shareholders, other notice
or other communication regarding any actual, alleged, possible
or potential violation or breach of, or default under, any
Contract.
(e) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or
payable to the Subject Company under current or completed Contracts
with any Person and no such Person has made written demand for such
renegotiation.
(f) The Contracts relating to the provision of products or
services by the Subject Company have been entered into in the Ordinary
Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any
Legal Requirement.
5. 17 Insurance.
(a) The Subject Company has delivered to CSR:
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(i) a true and complete list of all policies of
insurance to which the Subject Company is a party or under
which the Subject Company or any director or officer of the
Subject Company, is or has been covered at any time within the
three years preceding the date of this Agreement; and
(ii) any statement by the auditor of the Financial
Statements prepared in connection with such Financial
Statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Schedule 5.17 describes:
(i) any self-insurance arrangement by or affecting
the Subject Company, including any reserves established
thereunder; and
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by the
Subject Company.
(c) Schedule 5.17 sets forth, by year, for the current policy
year and each of the three preceding policy years:
(i) a summary of the loss experience under each
policy; and
(ii) a statement describing the loss experience for
all claims that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth in Schedule 5.17:
(i) All policies to which the Subject Company is a
party or that provide coverage to the Subject Company or any
director or officer of the Subject Company:
(l) are valid, outstanding and enforceable;
(2) are sufficient for compliance with all
Legal Requirements and Contracts to which the Subject
Company is a party or by which it is bound;
(3) will continue in full force and effect
following the consummation of the Transactions; and
(4) do not provide for any retrospective
premium adjustment or other experienced-based
liability on the part of any of the Subject
Companies.
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(ii) the Subject Company has not received (A) any
refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) To the Knowledge of the Shareholders, the
Subject Company has given notice to the insurer of all
material claims that may be insured thereby.
5.18 Environmental Matters .
Except as set forth in Schedule 5.18:
(a) The Subject Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable
under, any Environmental Law, except where such noncompliance or
violations would not, individually or in the aggregate, have a Material
Adverse Effect on the Subject Company. To the Knowledge of the
Shareholders, the Subject Company has no basis to expect, nor has it or
any other Person for whose conduct the Subject Company is or may be
held to be responsible received, any actual or Threatened order or
written or other notice or communication from (i) any Governmental Body
or private citizen acting in the public interest or (ii) the current or
prior owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal or
mixed) in which the Subject Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported, used or
processed by the Subject Companies or any other Person for whose
conduct the Subject Company is or may be held responsible, or from
which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled or received.
(b) There are no pending or Threatened claims, Encumbrances or
other restrictions of any nature, resulting from any Environmental,
Health and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting (i) to the Knowledge of
the Shareholders, any of the Facilities or (ii) any other properties
and assets (whether real, personal or mixed) in which the Subject
Company has or had an interest.
(c) Neither the Subject Company nor, to the Knowledge of the
Shareholders, any other Person for whose conduct the Subject Company is
or may be held responsible, has received any citation, directive,
inquiry, notice, Order, summons, warning or other communication that
relates to Hazardous Activity, Hazardous Materials, or any alleged,
actual or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual or potential obligation to
undertake or bear the cost of any Environmental,
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Health and Safety Liabilities with respect to any of the Facilities or
any other properties or assets (whether real, personal or mixed) in
which the Subject Company has or had an interest, or with respect to
any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used or processed by the
Subject Company or any other Person for whose conduct the Subject
Company is or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled or received.
(d) Neither the Subject Company nor, to the Knowledge of the
Shareholders, any other Person for whose conduct the Subject Company is
or may be held responsible, has any Environmental, Health and Safety
Liabilities with respect to the Facilities or, to the Knowledge of the
Shareholders, with respect to any other properties and assets (whether
real, personal or mixed) in which the Subject Company (or any
predecessor), has or had an interest, or to the Knowledge of the
Shareholders at any property geologically or hydrologically adjoining
the Facilities or any such other property or assets.
(e) To the Knowledge of the Shareholders, there has been no
Release or Threat of Release of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used
or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal or mixed) in which the
Subject Company has or had an interest.
(f) The Subject Company has delivered to the Purchaser true
and complete copies and results of any reports, studies, analyses,
tests or monitoring possessed or initiated by the Subject Company
pertaining to Hazardous Materials or Hazardous Activities in, on or
under the Facilities or concerning compliance by the Subject Company or
any other Person for whose conduct it is or may be held responsible
with Environmental Laws.
5.19 Labor Relations; Compliance: Employees. Except as set
forth in Schedule 5.19, since January 1, 1995, the Subject Company has not been
nor is a party to any collective bargaining or other labor Contract. Except as
set forth in Schedule 5.19, since January 1, 1995, there has not been, there is
not presently pending or existing, and, to the Knowledge of the Shareholders,
there is not Threatened, (a) any strike, slowdown, picketing, work stoppage or
employee grievance process, (b) any Proceeding against or affecting the Subject
Company relating to the alleged violation of any Legal Requirement pertaining to
labor relations or employment matters, including any charge or complaint filed
by an employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission or any comparable Governmental Body,
organizational activity or other labor or employment dispute against or
affecting the Subject Company or its premises or (c) any application for
certification of a collective bargaining agent. To the Knowledge of the
Shareholders, no event has occurred or circumstance exists that could provide
the basis for any work stoppage or other labor dispute. There is no lockout of
any employees by the Subject Company, and no such action is contemplated by the
Subject Company. Except as set forth in Schedule 5.19, the Subject Company has
complied in all material respects with all Legal
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Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and health
and plant closing. Except as set forth in Schedule 5.19, the Subject Company is
not liable for the payment of any compensation, damages, taxes, fines, penalties
or other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements. Schedule 5.19 sets forth the names of all Persons
employed by the Subject Company who are expected to receive more than $100,000
annualized cash compensation for the 1998 calendar year from the Subject Company
(including without limitation, salary, commission and bonus) and who are
expected to be employed by the Subject Company on the Closing Date. Except as
set forth in Schedule 5.19, the Subject Company has not entered into any
severance or similar arrangement in respect of any personnel that provides for
any obligation (absolute or contingent) of the Subject Company or any other
Person to make any payment to any such personnel following termination of
employment.
5.20 Intellectual Property.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the corporate name and all fictional business
names, trade names, registered and unregistered trademarks,
service marks and applications owned by, used by or licensed
to any of the Subject Company (collectively, "the Marks");
(ii) all of the patents, patent applications and
inventions and discoveries that may be patentable of the
Subject Company (collectively, "the Patents");
(iii) all of the copyright rights in both published
works and unpublished works of the Subject Company
(collectively, "the Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings and blue prints
owned, used or licensed by the Subject Company as licensee or
licensor (collectively, "the Trade Secrets").
(b) Agreements. Schedule 5.20 contains a complete and accurate
list and summary description, including any royalties paid or received
by the Subject Company, of all Contracts relating to the Intellectual
Property Assets to which the Subject Company is a party or by which the
Subject Company is bound, except for any license implied by the sale of
a product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $1,000 under which the
Subject Company is the licensee. There are no outstanding and, to the
Knowledge of the Shareholders, no Threatened disputes or disagreements
with respect to any such contract.
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(c) Know-How Necessary for the Business. The Intellectual
Property Assets are all those necessary for the operation of the
business of the Subject Company as it is currently conducted.
(d) Patents. The Subject Company has not been issued any
Patents nor has any Patents pending No process or know-how used by the
Subject Company is known to infringe or is alleged to infringe any
patent or other proprietary right of any other Person.
(e) Trademarks.
(i) Schedule 5.20 contains a complete and accurate
list and summary description of all the Marks of the Subject
Company. Except as set forth in Schedule 5.20, the Subject
Company is the owners of such right, title and interest in and
to each of the Marks as is necessary to conduct the business
of the Subject Company, free and clear of all liens, security
interests, charges, Encumbrances, equities and other adverse
claims.
(ii) Except as set forth in Schedule 5.20, all the
Marks of the Subject Company that have been registered with
the United States Patent and Trademark Office are, to the
Knowledge of the Shareholders, currently in compliance with
all formal legal requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the
Closing.
(iii) Except as set forth in Schedule 5.20, no Xxxx
of the Subject Company has been or is now involved in any
opposition, invalidation or cancellation and, to the Knowledge
of the Shareholders, no such action is Threatened with the
respect to any of the Marks of the Subject Company.
(iv) Except as set forth in Schedule 5.20, to the
Knowledge of the Shareholders, there is no potentially
interfering trademark or trademark application of any third
party.
(v) Except as set forth in Schedule 5.20, no Xxxx of
the Subject Company is infringed or, to the Knowledge of the
Shareholders, has been challenged or threatened in any way.
None of the Marks of the Subject Company used by the Subject
Company is known to infringe or is alleged to infringe any
trade name, trademark or service xxxx of any third party.
(f) Copyrights. The Subject Company has no Copyrights.
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(g) Trade Secrets. Except as set forth in Schedule 5.20, the
Subject Company has no Trade Secrets and no Trade Secrets are necessary
or currently used by the Subject Company to conduct its business as it
is presently conducted.
5.21 Certain Payments. To the Knowledge of the Shareholders,
since January 1, 1995, neither the Subject Company, nor any director, officer,
agent or employee of the Subject Company or any other Person affiliated with or
acting for or on behalf of any of the Subject Company, has directly or
indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Subject Company or any Affiliate of the
Subject Company or (iv) in violation of any Legal Requirement or (b) established
or maintained any fund or asset that has not been recorded in the books and
records of the Subject Company.
5.22 No Other Agreements to Sell Assets or Capital Stock of
the Subject Company. Neither the Subject Company, nor any officers, directors or
Affiliates of the Subject Company have any commitment or legal obligation,
absolute or contingent, to any other Person or firm, other than as contemplated
by the Transactions, to sell, assign, transfer or effect a sale of any of the
assets (other than inventory and products in the Ordinary Course of Business),
to sell or effect a sale of the capital stock or other equity interests of the
Subject Company, to effect any merger, consolidation, liquidation, dissolution
or other reorganization of the Subject Company, to enter into any agreement or
cause the entering into of an agreement with respect to any of the foregoing.
5.23 Relationships with Related Persons. Except as set forth
in Schedule 5.23, neither the Subject Company, nor any of its Related Persons is
or has owned (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in a Person that has (i) had business
dealings or a material financial interest in any transaction with the Subject
Company other than business dealings or transactions conducted in the Ordinary
Course of Business with the Subject Company at substantially prevailing market
prices and on substantially prevailing market terms or (ii) engaged in a
business competing with any of the Subject Companies with respect to any line of
the products or services of the Subject Company in any market presently served
by the Subject Company, except for less than one percent (1%) of the outstanding
capital stock of any such competing business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set forth in
Schedule 5.23, no Related Person of the Subject Company is a party to any
Contract with, or has any claim or right against, the Subject Company.
5.24 Customers and Suppliers. Schedule 5.24 contains a
complete and accurate list of the five (5) largest suppliers and ten (10)
largest customers of the Subject Company during the last fiscal year, showing
the approximate total purchases by the Subject Company from each such supplier
during such fiscal year and the total sales by the Subject Company to each such
customer during such fiscal year. Since the date of the Balance Sheet, there has
been no adverse change in the
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business relationship with any supplier or customer named in Schedule 5.24 and
no threat or indication that any such change is reasonably foreseeable.
5.25 Bank Accounts. Schedule 5.25 sets forth an accurate and
complete list showing the name and address of each bank in which the Subject
Company has any account, safe deposit box, borrowing arrangement or certificate
of deposit, the number of any such account or any such box and the names of all
Persons authorized to draw thereon or to have access thereto.
5.26 Brokers and Finders; Advisors. Neither the Shareholder
nor the Subject Company nor their respective agents have incurred any obligation
or Liability for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement. The Shareholder agrees to
indemnify the Purchaser and the Subject Company against and to hold CSR and the
Purchasers and the Subject Company harmless from, any claims for brokerage or
similar commission or other compensation which may be made against CSR, the
Purchasers or the Subject Company by any third party in connection with the
Transactions, which claim is based upon such third party having acted as broker,
finder, investment banker, advisor, consultant or appraiser or in any similar
capacity on behalf of the Subject Company, the Shareholders or any of their
respective Affiliates.
5.27 Disclosure. No representation or warranty of the
Shareholder in this Agreement and no statement in the Disclosure Schedules with
respect to the Subject Company omits to state a material fact necessary to make
the statements herein or therein, in light of the circumstances in which they
were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CSR AND THE PURCHASER
CSR and the Purchasers hereby represent and warrant to the
Sellers and the Shareholders as follows:
6.1 Organization. CSR is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and corporate authority to own, lease and operate its properties
and to carry on its business in the manner in which such business is now being
conducted, and to enter into and perform its obligations under this Agreement.
CSR Indiana is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana, with full corporate power and
corporate authority to own, lease and operate its properties and to carry on its
business in the manner in which such business is now being conducted, to own the
Stock being acquired in the Stock Acquisition pursuant to this Agreement and to
enter into and perform its obligations under this Agreement. CMS LLC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Indiana, with full company power and authority to
own the Assets being acquired in the Asset Acquisitions and to engage in the
Staffing Services Business and to enter into and perform its obligations under
this Agreement. CMS LLC is newly organized and has not engaged in or conducted
any business and will not engage in or conduct any business prior to the Closing
Date other than the execution and
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delivery of this Agreement and the consummation of the transactions contemplated
hereby. CSR is the owner of all of the issued and outstanding shares of the
capital stock of CSR Indiana. CSR Indiana is the owner of ninety-nine percent
(99%) of the membership interests in CMS LLC. The remaining one percent (1%)
membership interest in CMS LLC is owned by CSR Manager, Inc., a wholly owned
subsidiary of CSR. CSR Manager, Inc. is the Manager of CMS LLC.
6.2 Corporate Authority and Ability. All requisite corporate
authorizations for the execution, delivery and performance by CSR and each of
the Purchasers of this Agreement and the consummation of the Transactions have
been obtained. No further corporate action shall be necessary on the part of CSR
or the Purchasers to authorize the execution, delivery and performance of this
Agreement or the consummation of the Transactions.
6.3 Authorization: No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of CSR and the Purchasers, enforceable against them in
accordance with its terms. Upon the execution and delivery by CSR and
the Purchasers of the Transaction Documents to which they are a party,
such Transaction Documents will constitute the legal, valid and binding
obligations of CSR and the Purchasers, enforceable against them in
accordance with their respective terms, except where such
enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors'
rights generally and (ii) the general principles of equity, regardless
of whether asserted in a proceeding in equity or at law. CSR and each
of the Purchasers has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Transaction
Documents to which it is a party and to perform its obligations under
this Agreement and the Transaction Documents to which it is a party.
(b) Neither the execution and delivery of this Agreement by
CSR or the Purchasers nor the consummation or performance of any of the
Transactions by CSR or the Purchasers will give any Person the right to
prevent, delay, or otherwise interfere with any of the Transactions
pursuant to: (i) any provision of Organizational Documents of CSR or
the Purchasers; (ii) any resolution adopted by the board of directors
or the stockholders or members of CSR or the Purchasers; (iii) any
Legal Requirement or Order to which CSR or the Purchasers may be
subject; or (iv) any Contract to which CSR or the Purchasers is a party
or by which CSR or the Purchasers may be bound, except in the case of
each of clauses (iii) and (iv) above, for such contraventions,
conflicts, violations, Liabilities, reassessments, revaluations,
breaches or creations of Encumbrances which, individually and in the
aggregate, would not have a Material Adverse Effect with respect to the
Purchaser. Except as set forth in Schedule 6.3, neither CSR nor the
Purchasers is and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Transactions.
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6.4 Financial Statements. CSR has delivered to the
Shareholders (a) internally prepared balance sheets of CSR as of January 31,
1998 and February 28, 1998 and the related statements of income, for each of
such periods, and (b) an audited balance sheet of CSR as of December 31, 1997
(including the notes thereto) (the "CSR Balance Sheet), and the related combined
statements of income, changes in shareholders' equity and cash flow for the
twelve month period then ended, together with the report thereon of Ernst &
Young LLP, independent certified public accountants (including the notes
thereto) (the "CSR Financial Statements"). The CSR Financial Statements fairly
and accurately present the financial condition and the results of operations,
income, expenses, assets, liabilities, changes in stockholders' equity, and cash
flow of CSR as of the respective dates of, and for the periods referred to in
the Financial Statements, all in accordance with GAAP; the CSR Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved. No financial statements of any person other
than CSR are required by GAAP to be included in the Financial Statements.
6.5 No Material Adverse Change. Since the date of CSR's
Balance Sheet, there has not been any Material Adverse Change in the business,
operations, properties, assets or condition of CSR or the Purchasers, and to the
Knowledge of CSR and the Purchasers, no event has occurred or circumstances
exist that may result in such a Material Adverse Change.
6.6 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 6.6, there is no
pending Proceeding:
(i) that has been commenced by or against
CSR or the Purchasers or, to the Knowledge of CSR or
the Purchasers, that otherwise relates to or may
effect the business of or any of the assets owned or
used by, CSR or the Purchasers; or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Transaction.
To the Knowledge of CSR or the Purchasers, (1) no
such Proceeding has been threatened, and (2) no event has
occurred or circumstances exists that may give rise to or
serve as a basis for the commencement of any such Proceeding.
(b) Except as set forth in Schedule 6.6:
(i) there is no order to which CSR or the Purchasers
or any of the assets owned or used by CSR or the Purchasers is
subject;
(ii) neither CSR nor the Purchasers is subject to any
Order that relates to the business of, or any of the assets
owned or used by, CSR or the Purchasers; and
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(iii) to the Knowledge of CSR and the Purchasers, no
officer, director, agent or employee of CSR or the Purchasers
is subject to any Order that prohibits such officer, director,
agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of CSR or the
Purchasers.
(c) Except as set forth in Schedule 6.6:
(i) CSR and the Purchasers are, and at all times
since January 1, 1995 have been, in full compliance with all
of the terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstances exist
that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which CSR or the
Purchasers or any of the assets owned or used by CSR or the
Purchasers, is subject; and
(iii) neither CSR nor the Purchasers has received, at
any time since January 1, 1995, any written notice or, to the
Knowledge of CSR or the Purchasers, other notice or
communication from any Governmental Body or any other Person
regarding any actual, alleged, possible or potential violation
of, or failure to comply with, any term or requirement of any
Order to which CSR or the Purchasers or any of the assets
owned or used by CSR or the Purchasers, is or has been
subject.
6.7 Proceedings. There is no pending Proceeding that has been
commenced against CSR or the Purchasers and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Transactions. To the Knowledge of CSR and the Purchasers, no such
Proceeding has been Threatened.
6.8 Relationship with Related Persons. Except as set forth in
Schedule 6.8, neither CSR, the Purchasers or any of their Related Persons is or
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in a Person that has (i) had business dealings or a
material financial interest in any transaction with CSR or the Purchasers other
than business dealings or transactions conducted in the Ordinary Course of
Business with CSR or the Purchasers at substantially prevailing market prices
and on substantially prevailing market terms, or (ii) engaged in a business
competing with CSR or Purchasers with respect to any line of the products or
services of CSR or the Purchasers in any market presently served by CSR or the
Purchasers, except for less than one percent (1%) of the outstanding capital
stock of any such competing business that is publicly traded on any recognized
exchange or in the over-the-counter market.
6.9 Investment. The Stock Purchaser is purchasing the Stock
for its own account for investment, without a view to their distribution within
the meaning of Section 2(11) of the Securities Act.
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6.10 Brokers or Finders. Neither CSR nor the Purchasers or
their respective officers and agents have incurred any obligation or Liability,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement and will indemnify and hold the Sellers and
the Shareholders harmless from any such payment alleged to be due by or through
CSR or the Purchasers as a result of the action of CSR or the Purchasers or
their respective officers or agents.
6.11 Disclosure. No representation or warranty of CSR and/or
the Purchasers in this Agreement and no statement in Schedule 6.3 omits to state
a material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. The copies of the
charter documents and bylaws of CSR and the Purchasers delivered to the Sellers
or Shareholders prior to the Closing shall be true, correct and complete.
ARTICLE VII
ACTIONS OF THE SELLERS, THE SHAREHOLDERS, THE PURCHASERS
AND CSR BEFORE AND AFTER THE CLOSING DATE
Each of the Sellers, the Shareholders, the Purchasers and CSR
covenant and agree with each other as follows:
7.1 Access and Investigation.
(a) Between the date of this Agreement and the Closing, the
Sellers and Shareholders will (a) afford CSR and the Purchasers and
their Representatives and prospective lenders and their Representatives
(collectively, "Purchaser's Advisors") access to the Subject Companies'
personnel, properties, Contracts, books and records and other documents
and data, provided, however, no such access will be allowed to
personnel without the prior consent of the Shareholders, (b) furnish
CSR and the Purchasers and Purchasers' Advisors with copies of all such
Contracts, books and records and other existing documents and data as
they may reasonably request and (c) furnish CSR and the Purchasers and
Purchasers' Advisors with such additional financial, operating and
other data and information as they may reasonably request.
(b) Between the Date of this Agreement and the Closing, CSR
and the Purchasers will (a) afford the Sellers, the Shareholders and
their Representatives ("Sellers Advisor's") access to CSR's and
Purchasers' personnel, properties, documents and data which have a
bearing on the Notes and/or the Contingent Amounts, (b) furnish the
Sellers, the Shareholders and Seller's Advisors with copies of all
Contracts, books and records and other existing documents and data
relevant to the Notes and Contingent Amounts, and (c) furnish the
Seller, the Shareholders and Seller's Advisors with such additional
financial operating and other data and information as they may
reasonably request so long as it is relevant to the Notes and
Contingent Amounts.
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7.2 Operation of Business. Between the date of this Agreement
and the Closing, CSR and the Purchasers will and the Shareholders will cause
each of the Subject Companies to:
(a) conduct its business only in the Ordinary Course of
Business;
(b) use its Best Efforts to preserve intact its current
business organization, keep available the services of its current
officers, employees and agents and maintain the relations and good will
with its suppliers, customers, landlords, creditors, employees, agents
and others having business relationships with it;
(c) confer with each other and their Advisors concerning
operational matters of a material nature; and
(d) otherwise report periodically to each other concerning the
status of their respective businesses, operations and finances.
7.3 Negative Covenants.
(a) Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing, the Subject
Companies and the Shareholders will not, without the prior consent of
CSR, take any affirmative action or fail to take any reasonable action
within its control, as a result of which any of the changes or events
listed in Section 5.15 is likely to occur.
7.4 Required Approvals.
As promptly as practicable after the date of this Agreement,
each party will make all filings required by Legal Requirements to be made by it
in order to consummate the Transactions (including all filings under the HSR
Act, if any). Between the date of this Agreement and the Closing, the parties
will (a) cooperate with respect to all filings that they may elect to make or
may be required by Legal Requirements to make in connection with the
Transactions and (b) cooperate in obtaining all consents identified in Schedules
5.2 or 6.2.
7.5 Notification.
Between the date of this Agreement and the Closing, each party to this Agreement
will promptly notify each other party hereto in writing if such party becomes
aware of any fact or condition that causes or constitutes a Breach (which has or
will have a Material Adverse Effect) of any of its representations and
warranties as of the date of this Agreement, or if such party becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach (which has or will have a Material Adverse Effect) of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition; provided,
however,
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that such disclosure shall not be deemed to cure any Breach of a representation
or warranty. Should any such fact or condition require any change in the
Disclosure Schedules if such Schedules were dated the date of the occurrence or
discovery of any such fact or condition, the discovering party will promptly
deliver to each other party a supplement to the Disclosure Schedules specifying
such change. During the same period, each party to this Agreement will promptly
notify each other party hereto of the occurrence of any Breach (which has or
will have a Material Adverse Effect) of any covenant or agreement by such party
in this Article VII or of the occurrence of any event that may make the
satisfaction of the conditions in Articles VIII and IX impossible or unlikely;
provided, however, that such disclosure shall not be deemed to cure any Breach
of a covenant or agreement or to satisfy a condition. Each party to this
Agreement shall promptly notify each other party hereto of any default, the
threat or commencement of any Proceeding or any development that occurs before
the Closing that could in any way materially affect such party, the business or
assets of such party or the ability of such party to consummate the
Transactions.
7.6 No Negotiation.
Until thirty (30) days from the date hereof or unless this
Agreement is earlier terminated pursuant to Article XI, neither the Subject
Companies nor the Shareholders nor any of their respective Representatives will
directly or indirectly solicit, initiate or encourage any inquiries or proposals
from, discuss or negotiate with, provide any non-public information to or
consider the merits of any unsolicited inquiries or proposals from, any Person
(other than CSR and the Purchasers) relating to any transaction involving the
sale of all or a substantial portion of its business or assets of any of the
Subject Companies or any of their capital stock or other equity interests or any
merger, consolidation, business combination or similar transaction involving any
of the Subject Companies (each such transaction referred to herein as a
"Proposed Acquisition Transaction"). The Subject Companies and the Shareholders
will immediately notify CSR if any discussions or negotiations are sought to be
initiated, any inquiry or proposal is made or any information is requested with
respect to any Proposed Acquisition Transaction and notify CSR of the terms of
any proposal which they or their respective Representatives may receive in
respect of any such Proposed Acquisition Transaction, including without
limitation the identity of the prospective purchaser or soliciting party. The
Subject Companies and the Shareholders shall also provide CSR with a copy of any
offer.
7.7. Assumption of Asset Sellers' Liabilities. Subject to the
Shareholders' indemnification obligations pursuant to Article X, from and after
the Closing Date the Asset Purchaser shall assume, pay, perform and discharge
all Assumed Liabilities of each of the Asset Sellers of every kind, character
and description, whether accrued, absolute, contingent or otherwise, arising on
or before the Closing Date.
7.8 Conduct of Subject Companies' Business. From and after the
Closing Date until December 31, 2000, unless all of the Shareholders shall
otherwise consent in writing, CSR and the Purchasers will cause all of the
business of the Subject Companies to be conducted by CMS LLC, will maintain the
separate corporate existence of CMS LLC, and will not sell, transfer or
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dispose of any of the assets or business of the Subject Companies or CMS LLC
except in the Ordinary Course of Business or transfer any of the employees of
CMS LLC. On the Closing Date CSR Indiana will assign and transfer all of the
business assets and liabilities of CMS/TemPro Resources of Indianapolis, Inc. to
CMS LLC.
7.9 Indemnity Obligations. CSR and the Purchasers covenant and
agree that their indemnity obligations to the Shareholders shall include those
liabilities described in the letter agreement among CSR, the Purchasers and the
Shareholders dated the Closing Date.
7.10 CMS 401(k) Plans and Related Matters. Prior to Closing,
appropriate documentation will be adopted by the Subject Companies for
termination of the Nashville 401(k) Plan and termination of the CMS 401(k) Plan.
In addition to 100% vesting of those employees covered by each of such two
Qualified Plans, such documentation will provide (subject to compliance with IRS
requirements and applicable plan provisions) that employees who terminate
employment from the Subject Companies, shall be entitled to a distribution of
their benefits from such Plans either through a lump sum distribution, rollover
to an XXX or other Qualified Plan as may be permitted by such other Qualified
Plan. Subject Companies shall remain fully responsible and liable for any and
all liabilities/benefits ERISA compliance, or claims relating to the CMS 401(k)
Plan or Nashville 401(k) Plan and the Shareholders shall fully indemnify CSR and
Purchasers from any and all Liabilities associated with the CMS 401(k) Plan or
the Nashville 401(k) Plan.
7.11 Credit for Service with Subject Companies. CSR and
Purchasers hereby agree that to the extent that any employees of the Subject
Companies become employees of CSR, Purchasers or any related entity, their
service with the Subject Companies will be credited for vesting and eligibility
purposes if they are covered by any Qualified Plan of CSR, Purchasers or any
related entity after closing. It is CSR's and Purchasers' intention that all
current employees of Subject Companies will be offered employment by CMS LLC as
of the Closing Date.
7.12 Post Closing Cooperation of CSR and the Purchasers. CSR
and the Purchasers recognize that it is in the mutual best interests of the
Purchasers and the Sellers to achieve the Adjusted EBITDA levels that would
allow the Sellers to maximize the Contingent Amounts. CSR and the Purchasers
therefore agree to cooperate with an assist the Sellers (subject to the exercise
of prudent business judgment by CSR and the Purchasers) in Sellers' attempt to
maximize the Contingent Amounts.
7.13 The Sellers' and the Shareholders' Compliance with
Subordination Provisions of the Notes. Each of the Sellers and the Shareholders
covenant and agree for the benefit of the Senior Lenders (as defined in the
Notes) to comply with and be bound by each of the Subordination Provisions (as
defined in the Notes) set forth in the Notes.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATION TO CLOSE
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The Purchasers' obligation to pay the Consideration and to
take the other actions required to be taken by the Purchasers at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Purchasers, in whole or
in part):
8.1 Accuracy of Representations. All of the representations
and warranties of the Shareholders in this Agreement (considered collectively)
and each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing.
8.2 Shareholders' and Subject Companies' Performance.
(a) All of the covenants and obligations that the Shareholders
and the Subject Companies are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively) and each of these covenants and obligations (considered
individually), must have been performed and complied with in all
material respects.
(b) The Shareholders and the Subject Companies must have
delivered each of the documents required to be delivered by the
Shareholders and the Subject Companies pursuant to Section 4.2.
8.3 Consents. Each of the Consents identified in Schedule 5.2
must have been obtained and must be in full force and effect.
8.4 Additional Documents.
The Shareholders must have delivered to the Purchaser such
documents as the Purchaser may reasonably request for the purpose of (i)
evidencing the accuracy of any representation or warranty of the Shareholders,
(ii) evidencing the performance by the Subject Companies and the Shareholders,
or the compliance by the Subject Companies and the Shareholders with, any
covenant or obligation required to be performed or complied with by the Subject
Companies and the Shareholders, (iii) evidencing the satisfaction of any
condition referred to in this Article VIII or (iv) otherwise facilitating the
consummation of any of the Transactions.
8.5 No Claim Regarding Stock Ownership or Sale Proceeds. There
must not have been made or Threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Subject Companies, or (b) is
entitled to all or any portion of the Consideration payable for the Stock or the
Assets.
ARTICLE IX
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CONDITIONS PRECEDENT TO SELLERS'
OBLIGATION TO CLOSE
The Sellers' obligation to sell the Stock and the Assets in
exchange for the Consideration and to take the other actions required to be
taken by the Sellers at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by the Sellers, in whole or in part):
9.1 Accuracy of Representations. All of the representations
and warranties of CSR and the Purchasers in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing.
9.2 The Purchasers' Performance.
(a) All of the covenants and obligations that CSR and the
Purchasers are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and
each of these covenants and obligations (considered individually), must
have been duly performed and complied with in all material respects.
(b) Each document required to be delivered by CSR and the
Purchasers pursuant to Section 4.2 must have been delivered.
9.3 Consents. Each of the Consents identified in Schedule 6.2
must have been obtained and must be in full force and effect.
9.4 Additional Documents.
CSR and the Purchasers must have delivered to the Sellers such
documents as the Sellers may reasonably request for the purpose of (i)
evidencing the accuracy of any of CSR's or Purchasers' representations and
warranties, (ii) evidencing the performance by CSR and the Purchasers of, or the
compliance by CSR or the Purchasers with, any covenant or obligation required to
be performed or complied with by CSR or the Purchasers, (iii) evidencing the
satisfaction of any condition referred to in this Article IX or (iv) otherwise
facilitating the consummation or performance of any of the Transactions.
ARTICLE X
INDEMNIFICATION; REMEDIES
10.1 Survival of Representations. Etc. The representations and
warranties of the Shareholders and of CSR and the Purchasers contained herein
and the indemnity obligations of the
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Shareholders set forth in Section 10.2(a)(iii) shall survive until two (2) years
after the Closing; provided, however, that the representations and warranties
contained in Section 5.10, Section 5.12 and Section 5.18 shall continue to
survive until sixty (60) days after the expiration of the applicable statute of
limitations (giving effect to any waiver or extension thereof). All of said
representations and warranties shall in no respect be limited or diminished by
any past or future investigation on the part of CSR or Purchasers; provided,
however, that to the extent that as a result of any such investigation prior to
the Closing, CSR or the Purchasers have actual knowledge that any representation
or warranty of the Shareholders is untrue or that any covenant or agreement made
by the Shareholders have not been performed, then the Shareholders shall not
have any liability with respect to such untrue representation or warranty or
such unperformed covenant or agreement.
10.2 Indemnifications.
(a) By the Shareholders. Each Shareholder shall indemnify,
save and hold harmless CSR and the Purchasers and their Affiliates and
Subsidiaries and each of their respective Representatives
(individually, a Shareholder Indemnified Party, and collectively, the
"Shareholder Indemnified Parties"), from and against any and all costs,
losses, Liabilities, damages, lawsuits and demands (whether or not
arising out of third-party claims), including without limitation losses
in connection with workers compensation claims, interest, penalties,
costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up, remedial correction or
responsive action), damages to the Environment, attorneys' fees and all
amounts paid in investigation, defense or settlement of any of the
foregoing (herein, "Damages"), incurred in connection with, arising out
of, resulting from or incident to (i) any Breach of any representation
or warranty (including, but not limited to, the representations and
warranties contained in Section 5.10) made by the Shareholder in this
Agreement; (ii) any Breach of any covenant or agreement made by the
Shareholder in this Agreement or any certificate delivered by the
Shareholder at the Closing; or (iii) the negligent performance of any
services to clients or customers by the Subject Company of which the
Shareholder is a shareholder or member prior to the Closing.
The term "Damages" as used in this Section 10.2 is not limited
to matters asserted by third parties against any indemnified Party, but includes
Damages incurred or sustained by an indemnified Party in the absence of third
party claims. Payments by any indemnified Party of amounts for which such
indemnified Party is indemnified hereunder shall not be a condition precedent to
recovery. The rights and remedies provided in this Article X shall be exclusive
as to any Damages incurred by a party under this Agreement; provided, however,
that nothing herein shall preclude a party from exercising its rights under this
Agreement and applicable law to such equitable remedies, including without
limitation specific performance and injunctions.
(b) By Purchasers and CSR. Purchasers shall indemnify, save
and hold harmless the Shareholders, the Sellers and their respective
Affiliates and Representatives (the "Purchaser Indemnified Parties")
from and against any and all Damages incurred in connection with,
arising out of, resulting from or incident to (i) any Breach of any
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representation or warranty made by CSR and the Purchasers in this
Agreement; or (ii) any Breach of any covenant or agreement made by CSR
and/or the Purchasers in this Agreement.
(c) Cooperation. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and its Representatives
(including without limitation their attorneys) in the investigation,
trial and defense of such lawsuit or action and any appeal arising
therefrom; provided, however, that the indemnified party may, at its
own cost, participate in negotiations, arbitrations and the
investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom. The parties shall cooperate with each other
in any notifications to insurers.
(d) Defense of Claims. If a claim for Damages (a "Claim") is
to be made by an indemnified party hereunder against the indemnifying
party, the indemnified party shall give written notice (a "Claim
Notice") to the indemnifying party as soon as practicable after the
indemnified party becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under
this Section 10.2. If any lawsuit or enforcement action is filed
against an indemnified party, written notice thereof shall be given to
the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or
summons). The failure of any indemnified party to give timely notice
hereunder shall not affect rights to indemnification hereunder, except
to the extent that the indemnifying party has been damaged by such
failure. After such notice, if the indemnifying party shall acknowledge
in writing to the indemnified party that the indemnifying party shall
be obligated under the terms of their indemnity hereunder in connection
with such lawsuit or action, then the indemnifying party shall be
entitled, if it so elects at the indemnifying party's own cost, risk
and expense, (i) to take control of the defense and investigation of
such lawsuit or action, (ii) to employ and engage attorneys of its own
choice, but, in any event, reasonably acceptable to the indemnified
party, to handle and defend the same unless the named parties to such
action or proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and the indemnified party
has been advised in writing by counsel that there may be one or more
legal defenses available to such indemnified party that are different
from or additional to those available to the indemnifying party, in
which event the indemnified party shall be entitled, at the
indemnifying party's cost, risk and expense, to separate counsel of its
own choosing and (iii) to compromise or settle such lawsuit or action,
which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably
withheld.
If the indemnifying party fails to assume the defense of such
lawsuit or action within fifteen (15) calendar days after receipt of the Claim
Notice, the indemnified party against which such lawsuit or action has been
asserted will (upon delivering notice to such effect to the indemnifying party)
have the right to undertake, at the indemnifying party's cost and expense, the
defense, compromise or settlement of such lawsuit or action on behalf of and for
the account and risk of the indemnifying party; provided, however, that such
lawsuit or action shall not be compromised or
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settled without the written consent of the indemnifying party which consent
shall not be unreasonably withheld. If the indemnified party settles or
compromises such lawsuit or action without the prior written consent of the
indemnifying party, the indemnifying party will bear no liability hereunder for
or with respect to such lawsuit or action. In the event the indemnified party
assumes the defense of the lawsuit or action, the indemnified party will keep
the indemnifying party reasonably informed of the progress of any such defense,
compromise or settlement. The indemnifying party shall be liable for any
settlement of any action effected pursuant to and in accordance with this
Section 10.2 and for any final judgment (subject to any right of appeal) and the
indemnifying party agrees to indemnify and hold harmless an indemnified party
from and against any Damages by reason of such settlement or Judgment.
(e) Representatives. No individual Representative of any party
shall be personally liable for any Damages under the provisions
contained in this Section 10.2 (except to the extent any such Person is
party hereto in his or her individual capacity). Nothing herein shall
relieve either party of any Liability to make any payment expressly
required to be made by such party pursuant to this Agreement.
(f) Limitation on Indemnity/Commitments.
(i) The indemnification obligation of the
Shareholders and of the Purchasers and CSR with respect to any
Breach of any representation or warranty pursuant to Section
10.2(a)(i) or (b)(i) and of the Shareholders with respect to
Damages arising under Section 10.2(a)(iii) shall be limited to
Claims for Damages made prior to the last date of survival
thereof referred to in Section 10.1. The indemnification
obligation of the Shareholders and the Purchasers and CSR with
respect to any Breach of any covenant or agreement pursuant to
Section 10.2(a)(ii) or (b)(ii) shall survive indefinitely
subject to the terms of this Agreement.
(ii) The Shareholder Indemnified Parties may not recover
Damages from the Shareholders pursuant to Section 10.2(a)(i)
or 10.3(a)(iii) until the aggregate amount of Damages relating
to such Claims for which the Shareholder Indemnified Parties,
in the aggregate, are entitled to indemnification under
Section 10.2(a)(i) or 10.3(a)(iii) exceeds Two Hundred
Thousand Dollars ($200,000) (the "Threshold"); provided,
however, in the event that the aggregate amount of Damages for
which the Shareholder Indemnified Parties are seeking
indemnification under Section 10.2(a)(i) or 10.3(a)(iii)
exceeds such amount, the Shareholder Indemnified Parties may
recover the amount of such Damages in excess of One Hundred
Thousand Dollars ($100,000); provided, further, however, that
for Claims Notices given prior to the first anniversary of the
Closing Date the maximum aggregate amount of such Damages for
which the Shareholders shall be liable pursuant to Section
10.2(a)(i) and 10.3(a)(iii) shall not exceed Five Million
Dollars $5,000,000) and, that, for Claims Notices given on or
after the first anniversary of the Closing Date, the maximum
aggregate amount of such Damages for which the Shareholders
shall be liable
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pursuant to Section 10.2(a)(i) and 10.3 (a)(iii) shall not
exceed Four Million Dollars ($4,000,000). The Shareholder
Indemnified Parties shall have the right to make a Claim
hereunder prior to the time at which the Threshold that is
applicable to such Claim has been surpassed for the purpose of
asserting such Claim within the relevant survival period of
the applicable indemnification obligation and any such Claim
made within such period shall, to the extent such Threshold
ultimately is met, survive until its final resolution.
(iii) The Threshold and maximum damages limitations
in Section 10.2(e)(ii) shall not apply to Damages incurred in
connection with, arising out of or resulting from any Breach
of any representation or warranty made by the Shareholders in
Section 5.3.
(iv) The Purchaser Indemnified Parties may not
recover Damages from CSR or the Purchasers pursuant to Section
10.2(b)(i) until the aggregate amount of Damages for which the
Purchaser Indemnified Parties, in the aggregate, are entitled
to indemnification exceeds the Threshold; provided, however,
in the event that the aggregate amount of Damages for which
the Purchaser Indemnified Parties are seeking indemnification
under Section 10.2(b)(i) exceeds such amount, the Purchaser
Indemnified Parties may recover the amount of such Damages in
excess of One Hundred Thousand Dollars ($100,000); provided,
further, however, that for claims notices given prior to the
first anniversary of the Closing Date the maximum aggregate
amount of Damages for which CSR and the Purchasers shall be
liable pursuant to Section 10.2(b)(i) shall not exceed Five
Million Dollars ($5,000,000) and, that, for Claims Notices
given on or after the first anniversary of the Closing Date
the maximum aggregate of such Damages for which CSR and the
Purchasers shall be liable pursuant to Section 10.2(b)(i)
shall not exceed Four Million Dollars ($4,000,000). The
Purchaser Indemnified Parties shall have the right to make a
Claim hereunder prior to the time at which the Threshold that
is applicable to such Claim has been surpassed for the purpose
of asserting such Claim within the relevant survival period of
the applicable indemnification obligation and any such Claim
made within such period shall, to the extent such Threshold
ultimately is met, survive until its final resolution.
(v) Neither (a) the termination of the
representations or warranties contained herein, nor (b) the
expiration of the indemnification obligations described above,
will affect the rights of an indemnified party in respect of
any Claim made by such indemnified party received by the
indemnifying party prior to the expiration of the applicable
survival period provided herein.
10.3 Tax.
(a) Tax Indemnification.
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(i) With Respect to each of the Asset Sellers. The
Shareholders of each Asset Seller shall be responsible for and
pay and shall jointly and severally indemnify and hold
harmless CSR and the Purchasers from and against all Taxes
imposed on the Asset Seller or for which the Asset Seller is
liable, with respect to all periods ending on or after the
Closing Date.
(ii) With respect to CMS/TemPro Resources of
Indianapolis, Inc. ("CMS/TemPro INDY"). Except for Taxes that
are reserved for on the Closing Balance Sheet, the Stock
Sellers shall be responsible for and pay and shall jointly and
severally indemnify and hold harmless CSR and the Purchasers
and CSM/TemPro INDY (and each of their respective affiliates,
successors and assigns) from and against (i) all Taxes imposed
on CMS/TemPro INDY, or for which CMS/TemPro INDY is liable,
with respect to any period beginning before the Closing
Balance Sheet Date and ending on or after the Closing Balance
Sheet Date but only with respect to the portion of such period
up to and including the Closing Balance Sheet Date (such
portion, a "Pre-Closing Partial Period"), (ii) any costs or
expenses (other than the time of employees of CMS/TemPro INDY
and advisory fees and facilitating fees associated with a
federal income tax audit of a Tax Return for a Pre-Closing
Partial Period) with respect to the Taxes indemnified under
this Section 10.3(a)(ii) and (iii) advisory fees and
facilitating fees with respect to a federal income tax audit
for a Pre-Closing Partial Period. For purposes of this Section
10.3(a)(ii), Taxes shall include the amount of Taxes which
would have been paid but for the application of any credit or
net operating or capital loss deduction attributable to any
period (or portion thereof) beginning on the Closing Balance
Sheet Date and ending after the Closing Balance Sheet Date,
but shall not include amounts which would have been paid but
for the application of any credit or net operating or capital
loss deductions attributable to any period (or portion
thereof) ending on or before the Closing Date.
(b) Refunds. The Purchasers agree to assign and promptly remit
(and to cause CMS/TemPro INDY to assign and promptly remit) all refunds
(including interest thereon) net of any Tax effect to the Purchasers or
CMS/TemPro INDY received by the Purchasers or CMS/TemPro INDY of any
Taxes for which the Stock Sellers have indemnified the Purchasers or
CMS/TemPro INDY hereunder; provided, however, that the Purchasers shall
be entitled to the portion of any refund resulting from a carryback
(including carrybacks to periods ending on or prior to the Closing
Balance Sheet Date) of a net operating loss, net capital loss, Tax
credit or similar item sustained or arising in any period ending after
the Closing Balance Sheet Date or in any Post-Closing Partial Period.
(c) Asset Sellers' Tax Returns. The Shareholders of each Asset
Seller shall prepare or cause to be prepared, and timely file, or cause
to be filed, all Tax Returns of the Asset Seller for all taxable
periods of the Asset Seller ending on or after the Closing Date and
shall pay or cause to be paid all taxes due with respect to such Tax
Returns.
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(d) Other Matters. The Purchasers shall promptly notify the
Shareholders in writing upon receipt by the Purchasers or any Affiliate
of the Purchasers of notice of (i) any pending or threatened federal,
state, local or foreign Tax audits or assessments of any Subject
Company and (ii) any pending or threatened federal, state, local or
foreign Tax audits or assessments of the Purchasers or any Affiliate of
the Purchasers which may affect the Tax Liabilities of any Subject
Company with respect to any period ending on or before the Closing
Balance Sheet Date, or any Pre-Closing Partial Period. The Shareholders
shall promptly notify the Purchaser in writing upon receipt by the
Shareholders or any affiliate of the Shareholders of notice of any
pending or threatened federal, state, local or foreign Tax audits or
assessments relating to the income, properties or operations of any
Subject Company.
CSR, the Purchasers and the Stock Sellers shall cooperate with
each other in the conduct of any audit or other proceedings involving CSM/TemPro
INDY for periods beginning before the Closing Date and each may participate at
its own expense, provided that the Stock Sellers shall have the right to control
the conduct of any such audit or proceeding for which the Stock Sellers (i)
agree that any resulting Tax is covered by the indemnity provided in Section
10.2(a)(i) or 10.3(a)(ii) of this Agreement and (ii) demonstrate to the
Purchasers their ability to make such indemnity payment. Notwithstanding the
foregoing, neither CSR, the Purchasers nor the Stock Sellers may settle or
otherwise resolve any such claim, suit or proceeding without the consent of the
other party, such consent not to be unreasonably withheld.
After the Closing Date, the Purchasers and the Shareholders
shall make available to the other, as reasonably requested, all information,
records or documents relating to Tax liabilities or potential Tax liabilities of
any Subject Company and shall preserve all such information, records and
documents until the expiration of any applicable statute of limitations,
including extensions thereof, or such other period as required by law. The
Purchasers and the Shareholders shall also make available to each other as
reasonably requested by the Purchasers or the Shareholders, as the case may be,
personnel responsible for preparing or maintaining information, records and
documents, in connection with Tax matters. In case at any time after the Closing
Date any further action is necessary to carry out the purposes of this
Agreement, the parties hereto shall take all such necessary action.
All sales, value added, use, state or local transfer and gains
Taxes, registration, stamp and similar Taxes imposed in connection with the
Transactions shall be borne by the Purchasers.
Any payments made to the Shareholders, any Subject Company or
CSR and the Purchasers pursuant to this Article X or pursuant to the terms of
the letter agreement referred to in Section 7.9 hereof shall constitute an
adjustment of the Consideration for Tax purposes and shall be treated as such by
the Purchasers and the Sellers on their Tax Returns to the extent permitted by
law.
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All Tax sharing or similar agreements, if any, to which any
Subject Company is a party will be canceled at or prior to the Closing and
neither the Purchasers nor any Subject Company shall have any obligation under
any such agreement.
The indemnity obligations and other responsibilities of each
Shareholder in this Section 10.3 shall apply only with respect to a Subject
Company of which the Shareholder is a shareholder or member.
ARTICLE XI
TERMINATION
11.1 Termination Events.
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by the Sellers, on the one hand, or by CSR and the
Purchasers on the other hand, if a Breach of any provision of this
Agreement having a Material Adverse Effect or representing a Material
Adverse Change has been committed by the other party or its Affiliates
and such Breach has not been expressly waived in writing;
(b) (i) by the Purchasers and CSR if any of the conditions in
Article VIII has not been satisfied as of the Closing or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of CSR or the Purchasers to comply with their
respective obligations under this Agreement) and the Purchasers have
not expressly waived such condition in writing on or before the
Closing; or (ii) by the Sellers, if any of the conditions in Article IX
has not been satisfied as of the Closing or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
the Sellers or the Subject Companies to comply with its obligations
under this Agreement) and the Sellers have not expressly waived such
condition in writing on or before the Closing;
(c) by mutual consent of CSR, the Purchasers and the Sellers;
or
(d) by either CSR and the Purchasers or the Sellers if the
Closing has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before May 1, 1998 (the
"Closing Date"), or such later date as the Parties may agree upon.
11.2 Effect of Termination.
Each party's right of termination under Section 11.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 11.1, all further
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obligations of the Parties under this Agreement will terminate, except that the
obligations in Sections 12.6, 12.9 and 12.10 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of this
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE XII
MISCELLANEOUS
12.1 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party without the prior written
consent of the other party; provided, however, that any Asset Seller may assign
its rights and obligations under this Agreement including the rights and
obligations with respect to the Notes and the Contingent Amounts to its
Shareholders in connection with any liquidation of the Asset Sellers. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
12.2 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to CSR or the Purchasers, addressed to CSR at:
Xxxxxxx X. Xxxxxxxxx
Corporate Staffing Resources, Inc.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx Xxxxxxxxx & Xxxxxx LLP
0000 Xxx Xxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
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Telecopy: (000) 000-0000
If to CMS Management Services Co. or TemPro Resources, Inc.,
addressed to each of its Shareholders, Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxx, Xxxxxx X. Xxxxxxx, Xx. and Xxxxxx X. Xxxxxx,
at their respective notice addresses provided herein.
If to CSM/TemPro Resources of Indianapolis, Inc. or CMS
Services, Inc., addressed to each of its Shareholders, Xxxxxxx
X. Xxxxxxxx, Xxxxxx X. Xxxx, Xxxxxx X. Xxxxxxx, Xx. and Xxxxxx
X. Xxxxxx, at their respective notice addresses provided
herein.
If to CSM/TemPro Resources of Nashville, LLC, to each of its
members, C. Xxxx Xxxxxx, Xxxxxx X. Xxxx, Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxxxx, Xx. and Xxxxxx X. Xxxxxx, at their
respective notice addresses provided herein.
If to Xxxxxxx X. Xxxxx, addressed to him at:
00000 Xxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
If to Xxxxxx X. Xxxx, addressed to him at:
00000 Xxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
If to Xxxxxx X. Xxxxxxx, Xx., addressed to him at:
00000 Xxxx Xxxxx Xx.
Xxxxxxx, XX 00000
If to Xxxxxx X. Xxxxxx, addressed to him at
00000 Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to Xxxxxxx X. Xxxxxxxx, addressed to him at:
0000 Xxxxxxxx Xx.
Xxxxxxxxxxxx, XX 00000
If to C. Xxxx Xxxxxx, addressed to him at:
0000 Xxxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
With a copy in the case of each notice to a Subject Company or
a Shareholder to.:
Xxxxxx X. Xxxxx, Xx.
Xxxxxx & Xxxxxxxxx
600 1st Source Bank Center
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000 Xxxxx Xxxxxxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.3 Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Indiana (without giving
effect to its choice of law principles), except with respect to matters of law
concerning the internal corporate affairs of any corporate entity which is a
party to or the subject of this Agreement, and as to those matters the law of
the jurisdiction under which the respective entity derives its powers shall
govern.
12.4 Entire Agreement: Amendments and Waivers. This Agreement,
together with all exhibits and schedules hereto (including the Disclosure
Schedule) and the other agreements referred to herein, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. This Agreement may not be amended
except in an instrument in writing signed on behalf of each of the parties
hereto. No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
12.5 Multiple Counterparts. 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.
12.6 Expenses. Each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the Transactions (it being understood that in
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by the other party).
12.7 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
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12.8 Titles. The titles, captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
12.9 Publicity. Except as required by law, none of CSR, the
Purchasers, the Subject Companies nor the Shareholders shall issue any press
release or make any public statement regarding this Agreement and the
Transactions, without prior written approval of the other parties; provided,
however, that in the case of announcements, statements, acknowledgments or
revelations which either party is required by law to make, issue or release, the
making, issuing or releasing of any such announcement, statement, acknowledgment
or revelation by the party so required to do so by law shall not constitute a
breach of this Agreement if such party shall have given, to the extent
reasonably possible, not less than two (2) calendar days prior notice to the
other party, and shall have attempted, to the extent reasonably possible, to
clear such announcement, statement, acknowledgment or revelation with the other
party. Each party hereto agrees that it will not unreasonably withhold any such
consent or clearance.
12.10 Confidential Information.
(a) No Disclosure. The parties acknowledge that the
Transactions described herein are of a confidential nature and shall
not be disclosed except to consultants, advisors and Affiliates or as
required by law, without the prior written consent of the parties.
(b) Preservation of Confidentiality. In connection with the
negotiation of this Agreement, the preparation for the consummation of
the Transactions, and the performance of obligations hereunder, CSR and
the Purchasers acknowledges that they will have access to confidential
and proprietary information relating to the Subject Companies and the
Sellers acknowledge that they will have access to confidential
information relating to CSR and its Affiliates, in each case, including
technical or marketing information, ideas, methods, developments,
inventions, improvements, business plans, trade secrets, scientific or
statistical data, diagrams, drawings, specifications or other
proprietary information relating thereto, together with all analyses,
compilations, studies or other documents, records or data prepared by
the Sellers and the Subject Companies or CSR, as the case may be, or
their respective Representatives or Affiliates, which contain or
otherwise reflect or are generated from such information ("Confidential
Information"). The term "Confidential Information" does not include
information received by one party in connection with the Transactions
which (i) is or becomes generally available to the public other than as
a result of a disclosure by such party or its Representatives, (ii) was
within such party's possession prior to its being furnished to such
party by or on behalf of the other party in connection with the
Transactions, provided that the source of such information was not
known by such party to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to
the other party or any other Person with respect to such information or
(iii) becomes available to such party on a non-confidential basis from
a source other than the other party or any of their respective
Representatives, provided that such source is not bound
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by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the other party or any other
Person with respect to such information.
(c) Each party shall treat all Confidential Information of the
other party as confidential, preserve the confidentiality thereof and
not disclose any such Confidential Information, except to its
Representatives and Affiliates who need to know such Confidential
Information in connection with the Transactions. Each party shall use
all reasonable efforts to cause its Representatives to treat all such
Confidential Information of the other party as confidential, preserve
the confidentiality thereof and not disclose any such Confidential
Information. Each party shall be responsible for any breach of this
Agreement by any of its Representatives. If, however, Confidential
Information is disclosed, the party responsible for such disclosure
shall immediately notify the other party in writing and take all
reasonable steps required to prevent further disclosure.
(d) Until the Closing or the termination of this Agreement,
all Confidential Information shall remain the property of the party who
originally possessed such information. In the event of the termination
of this Agreement for any reason whatsoever, each party shall, and
shall cause its Representatives to, return to the other party all
Confidential Information (including all copies, summaries and extracts
thereof) furnished to such party by the other party in connection with
the Transactions.
(e) If one party or any of its Representatives or Affiliates
is requested or required (by oral questions, interrogatories, requests
for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) or is required by
operation of law to disclose any Confidential Information, such party
shall provide the other party with prompt written notice of such
request or requirement, which notice shall, if practicable, be at least
forty-eight (48) hours prior to making such disclosure, so that the
other party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. If, in
the absence of a protective order or other remedy or the receipt of
such a waiver, such party or any of its Representatives are
nonetheless, in the opinion of counsel, legally compelled to disclose
Confidential Information, then such party may disclose that portion of
the Confidential Information which such counsel advises is legally
required to be disclosed, provided that such party uses its reasonable
efforts to preserve the confidentiality of the Confidential
Information, whereupon such disclosure shall not constitute a breach of
this Agreement.
(f) In the event of the termination of this Agreement for any
reason whatsoever, each of CSR and the Purchasers jointly and severally
covenant and agree for the benefit of each of the Subject Companies and
the Shareholders that during the 12 month period following the date of
this Agreement, neither CSR, the Purchasers, nor any of their
Affiliates will solicit, entice, persuade or induce, directly or
indirectly, any internal staff (non-billable) employee of any of the
Subject Companies to terminate their employment by or with a Subject
Company or to refrain from extending or renewing the same (upon the
same or new
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terms) or to refrain from rendering services to or for a Subject
Company or to become employed by or enter into contractual relations
with any persons other than a Subject Company or to enter into a
relationship with a competitor of any Subject Company, approach any
such internal staff employee for any of the foregoing purposes, or
authorize or knowingly approve or assist in the taking of any such
actions by any person.
12.11 Burden and Benefit. This Agreement shall be binding upon
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. There are no third party beneficiaries of this
Agreement; provided, however, that any Person that is not a party to this
Agreement but, by the terms of Section 10.2, is entitled to indemnification,
shall be considered a third party beneficiary of this Agreement, with full
rights of enforcement as though such Person was a signatory to this Agreement.
12.12 Service of Process; Consent to Jurisdiction.
(a) Services of Process. Each of the parties hereto
irrevocably consents to the service of any process, pleading, notices
or other papers by the mailing of copies thereof by registered,
certified or first class mail, postage prepaid, to such party at such
party's address set forth herein, or by any other method provided or
permitted under Indiana law.
(b) Consent and Jurisdiction. Each party hereto irrevocably
and unconditionally (i) agrees that any suit, action or other legal
proceeding arising out of this Agreement may be brought in the United
States District Court for the Northern District of Indiana or, if such
court does not have jurisdiction or will not accept jurisdiction, in
any court of general jurisdiction in the County of St. Xxxxxx, Indiana;
(ii) consents to the jurisdiction of any such court in any such suit,
action or proceeding; and (iii) waives any objection which such party
may have to the laying of venue of any such suit, action or proceeding
in any such court.
12.13. Attorneys' Fees. If any party to this Agreement brings
an action to enforce its rights under this Agreement, the prevailing party shall
be entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees, incurred in connection with such action, including
any appeal of such action.
12.14 Limitation of Liability. Notwithstanding anything to the
contrary in this Agreement, in no event shall any party hereto be liable for any
incidental or consequential damages occasioned by any failure to perform or the
breach of any obligation under this Agreement.
12.15 Additional Survival. In addition to the survival of
representations and warranties and other provisions referenced in Section 10.1
of this Agreement, which shall survive pursuant to the terms of such Section,
the obligations of the parties contained in Sections 2.1, 2.2, 2.3, 2.6, 4.2,
4.3, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 12.6, 12.9 and 12.10 and in Article
III and Article X of this Agreement shall survive the Closing Date indefinitely.
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IN WITNESS WHEREOF, the parties hereto have executed, or have
caused this Agreement to be duly executed on their respective behalf by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
Corporate Staffing Resources of Indiana, Inc. Corporate Staffing Resources, Inc.
Inc.
/s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------- ---------------------------------------------
By: Xxxxxxx X. Xxxxxxxxx By: Xxxxxxx X. Xxxxxxxxx
Its: Chairman and Chief Executive Officer Its: Chairman & Chief Executive Officer
CMS Management Services, Co. CMS Management Services LLC
/s/ Xxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------- ---------------------------------------------
By: Xxxxxx X. Xxxx By: Xxxxxxx X. Xxxxxxxxx
Its: President Its: Chairman and CEO of its Managing
Member
/s/ Xxxxxx X. Xxxx
TemPro Resources, Inc. ---------------------------------------------
/s/ Xxxxxx X. Xxxx Xxxxxx X. Xxxx
--------------------------------------------- /s/ Xxxxxx X. Xxxxxxx
By: Xxxxxx X. Xxxx ---------------------------------------------
Its: President Xxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
CMS Services, Inc. Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxx
--------------------------------------------- ---------------------------------------------
By: Xxxxxx X. Xxxx Xxxxxxx X. Xxxxx
Its: Vice President /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxxx
CMS/TemPro Resources of Indianapolis, /s/ C. Xxxx Xxxxxx
Inc. ---------------------------------------------
/s/ Xxxxxxx X. Xxxxxxxx C. Xxxx Xxxxxx
---------------------------------------------
By: Xxxxxxx X. Xxxxxxxx
Its: President
CMS/TemPro Resources of Nashville, LLC
/s/ C. Xxxx Xxxxxx
---------------------------------------------
By: C. Xxxx Xxxxxx
Its: President
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