X-00
Xxxxxxx Xx. 0
Xxxx 0-X
Xxxxxxx Corporate Resources, Inc.
SEC File No. 0-23170
[Each of the schedules to this Agreement described in Sections 1
and 6 are omitted, and will be provided supplementally to the
Commission on request.]
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of March 23, 1998, among HEADWAY
CORPORATE RESOURCES, INC., a Delaware corporation ("Headway"),
HEADWAY CORPORATE STAFFING SERVICES OF NORTH CAROLINA, INC., a
Delaware corporation ("Buyer"), SELECT STAFFING SERVICES, INC., a
Virginia corporation ("Seller"), and XXXX X. XXXXXX, XX.
("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Buyer wishes to purchase, and Seller wishes to
sell, the assets and business of Seller specified in this
Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale of the Acquired Assets.
1.1 Acquired Assets. Subject to the terms and
conditions of this Agreement, and in reliance on the
representations, warranties and agreements set forth herein, on
the Closing Date (as defined in Section 2), Seller shall sell,
convey, transfer, assign and put Buyer into possession of, and
Buyer shall purchase from Seller, effective as of the Closing
Date, all of Seller's right, title and interest in and to those
certain assets of Seller utilized in connection with Seller's
business of the placement or provision of temporary, permanent,
leased or payrolled (as that term is defined in Section 1.3(f))
personnel (including, without limitation, self-incorporated
personnel) conducted at its Richmond, Hampton, Norfolk and
Virginia Beach, Virginia locations (the "Business") and
identified or described below:
(a) the office furniture, equipment, computers,
fixtures and vehicles of Seller pertaining to the Business and
listed in Schedule 1.1.A;
(b) all computer software (except "Branchpack"
computer software), programs and databases owned by Seller
pertaining to the Business and identified on Schedule 1.1.B;
(c) all office supplies owned by Seller pertaining to
the Business;
(d) the client agreements and arrangements of Seller
pertaining to the Business set forth in Schedule 1.1.C;
(e) the office leases, equipment leases and other
agreements, contracts and instruments of Seller pertaining to the
Business listed in Schedule 1.1.D;
(f) all prepayments and deposits of Seller pertaining
to the Business, including without limitation, security deposits
under assigned leases;
(g) originals or true copies of all books and records
of Seller pertaining to the assets referred to in subparagraphs
(a) through (f) above, as appropriate, including customer lists
and credit files, and all those pertaining to Seller's employees
who are hired by Buyer pursuant to Section 9.2;
(h) all permits, licenses, approvals and other
governmental authorizations pertaining to the Business that are
transferable to Buyer and listed in Schedule 1.1.E;
(i) any other assets not referred to in Section 1.2,
including, without limitation, telephone and facsimile numbers
and data transmission lines, which are used by Seller exclusively
in connection with the Business; and
(j) the goodwill pertaining to the Business;
all as the same exist on the date hereof and shall exist on the
Closing Date, subject only to changes occurring in the ordinary
course of business of Seller. All such assets to be acquired are
referred to together as the "Acquired Assets".
1.2 Excluded Assets. The following assets of Seller
are excluded from the Acquired Assets: (a) the consideration
payable to Seller by Buyer, (b) any cash, bank deposits,
certificates of deposit, marketable securities, notes, drafts,
checks or other cash equivalents or similar instruments owned by
Seller, (c) accounts receivable of Seller pertaining to the
Business as of the Closing Date (the "Accounts Receivable"), (d)
all claims and rights of Seller to any federal, state or local
refunds, credits, rebates, claims, repayments or benefits of
Taxes (as defined in Section 6.14), (e) any loans receivable of
Seller, (f) any refundable portions of paid insurance premiums
and prepaid federal, state or local income taxes, (g) Seller's
interest in any life insurance policies maintained by Seller on
the life of any employee, (h) any treasury stock held by Seller,
(i) the corporate stock certificate books, ledger books, minute
books and similar corporate records of Seller, (j) Seller's tax
records and any books and records which Seller shall be required
to retain pursuant to any applicable law, rule or regulation
(provided, that at Buyer's request and expense, Seller shall
provide Buyer with copies of any record or document retained by
Seller and, similarly, Buyer, at Seller's request and expense,
shall provide Seller with copies of any record or document
transferred to Buyer hereunder) and (k) all records and
correspondence relating to the foregoing excluded assets.
1.3 Purchase Price.
(a) As consideration for the sale, conveyance,
transfer, assignment and delivery to Buyer of the Acquired
Assets, Buyer shall pay to Seller a purchase price (the "Purchase
Price"), subject to adjustment as provided in Section 1.3(b), as
follows:
(i) $2,965,000 payable on the Closing Date; and
(ii) the Earnout on the Earnout Payment Dates (as
such terms are defined in Sections 1.3(b) and
1.3(d)), respectively).
All amounts payable by Buyer pursuant to Sections 1.3(a) and
1.3(b) shall be paid by wire transfer in immediately available
funds to accounts designated by Seller to Buyer not later than
two business days prior to the scheduled date of such payment.
(b) Each of the three consecutive twelve-month periods
commencing April 1, 1998 is referred to as an "Earnout Period".
If, for any Earnout Period, Buyer's EBITA equals or exceeds
$1,000,000 (the "Base Amount"), Buyer shall pay to Seller
$500,000 in cash for such Earnout Period (each, an "Earnout"),
plus (i) $1.50 for each $1.00 that Buyer's EBITA for such Earnout
Period exceeds the Base Amount or minus (ii) $1.50 for each $1.00
that Buyer's EBITA for such Earnout Period is less than the Base
Amount. During each Earnout Period, the Business shall be
operated as a separate division of Buyer. On each Earnout
Payment Date, Buyer will furnish Seller with a detailed
computation of the Earnout.
The calculation of the Earnout for each Earnout Period
shall be independent of the calculations for the other Earnout
Periods, and there shall be no cumulation of EBITA from one
Earnout Period to another, except that if the Earnout for the
first or second Earnout Period is negative (that is, less than
zero), the amount of any negative Earnout shall be subtracted
from any positive Earnout, or added to any negative Earnout, for
the following Earnout Period. The fact that EBITA or the
Earnout for any Earnout Period is negative shall not result in
any liability by Seller or Xxxxxx to Buyer.
(c) For the purposes of this Agreement, "EBITA"
means, for an Earnout Period, Net Income (as defined below)
without deductions for (i) interest expense, (ii) provisions for
income taxes and (iii) amortization of goodwill and other
intangible assets resulting from Buyer's purchase of the Acquired
Assets. Net Income shall exclude revenues and expenses
attributable to acquisitions by Buyer of at least a majority of
the stock, or substantially all of the assets of, other entities
after the Closing Date.
"Net Income" means the net income (or loss) of Buyer
for an Earnout Period attributable to Buyer's continued operation
of the Business, as determined by Headway in accordance with
generally accepted accounting principles ("GAAP"). The
calculation of Net Income shall take into account the following
expenses to the extent incurred in the ordinary course of the
Business and consistent with GAAP: (i) wage, salary and
commission expense of all temporary, payrolled and full-time
employees of Buyer attributable to the Business; (ii) reasonable
travel and entertainment expenses incurred by Buyer's employees
attributable to the Business; (iii) bonuses paid to Buyer's
employees attributable to the Business; (iv) all amounts
attributable to FICA and any other federal, state and local taxes
paid by Buyer on behalf of such employees; (v) all unemployment
insurance premiums, workers' compensation premiums, medical and
disability coverage and any other benefits provided by Buyer to
such employees; (vi) expenses attributable to the in-house
processing by Buyer of the payroll for such employees; (vii)
Buyer's general and administrative expenses directly attributable
to the operation of the Business in the ordinary course; (viii)
sales commissions of outside sales representatives attributable
to the Business; (ix) any fall-offs, rebates, discounts, offsets
or concessions granted by Buyer to its clients with respect to
the Business; (x) depreciation in connection with the acquisition
by Headway, Buyer or any other subsidiary of Headway of computer
and telecommunications equipment consistent with that used by the
Headway group of companies and utilized by Buyer in connection
with the Business; (xi) for the first Earnout Period only, any
expenses reasonably and necessarily incurred by Headway, Buyer or
any other subsidiary of Headway in connection with the transition
of the operation of the Business to Buyer as part of the Headway
group of companies, including, without limitation, expenses for
the installation and implementation by Buyer in connection with
the Business of the third party accounting and operating software
used by Headway; and (xii) an annual charge for technical and
financial support provided by the Headway group of companies,
including, without limitation, the reasonable allocation by
Headway to the Business of fees charged by Headway's certified
public accountants in connection with the annual audit of the
Headway group of companies. Notwithstanding the foregoing, in no
event may the charges contemplated in clauses (x), (xi) and (xii)
above exceed $200,000 for any Earnout Period. For the purpose of
determining Net Income pursuant to this Section 1.3(c), any
reserves established by Buyer attributable to the Business for
bad debts with respect to its receivables during any Earnout
Period shall be added to Net Income to the extent deducted
therefrom.
In the event of a material change in the ownership,
management or operations of the Buyer during the Earnout Periods
that, in the reasonable discretion of Xxxxxx or Seller, would
materially and adversely affect the revenues of Buyer with
respect to the Business, including without limitation, changes
resulting from one or more sales or other dispositions of
substantially all of the assets of Buyer, an organizational or
ownership restructuring (such as a merger, consolidation or other
reorganization involving its business, or a spin-off, split-up or
other divisional restructuring or a substantial sale of its stock
to an unaffiliated organization) or any other organic change that
reduces operations, then the parties shall agree to discuss and
evaluate the then current definition of Net Income to assure that
the Earnout calculation set forth in this Section 1.3 continues
to be a fair and relevant method to measure the EBITA of the
Business and the Net Income defined herein, and whether
adjustments should be made to the method of calculation to take
into account the effect of such changes. Buyer also agrees not
to take actions calculated to minimize EBITA or to reduce Net
Income for the purpose of avoiding any Earnout obligations
hereunder, or to reduce any Earnout to which Seller would
otherwise be entitled to hereunder (including using affiliated
organizations to compete with the Business or using marketing or
business plans intended to cause the diversion of revenue from
the Business to the Buyer's affiliated organizations).
(d) Each Earnout shall be paid 90 days following the
close of the related Earnout Period (each, an "Earnout Payment
Date"). If any such day is not a business day, the Earnout
Payment Date shall be the next succeeding business day. If, as
of the close of business on the day prior to any Earnout Payment
Date, any account receivable included as income in the
calculation of Net Income has not been fully collected, the
uncollected amount of such account receivable shall be charged
against EBITA, and the Earnout shall be reduced accordingly. If
such account receivable is thereafter collected after such
Earnout Payment Date, Buyer shall pay Seller the amount by which
such Earnout had been reduced in respect of such account
receivable, net of any direct collection costs and net of an
interest charge for any account receivable paid more than 90 days
after the date of invoice (a "Restoration Amount"), with the
interest rate determined by reference to the interest rate then
in effect for Eurodollar Rate Loans under the Credit Agreement,
dated as of March 12, 1998, by and among Headway, as Borrower,
NationsBank, National Association, as Agent and as Lender, and
the lenders from time to time parties thereto, which amount shall
be calculated and paid at the end of each fiscal quarter,
commencing on June 30, 1998; provided, that with respect to the
Earnout Payment Date for the third Earnout Period, Buyer shall be
obligated to pay Seller a Restoration Amount with respect to any
such account receivable only if such account receivable is
collected within 90 days of such third Earnout Payment Date.
(e) Within 5 business days after receipt by Seller and
Xxxxxx of written notice from Headway, Seller and Xxxxxx, jointly
and severally, agree to pay Buyer $3.00 for each $1.00 that the
EBITA of the Business as determined by Headway based upon the
audited financial statements of the Business for the fiscal year
ended December 31, 1997 delivered to Buyer and Headway pursuant
to Section 9.3, is less than $1,000,000 (after excluding any
corporate overhead of Seller) ("Deficiency Amount").
(f) For the purposes of this Agreement, "payrolled"
personnel means (i) those employees of Headway, Buyer or Seller
(with respect to the Business), as the case may be, who are hired
by Headway, Buyer or Seller on behalf of a client and are
considered as full-time "permanent" employees of such client, but
whose compensation is paid by Headway, Buyer or Seller (with
respect to the Business) or (ii) those employees of Headway,
Buyer or Seller (with respect to the Business) who are considered
to be payrolled employees under industry practice or
understanding prevailing at the time.
(g) Headway guarantees to Seller and Xxxxxx the full
and timely performance and payment of all of Buyer's obligations
under this Agreement.
1.4 Assumption of Liabilities. As additional
consideration for the purchase of the Acquired Assets, Buyer
shall assume and agree to pay, perform and discharge in full the
following debts, contracts, obligations and liabilities of Seller
(the "Assumed Liabilities"), and no others, as and when due, and
to indemnify and hold Seller and Xxxxxx harmless therefrom:
(a) all obligations and liabilities of Seller arising
on or after the Closing Date under its office leases for the
premises located at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx; 00 Xxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000; and 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx,
Xxxxxxxx 00000; and
(b) all obligations or liabilities arising on or after
the Closing Date under Seller's client agreements and
arrangements set forth in Schedule 1.1.C and Seller's equipment
leases and other agreements, contracts and instruments set forth
in Schedule 1.1.D.
1.5 Liabilities Not Assumed. Other than the
liabilities referred to in Section 1.4, Buyer shall not assume or
be deemed to have assumed any of the liabilities or obligations
of Seller of any kind (together, the "Unassumed Liabilities"),
including, without limitation:
(a) any liability claims with respect to the business
and affairs of Seller and the acts and omissions of its current
or former officers, directors, employees and agents, either
before or after the Closing Date;
(b) any obligation or liability of Seller to Xxxxxx or
any other current or former officer or director of Seller;
(c) any obligation or liability for federal, state,
local or foreign income or other taxes (including any related
penalties, fines and interest) of Seller, including, without
limitation, any and all taxes arising out of the transactions
contemplated hereby;
(d) any obligation or liability arising out of the
operation of Seller's business (including the Business) prior to
the Closing Date, including any rebates, discounts, offsets or
concessions attributable to amounts invoiced to clients of Seller
prior to the Closing Date;
(e) any obligation or liability to Seller's temporary,
payrolled, leased or full-time employees for salary, wages,
bonuses or other compensation or benefits, including any with
respect to retirement plans, and accrued vacation, sick and
holiday time and pay incurred prior to the Closing Date,
including, without limitation, any liabilities of Seller
contemplated by Section 9.2 but excluding any liabilities set
forth in Schedule 1.7;
(f) any liabilities of Seller with respect to any
pension, retirement, savings, profit-sharing or other benefit
plans;
(g) any liability arising out of, and any expenses
relating to, any claim, action, dispute or litigation involving
Seller;
(h) any liability of Seller for fines, penalties,
damages or other amounts payable to any government or
governmental agency or instrumentality; and
(i) any obligation or liability of Seller or Xxxxxx
for any expenses incurred in preparing or negotiating this
Agreement and consummating the transactions contemplated
hereunder.
Seller and Xxxxxx, jointly and severally, agree to discharge and
indemnify, defend and hold harmless Buyer and Headway and their
respective officers, directors, employees, agents and
stockholders from all Unassumed Liabilities, whether or not now
known, liquidated or contingent, including, without limitation,
any that might otherwise be deemed to have been assumed by Buyer
by virtue of its purchase of the Acquired Assets or otherwise by
operation of law.
1.6 Allocation of Purchase Price. Buyer and Seller
agree to report this transaction for United States federal income
tax purposes in accordance with a written allocation of Purchase
Price to be prepared, initialed and mutually agreed to by Buyer
and Seller at or before the Closing Date.
1.7 Closing Date Adjustments. On or before the
Closing Date, Buyer and Seller shall determine and agree on, as
of the Closing Date, (i) any amounts that Seller may have prepaid
for equipment or office leases included in the Acquired Assets
in respect of periods beginning on or after the Closing Date,
(ii) any amounts that Seller may have prepaid for sales, use or
similar taxes, license fees (exclusive of corporate franchise
fees), insurance, services or other expenses relating to the
Acquired Assets in respect of periods beginning on or after the
Closing Date, (iii) the amount of any bonuses, vacation, sick or
holiday time or pay accrued as of the Closing Date with respect
to temporary, payrolled, leased or full-time employees of Seller
retained by Buyer pursuant to Section 9.2, as set forth in
Schedule 1.7 and (iv) any amounts of the type described in
clauses (i) and (ii) in respect of periods prior to the Closing
Date which are expected to be billed after the Closing Date. All
amounts relating to periods ending prior to the Closing Date
shall be for the account of Seller and all amounts relating to
periods beginning on or after the Closing Date shall be for the
account of Buyer. The respective amounts shall be netted against
each other on the Closing Date. If the result is an amount owing
to Seller, Buyer shall pay such amount to Seller on the Closing
Date. If the result is an amount owing to Buyer, Seller shall
pay such amount to Buyer at the Closing Date.
1.8 Collection of Accounts Receivable and Time Sheet
Receivables.
(a) From time to time after the Closing Date, Buyer
and Seller shall determine and agree upon any time sheets of
temporary, payrolled or leased personnel employed by Seller in
connection with the Business not submitted to Seller prior to the
Closing Date attributable to services rendered by such personnel
to clients of the Business on or prior to the Closing Date.
Seller shall pay such employees and render invoices (the
"Invoices") to the client for the services so provided and shall
be entitled to any proceeds received therefrom. However, if
requested by Seller, and to the extent practicable, Buyer shall
pay such employees and render and collect such Invoices. After
any Invoice is collected by Buyer, Seller shall be entitled to
receive from Buyer the amount so collected, less (i) 115% of the
amount actually paid by Buyer to the personnel who provided the
service to which such invoice relates and (ii) any billed
expenses paid by Buyer to such personnel in connection with their
providing such service (the "Net Invoice Amount"). Buyer shall
remit to Seller all Net Invoice Amounts and payments received by
it on account of any Receivables within 15 days after the end of
each month in which such payments or Net Invoice Amounts are
received. While Buyer shall use reasonable efforts to collect
the Receivables and the Invoices commensurate with the efforts it
would use to collect its own accounts receivable, Buyer shall not
be required to institute litigation or other collection
proceedings in order to do so and, in any event, Buyer shall have
no liability to Seller for any Receivables or Invoices that are
not collected. Seller shall have the right to institute
collection proceedings with respect to any Receivables that are
aged more than 120 days after the date of the related invoice,
but shall notify Buyer of any such action not less than five
business days before it is instituted.
(b) Seller shall promptly pay to Buyer, if and when
received, any amounts which are received by it after the Closing
Date in respect of any of the Acquired Assets or with respect to
any accounts receivable generated by Buyer with respect to
periods on or after the Closing Date; provided, that if any such
amount is remitted to Buyer more than 5 business days after
receipt by Seller, Seller shall pay interest to Buyer on such
amount for that number of days during which such amount remains
unremitted to Buyer at the Default Rate for Base Rate Loans (as
those terms are defined in the Credit Agreement). If Buyer
receives after the Closing Date any payments with respect to any
assets of Seller not included in the Acquired Assets other than
with respect to the Invoices and the Receivables (which shall be
governed by Section 1.8(a)), Buyer shall promptly pay such
amounts to Seller; provided, that if any such amount is remitted
to Seller more than 5 business days after receipt by Buyer, Buyer
shall pay interest to Seller on such amount for that number of
days during which such amount remains unremitted to Seller at the
Default Rate for Base Rate Loans. Any amounts received pursuant
to this Section 1.8(b) shall be applied to the receivables
specifically identified by the client. If no such identification
is provided, Buyer or Seller, as the case may be, shall inquire
of client for written identification and apply the amount
received accordingly. Seller agrees to permit Buyer to use its
name for the purpose of depositing checks received by Buyer in
respect of accounts receivable generated by Buyer attributable to
periods on or after the Closing Date.
1.9 Nonassignable Contracts. Nothing in this
Agreement shall be construed as an attempt to assign any contract
which is by law nonassignable without the consent of any other
party thereto unless and until such consent is given.
2. Closing. The consummation of the purchase and
sale of the Acquired Assets shall take place at 10:00 a.m. on
March 23, 1998 (the "Closing Date") at the offices of Xxxxxxx &
Xxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
3. Conditions to the Obligations of Buyer. The
obligations of Buyer under Section 1 are subject to the
satisfaction, on or before the Closing Date, of the following
conditions:
3.1 Due Performance. Seller and Xxxxxx shall have in
all material respects fully performed and complied with all
agreements and conditions required under this Agreement to be
performed or complied with by it or him on or prior to the
Closing Date.
3.2 Accuracy of Representations and Warranties. All
representations and warranties of Seller and Xxxxxx set forth in
Section 6 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and
as of such date.
3.3 Certificate. Buyer shall have received a
certificate from each of Seller and Xxxxxx to the effect set
forth in Sections 3.1 and 3.2.
3.4 Related Instruments. Seller shall have executed
and delivered to Buyer a General Xxxx of Sale in customary form
with respect to the Acquired Assets, as well as such other
instruments of assignment with respect to specific Acquired
Assets as Buyer shall reasonably request.
3.5 Solvency Certificate. Xxxxxx, individually and in
his capacity as President of Seller, and the most senior
financial officer or employee of Seller shall have executed and
delivered to Buyer and Headway a certificate attesting to the
solvency of Seller.
3.6 Financial Statements. On or before the Closing
Date, Seller and Xxxxxx shall have prepared and delivered to
Buyer and Headway (a) unaudited financial statements with respect
to the Business as of and for the nine-month period ended
September 30, 1997 and for the fiscal years ended December 31,
1995, December 31, 1996 and December 31, 1997 (collectively, the
"Unaudited Financial Statements") and (b) audited issued
financial statements of Seller for the fiscal year ended December
31, 1996 (the "Audited Financial Statements"; the Audited
Financial Statements and the Unaudited Financial Statements being
collectively referred to as the "Financial Statements"). The
Financial Statements delivered pursuant to this Section 3.6 shall
have been prepared at the expense of Seller and Xxxxxx in
accordance with generally accepted accounting principles applied
on a basis consistent throughout all periods presented and on an
accrual basis.
3.7 Procedures Report. On or before the Closing
Date, Seller and Xxxxxx shall have delivered to Buyer and Headway
a report prepared by Xxxxxx Xxxxxxxx, LLP with respect to income
and expense verification procedures of Seller in form and
substance reasonably satisfactory to Buyer and Headway.
3.8 Lease Assignments. On the Closing Date, Buyer
and Select shall have entered into lease assignment agreements
with the landlords of each of the Richmond, Hampton and Virginia
Beach, Virginia offices in form and substance satisfactory to
Buyer and Headway.
3.9 Non-Competition Agreement Assignments. On or
prior to the Closing Date, Seller shall provide Headway and Buyer
with evidence of the assignment to Buyer of all non-competition
agreements of Seller with all of its permanent employees with
respect to the Business.
3.10 Form UCC-3's. On or prior to the Closing Date,
Buyer shall have received from each of Crestar Bank ("Crestar")
and NationsBank, National Association ("NationsBank"), original
signed Form UCC-3's releasing all liens held by each of Crestar
and NationsBank with respect to the Acquired Assets, all such
releases to be in form and substance satisfactory to Buyer and
Headway.
3.11 Legal Opinion. Buyer shall have received an
opinion of Messrs. Hunton & Xxxxxxxx, counsel for Seller and
Xxxxxx, dated the Closing Date, reasonably satisfactory in form
and substance to counsel for Buyer and covering the matters set
forth in Sections 6.1 (exclusive of the last sentence thereof),
6.2, 6.3, 6.4(a) and 6.8.
3.12 Corporate Action. Buyer shall have received
copies, certified by the Secretary of Seller, of resolutions of
its Board of Directors and sole Stockholder approving the
execution of this Agreement and the consummation of the
transactions contemplated hereby.
3.13 Consents and Governmental Approvals. Headway and
Buyer shall have received any material consents of third parties,
and any authorizations, orders, grants, consents, permits and
approvals of all relevant governmental authorities, required in
connection with the consummation of the transactions contemplated
under this Agreement, without the imposition of any materially
burdensome conditions or restrictions, which shall continue to be
in full force and effect on the Closing Date.
3.14 No Claims. No claim, action, suit, investigation
or proceeding shall be pending or threatened against any of the
parties which, if adversely determined, might (i) prevent or
hinder consummation of the transactions contemplated by this
Agreement, (ii) result in the payment of substantial damages by
Buyer or Headway as a result of the transactions contemplated
hereby or (iii) materially and adversely affect the business or
assets of Seller, Buyer or Headway.
4. Conditions to the Obligations of Seller and
Xxxxxx. The obligations of Seller and Xxxxxx under Section 1 are
subject to the satisfaction, on or before the Closing Date, of
the following conditions:
4.1 Due Performance. Headway and Buyer shall have in
all material respects fully performed and complied with all
agreements and conditions required under this Agreement to be
performed or complied with by them on or prior to the Closing
Date.
4.2 Accuracy of Representations and Warranties. All
representations and warranties of Headway and Buyer set forth in
Section 7 of this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and
as of such date.
4.3 Certificate. Seller and Xxxxxx shall have
received a certificate from each of Buyer and Headway to the
effect set forth in Sections 4.1 and 4.2.
4.4 Related Instruments. Buyer shall have executed
and delivered to Seller a General Instrument of Assumption in
customary form with respect to the Assumed Liabilities, as well
as such other instruments of assumption with respect to specific
Assumed Liabilities as Seller shall reasonably request.
4.5 Legal Opinion. Seller and Xxxxxx shall have
received an opinion of Messrs. Xxxxxxx & Xxxxxx, counsel for
Buyer and Headway, dated the Closing Date, reasonably
satisfactory in form and substance to counsel for Seller and
Xxxxxx and covering the matters set forth in Sections 7.1
(exclusive of the last sentence thereof), 7.2, 7.3, 7.4 (a) and
7.6.
4.6 Corporate Action. Seller and Xxxxxx shall have
received copies from each of Headway and Buyer of resolutions of
their respective Board of Directors certified by their respective
Secretaries, in each instance approving the execution of this
Agreement and the consummation of the transactions contemplated
hereby.
4.7 Consents and Governmental Approvals. Seller and
Xxxxxx shall have received any material consents of third
parties, and any authorizations, orders, grants, consents,
permits and approvals of all relevant governmental authorities,
required in connection with the consummation of the transactions
contemplated under this Agreement, without the imposition of any
materially burdensome conditions or restrictions, which shall
continue to be in full force and effect on the Closing Date.
4.8 No Claims. No claim, action, suit, investigation
or proceeding shall be pending or threatened against any of the
parties which, if adversely determined, might (i) prevent or
hinder consummation of the transactions contemplated by this
Agreement, (ii) result in the payment of substantial damages by
Seller or Xxxxxx as a result of the transactions contemplated
hereby or (iii) materially and adversely affect the business or
assets of Seller, Buyer or Headway.
5. Waiver of Conditions. Each of the parties shall
have the right to waive, in whole or in part, any of the
conditions to its performance set forth in this Agreement and, on
such waiver, the waiving party may proceed with the consummation
of the transactions contemplated herein, it being understood
that such waiver shall not constitute a waiver of any right which
such party may have by reason of the breach by the other party of
any representation, warranty or agreement contained herein.
6. Representations and Warranties of Seller and
Xxxxxx. Each of Seller and Xxxxxx, jointly and severally,
represents and warrants to Buyer and Headway as follows (as used
herein, "Seller's knowledge" shall mean the actual knowledge of
Seller's officers and key employees, including Xxxxxxxxx Xxxxx,
excluding knowledge implied by law):
6.1 Due Organization and Qualification. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Virginia, with
full corporate power and authority to own, lease and operate its
properties and to carry on its business in the places and in the
manner currently conducted or proposed to be conducted. Seller
is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the
activities conducted by it or the character of the properties
owned or leased by it makes such qualification necessary and
where such failure to so qualify would have a material adverse
effect on the Business.
6.2 Authority; Due Authorization. Seller has all
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. Seller has taken all corporate action necessary for the
execution and delivery by it of this Agreement and for the
consummation of the transactions contemplated hereby. Xxxxxx has
the requisite power and authority to execute and deliver, and has
taken all action necessary for the execution and delivery of,
this Agreement and for the consummation of the transactions
contemplated hereby.
6.3 Valid Obligation. This Agreement, when executed
and delivered by each of Seller and Xxxxxx, shall constitute the
valid and binding obligation of each of Seller and Xxxxxx,
enforceable in accordance with its terms, except as may be
limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
6.4 No Conflicts or Defaults. The execution and
delivery of this Agreement by each of Seller and Xxxxxx and the
consummation of the transactions contemplated hereby, do not and
shall not (a) contravene the Articles of Incorporation or By-Laws
of Seller or (b) with or without the giving of notice or the
passage of time, (i) materially violate or conflict with, or
result in a material breach of, or a material default or loss of
rights under, any agreement, lease, mortgage, instrument, permit
or license to which Seller is a party and which is included in
the Acquired Assets, or to which any of the Acquired Assets are
subject, or any judgment, order, decree, law, rule or regulation
to which any of the Acquired Assets are subject, (ii) result in
the creation of, or give any party the right to create, any lien,
charge, encumbrance or any other right or adverse interest on or
with respect to any of the Acquired Assets or (iii) terminate or
give any party the right to terminate, abandon or refuse to
perform any material agreement, arrangement or commitment to
which Seller is a party and which is included in the Acquired
Assets or to which any of the Acquired Assets are subject.
6.5 Copies of Charter Documents. Copies of the
Articles of Incorporation and By-Laws of Seller, in each case as
amended to the date hereof, have been delivered to Buyer or its
representatives and are true and complete copies of such
documents as in effect on the date of this Agreement.
6.6 Capitalization of Seller Xxxxxx holds all of the
issued and outstanding capital stock of Seller. There are no
outstanding options, warrants, rights, conversion rights,
preemptive rights, calls, commitments or demands of any character
obligating Seller or Xxxxxx to issue, sell, redeem or repurchase
any capital stock of Seller or any other security giving a right
to shares of Seller's capital stock, or obligating Xxxxxx to sell
or otherwise dispose of any of his shares of capital stock of
Seller.
6.7 Subsidiaries and Related Parties. The Business is
conducted entirely by and through Seller. Seller has no direct
or indirect subsidiaries, nor are there any other entities that
Seller otherwise directly or indirectly controls or in which it
has any ownership or other interest. Except as set forth in
Schedule 6.7, neither Xxxxxx nor any director, officer or key
employee of Seller or any of their respective affiliates or
relatives has any direct or indirect interest (other than an
ownership interest of up to 5% of the voting securities of any
corporation, the securities of which are publicly-traded) in any
assets used in the Business or in any corporation, partnership or
other entity that (a) competes with Seller, (b) sells or
purchases products or services to or from Seller, (c) leases real
or personal property to or from Seller or (d) otherwise does
business with Seller.
6.8 Authorizations. Except as set forth in Schedule
6.8, no authorization, approval, order, license, permit or
consent of, or filing or registration with, any court or
governmental authority, regulatory entity or official body, and
no consent of any other party, is required in connection with the
execution, delivery and performance of this Agreement by each of
Seller and Xxxxxx.
6.9 The Acquired Assets.
(a) Seller has and shall transfer to Buyer, good and
marketable title to all of the Acquired Assets, free and clear of
all claims, liens, security interests, charges, restrictions and
other encumbrances except: (i) any created pursuant to this
Agreement; (ii) any arising under leases of real or personal
property to which Seller is a party and which have been
specifically disclosed to Buyer; or (iii) mechanics' or other
liens arising or incurred in the ordinary course of business and
which do not interfere materially with the possession, ownership
or use of any real or personal property used by Seller in
connection with the Business.
(b) Set forth in Schedule 6.9 is a list of all real
property leased by Seller in connection with the Business, with a
brief description of the premises. Seller owns no real property
used in connection with the Business.
(c) The office equipment, furniture, vehicles,
computers, computer software, office supplies and leasehold
improvements included in the Acquired Assets are, in all material
respects, in good operating condition and repair, reasonable wear
and tear excepted, and are satisfactory for the requirements of
the Business.
6.10 Client Agreements.
(a) Schedule 1.1.B sets forth a true and complete list
of all written and oral client agreements and arrangements to
which Seller is party relating to the Business (the "Client
Agreements"). Seller has furnished Buyer with a true copy of
each Client Agreement or a written description of any Client
Agreement that has not been reduced to writing. The Client
Agreements constitute all of the contracts, agreements,
understandings and arrangements pursuant to which Seller provides
any temporary, permanent, leased or payrolled employee services
for or with respect to the clients who are parties to such
agreements. Except as set forth in Schedule 6.10.A, (i) each
Client Agreement was entered into in the ordinary course of
Seller's business, (ii) is in full force and effect on the date
of this Agreement and is valid, binding and enforceable in
accordance with its terms, (iii) Seller is not in material breach
or default under any of the Client Agreements and has not
received any notice or claim of any such breach or default from
any party, (iv) to the knowledge of Seller and the best knowledge
of Xxxxxx, the relationship of Seller with the clients that are
parties to the Client Agreements is generally good and there has
been no expression of any intention to terminate or materially
modify any of such relationships, (v) neither Seller nor Xxxxxx
has any knowledge of any material breach or default under any of
the Client Agreements by any other party thereto, (vi) no event
or action has occurred, is pending or, to Seller's knowledge, is
threatened, which, after the giving of notice, passage of time or
otherwise, could constitute or result in any such material breach
or default by Seller or any other party under any of the Client
Agreements and (vii) no material amount claimed to be payable to
Seller under any of the Client Agreements is being disputed by
any client.
(b) Except as set forth in Schedule 6.10.B, (i) for
its services under each Client Agreement, Seller receives the
compensation provided under such Client Agreement, without
discount, offset or concessions of any kind, and Seller has not
proposed or agreed to offer or accept any discount, offset or
concession and (ii) to the knowledge of Seller and the best
knowledge of Xxxxxx, the payment history of the clients under the
Client Agreements is good as judged by industry standards. Set
forth in Schedule 6.10.C is an aging schedule for all of Seller's
accounts receivable and accounts payable as of the Closing Date,
which list is accurate in all material respects.
6.11 Financial Statements.
(a) The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied
on a basis consistent throughout all periods presented. Such
statements are correct and complete in all material respects, are
reconcilable to the books and records of Seller, and present
fairly the financial position of Seller (with respect to the
Business) as of the dates, and the results of operations, cash
flows and changes in financial position of Seller for the
periods, indicated, except for the omission of footnotes and for
year-end review adjustments (which are not expected by Seller or
Xxxxxx to be material).
(b) Except as set forth in Schedule 6.11, Seller had
no material liabilities or obligations, whether secured or
unsecured, accrued, determined, absolute or contingent, asserted
or unasserted or otherwise, which are required to be reflected or
reserved in a balance sheet with respect to the Business or the
notes thereto under generally accepted accounting principles, but
which are not reflected in the Financial Statements.
6.12 Other Agreements.
(a) Schedule 1.1.C sets forth a true and complete list
of the office leases, equipment leases and other agreements,
contracts and instruments included in the Acquired Assets other
than the Client Agreements (the "Other Agreements"). Together
with the Client Agreements, the Other Agreements constitute all
of the material contracts, agreements, understandings and
arrangements required for the operation of the Business, as
currently conducted by Seller, or which have a material effect
thereon.
(b) Except as set forth in Schedule 6.12, (i) each
Other Agreement was entered into in the ordinary course of
business of the Business, is in full force and effect on the date
of this Agreement and is valid, binding and enforceable in
accordance with its terms, (ii) Seller is not in material breach
or default under any of the Other Agreements and has not received
any written notice or claim of any such breach or default from
any party, (iii) neither Seller nor Xxxxxx have any knowledge of
any material breach or default under any of the Other Agreements
by any party thereto and (iv) no event or action has occurred, is
pending or, to Seller's knowledge, is threatened, which, after
the giving of notice, passage of time or otherwise, could
constitute or result in any such material breach or default by
Seller or any other party under any of the Other Agreements.
6.13 Intellectual Property. Seller owns or has legal
right to use the trade name "Select Staffing" without infringing
on the rights or intellectual property of any third party. No
royalties or fees are payable by Seller to any party by reason of
the use by Seller of any of such intellectual property. To
Seller's knowledge, Seller has not received any claims that it or
its products or services have infringed the rights of others, and
neither Seller nor Xxxxxx are aware of any infringement by others
of Seller's intellectual property.
6.14 Taxes. Except as set forth in Schedule 6.14,
Seller has filed all federal, state, local and foreign returns
and reports which were required to be filed prior to the date
hereof in respect of all income, withholding, franchise, payroll,
excise, property, value-added, sales, use or other taxes,
imposts, duties or assessments (together with any related
penalties, fines or interest, "Taxes"). Each such return and
report is complete and accurate in all material respects, and
Seller has paid, or established adequate reserves for payment of,
all Taxes (and any related penalties, fines and interest) shown
to be due on such returns or reports and any assessments received
with respect thereto. Except as set forth in Schedule 6.14,
Seller has received no notice of any claims pending or threatened
for taxes against it for periods prior to the date hereof, in
excess of such reserves.
6.15 Permits; Compliance with Law. Seller holds all
permits, certificates, licenses, approvals and other
authorizations of governmental authorities as are materially
necessary to the conduct of the Business. Seller is in material
compliance with the terms of each thereof and have not received
any notice or claim pertaining to the failure to obtain, or the
breach or violation of the terms of, any such authorization.
Neither Seller nor Xxxxxx has received any notice of any
proceeding or investigation likely to result in the suspension or
revocation of any such authorization. Seller is conducting the
Business in material compliance with all applicable federal,
state and local laws, ordinances, rules, regulations and court or
administrative orders and decrees, including, without limitation,
any respecting wage and hour, withholding and unemployment
compensation requirements.
6.16 Litigation. Except as set forth in Schedule 6.16,
there are no claims, actions, suits, proceedings, investigations
or criminal proceedings, at law or in equity, before any court,
tribunal, governmental authority or other forum (collectively,
"Proceedings") pending or, to Seller's knowledge, threatened,
against Seller which, if adversely determined, would, singly or
in the aggregate, have a material adverse effect on the Business
or the Acquired Assets or the ability of Seller or Xxxxxx to
perform their respective obligations under this Agreement or
which would challenge the validity or propriety of the
transactions contemplated in this Agreement. Schedule 6.16
contains a list of all Proceedings to which Seller is a party or
to which it or any of the Acquired Assets are subject. There is
no material outstanding and unsatisfied judgment, order, writ,
ruling, injunction, stipulation or decree of any court,
arbitrator or governmental authority against or materially
affecting Seller, the Business or any material portion of the
Acquired Assets.
6.17 Ordinary Course; No Material Adverse Effect.
Except as set forth in Schedule 6.17 and for the transactions
contemplated in this Agreement, since December 31, 1996, Seller
has conducted its business and maintained its assets
substantially in the same manner as previously conducted or
maintained and solely in the ordinary course and, since such
date, there has not been any event that has or would, with or
without the giving of notice or the passage of time, result in a
material adverse effect on Seller or the Business. Since January
1, 1998, Seller has not entered into any new real property leases
(other than with respect to Virginia Beach, Virginia office) or
moved any temporary, payrolled, leased or full-time employees
employed by Seller in connection with the Business as of such
date to locations other than the Richmond, Hampton, Norfolk or
Virginia Beach, Virginia locations.
6.18 Employee Benefits and Relations.
(a) Except as set forth in Schedule 6.18, Seller does
not maintain or sponsor, or contribute or has any obligation or
liability to, any employee pension benefit plan, employee welfare
benefit plan or multi-employer plan (as such terms are defined in
Sections 3(2), 3(1) and 4001(a)(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")). Set forth in
Schedule 6.18 is a list of all bonus, pension, profit-sharing,
deferred compensation, stock ownership, stock bonus, stock
option, phantom stock, retirement, vacation, disability, death
benefit, unemployment, hospitalization, medical, dental,
severance, or other plan, agreement, arrangement or understanding
providing benefits to any current or former employee, officer or
director of Seller or to which Seller has any liability or
obligation (all such plans, agreements, arrangements and
understandings are referred to as "Benefit Plans"). Seller and
Xxxxxx have delivered to Buyer and Headway true, complete and
correct copies of (i) each Benefit Plan and all amendments
thereto (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) annual reports on Form 5500 for the
past three years (together with accompanying financial
statements) filed with the Internal Revenue Service or Department
of Labor, as applicable, with respect to each Benefit Plan (if
any such report was required), (iii) all summary plan
descriptions for each Benefit Plan for which such summary plan
description is required or otherwise available and (iv) each
trust agreement and group annuity contract relating to any
Benefit Plan. No Benefit Plan provides for post-retirement
medical or life insurance benefits unless the event giving rise
to the benefit entitlement occurs prior to the employee's
retirement (except as required by Title I, Part 6 of ERISA).
(b) Any accrued obligations of Seller under all
Benefit Plans that are required to be reflected on the balance
sheet of Seller in accordance with generally accepted accounting
principles are reflected thereon as of the dates indicated
thereon and on the books and records of Seller for all periods
thereafter. Seller and Xxxxxx have provided Buyer with copies of
all such balance sheets, books and records.
(c) Except as set forth in Schedule 6.18, each Benefit
Plan and any related trust complies currently, and has complied
at all times in the past, both as to form and operation, in all
material respects with the terms of such Benefit Plan and with
the applicable provisions of ERISA, the Code and other applicable
laws. All necessary government approvals for each Benefit Plan
have been obtained on a timely basis.
(d) Except as set forth in Schedule 6.18, Seller has
no liability (contingent or otherwise) with respect to any
terminated Benefit Plan. Seller is not a member of, and has no
liability with respect to, a controlled group of corporations or
a trade or business (whether or not incorporated) under common
control which, together with Seller, is or was at any time
treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA.
(e) Seller is not a party to any union or collective
bargaining contract with respect to any of its employees and
there has not been, nor has Seller or Xxxxxx received written
notice threatening, any representational or organizational
activity, strike, slowdown, picketing or work stoppage by any
union or other group of employees against Seller.
(f) Schedule 6.18 sets forth (i) the name of each
director and officer of Seller and each employee and sales
representative employed by Seller in connection with the Business
(other than temporary or payrolled personnel), together with the
annual compensation rate for each such person, and (ii) each oral
or written contract, commitment or understanding between Seller
and any current or former director, officer, stockholder or agent
of Seller and any current or former sales person or employee
employed by Seller in connection with the Business, or any
associate or relative of such persons (other than temporary or
payrolled personnel).
6.19 Miscellaneous. All representations and warranties
of Seller and Xxxxxx set forth in this Agreement and all
information set forth in the Schedules are true and complete in
all material respects and no such representation, warranty or
information contains any untrue statement of a material fact or,
to the knowledge of Seller and Xxxxxx, omits to state any
material fact necessary in order to make such representation,
warranty or information, in light of the circumstances under
which it is made, not false or misleading. Any disclosure made
pursuant to any of the representations and warranties in this
Section 6 shall be deemed to have been made for purposes of any
other such representations and warranties.
7. Representations and Warranties of Buyer and
Headway. Buyer and Headway, jointly and severally, represent
and warrant to Seller and Xxxxxx as follows:
7.1 Due Organization and Qualification. Each of Buyer
and Headway is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate
its properties and to carry on its business in the places and in
the manner currently conducted or proposed to be conducted. Each
of Buyer and Headway is qualified to do business and is in good
standing as a foreign corporation in which the nature of the
activities conducted by it or the character of the properties
owned or leased by it makes such qualification necessary and the
failure to so qualify would have a material adverse effect on its
business.
7.2 Authority; Due Authorization. Each of Buyer and
Headway has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby, including with respect to
Headway, the guarantee of Headway set forth in Section 1.3(g).
Each of Buyer and Headway has taken all corporate action
necessary for the execution and delivery by it of this Agreement
and for the consummation of the transactions contemplated hereby,
including, with respect to Headway, the guarantee of Headway set
forth in Section 1.3(g).
7.3 Valid Obligation. This Agreement, when executed
and delivered by each of Buyer and Headway, shall constitute
their respective valid and binding obligations, enforceable in
accordance with its terms, except as may be limited by principles
of equity or by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
7.4 No Conflicts or Defaults. The execution and
delivery of this Agreement by each of Buyer and Headway, and the
consummation of the transactions contemplated hereby, do not and
shall not (a) contravene the Certificates of Incorporation or the
By-Laws of Buyer or Headway or (b) with or without the giving of
notice or the passage of time, materially violate or conflict
with, or result in a material breach of, or a material default or
loss of rights under, any agreement, lease, mortgage, instrument,
permit or license to which Buyer or Headway is a party or by
which Buyer or Headway are bound or any judgment, order, decree,
law, rule or regulation to which Buyer or Headway are subject.
7.5 Copies of Charter Documents. Copies of the
Certificates of Incorporation and By-Laws of each of Buyer and
Headway, in each case as amended to the date hereof, have been
delivered to Seller and Xxxxxx and are true and complete copies
of such documents as in effect on the date of this Agreement.
7.6 Authorizations. No authorization, approval,
order, license, permit or consent of, or filing or registration
with, any court or governmental authority, regulatory entity or
official body, and no consent of any other party, is required in
connection with the execution, delivery and performance of this
Agreement by Buyer and Headway.
7.7 Litigation. There are no Proceedings, pending or
threatened, against Buyer or Headway which, if adversely
determined, would, singly or in the aggregate, have a material
adverse effect on the ability of Buyer or Headway to perform
their respective obligations under this Agreement or which would
challenge the validity or propriety of the transactions
contemplated in this Agreement. There is no material outstanding
and unsatisfied judgment, order, writ, ruling, injunction,
stipulation or decree of any court, arbitrator or governmental
authority against or materially affecting Buyer or Headway or any
material portion of their respective assets.
7.8 Miscellaneous. All representations and warranties
of Buyer and Headway set forth in this Agreement were, as of the
date on which they were made or given, true and complete in all
material respects and no such representation, warranty or
information contains or contained any untrue statement of a
material fact or, to the knowledge of Buyer and Headway, omits or
omitted to state any material fact necessary in order to make
such representation or warranty, in light of the circumstances
under which it is or was made, not false or misleading. Any
disclosure made pursuant to any of the representations in this
Section 7 shall be deemed to have been made for purposes of any
other such representations.
8. Survival of Representations and Warranties. All
representations and warranties made by any party in this
Agreement or in any document or certificate delivered pursuant to
this Agreement shall survive for a period of two years from the
Closing Date (except that the representations and warranties set
forth in Sections 6.14 and 6.18 relating to Taxes and Benefit
Plans shall survive for a period equal to the statute of
limitations applicable to any claims and liabilities which may
result from a breach thereof) and shall be unaffected by any
investigation made by or on behalf of any party or by any notice
of breach of, or failure to perform under, this Agreement which
is not effectively waived pursuant to Section 5, subject,
however, to the limitations on indemnification set forth in
Section 12.5.
9. Post-Closing Matters.
9.1 Use of Select Staffing Xxxx. Seller grants Buyer
(or its nominee) the right to use the trade name "Select
Staffing" for a period of 90 days following the Closing Date,
alone or in conjunction with the name "Headway", including,
without limitation, the right to (a) publish ads stating that the
Select Staffing offices located in Richmond, Hampton and Virginia
Beach, Virginia are now part of the Headway group of companies
and (b) identify on invoices and other correspondence and/or have
its staff answer the telephone and identify such offices as
"Select/Headway" or "Headway/Select". Buyer (or its nominee)
shall obtain Seller's prior approval for any other written use of
"Select Staffing", which approval shall not be unreasonably
withheld. Seller agrees to respond to such request within 24
hours of receipt thereof, and, if such response is not received
within such 24-hour period, the request shall be deemed granted.
9.2 Seller's Employees. Buyer shall, after conferring
with Xxxxxx in such regard, inform Seller reasonably prior to the
Closing Date as to whether it wishes to employ any employees
employed by Seller in connection with the Business, and if it
wishes to do so, the names of such employees and the positions
and compensation Buyer proposes to offer them. Seller shall
permit Buyer to offer employment to such employees on the terms
proposed by Buyer prior to the Closing Date. Immediately prior
to the Closing Date, Seller shall inform any of Seller's
employees to whom Buyer does not offer employment, or who do not
accept Buyer's offer of employment if made, that they shall be
relieved of their duties with respect to the business of Seller
being acquired by Buyer hereunder, effective on the Closing Date.
All liabilities and obligations associated with the termination
of employment by Seller of any of its employees to whom Buyer
does not offer employment or who do not accept Buyer's offer of
employment under contract or applicable law or otherwise shall be
the sole responsibility of Seller, and Seller and Xxxxxx, jointly
and severally, shall discharge and indemnify, defend and hold
harmless Buyer and Headway and their respective officers,
directors, employees, agents and shareholders from all such
obligations and liabilities.
9.3 Seller Financial Statements. On or prior to April
30, 1998, Seller and Xxxxxx shall have prepared and delivered to
Buyer and Headway (a) audited financial statements with respect
to the Business for the fiscal year ending December 31, 1997, (b)
audited issued financial statements of Seller for the fiscal
years ended December 31, 1996 and December 31, 1997 and (c)
unaudited financial statements with respect to the Business as of
and for the three-month periods ending March 31, 1997, June 30,
1997 and September 31, 1997. The financial statements shall be
prepared at the expense of Seller and Xxxxxx in accordance with
generally accepted accounting principles applied on a basis
consistent throughout all periods presented and on an accrual
basis. The audited financial statements may be prepared by
Seller's accounting firm as long as the firm is a member of the
SEC Practice section of the AICPA and agrees to provide the
consents required for the inclusion of their audit reports in any
filings made by Headway with the Securities and Exchange
Commission that require inclusion of any of such financial
statements.
9.4 Buyer Financial Statements and Billing Reports.
Buyer agrees, for the period from the Closing Date until the end
of the third Earnout Period, to provide Seller with unaudited
monthly financial statements with respect to the Business within
45 days after the end of each such month, commencing with the
month ending April 30, 1998. Such financial statements shall not
contain footnotes and may be subject to later adjustments and/or
revisions by Buyer. Buyer agrees to provide Seller, as promptly
as available, billing reports with respect to the Business for
the period from the Closing Date through March 31, 1998.
9.5 Further Assurances. Whenever reasonably requested
to do so by a party to this Agreement, on or after the Closing
Date, any other party shall do, execute, acknowledge and deliver
all such acts, bills of sale, assignments, confirmations,
consents and any and all such further instruments and documents,
in form reasonably satisfactory to the requesting party, as shall
be reasonably necessary or advisable to carry out the intent of
this Agreement, including, without limitation, to vest in Buyer
all of the right, title and interest of Seller in and to the
Acquired Assets.
9.6 Authorization to Buyer. Without limiting in any
respect the right, title and interest in and to the Acquired
Assets to be acquired by Buyer hereunder, Seller irrevocably
authorizes, effective upon the Closing Date, Buyer and its
successors and assigns, to demand and receive, from time to time,
any and all of the Acquired Assets, to give receipts and releases
for or in respect of the same, to collect, assert or enforce any
claim, right or title of any kind therein or thereto and, for
such purpose, from time to time, to institute and prosecute in
the name of Seller (but only if Seller consents to such use of
its name), or otherwise, any and all proceedings at law, in
equity or otherwise, which Buyer shall deem expedient or
desirable. Each of Xxxxxx and Seller hereby waives any right to
challenge the transactions contemplated by this Agreement
pursuant to sections 270 through 281 of the New York Debtor and
Creditor Law, 11 U.S.C. 547, 548 or 550 or any other similar
state or federal statutes and shall use his or its best efforts
to prevent any third party from exercising or enforcing any such
rights or remedies, and Xxxxxx, Seller and Seller's officers and
directors shall cooperate in the defense of Headway and Buyer
with respect to any such claims.
9.7 Correspondence. Seller authorizes Buyer, on and
after the Closing Date, to receive and open mail addressed to
Seller and to deal with the contents thereof in a responsible
manner; provided, that such mail relates to the Acquired Assets
or to the business of Seller to be carried on by Buyer. Buyer
shall promptly deliver to Seller all other mail addressed to
Seller which is received by Buyer. Seller shall have the right,
on its request and its expense, to inspect any such mail
addressed to it and retained by Buyer and to make copies thereof.
10. NonCompetition.
10.1 General. Each of Seller and Xxxxxx agrees, for a
period of five years after the Closing Date (the "Term"), that it
or he shall not, directly or indirectly:
(a) within a 75-mile radius of the Richmond, Hampton,
Norfolk and Virginia Beach, Virginia locations (the "Market
Area"), engage, for or on behalf of itself or any person or
entity other than Buyer or Headway, in the business of the
placement or provision of temporary, permanent, leased or
payrolled personnel (including self-incorporated personnel);
(b) solicit or attempt to solicit business for
services offered by Seller, Buyer or Headway from any parties who
(i) are clients of Seller (with respect to the Business) on the
Closing Date or at any time during the 12 months prior to the
Closing Date or to whom Seller (in connection with the Business)
has made or makes proposals for services during the 12 months
preceding the Closing Date or (ii) are clients of Buyer or
Headway during the Term or to whom Buyer or Headway makes
proposals for services during the Term;
(c) within the Market Area, otherwise divert or
attempt to divert from Buyer or Headway any business involving
the placement or provision of temporary, permanent, leased or
payrolled personnel (including self-incorporated personnel) of
the type now or during the Term conducted by Seller (with respect
to the Business), Buyer or Headway;
(d) solicit or attempt to solicit for any business
endeavor any employee of Buyer or Headway, including any employee
of Seller who is employed by Buyer after the Closing Date; or
(e) render any services as a joint venturer, partner,
consultant or otherwise to, or have any interest as a
stockholder, partner, member, lender or otherwise in, any person
or entity which is engaged in activities which, if performed by
Seller or Xxxxxx, would violate this Section 10.1.
The foregoing shall not prevent (a) Seller or Xxxxxx from
purchasing or owning (i) up to 5% of the voting securities of any
corporation, the securities of which are publicly-traded, or (ii)
any interest in any entity which is not also engaged in the
business of the placement or provision of temporary, permanent,
leased or payrolled personnel (including self-incorporated
personnel) and (b) Seller from conducting its business, as
presently conducted outside of the Market Area. Notwithstanding
the foregoing, to the extent that, in any particular instance,
Seller wishes to provide a temporary employee specializing in
information technology to any of its clients in the Market Area,
Seller may fill such assignment itself but only after Seller has
subcontracted such assignment to Headway and Headway is unable to
fill such assignment within 30 days after the request thereof of
Seller. References to Headway and Buyer in this Section 10 shall
also be deemed to refer to their respective divisions and
subsidiaries.
10.2 Injunctive Relief. Because Buyer and Headway
would not have an adequate remedy at law to protect their
businesses from any breach of the provisions of Section 10.1,
Buyer and Headway shall be entitled, in the event of such a
breach or threatened breach thereof by Seller or Xxxxxx, to
injunctive relief, in addition to such other remedies and relief
that would be available to Buyer. In the event of such a breach,
in addition to any other remedies, Buyer and Headway shall be
entitled to receive from Seller and Xxxxxx, jointly and
severally, payment of, or reimbursement for, their reasonable
attorneys' fees and disbursements incurred in successfully
enforcing any such provision. The provisions of this Section 10
shall survive the Closing Date.
11. Bulk Sales. Buyer waives compliance by Seller
with the provisions of any applicable bulk sales law. Seller
shall promptly pay or otherwise discharge all valid claims of its
creditors (as defined by the applicable bulk sales law), as and
when they become due and payable (in accordance with Seller's
customary and commercially reasonable practices), and Seller and
Xxxxxx, jointly and severally, shall indemnify and hold harmless
Buyer and Headway from any and all liabilities, costs and
expenses (including, without limitation, reasonable attorneys'
fees and disbursements) incurred by Buyer and arising from the
failure of Seller to satisfy the claims of such creditors.
12. Indemnification.
12.1 Obligations of Seller and Xxxxxx. Seller and
Xxxxxx, jointly and severally, shall indemnify, defend and hold
harmless Buyer and Headway and their respective officers,
directors, employees, agents, shareholders, successors and
assigns from and against any Damages (as defined in Section 12.3)
in connection with:
(a) any breach of any representation, warranty or
agreement of either Seller or Xxxxxx contained in this Agreement
or in any certificate, instrument or other agreement delivered by
either of them in connection with this Agreement;
(b) all Unassumed Liabilities and the operation of
Seller's business (including the Business) at any time prior to
the Closing Date;
(c) the termination of the employment of any of
Seller's employees, as contemplated in Section 9.2; and
(d) any claim, action, suit or proceeding asserted or
instituted on the basis of any matter described in clauses (a),
(b) or (c) of this Section 12.1;
provided, however, that, except in connection with liabilities
under clauses (b) or (c) above, the breach of the representations
and warranties set forth in Sections 6.14 and 6.18 relating to
Taxes and Benefit Plans or the breach of the provisions set forth
in Section 10 relating to non-competition (as to which the
limitations of these provisos shall not apply), no payment
hereunder shall be required to be made by Seller or Xxxxxx unless
and until the aggregate amount of any such losses, damages,
liabilities, costs and expenses exceeds $25,000 and Seller and
Xxxxxx shall not be required to make payments hereunder in excess
of $2,000,000.
12.2 Obligations of Buyer and Headway. Buyer and
Headway, jointly and severally, shall indemnify, defend and hold
harmless Seller and Xxxxxx and their respective heirs, executors,
officers, directors, employees, agents, shareholders, successors
and assigns, as applicable, from and against any Damages in
connection with:
(a) any breach of any representation, warranty or
covenant of either Buyer or Headway contained in this Agreement
or in any certificate, instrument or other agreement delivered by
either of them in connection with this Agreement;
(b) all Assumed Liabilities and the operation by Buyer
of the Business at any time on or after the Closing Date; and
(c) any claim, action, suit or proceeding asserted or
instituted on the basis of any matter described in clauses (a) or
(b) of this Section 12.2;
provided, however, that, except in connection with clause (b)
above, no payment hereunder shall be required to be made by Buyer
or Headway unless and until the aggregate amount of any such
losses, damages, liabilities, costs and expenses exceeds $25,000
and Buyer and Headway shall not be required to make payments
hereunder in excess of $2,000,000.
12.3 Damages. For purposes of this Section 12,
"Damages" means any loss, liability, damage or expense suffered
or incurred by a party in connection with the matters described
in Sections 12.1 or 12.2, as the case may be, including, without
limitation, assessments, fines, penalties, judgments,
settlements, costs, reasonable attorneys' fees and reasonable
disbursements and other reasonable out of pocket expenses of the
party incident to any matter as to which the party is entitled to
indemnification under such Sections, or incident to any
allegations or claims which, if true, would give rise to Damages
subject to indemnification hereunder, or incident to the
enforcement by the party of its rights and remedies under this
Section 12.
12.4 Proceedings. Any party seeking indemnification
pursuant to this Section 12 (the "Indemnified Party") shall give
the party from which indemnification is sought (the "Indemnifying
Party") prompt notice of any claim, allegation, action, suit or
proceeding which it believes might give rise to indemnification
under this Section 12, stating the nature and extent of any such
claim, allegation, suit or proceeding with reasonable
specificity, and the amount thereof, if known. Any failure to
give such notice shall not affect the indemnification provided
hereunder except to the extent that the Indemnifying Party is
actually prejudiced as a result of such failure. The
Indemnifying Party shall have the right to participate in, and,
with the consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed, to control, the defense
of any such claim, allegation, action, suit or proceeding, at the
Indemnifying Party's expense, and with counsel of its own
choosing reasonably acceptable to the Indemnified Party;
provided, however, that if Buyer and Headway are the Indemnified
Parties, they shall have the right to withhold such consent and
to retain control of such defense in the case of any claim,
action, suit or proceeding with respect to which an adverse
outcome could have a material adverse effect on Buyer or Headway,
with the expense of any counsel retained by Buyer and Headway in
any such instance to be at Buyer's and Headway's expense. No
settlement or compromise of any such claim, action, suit or
proceeding shall be made without the prior consent of the
Indemnified Party and the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed by either of them.
12.5 Limitations on Indemnification. No right to
indemnification may be asserted under this Section 12 after the
second anniversary of the Closing Date, except any such rights to
indemnification arising in connection with (a) any matter
referred to in Sections 6.14 or 6.18, none of which shall be
subject to any time limitation other than any statutes of
limitation applicable to such matters, (b) any matter covered by
Section 10 or (c) any claim as to which the notice required by
Section 12.4 has been given on or prior to the third anniversary
of the Closing Date.
12.6 Offset. It is agreed that, without limiting any
other rights of Buyer and Headway, they shall have the right to
set off against and deduct from any amounts payable pursuant to
the provisions of Section 1.3 the amount of any Damages for which
they are entitled to indemnification under this Section 12 and
the amount of any unpaid Deficiency Amount, if any, under Section
1.3(e). In order to set off any such indemnity claim against any
amount payable to Seller pursuant to Section 1.3, Buyer must, in
each instance, provide a certificate to Seller setting forth the
claim in reasonable detail. If Seller does not agree to such
claim in writing within 10 days after delivery of such notice,
Buyer agrees (a) to deposit into escrow, in an interest bearing
account, the amount of such claim, with Xxxxxxx & Xxxxxx as
escrow agent, under a form of escrow agreement to be mutually
agreed by the parties, with the costs of such escrow arrangement
to be borne equally by the parties, and (b) to utilize the
arbitration procedures set forth in Section 13 to resolve such
claim.
13. Arbitration.
13.1 General. Any controversy or claim arising out of
or relating to this Agreement shall be finally resolved by
arbitration pursuant to the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that this
Section 13.1 shall not in any way affect the right of Buyer and
Headway to seek injunctive relief or any other remedies pursuant
to Section 10.2. Any such arbitration shall take place in New
York, New York, before three arbitrators, one of which shall be
appointed by Buyer or Headway, one by Seller and Xxxxxx, and the
third by the arbitrators so appointed; provided, however, that
the parties may by mutual agreement designate a single
arbitrator. The parties further agree that (i) the arbitrators
shall be empowered to include arbitration costs and attorney fees
in the award to the prevailing party in such proceedings and (ii)
the award in such proceedings shall be final and binding on the
parties. The arbitrators shall apply the law of the State of New
York, exclusive of conflict of laws principles, to any dispute.
Judgment on the arbitrators' award may be entered in any court
having the requisite jurisdiction. Nothing in this Agreement
shall require the arbitration of disputes between the parties
that arise from actions, suits or proceedings instituted by third
parties.
13.2 Consent to Jurisdiction; Service of Process. Each
party irrevocably submits to the jurisdiction and venue of the
arbitration described in Section 13.1 and to the jurisdiction and
venue of the federal and state courts sitting in New York County,
New York, for the enforcement of any judgment on the arbitrators'
award, and waives any objection it may have with respect to the
jurisdiction of such arbitrations or courts or the inconvenience
of such forums or venues. Buyer and Headway appoint Messrs.
Xxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq., and Seller and Xxxxxx
appoint Messrs. Hunton & Xxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxx
0000, XxXxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Esq.,
as their respective attorneys-in-fact and authorized agents
solely to receive on their behalf, service of any demands for, or
any notice with respect to, arbitration hereunder or any service
of process. Service on either of such attorneys-in-fact may be
made by registered or certified mail or by personal delivery, in
any case return receipt requested, and shall be effective as
service on Buyer and Headway or Seller and Xxxxxx, as the case
may be. Nothing herein shall be deemed to affect any right to
serve any such demand, notice or process in any other manner
permitted under applicable law.
14. Miscellaneous.
14.1 Entire Agreement; Amendments; No Waivers. This
Agreement, together with the Schedules, sets forth the entire
understanding of the parties with respect to its subject matter
and merges and supersedes all prior and contemporaneous
understandings of the parties with respect to its subject matter.
No provision of this Agreement may be waived or modified, in
whole or in part, except by a writing signed by each of the
parties. Failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver of its rights under
such or any other provision. No waiver of any provision of this
Agreement in any instance shall be deemed to be a waiver of the
same or any other provision in any other instance.
14.2 Communications. All notices, consents and other
communications given under this Agreement shall be in writing and
shall be deemed to have been duly given (a) when delivered by
hand or by Federal Express or a similar overnight courier to, (b)
five days after being deposited in any United States post office
enclosed in a postage prepaid registered or certified mail
envelope addressed to, or (c) when successfully transmitted by
facsimile (with a confirming copy of such communication to be
sent as provided in (a) or (b) above) to, the party for whom
intended, at the address or facsimile number for such party set
forth below, or to such other address or facsimile number as may
be furnished by such party by notice in the manner provided
herein; provided, however, that any notice of change of address
or facsimile number shall be effective only on receipt.
If to Buyer or Headway: with a copy to:
Headway Corporate Resources, Inc. Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, President Atten: Xxxxxxxx X.
Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
If to Seller or Xxxxxx: with a copy to:
Xx. Xxxx X. Xxxxxx, Xx. Hunton & Xxxxxxxx
Select Staffing Services, Inc. 0000 Xxxxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxx Xxxxx 0000
Xxxxx 0000 XxXxxx, Xxxxxxxx 00000
XxXxxx, Xxxxxxxx 00000 Attention: Xxxxxx X.
Xxxxxx, Esq.
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
14.3 Successors and Assigns. This Agreement shall be
binding on, enforceable against and inure to the benefit of, the
parties and their respective heirs, successors and permitted
assigns (whether by merger, consolidation, acquisition or
otherwise), and nothing herein is intended to confer any right,
remedy or benefit upon any other person. No party may assign its
rights or delegate its obligations under this Agreement without
the express written consent of all of the other parties;
provided, however, that Buyer may assign its rights or delegate
its obligations hereunder, either before or after the Closing
Date, to Headway or any other wholly-owned subsidiary of Headway.
14.4 Expenses. Each of the parties shall bear and pay,
without any right of reimbursement from any other party, all
costs, expenses and fees incurred by it or on its or his behalf
incident to the preparation, execution and delivery of this
Agreement and the performance of such party's obligations
hereunder, whether or not the transactions contemplated in this
Agreement are consummated, including, without limitation, the
fees and disbursements of attorneys, accountants and consultants
employed by such party, and shall indemnify and hold harmless the
other parties from and against all such fees, costs and expenses.
14.5 Brokers and Finders. Each party represents to the
others that no agent, broker, investment banker, financial
advisor or other person or entity is or shall be entitled to any
broker's or finder's fee or other commission or similar fee in
connection with the transactions contemplated by this Agreement.
Each party shall indemnify and hold harmless the others from and
against any claim, liability or obligation with respect to any
fees, commissions or expenses asserted by any person or entity on
the basis of any act or statement alleged to have been committed
or made by such indemnifying party or any of its affiliates.
14.6 Public Announcements. No oral or written public
announcement or disclosure with respect to this Agreement and the
transactions contemplated herein prior to the Closing Date shall
be made by or on behalf of any party without the prior approval
of the other parties, except to the extent required by applicable
securities laws or the rules and regulations of any stock
exchange, by court order or as otherwise required by law.
14.7 Governing Law. This Agreement shall in all
respects be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and fully
to be performed in such state, without giving effect to conflicts
of law principles.
14.8 Severability and Savings Clause. If any provision
of this Agreement is held to be invalid or unenforceable by any
court or tribunal of competent jurisdiction, the remainder of
this Agreement shall not be affected thereby, and such provision
shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or
unenforceability. In this regard, the parties agree that the
provisions of Section 10, including, without limitation, the
scope of the territorial and time restrictions, are reasonable
and necessary to protect and preserve Buyer's legitimate
interests. If the provisions of Section 10 are held by a court
of competent jurisdiction to be in any respect unreasonable, then
such court may reduce the territory or time to which it pertains
or otherwise modify such provisions to the extent necessary to
render such provisions reasonable and enforceable.
14.9 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
14.10 Construction. Headings used in this
Agreement are for convenience only and shall not be used in the
interpretation of this Agreement. References to Sections and
Schedules are to the sections and schedules of this Agreement.
As used herein, the singular includes the plural and the
masculine, feminine and neuter gender each includes the others
where the context so indicates.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
HEADWAY CORPORATE RESOURCES, INC. HEADWAY CORPORATE STAFFING
SERVICES OF NORTH CAROLINA,
INC.
By /s/ Xxxxx X. Xxxxxxx By /s/ Xxxxx X. Xxxxxxx
President Treasurer
SELECT STAFFING SERVICES, INC.
By /s/ Xxxx X. Xxxxxx, Xx. /s/ XXXX X. XXXXXX, XX.
President
