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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
STAFFMARK, INC.,
STAFFMARK ACQUISITION CORPORATION TEN
AND
EXPERT BUSINESS SYSTEMS, INCORPORATED
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Closing Date: August 4, 1997
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TABLE OF CONTENTS
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PAGE
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INDEX TO EXHIBITS................................................................................. iv
ARTICLE I. PURCHASE AND SALE OF ASSETS.......................................................... 1
SECTION 1.1. Transfer of Assets............................................................ 1
SECTION 1.2. Consideration for the Transferred Assets...................................... 3
SECTION 1.3. Assumption of Liabilities..................................................... 3
SECTION 1.4. Transfer Taxes................................................................. 4
SECTION 1.5. Allocation of Purchase Price.................................................. 4
SECTION 1.6. Procedures for Assets Not Transferable........................................ 4
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF
THE CORPORATION....................................................................... 4
SECTION 2.1. Organization and Qualification................................................. 4
SECTION 2.2. Corporate Power and Authority.................................................. 5
SECTION 2.3. Shares of the Corporation...................................................... 5
SECTION 2.4. No Violation; Consents......................................................... 5
SECTION 2.5. Subsidiaries and Investments................................................... 6
SECTION 2.6. Books and Records.............................................................. 6
SECTION 2.7. Financial Statements........................................................... 6
SECTION 2.8. Absence of Undisclosed Liabilities............................................. 7
SECTION 2.9. Labor and Employee Relations................................................... 7
SECTION 2.10. Real Property.................................................................. 8
SECTION 2.11 Powers of Attorney; Absence of Limitations on
Competition; Guarantees........................................................ 8
SECTION 2.12. Significant Customers.......................................................... 8
SECTION 2.13. Governmental Approvals......................................................... 8
SECTION 2.14. Absence of Certain Changes; Conduct of Business................................ 8
SECTION 2.15. Certain Practices..............................................................10
SECTION 2.16. Compliance with Law; Licenses and Permits......................................11
SECTION 2.17. Employee Benefits..............................................................11
SECTION 2.18. Fixed Assets...................................................................13
SECTION 2.19. Insurance......................................................................13
SECTION 2.20. Outstanding Contracts..........................................................13
SECTION 2.21. Outstanding Leases.............................................................14
SECTION 2.22. Intellectual Properties........................................................14
SECTION 2.23. Proprietary Information of Third Parties.......................................15
SECTION 2.24. Transactions with Affiliates...................................................15
SECTION 2.25. Taxes..........................................................................15
SECTION 2.26. Litigation.....................................................................16
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SECTION 2.27. Environmental Matters..........................................................16
SECTION 2.28. Broker's or Finder's Fees......................................................17
SECTION 2.29. Disclosure.....................................................................17
SECTION 2.30. Protection of Creditors........................................................17
SECTION 2.31. Accounts Receivable............................................................17
SECTION 2.32. Securities Exemption...........................................................18
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................18
SECTION 3.1. Organization...................................................................18
SECTION 3.2. Corporate Power and Authority..................................................19
SECTION 3.3. Validity, Etc..................................................................19
SECTION 3.4. The Shares.....................................................................19
SECTION 3.5. Disclosure.....................................................................19
SECTION 3.6. Governmental Approvals.........................................................20
ARTICLE IV. COVENANTS AND AGREEMENTS..............................................................20
SECTION 4.1. Cooperation....................................................................20
SECTION 4.2. Best Efforts...................................................................20
SECTION 4.3. Intentionally Omitted..........................................................20
SECTION 4.4. Investigations.................................................................20
SECTION 4.5. Distributions..................................................................20
SECTION 4.6. Corporate Matters..............................................................20
SECTION 4.7. Noncompetition Covenant........................................................21
SECTION 4.8. Intentionally Omitted..........................................................21
SECTION 4.9. Payment of Liabilities.........................................................21
SECTION 4.10. Employees and Consultants......................................................21
SECTION 4.11. Obligations Concerning Employees...............................................22
SECTION 4.12. Corporate Name.................................................................22
SECTION 4.13 Employee Stock Options.........................................................23
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATIONS..................................................23
SECTION 5.1. Representations and Warranties True............................................23
SECTION 5.2. Consents.......................................................................23
SECTION 5.3. No Obstructive Proceeding......................................................23
SECTION 5.4. Opinion of Counsel to the Corporation..........................................23
SECTION 5.5. Closing Documents..............................................................23
SECTION 5.6. Approval of the Buyer and Its Counsel..........................................23
SECTION 5.7 Due Diligence..................................................................24
SECTION 5.8. No Adverse Change..............................................................24
SECTION 5.9. Indemnification Agreement......................................................24
SECTION 5.10. Escrow Agreement...............................................................24
SECTION 5.11. Employment Agreements..........................................................24
SECTION 5.12. Noncompetition Agreements......................................................24
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SECTION 5.13. Additional Agreements..........................................................24
ARTICLE VI. CONDITIONS TO THE CORPORATION'S OBLIGATIONS...........................................24
SECTION 6.1. Representations and Warranties True...........................................24
SECTION 6.2. Closing Documents.............................................................25
SECTION 6.3. No Obstructive Proceeding.....................................................25
SECTION 6.4. Approval of the Corporation and Its Counsel...................................25
SECTION 6.5. Opinion of Counsel to Buyer...................................................25
SECTION 6.6. Earnout Agreement.............................................................25
SECTION 6.7. Registration Rights Agreement.................................................25
SECTION 6.8. Employment Agreement..........................................................25
SECTION 6.9. Additional Agreements.........................................................25
ARTICLE VII. THE CLOSING, AND CERTAIN CLOSING DELIVERIES
AND OTHER MATTERS....................................................................25
SECTION 7.1. Time and Place of the Closing.................................................25
SECTION 7.2. Survival of Representations, Warranties and Covenants.........................26
SECTION 7.3 Remedies......................................................................26
ARTICLE VIII. TERMINATION..........................................................................25
SECTION 8.1. Termination of Agreement......................................................26
SECTION 8.2. Effect of Termination.........................................................27
SECTION 8.3. Other Termination Matters.....................................................27
ARTICLE IX. MISCELLANEOUS.........................................................................27
SECTION 9.1. Knowledge of the Corporation..................................................27
SECTION 9.2. Knowledge of Buyer............................................................27
SECTION 9.3. "Person" Defined..............................................................28
SECTION 9.4. Notices.......................................................................28
SECTION 9.5. Entire Agreement..............................................................29
SECTION 9.6. Modifications and Amendments..................................................29
SECTION 9.7. Assignment/Binding Effect.....................................................29
SECTION 9.8. Parties in Interest...........................................................29
SECTION 9.9. Governing Law.................................................................29
SECTION 9.10. Severability..................................................................29
SECTION 9.11. Interpretation................................................................30
SECTION 9.12. Headings and Captions.........................................................30
SECTION 9.13. Reliance......................................................................30
SECTION 9.14. Expenses......................................................................30
SECTION 9.15. Gender........................................................................30
SECTION 9.16. Publicity.....................................................................30
SECTION 9.17. Counterparts..................................................................30
SECTION 9.18. Telecopy Execution and Delivery...............................................30
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INDEX TO EXHIBITS
EXHIBIT A -- Form of the Xxxx of Sale and Assignment
EXHIBIT B -- Form of the Earnout Agreement
EXHIBIT C -- Form of the Assumption Agreement
EXHIBIT D -- Form of the Indemnification Agreement
EXHIBIT E -- Form of the Escrow Agreement
EXHIBIT F -- Form of the Noncompetition Agreement
EXHIBIT G -- Form of the Registration Rights Agreement
INDEX TO SCHEDULES
Schedule 1.1 -- The Transferred Assets
Schedule 1.1.2 -- The Excluded Assets
Schedule 1.5 -- Allocation of Consideration for the Transferred Assets
Schedule 2.1 -- Organization and Qualification
Schedule 2.3 -- Shares of the Corporation
Schedule 2.4 -- No Violation; Consents
Schedule 2.7 -- Financial Statements
Schedule 2.7.1 -- Change in Financial Statements
Schedule 2.9 -- Labor and Employee Relations
Schedule 2.11 -- Powers of Attorney; Absence of Limitations on
Competition; Guarantees
Schedule 2.12 -- Significant Customers
Schedule 2.14 -- No Adverse Change
Schedule 2.16 -- Compliance with Law
Schedule 2.17 -- Employee Benefits
Schedule 2.17.1 -- Employee Compensation
Schedule 2.18 -- Claims on Fixed Assets
Schedule 2.19 -- Insurance
Schedule 2.20 -- Outstanding Contracts
Schedule 2.20.1 -- Notice of Contract Defaults
Schedule 2.20.2 -- Termination of Contracts
Schedule 2.20.3 -- Limitations on Contracts
Schedule 2.20.4 -- Contracts Requiring Consent of Other Party
Schedule 2.21 -- Leases
Schedule 2.22 -- Intellectual Properties
Schedule 2.23 -- Proprietary Information of Third Parties
Schedule 2.24 -- Transactions with Affiliates
Schedule 2.26 -- Litigation
Schedule 2.27 -- Environmental Matters
Schedule 2.28 -- Brokers
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into this
4th day of August, 1997, by and among StaffMark, Inc., ("StaffMark"), a
Delaware corporation, StaffMark Acquisition Corporation Ten, a Delaware
corporation and wholly-owned subsidiary of StaffMark ("SAC", and collectively
with StaffMark, the "Buyer"), and Expert Business Systems, Incorporated, a
Texas corporation (the "Corporation").
RECITALS
WHEREAS, the Corporation is engaged in the business of providing
information technology consulting and staffing services, personal computer and
help desk services, distributed services, application development, project
management, systems management, power protection and recover services (the
"Business");
WHEREAS, the Corporation is the owner of all right, title and interest
in and to the assets described in Section 1.1 hereto, with such assets being
substantially all of the assets currently used by the Corporation in the
Business; and
WHEREAS, the Corporation desires to sell substantially all of its
assets to the Buyer, and the Buyer desires to purchase, through SAC, the assets
from the Corporation, all pursuant to this Agreement as hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
SECTION 1.1. Transfer of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing the Corporation shall
transfer to SAC, free and clear of all claims, charges, liens, contracts,
rights, pledges, options, security interests, mortgages, encumbrances and
restrictions whatsoever (collectively, "Claims"), all of the assets, properties
and rights owned as of the date of this Agreement by the Corporation or in
which the Corporation has any right or interest of every type and description,
real, personal and mixed, tangible and intangible, liquidated or contingent
(other than the Excluded Assets as hereinafter defined) relating to the
Business, including, without limitation the assets listed on Schedule 1.1 and
the following:
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(a) Generally. Cash, accounts receivable, business agreements,
property, equipment, inventory, goodwill, supplier lists, customer
lists, prepaid insurance, licenses and permits (that are
transferrable), processes, service marks, trade secrets, computers and
computer equipment, files and other records (other than corporate
minute books, financial records and tax records), systems and
processes, security deposits, memberships (that are transferrable),
contracts, leasehold interests, leasehold and other improvements (that
are transferrable), machines, machinery, furniture, fixtures, supplies,
all rights and claims under insurance policies and other contracts of
whatever nature, all causes of action, claims and demands by the
Corporation relating to all of the assets set forth in this Section
1.1.
(b) Name and Related Items. The name "Expert Business Systems,
Incorporated" and any variants thereof, all copyrights, copyright
applications, trade names, trademarks, service marks and logos (whether
or not registered) related thereto; the Corporation's transferable
interest in the phone number (000) 000-0000, the facsimile number (817)
000- 0000, and other phone and facsimile numbers for the Business
existing as of Closing.
(c) Agreements and Contracts. All orders, bids, quotations,
contracts, and other agreements with or related to present and
prospective clients of the Business and all amendments, updates,
customer files, lists, records, studies, surveys, reports,
correspondence and other similar materials related to the foregoing;
(d) Employee Agreements and Information. All employment
agreements and contracts for those individuals listed on Schedule
2.17.1 (the "Employees") and all rights thereunder and copies of the
information for each Employee as indicated on such Schedule 2.17.1 and
any additional employment agreements or contracts entered into prior to
the Closing (collectively, the "Employee Information"); provided,
however, the transfer of all rights relating to such employees shall be
made only upon the termination of the Employee Leasing Agreement if
executed between the parties.
(e) Records. All books, records, lists and reports, including
but not limited to, resumes and resume files, related to the Business
whether or not currently being utilized by the Business (other than
corporate minute books, financial records and tax records)
(collectively, the "Records");
(f) Electronic Data. All electronic information and data
related to the Business wherever located (collectively, the
"Electronic Data"); and
(g) Additional Information. All sales, advertising and
promotional literature and materials, advertising and advertising copy
and other similar materials on which solely appears the name and such
other materials which are currently in the possession of stockholder of
the Corporation and the Employees on which appear the name "Expert
Business Systems, Incorporated," or any form thereof.
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All of the foregoing assets shall be referred to collectively as the
"Transferred Assets".
SECTION 1.1.1. Instruments of Conveyance and Transfer.
(a) The Corporation shall transfer the Transferred Assets to the
Buyer pursuant to a Xxxx of Sale and Assignment in substantially the
form of Exhibit A attached hereto (the "Assignment Agreement"), and in
and such other documents and instruments relating thereto as the Buyer
or its counsel may reasonably request.
(b) At any time and from time to time after the Closing Date, at
the request of the Buyer, without further consideration, the
Corporation shall execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to
the Buyer and to confirm the Buyer's title to the Transferred Assets.
SECTION 1.1.2. Excluded Assets. Notwithstanding any provision of this
Agreement to the contrary, there shall be excluded from the Transferred Assets
and retained by the Corporation the assets and rights listed on Schedule 1.1.2
hereto (the "Excluded Assets").
SECTION 1.2. Consideration for the Transferred Assets. In consideration
for the transfer of the Transferred Assets, upon the terms and subject to the
conditions set forth in this Agreement, the Buyer shall pay to the Corporation
an aggregate purchase price (the "Purchase Price") as follows:
(a) At the Closing, Buyer shall deliver to the Corporation a
promissory note in the form attached hereto as Exhibit AA (the
"Promissory Note") pursuant to which Buyer will pay or deliver to the
Corporation: (i) 105,611 shares of StaffMark common stock, $.01 par
value, (the "Closing Shares"); and (ii) $3,784,945.49 in cash; and
(b) At the Closing Buyer shall deliver cash in the amount of
$260,329.50 to the Corporation via wire transfer; and
(c) At the Closing, Buyer shall deposit into escrow with
Mercantile Bank National Association, St. Louis, Missouri, the
following: (i) 17,889 shares of StaffMark common Stock (together with
the Closing Shares, the "Shares"); and (ii) $125,371.02 in cash; and
(d) Buyer shall pay to the Corporation the earnout amounts
pursuant to and in accordance with the "Earnout Agreement," the form of
which is attached hereto as Exhibit B attached hereto.
SECTION 1.2.1 Agreed Value. For purposes of this Agreement, the term
"Agreed Value" shall be $21.725.
SECTION 1.3. Assumption of Liabilities. In connection with its
acquisition of the Transferred Assets, Buyer agrees to assume and discharge the
obligations and liabilities reflected in
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or on an exhibit to the Assumption Agreement, the form of which is attached
hereto as Exhibit C (the "Assumption Agreement") and agrees to enter into the
Assumption Agreement at the Closing. Except for the Assumed Liabilities, the
Buyer shall not assume or be responsible for any other liabilities or
obligations which relate in any manner to the Corporation prior to the Closing
Date.
SECTION 1.4. Transfer Taxes. Buyer and the Corporation acknowledge and
agree that for any sales, use, transfer or other similar tax purposes, the
Purchase Price is deemed to have been paid by Buyer to the Corporation pursuant
to this Agreement and includes and is inclusive of any and all sales, use,
transfer or other similar tax imposed as a result of the consummation of the
transactions contemplated by this Agreement. The Corporation hereby agrees to
pay and discharge, and to indemnify Buyer against, and protect, save and hold
Buyer harmless from, any liability, obligation, claim, assessment or deficiency
(whether or not ultimately successful) for any and all sales, use, transfer or
other similar taxes, but excluding Arkansas Sales and Use Tax, if any, (and any
and all interest, penalties, additions to tax and fines thereon or related
thereto) resulting or arising from or incurred in connection with the
consummation of the transactions contemplated by this Agreement, except to the
extent such tax liability is incurred as a result of any act or omission of
Buyer or StaffMark.
SECTION 1.5. Allocation of Purchase Price. The consideration paid and
the liabilities assumed by Buyer pursuant to Sections 1.2 and 1.3 above shall
be allocated among the Transferred Assets purchased hereunder as set forth on
Schedule 1.5 attached hereto. The Corporation and Buyer each hereby covenant
and agree that none of them will take a position on any income tax return,
before any governmental agency, or in any judicial proceeding that is in any
way inconsistent with the allocation set forth on Schedule 1.5. Each party
shall duly and timely file a Form 8594 with its appropriate tax returns.
SECTION 1.6. Procedures for Assets Not Transferable. Following the
Closing, the Corporation shall use all reasonable efforts to obtain any
consents not previously obtained as soon as possible after the Closing Date.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Corporation represents and
warrants to the Buyer as follows:
SECTION 2.1. Organization and Qualification. The Corporation is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. The Corporation is duly qualified or otherwise
authorized to transact business and is in good standing as a foreign
corporation in each jurisdiction set forth on Schedule 2.1 attached hereto,
which are all jurisdictions in which either the ownership or use of its
properties, or the nature of the activities conducted by it, requires such
authorization or qualification. The Corporation has made available
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to the Buyer complete and correct copies of its Certificate of Incorporation
and its By-laws as currently in effect.
SECTION 2.2. Corporate Power and Authority. The Corporation has the
corporate power and authority to own and hold its properties and to carry on
its business as now conducted, including the right to use the name "Expert
Business Systems, Incorporated," and any fictitious names currently being used
in the geographic area presently served by it. The Corporation (a) has the full
power and authority to execute, deliver and perform this Agreement, the
Exhibits and the Schedules hereto and the other documents and instruments
contemplated hereby (collectively this Agreement, the Exhibits and Schedules
hereto, and the other documents and instruments contemplated hereby shall
constitute the "Documents") and to consummate the transactions contemplated
hereby and thereby, and (b) this Agreement and the other Documents have been
duly and validly executed and delivered by the Corporation and constitute valid
and binding obligations of the Corporation, enforceable against the Corporation
in accordance with their terms.
SECTION 2.3. Shares of the Corporation. The Corporation has authorized
capitalization consisting of 20,000,000 shares of common stock, no par value,
of which 10,250,000 shares are issued and outstanding and no shares are held as
treasury stock. All shares have been duly authorized and validly issued and are
fully paid and nonassessable, and such shares have been so issued in full
compliance with all federal and state securities laws. None of the shares have
been issued in violation of any pre-emptive right. The Corporation has no other
equity securities or other evidence of ownership outstanding other than the
shares possessed by the Corporation's stockholders. Except as set forth in this
Agreement or on Schedule 2.3, there are no outstanding subscriptions, options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase,
issuance, transfer or sale of any of the equity securities of the Corporation
or other evidence of ownership in the Corporation. Except as set forth on
Schedule 2.3, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Corporation. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting capital stock of the Corporation.
SECTION 2.4. No Violation; Consents. Except as set forth on Schedule
2.4, neither the execution and delivery of this Agreement or the other
Documents, the consummation of the transactions contemplated hereby or thereby,
nor the performance of this Agreement or the other Documents and such other
agreements in compliance with the terms and conditions hereof and thereof by
the Corporation will: (i) violate or result in any breach of any trust
agreement, Articles of Incorporation, Bylaws, judgment, decree, order, statute
or regulation applicable to the Corporation; (ii) violate or result in a
breach, default or termination or give rise to any right of termination,
cancellation or acceleration of the maturity of any payment date of any of the
material obligations of the Corporation or increase or otherwise affect the
obligations of the Corporation under any law, rule, regulation or any judgment,
decree, order, governmental permit, license or order or any of the terms,
conditions or provisions of any material mortgage, indenture, note, license,
agreement or other instrument or obligation related to (x) the Corporation or
(y) the Corporation's ability to consummate the transactions contemplated
hereby or thereby, except for such defaults (or
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rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained in writing and provided to the Buyer;
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Corporation; (iv) result in the creation of any claims,
charges, liens, contracts, rights, options, security interests, mortgages,
encumbrances or restrictions whatsoever (collectively, the "Claims") upon the
assets of the Corporation; or (v) require the consent, waiver, authorization or
approval of any federal, state or local government or governmental department,
agency, board, commission, bureau, instrumentality, or public or self
regulatory body or authority, or of any other Person, entity or organization.
The Corporation will give any required notices to third parties, and the
Corporation will obtain any third party consents required to be obtained due to
the consummation of the transactions contemplated hereby.
SECTION 2.5. Subsidiaries and Investments. The Corporation has no
subsidiaries and does not own, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any other corporation,
partnership, association, trust, joint venture or other entity.
SECTION 2.6. Books and Records. The minute books of the Corporation,
which have been and will be made available to the Buyer and its
representatives, contain accurate records of all meetings of and actions or
written consents by the respective officers, directors and shareholders of the
Corporation set forth in such minute books. The Corporation does not have any
of its records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by
any means (including electronic, mechanical or photographic process whether
computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Corporation. The Employee Information, the Records, and the Electronic Records
are true and correct and accurately reflect the operations of the Business and
have been maintained consistent with past practices.
SECTION 2.7. Financial Statements. The Corporation has previously
furnished to the Buyer, and attached hereto as Schedule 2.7 are, the compiled
balance sheet of the Corporation as of December 31, 1996, the related
statements of income and expenses for the fiscal year then ended, and the
compiled balance sheet of the Corporation (the "Balance Sheet") as of June 30,
1997 (the "Balance Sheet Date") and the related statements of income and the
expenses for the six months then ended. All such financial statements (the
"Financial Statements") have been prepared in accordance with generally
accepted accounting principles ("GAAP") on a consistent basis and were prepared
from the books and records of the Corporation. Such books and records are
complete and correct in all material respects, accurately reflect all
transactions of the Corporation, and have been made available to Buyer for
examination. The Financial Statements fairly present the financial position of
the Corporation as of the dates thereof and the results of its operations for
the periods ended on the dates thereof. Since the Balance Sheet Date, except as
set forth on Schedule 2.7.1: (i) there has been no change in the assets,
liabilities or financial condition of the business of the Corporation from that
reflected in its Balance Sheet outside the ordinary course of business; and
(ii) none of the business, prospects, financial condition, operations, property
or affairs of the Corporation has been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against. The Balance Sheet reflects, as of the Balance Sheet Date, all
liabilities, debts, and obligations of any nature of the Corporation related to
the Corporation, whether
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accrued, absolute, contingent, or otherwise, and whether due, or to become due,
including, but not limited to, liabilities, debts, or obligations on account of
taxes or other governmental charges or penalties, interest, or fines thereon or
in respect thereof, to the extent such items are required to be reflected on
such Balance Sheet under GAAP.
SECTION 2.8. Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically
reflected or reserved against in its Balance Sheet, the Corporation has
no liabilities or obligations of any nature whatsoever due or to become
due, accrued, absolute, contingent or otherwise, except for liabilities
and obligations incurred since the date thereof in the ordinary course
of business.
(b) The Corporation has adequate workers' compensation coverage
under a full- premium policy and there is no unrecorded liability for
any workers' compensation claim for which the Buyer will be liable. All
referral fees and commissions due to employees for all periods ending
prior to the Closing Date have been properly paid or accrued on the
Balance Sheet.
(c) The Corporation is not bound by any agreement, or subject to
any charter or other corporate restriction or any legal requirement,
which has, or can reasonably be expected to have in the future, a
material adverse effect on the Transferred Assets.
SECTION 2.9. Labor and Employee Relations.
(a) Schedule 2.9 sets forth a list of each employment or
collective bargaining agreement to which the Corporation is a party and
any other employment or collective bargaining agreement which pertain
to employees of the Corporation.
(b) No labor organization or group of employees of the
Corporation has made a pending demand for recognition or certification,
and there are no representation proceedings presently pending or
threatened (in writing) with the National Labor Relations Board or any
other federal, state, or other governmental agency or authority. There
are no other organizing activities involving the Corporation presently
being conducted or threatened (in writing) by any labor organization or
group of employees of the Corporation.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
labor disputes or material grievances pending or threatened (in
writing) against the Corporation, and there have been no actual or
threatened labor disputes or work stoppages within the last three (3)
years. There are no unfair labor practice charges or complaints pending
or threatened (in writing) by or on behalf of any employee or group of
employees of the Corporation.
(d) There are no complaints, charges or claims pending or
threatened (in writing) against the Corporation by any federal, state
or other governmental agency or authority based
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on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Corporation of any
individual.
(e) The Corporation is in compliance with all laws, regulations
and orders relating to the employment, including but not limited to all
such laws, regulations and orders relating to wages, hours, the Workers
Adjustment and Restraining Notification Act, 29 U.S.C. ss. 2201 et.
seq., ("WARN"), the National Labor Relations Act, as amended, 29 U.S.C.
ss. 151 et. seq., and any comparable state or local laws or
regulations, equal employment opportunity discrimination laws or
regulations, civil rights laws or regulations safety and health laws or
regulations, workers' compensation laws or regulations and the
collection and payment of withholding and/or social security taxes.
SECTION 2.10. Real Property. The Corporation owns no real property.
SECTION 2.11 Powers of Attorney; Absence of Limitations on Competition;
Guarantees. Except as set forth in Schedule 2.11: (i) no power of attorney or
similar authorization given by the Corporation presently is in effect or
outstanding as to any of the Transferred Assets; (ii) no contract or agreement
to which the Corporation is a party or is bound or to which the Corporation's
properties or assets is subject expressly prohibits the Corporation from
competing in any line of business or with any Person; and (iii) the Corporation
is not a party to or bound by any guarantee of any debt or obligation of any
other Person which relates to the Transferred Assets.
SECTION 2.12. Significant Customers. Set forth on Schedule 2.12 is a
true and correct list of the Corporation's ten largest customers for the last
fiscal year and the most recent seven-month period ending June 30, 1997,
together with the amount of services attributable to such customers expressed
in dollars and as a percentage of total sales and services. None of the
customers identified on Schedule 2.12 has terminated, reduced, or threatened
(in writing) to terminate or reduce, its request for services of the
Corporation during the period covered by such schedule or prior to the Closing
Date.
SECTION 2.13. Governmental Approvals. No registration or filing with,
or consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Corporation of this Agreement.
SECTION 2.14. Absence of Certain Changes; Conduct of Business. Except
as set forth on Schedule 2.14, during the period from the Balance Sheet Date to
and including the date of this Agreement:
(a) The Corporation has not canceled any indebtedness owing to
it or any claims that it might have possessed, waived any material
rights of substantial value or sold, leased, encumbered, transferred,
or otherwise disposed of, or agreed to sell, lease, encumber, or
otherwise dispose of its assets or permitted any of its assets to be
subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind;
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(b) The Corporation has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, of the Corporation
except in the ordinary course of business;
(c) The Corporation has not made any material changes in the
types, nature, composition or quality of the services of the Business
and there has not been any adverse change in the sales, revenue or net
income of the Business;
(d) The Corporation has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases and licenses) outside the ordinary course of
business;
(e) No party (including the Corporation) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) to which Corporation is a party or by which it is bound
involving more than $10,000 or outside the ordinary course of business;
(f) The Corporation has not allowed any Claims to be imposed
upon any of its assets, tangible or intangible outside the ordinary
course of business;
(g) The Corporation has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$5,000 or outside the ordinary course of business;
(h) The Corporation has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person;
(i) The Corporation has not issued, or agreed to issue, any
note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $2,000 or outside the ordinary
course of business;
(j) The Corporation has not delayed or postponed the payment of
accounts payable or other liabilities outside the ordinary course of
business;
(k) The Corporation has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $3,000 or outside the ordinary course of
business;
(l) The Corporation has not granted any license or sublicense of
any rights under or with respect to any patents, trademarks or
copyrights;
(m) The Corporation has not accelerated collection of accounts
receivables through special inducements or outside the ordinary course
of business;
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(n) The Corporation has not issued, sold or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock;
(o) The Corporation has not declared, set aside, or paid any
dividend or made any distribution with respect to its stockholders
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(p) The Corporation has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
(q) The Corporation has not made any loan to, or entered into
any other transaction with, any of its shareholders, directors,
officers, or employees outside the ordinary course of business;
(r) The Corporation has not entered into any employment
contract, written or oral, or modified the terms of any existing such
contract or agreement outside the ordinary course of business and the
Corporation has not entered into any collective bargaining agreement;
(s) The Corporation has not granted any increase in the base
compensation of any of its directors, officers, or employees outside
the ordinary course of business;
(t) The Corporation has not adopted, amended, modified or
terminated any bonus, profit sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, or employees (or taken any such action with respect to any
other Employee Benefit Plan);
(u) The Corporation has not made any other change in employment
terms for any of its directors, officers, or employees; or
(v) The Corporation has not agreed, whether or not in writing,
to do any of the foregoing.
SECTION 2.15. Certain Practices. Neither the Corporation, nor any of
its officers, directors, shareholders, or employees have, directly or
indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic political activity; made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; made any false or fictitious entry on the books or
records of the Corporation or any subsidiary; made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment; or made any bribe,
kickback, or other payment of a similar or comparable nature, whether lawful or
not, to any person or entity, private or public, regardless of form, whether in
money, business or to
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obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
SECTION 2.16. Compliance with Law; Licenses and Permits. Except as set
forth on Schedule 2.16, the Corporation has complied with all laws, ordinances,
legal requirements, rules, regulations and orders applicable to it, its
operations, properties, assets, products and services. The Corporation
possesses all franchises, permits, licenses, certificates and consents required
from any governmental or regulatory authority in order for the Corporation to
carry on its business as currently conducted and to own and operate its
properties and assets as now owned and operated. All of such licenses and
permits are in full force and effect, and true and correct copies of all such
licenses and permits are included in Schedule 2.16 hereto.
SECTION 2.17. Employee Benefits.
(a) Set forth on Schedule 2.17 is a list of all pension, profit
sharing, retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance, life insurance, fringe benefit,
welfare and other employee benefit plans, programs or arrangements
pursuant to which the Corporation or its ERISA Affiliates provides
(directly or indirectly, individually or jointly through others)
benefits or compensation to or on behalf of employees or former
employees of the Corporation or its ERISA Affiliates, whether formal or
informal, whether or not written ("Employee Plan"). On request by the
Buyer, the Corporation shall furnish a copy of each Employee Plan and a
copy of any related materials. The Corporation will maintain the
benefits listed on Schedule 2.17 in full force and effect through the
Closing Date. Except as set forth on Schedule 2.17, the Buyer shall not
have any obligation or liability of any kind or nature for any
compensation or benefits of any kind or nature to the employees or
consultants of the Corporation for services rendered prior to the
Closing Date. Schedule 2.17.1 hereto sets forth a true and complete
list of the names and current base salary and any bonus or commission
for the prior fiscal year paid by Corporation to each corporate or
administrative employee and each consultant utilized in connection with
the operation of the Business.
(b) Each Employee Plan covering any present or former employee
of the Corporation which is subject to the continuation health coverage
requirements of Section 4980B of the Code or Section 601 of ERISA or
any applicable state law has complied with all such requirements for
continuation coverage.
(c) Except as set forth on Schedule 2.17, there are no actions,
suits or claims pending (other than routine claims for benefits) or
threatened (in writing) against or with respect to any Employee Plan or
the assets of any Employee Plan.
(d) Each Employee Plan (and the related trust or funding
vehicle, if any) has been administered and maintained in material
compliance with its terms and with applicable law. Except as set forth
on Schedule 2.17, each Employee Plan which is intended to be qualified
under Section 401 of the Code and each amendment to such plan is
subject to a favorable
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determination letter from the Internal Revenue Service and each such
plan has at all times been maintained, by its terms and in operation,
in material compliance with Section 401 of the Code. Except with
respect to the Flexible Benefit Spending Account, the assets of each
Employee Plan which is not funded through the general assets of the
Corporation are at least equal to the liabilities under such Employee
Plan, and all assets of each Employee Plan are shown on the books and
records of such Employee Plan at fair market value as of the date
indicated therein. No Employee Plan has unfunded liabilities that as of
the Closing Date are not accurately and fully reflected on the
Corporation's Balance Sheet.
(e) Neither the Corporation nor any of its ERISA Affiliates is
or has been a participant in, or is or has been obligated to maintain
or to make contributions to, a multi-employer plan (within the meaning
of ERISA Section 3(37) and ERISA Section 40001(a)(3)) or an Employee
Plan which is subject to Title IV of ERISA. Neither the Corporation nor
any ERISA Affiliate has sponsored, contributed to or been obligated
under Title I or IV of ERISA to contribute to a "defined benefit plan"
(as defined in ERISA Section 3(35)). The Corporation is not obligated
to provide post-retirement medical benefits or any other unfunded
post-retirement welfare benefits to or on behalf of any persons
whatsoever (except the benefits pursuant to the continuation health
coverage requirements under Section 4980B of the Code, ERISA Section
601, or applicable state law).
(f) Neither the Corporation nor its ERISA Affiliates is subject
to and no facts exist which could subject the Corporation or any of its
ERISA Affiliates to, any liability whatsoever which is directly or
indirectly related to any Employee Plan, including, but not limited to,
liability for benefit payments or related claims, any liability for any
tax or related penalty under the Code, or liability for any damages or
penalties arising under Title I or Title IV of ERISA other than claims
for medical benefits or distribution requests processed in the normal
course of business. No reportable event under Section 4043 of ERISA,
has occurred or will occur with respect to such Employee Plan.
(g) The execution or performance of the transactions
contemplated by this Agreement will not create, accelerate or increase
any obligations under the Employee Plans, including any obligation to
make any payment which would not be deductible as an excess golden
parachute payment under Section 280G of the Code.
(h) All contributions to or under each Employee Plan and all
expenses of each Employee Plan are fully deductible for income tax
purposes for the taxable year for which such contributions are made or
such expenses are paid. All contributions to or under each Employee
Plan have been made when due under the terms of such Employee Plan in
accordance with applicable law.
(i) Neither the Corporation nor its ERISA Affiliates have
entered into any contract, agreement or arrangement (whether oral or
written) under which the Corporation or its ERISA Affiliates have
assumed any liability relating to its clients' retirement plans, nor
have the Corporation and/or its ERISA Affiliates made any verbal
representations that the use of any
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employees of the Corporation or its ERISA Affiliates would have no
adverse consequence on such client retirement plans.
(j) Corporation has not engaged in employee leasing as defined
in this Section 2.17(k). Employee leasing is defined solely for
purposes of this Section 2.17(k) to mean the placement by an employer
(customer) of all or most of its existing work force onto the payroll
of an employee leasing firm and an explicit co-employment relationship
following the termination-lease back.
(k) For purposes of this Section 2.17, the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended,
and the term "ERISA Affiliate" shall mean each trade or business
(whether or not incorporated) which together with the Corporation is
treated as a single employer under Section 414(b), (c), (m), (o) or (t)
of the Code.
(l) All obligations of Corporation to employees under each
Employee Plan for all periods ending prior to the Closing Date have
been properly paid or accrued on the Balance Sheet.
SECTION 2.18. Fixed Assets. Except as shown on Schedule 2.18, the
Corporation has good and marketable title to all of its assets, free and clear
of all claims, liens, mortgages, charges and encumbrances. All of the assets
owned by the Corporation and any property leased is adequate and usable for the
purposes for which they are currently used, are in good operating condition and
repair and have been properly maintained (ordinary wear and tear excepted).
SECTION 2.19. Insurance. The Corporation is, and will be through the
Closing Date, insured with insurers in respect of its properties, assets and
businesses as set forth on the attached Schedule 2.19. Schedule 2.19 lists the
insurance coverage carried by the Corporation, which insurance will remain in
full force and effect with respect to all events occurring prior to the Closing
Date and Schedule 2.19 sets forth an accurate list of all insurance loss runs
or workers' compensation claims received for the past three policy years.
Except as set forth on Schedule 2.19, the Corporation (i) has not failed to
give any notice or present any claim under any such policy or binder in due and
timely fashion, (ii) has not received notice of cancellation or nonrenewal of
any such policy or binder, (iii) is not aware of any threatened (in writing) or
proposed cancellation or nonrenewal of any such policy or binder, (iv) has not
received notice of any insurance premiums which will be materially increased in
the future, and (v) is not aware of any insurance premiums which will be
materially increased in the future. There are no outstanding claims under any
such policy which have gone unpaid for more than 45 days, or as to which the
insurer has disclaimed liability.
SECTION 2.20. Outstanding Contracts. Schedule 2.20 lists and briefly
describes all existing contracts, agreements, leases, commitments, licenses and
franchises, whether written or oral, relating to the Corporation in excess of
$10,000 (collectively, the "Contracts"). The Corporation has delivered or made
available to the Buyer true, correct and complete copies of all of the
Contracts specified on Schedule 2.20 which are in writing, and such schedule
sets forth a complete description
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of all Contracts which are not in writing. All of the Contracts are in full
force and effect and enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be subject to or affected by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of creditors
generally. Except as set forth on Schedule 2.20.1, the Corporation and each
other party thereto have materially performed all the obligations required to
be performed by it, have received no notice of default and are not in default
(with due notice of lapse of time or both) under any of the Contracts. The
Corporation has no present expectation or intention of not fully performing all
its obligations under each of the Contracts, and the Corporation is not aware
of any breach or anticipated breach by the other party to any of the Contracts
to which the Corporation is a party. Except as set forth on Schedule 2.20.2,
none of the Contracts has been terminated; no notice has been given by any
party thereto of any alleged default by any party thereunder; and the
Corporation is not aware of any intention or right of any party to declare
another party to any of the Contracts to be in default. Except as set forth on
Schedule 2.20.3, there exists no actual or, to the best knowledge of the
Corporation, threatened (in writing) termination, cancellation or limitation of
the business relationship of the Corporation by any party to any of the
Contracts. Except as set forth on Schedule 2.20.4, none of the Contracts
requires the consent of the other party thereto for the assignment of such
Contract to Buyer and, upon such assignment at Closing as contemplated by this
Agreement, Buyer shall have all of the rights of Corporation thereunder.
SECTION 2.21. Outstanding Leases. Schedule 2.21 sets forth a
description of each agreement by which the Corporation leases each parcel of
real property (the "Leased Parcels") used in connection with the Business
(collectively, the "Leases"). The Corporation has delivered or made available
to the Buyer true, correct and complete copies of all of the Leases specified
on Schedule 2.21. All rents due under the Leases have been paid. Each of the
Leases is in full force and effect and enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be subject to
or affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the rights
of creditors generally. Except as set forth on Schedule 2.21, the Corporation
and each other party to the Leases have performed all the material obligations
required to be performed by them, have received no notice of default and are
not in default (with due notice or lapse of time or both) under any of the
Leases. The Corporation has no present expectation or intention of not fully
performing all of its obligations under each of the Leases, and the Corporation
is not aware of any breach or anticipated breach by the other party to any of
the Leases. Except as set forth on Schedule 2.21, none of the Leases has been
terminated; no notice has been given by any party thereto of any alleged
default by any party thereunder; and the Corporation is not aware of any
intention or right of any party to declare another party to any of the Leases
to be in default. There exists, in writing, no actual threatened termination,
cancellation, or limitation of the business relationship of the Corporation
with any party to any of the Leases.
SECTION 2.22. Intellectual Properties. Schedule 2.22 contains an
accurate and complete list of all domestic and foreign letters patent, patents,
patent applications, patent licenses, software licenses and know-how licenses,
trade names, trademarks, copyrights, unpatented inventions, service marks
(other than personal computer software license), trademark registrations and
applications,
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service xxxx registrations and applications and copyright registrations and
applications, trade secrets or other confidential proprietary information owned
or used by the Corporation in the operation of the Business (collectively the
"Intellectual Property"). Except as set forth on Schedule 2.22 and except for
commercial software licensed for use on personal computers, the Corporation
owns the entire right, title and interest in and to the Intellectual Property,
trade secrets and technology used in the operation of its Business and each
item constituting part of the Intellectual Property which is owned by the
Corporation has been, to the extent indicated in Schedule 2.22, duly registered
with, filed in or issued by, as the case may be, the United States Patent and
Trademark office or such other government entities, domestic or foreign as are
indicated in Schedule 2.22 and such registrations, filings and issuances remain
in full force and effect. There are no pending or threatened (in writing)
proceedings or litigation or other adverse claims affecting or with respect to
the Intellectual Property. To the best knowledge of the Corporation, there is
no reasonable basis upon which a claim may be asserted against the Corporation
for infringement of any domestic or foreign letters patent, patents, patent
applications, patent licenses and know-how licenses, trade names, trademark
registrations and applications, common law trademarks, service marks, service
xxxx registrations or applications copyrights, copyright registrations or
applications, trade secrets or other confidential proprietary information.
SECTION 2.23. Proprietary Information of Third Parties. Except as
disclosed on Schedule 2.23, no third party has claimed or to the best knowledge
of the Corporation has reason to claim that any Person employed by or
consulting with the Corporation ("Related Person") has (i) violated or may be
violating any of the terms or conditions of such person's employment,
noncompetition or nondisclosure agreement with such third party, (ii) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from the Corporation which suggests that such a claim
might be contemplated. Except as disclosed on Schedule 2.23, to the best
knowledge of the Corporation, no Related Person has employed or proposes to
employ any trade secret or any information or documentation proprietary to any
former employer and, no Related Person has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, or sale of any service of the Corporation, and the
Corporation has no reason to believe that there will be any such employment or
violation.
SECTION 2.24. Transactions with Affiliates. Except as disclosed on
Schedule 2.24, no stockholder, director, or officer of the Corporation, or
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or any member of the family of any
such person, has a beneficial ownership interest greater than 5% or is an
officer, director, trustee, partner or holder of any equity interest greater
than 5%, is a party to any transaction with the Corporation, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or
otherwise requiring payments or involving other obligations to any such person
or firm.
SECTION 2.25. Taxes. All federal, state, local and foreign Tax returns
and Tax reports required to be filed by the Corporation on or before the date
hereof have been timely filed with the
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appropriate governmental agencies in all jurisdictions in which such returns
and reports are required to be filed and all amounts shown as owing thereon
have been paid. All Taxes which have become due or payable or are required to
be collected by the Corporation or are otherwise attributable to any periods
ending on or before the Closing Date and all interest and penalties thereon,
whether disputed or not, have been paid or will be paid in full or adequately
reflected on the Balance Sheet in accordance with GAAP or the Corporation's
books and records on or prior to the Closing Date. All deposits required by law
to be made by the Corporation with respect to employees' withholding taxes have
been duly made, and as of the Closing Date all such deposits due will have been
made. The Corporation has delivered to the Buyer true and complete copies of
all of the Corporation's state and federal income tax returns for the fiscal
periods ended December, 1996 and 1995 and all reports and results of income tax
audits, if any, related thereto. No audit of any Tax return of the Corporation
is currently in progress. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any such tax
return.
"Tax" or "Taxes" means all taxes, including any interest, penalties or
other additions to tax, which the Corporation is required to pay, withhold or
collect (including without limitation all income or profits taxes, payroll and
employee withholding taxes, unemployment insurance, social security or welfare
taxes, sales and use taxes, ad valorem taxes, value-added taxes, excise taxes,
surcharges, franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, assessments, environmental
taxes, transfer taxes, and other similar obligations).
SECTION 2.26. Litigation. Except as set forth on Schedule 2.26, there
is no (i) action, suit, claim, proceeding or investigation pending or, to the
best knowledge of the Corporation, threatened (in writing) against or affecting
the Corporation (whether or not the Corporation is a party or prospective party
thereto), at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding pending
relating to the Corporation or (iii) governmental inquiry pending or threatened
(in writing) against or involving the Corporation, and there is no basis for
any of the foregoing. The Corporation has not received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability which may be material to the
business, prospects, financial condition, operations, property or affairs of
the Corporation. There are no outstanding orders, writs, judgments, injunctions
or decrees served upon the Corporation by any court, governmental agency or
arbitration tribunal against the Corporation. To the best knowledge of the
Corporation, there are no facts or circumstances which are reasonably
anticipated to result in institution of any action, suit, claim or legal
administrative or arbitration proceeding or investigation against, involving or
affecting the Corporation or the transactions contemplated hereby. The
Corporation is not in default with respect to any order, writ, injunction or
decree known to or served upon it from any court or of any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign. Except as disclosed on Schedule 2.26,
there is no action or suit by the Corporation pending or threatened (in
writing) against others.
SECTION 2.27. Environmental Matters. The Corporation and, to the best
knowledge of the Corporation, all Leased Parcels, are in compliance with all
applicable laws, rules, regulations, orders,
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ordinances, judgments and decrees of all governmental authorities with respect
to all environmental statutes, rules and regulations. Except as set forth on
Schedule 2.27, there are no past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Corporation which may interfere with or prevent continued compliance with, or
which may give rise to any common law or legal liability or otherwise form the
basis of any claim, action, suit, proceeding, hearing, or investigation, based
on or related to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment or transport, or the emission, discharge, release
or threatened release into the environment, of any substance. As used in this
Section 2.27, the term "Substance" or "Substances" shall mean any pollutant,
hazardous substance, hazardous material, hazardous waste or toxic waste, as
defined in any presently enacted federal, state or local statute or any
regulation that has been promulgated pursuant thereto. No part of any of the
Leased Parcels has been listed or proposed for listing on the National
Priorities List established by the United States Environmental Protection
Agency, or any other such list by any federal, state or local authorities.
SECTION 2.28. Broker's or Finder's Fees. Except as set forth on
Schedule 2.28, no agent, broker, person or firm acting on behalf of the
Corporation is, or will be, entitled to any commission or broker's or finder's
fees from the Corporation or from any person controlling, controlled by or
under common control with the Corporation in connection with any of the
transactions contemplated herein.
SECTION 2.29. Disclosure. All Documents delivered or to be delivered by
the Corporation, and all Documents delivered or to be delivered on behalf of
the Corporation by its agents, in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct in all material
respects. Neither this Agreement, nor any of the other Documents contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements made by the Corporation herein or therein, in light of the
circumstances in which made, not misleading.
SECTION 2.30. Protection of Creditors. The transfer to Buyer by the
Corporation of the Transferred Assets does not and will not constitute a
fraudulent transfer or fraudulent conveyance under any applicable state or
federal law or regulation or under any similar laws relating to creditors'
rights generally. The Corporation has not entered into this agreement or made
any transfer of the Transferred Assets or incurred any obligations hereunder or
in connection herewith, with actual intent to disturb, hinder, delay or defraud
either present or future creditors or other persons.
SECTION 2.31. Accounts Receivable. All accounts receivable of the
Corporation that are reflected on the Balance Sheet or on the accounting
records of the Corporation as of the Closing Date (collectively, the "Accounts
Receivable") represent or will at the Closing Date represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business. Unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet or on the accounting records
of the Corporation as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve
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reflected in the Balance Sheet represented of the Accounts Receivable reflected
therein and will not represent a material adverse change in the composition of
such Accounts Receivable in terms of aging.) Subject to such reserves, each of
the Accounts Receivable either has been or will be collected in full, without
any set-off, within one hundred fifty (150) days after the day on which it
first becomes due and payable. After such 150-day period, the Buyer shall
re-assign any uncollectible account to the Corporation for collection and Buyer
shall have the right to make a claim in accordance with the Escrow Agreement
for an amount equal to the uncollectible accounts receivable, net of the
allocable reserves; however, the Corporation shall not have a right to dispute
such claim. There is no contest, claim, or right of set-off, other than returns
in the ordinary course of business, under any contract with any obligor of any
Accounts Receivable relating to the amount or validity of such Accounts
Receivable.
SECTION 2.32. Securities Exemptions. The Shares constituting a portion
of the Purchase Price are being issued to the Corporation for its account, for
investment purposes only and with no current intention of distributing, selling
or otherwise disposing of such Shares, except for a transfer to its
stockholders, in connection with a distribution within the meaning of the
Securities Act of 1933, as amended, (the "Securities Act") and the rules and
regulations thereunder. The Shares have not been registered under the
Securities Act or any state securities laws pursuant to exemptions afforded by
Sections 3 or 4, or both, of the Securities Act and the exemptions under the
applicable state securities laws. The Corporation and each of its stockholders
has been afforded full and complete access to all relevant financial and other
information regarding StaffMark. Each stockholder is an "accredited investor,"
as such term is defined in rule 501(a) of the Securities Act. The Corporation
has not paid a commission in connection with its acquisition of the Shares.
Except for a transfer to its stockholders, the Corporation will not offer,
sell, assign, pledge, hypothecate, transfer or otherwise dispose of those of
the Shares except in compliance with all of the applicable provisions of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission, applicable state securities laws and regulations, and any legends
that appear on the certificate evidencing the Shares. Each stockholder of the
Corporation is familiar with the provisions of Rule 144 of the Securities Act,
and realizes that sales of the Shares may be required to be made pursuant to
the terms of that rule.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Corporation to enter into this Agreement and to
consummate the transactions contemplated hereby, StaffMark and the Buyer,
jointly and severally, represents and warrants to the Corporation as follows:
SECTION 3.1. Organization. Each of StaffMark and the Buyer are
companies duly organized, validly existing and in good standing under the laws
of the State of Delaware and are duly qualified to transact business as a
foreign corporation in each jurisdiction where the conduct of its business
requires it to be so qualified.
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SECTION 3.2. Corporate Power and Authority. The Buyer has the corporate
power and authority to execute, deliver and perform this Agreement and the
other Documents to which it is a party. The execution, delivery and performance
of the Documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action of the Buyer. The Documents to be executed and
delivered by the Buyer have been duly executed and delivered by, and constitute
the legal, valid and binding obligation of the Buyer enforceable against the
Buyer in accordance with their terms.
SECTION 3.3. Validity, Etc. Neither the execution and delivery by the
Buyer of this Agreement and the other Documents to which it is a party, the
consummation by the Buyer of the transactions contemplated hereby or thereby,
nor the performance by the Buyer of this Agreement and such other agreements in
compliance with the terms and conditions hereof and thereof will: (i) violate,
conflict with or result in any breach of any trust agreement, articles of
incorporation, bylaw, judgment, decree, order, statute or regulation applicable
to the Buyer, (ii) violate result in a breach, default or termination (or give
rise to any right of termination, cancellation or acceleration) under any law,
rule or regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument to which the Buyer is a
party, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained and
except for any such default that would not result in an adverse effect on its
business or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Buyer.
SECTION 3.4. The Shares. The Shares when delivered hereunder will be
duly authorized, validly issued, and fully paid and nonassessable, free and
clear of any Claims, except for any transfer restrictions imposed by the state
and federal securities laws. The Shares, when issued, will not be issued in
violation of any pre-emptive or other right. The Shares will be issued pursuant
to Section 4(2) of the Securities Act promulgated thereunder. Certificates
representing the Shares issued to the Company will contain a restrictive legend
in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, DISTRIBUTED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF: (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT OF THE AVAILABILITY OF AN EXEMPTION
THEREFROM; OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO STAFFMARK, INC.
("STAFFMARK") TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
SECTION 3.5 Disclosure. All Documents delivered or to be delivered by
the Buyer and all Documents delivered or to be delivered on behalf of the Buyer
by its agents, in connection with this Agreement and the transactions
contemplated hereby are true, complete and correct in all material respects.
Neither this Agreement, nor any of the other Documents contains any untrue
statement of
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a material fact or omits a material fact necessary to make the statements made
by the Buyer herein or therein, in light of the circumstances in which made,
not misleading.
SECTION 3.6 Governmental Approvals. No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Buyer of this Agreement.
ARTICLE IV. COVENANTS AND AGREEMENTS
SECTION 4.1. Cooperation. Each of the parties hereto shall use its best
efforts in good faith to perform and fulfill all conditions and obligations to
be fulfilled or performed by it hereunder to the end that the transactions
contemplated hereby will be fully and timely consummated.
SECTION 4.2. Best Efforts. The Corporation and Buyer shall each use
commercially reasonable efforts to procure upon reasonable terms and conditions
all consents and approvals, completion of all filings, all registrations and
certificates, and satisfaction of all other requirements prescribed by law
which are necessary for the consummation of the transactions contemplated by
this Agreement and the Buyer's ownership and operation of the Business after
the Closing Date. Prior to the Closing Date, the Corporation will use
commercially reasonable efforts to preserve its relationships with its
employees, customers, and others having business relationships with the
Corporation.
SECTION 4.3. Intentionally omitted.
SECTION 4.4. Investigations. The Corporation shall give Buyer and its
employees, accountants, attorneys and other authorized representatives full
access during all reasonable times to all the premises, properties, books and
records, and furnish Buyer with such financial and operating data, analyses and
other information of any kind respecting Corporation's business and properties
as Buyer shall from time to time request. Any investigation shall be conducted
in a manner which does not unreasonably interfere with business operations.
SECTION 4.5. Distributions. The Corporation shall pay no dividends,
distributions, consulting fees or management fees to stockholder, except as set
forth on Schedule 2.7.1. The Corporation shall not increase management
compensation policies or plans, and shall conduct no transactions with, or
transfer anything of value, directly or indirectly, to stockholder, except as
set forth on Schedule 2.7.1.
SECTION 4.6. Corporate Matters. During the period from the date of this
Agreement to the Closing, the Corporation will not (i) amend its articles of
incorporation or bylaws; (ii) issue any shares of its capital stock; (iii)
issue or create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments under which any additional shares of its
capital stock of any class might be directly or indirectly authorized, issued
or transferred from treasury; or (iv)
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agree to do any of the acts listed above. In addition, subsequent to the
Closing, the Corporation will not dissolve or otherwise terminate its existence
at any time prior to December 31, 1997.
SECTION 4.7. Intentionally omitted.
SECTION 4.8. Nondisclosure of Confidential Information. The Corporation
recognizes and acknowledges that it has and will have access to certain
confidential information of the Corporation and Buyer (including, but not
limited to, list of customers, and costs and financial information) that after
the Closing will be valuable, special and unique property of StaffMark. The
Corporation agrees that it will not disclose, and it will use its best efforts
to prevent disclosure by any other Person of, any such confidential information
to any Person, except to authorized representatives of StaffMark. The
Corporation recognizes and agrees that violation of any of the agreements
contained in this Section 4.8 will cause irreparable damage or injury to
StaffMark, the exact amount of which may be impossible to ascertain, and that,
for such reason, among others, StaffMark shall be entitled to an injunction,
without the necessity of posting bond, therefor, restraining any further
violation of such agreements. Such rights to any injunction shall be in
addition to, and not in limitation of, any other rights and remedies StaffMark
may have against the Corporation.
SECTION 4.9. Payment of Liabilities. Except for the Assumed
Liabilities, the Corporation shall pay and satisfy in full all of its other
obligations and liabilities, of any nature whatsoever, which accrue prior or
subsequent to the Closing Date.
SECTION 4.10. Employees and Consultants.
(a) Buyer and Corporation agree that on the Closing Date, or the
termination of the Employee Leasing Agreement, if executed by the
parties, the employees of Corporation shall cease to be employees of
Corporation and, except as otherwise determined by Buyer in its sole
discretion, shall become employees of Buyer or an affiliate of Buyer on
an employment at will basis. Notwithstanding the foregoing, Buyer will
have no liability to Corporation if for any reason (i) Buyer decides
not to offer employment to any of Corporation's employees (other than
employees subject to employment agreements as required by this
Agreement), (ii) any of the employees do not accept Buyer's offer of
employment or (iii) any of the employees (other than employees subject
to the employment agreements) accept employment with Buyer, but such
employment is terminated for any reason after the Closing Date, or the
termination of the Employee Leasing Agreement, if executed by the
parties.
(b) The parties acknowledge and agree that it is the intention
of the parties that all existing contracts of employment,
nondisclosure, and nonsolicitation and noncompetition between
Corporation and its employees, except as set forth on Schedule 1.1.2,
shall be transferred to and assumed by Buyer as a result of the
transactions described herein and that such contracts shall constitute
part of the Transferred Assets hereunder and Buyer shall assume and
discharge the liabilities, if any, associated therewith from and after
the Closing Date, or the termination of the Employee Leasing Agreement,
if executed by the parties.
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(c) The Corporation shall, if requested by Buyer, assign to
Buyer or its designated affiliates the Corporation's unemployment
insurance and workers' compensation experience ratings and take such
steps as Buyer shall reasonably request to effect such assignment, if
such assignment is permitted and does not result in any cost, expense
or penalty to Corporation and is otherwise not prejudicial to
Corporation.
(d) Unless prohibited by law, the Corporation shall make
available to Buyer all personnel records, including without limitation
names, Social Security numbers, dates of hire by Corporation, dates of
birth, number of hours worked each calendar year, and salary histories,
for all Corporation's employees. Corporation and Buyer shall also
cooperate, both before and after the Closing Date, in exchanging
information, including pertinent employment records, benefit
information, salary and compensation records, financial statements and
other data, and in taking other action respecting the interests of
Corporation's employees who become employees of Buyer at or shortly
following the Closing Date, and their respective beneficiaries and
dependents, in each of the employee benefit plans of Corporation and
any plans established by Buyer, so as to secure an orderly and
effective transition of the benefit arrangements for such employees of
Corporation and their respective beneficiaries and dependents.
SECTION 4.11. Obligations Concerning Employees.
(a) The Corporation will be responsible for all liabilities
associated with the employees which relate to the period prior to 12:01 a.m.
C.D.T. on the Closing Date or the termination of the Employee Leasing
Agreement, if executed by the parties (the "Employee Transfer Date"). Buyer
will be responsible for all liabilities associated with the employees which
relate to the period subsequent to the Employee Transfer Date. After the
Employee Transfer Date, Buyer will notify the relevant parties that Buyer will
be responsible for expenses associated with benefit plans for the Employees. On
the Closing Date, the Corporation agrees to provide Buyer with a true and
complete list of the FICA wages and FICA withholdings related to compensation
paid by the Corporation to the Employees prior to the Employee Transfer Date.
(b) The Buyer agrees to retain the employee benefit plans set
forth on Schedule 2.17 until such time it determines, in its sole discretion,
whether to retain or terminate such plans, in which case Buyer shall provide
benefits to such employees comparable to those provided to similarly situated
employees of Buyer.
SECTION 4.12. Corporate Name. On the Closing Date or as soon as
practicable thereafter, Corporation shall change its corporate name such that
the new name of Corporation is not similar to the existing name and otherwise
is not likely to be confused with its present names so as to make Corporation's
name available to Buyer. From and after the Closing, Corporation shall not use
the words making up its existing name (or any existing trade names) or similar
names in connection with any business.
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SECTION 4.13. Employee Stock Options. Within thirty (30) days of
Closing, StaffMark shall grant employees of the Corporation, other than the
current stockholders, options to purchase an aggregate of 15,000 shares of
StaffMark common stock, par value $.01 per share. Such options shall be granted
pursuant to and subject to the terms of the StaffMark, Inc. 1996 Stock Option
Plan.
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Corporation
pursuant to Section 1.2 of this Agreement and to consummate the other
transactions contemplated hereby is subject to the satisfaction, on or before
the Closing Date, of the following conditions each of which may be waived by
the Buyer in its sole discretion:
SECTION 5.1. Representations and Warranties True. All of the
representations and warranties made by the Corporation in Article II of this
Agreement shall be true and correct on and as of the Closing Date as though
such representations and warranties were made on and as of the Closing Date,
except to the extent such representations and warranties are expressly made as
of an earlier specified date. The Corporation shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date. The President of the
Corporation shall deliver a certificate to the Buyer to the effect that each
above conditions are satisfied in all respects.
SECTION 5.2. Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license,
permit, Contract or agreement relating to the Business from terminating prior
to its scheduled termination, as a result of the consummation of the
transactions contemplated hereby, shall have been obtained, and all permits
listed on Schedule 2.16 shall have been transferred to Buyer.
SECTION 5.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any governmental authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 5.4. Opinion of Counsel to the Corporation. The Buyer shall
have received an opinion from counsel to the Corporation, dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer.
SECTION 5.5. Closing Documents. The Corporation shall have delivered
all of the Schedules, resolutions, certificates, documents and instruments
required by this Agreement to be delivered by the Corporation.
SECTION 5.6. Approval of the Buyer and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the direction of, the Corporation hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Buyer and its counsel.
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SECTION 5.7 Due Diligence. Buyer shall have completed its due diligence
review of the Corporation and the Business, and the results of such review
shall have been satisfactory to Buyer.
SECTION 5.8. No Adverse Change. From the date of this Agreement through
the Closing Date, (i) there shall have been no change in the assets,
liabilities, or financial condition of the business of the Corporation from
that reflected in the Balance Sheet outside the ordinary course of business,
and (ii) none of the business, prospects, financial condition, operations,
property, or affairs of the Corporation shall have been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against.
SECTION 5.9. Indemnification Agreement. The Buyer shall have received
a counterpart executed copy of the "Indemnification Agreement" from the
Corporation and each of the stockholders of the Corporation in substantially
the form of Exhibit D attached hereto.
SECTION 5.10. Escrow Agreement. The Buyer shall have received a
counterpart executed copy of the "Escrow Agreement" in substantially the form
of Exhibit E attached hereto.
SECTION 5.11. Employment Agreements. The Buyer shall have received
counterpart executed copies of employment agreements with Xxxxx Xxxxxx and Xxxx
Xxxxxxx satisfactory to Buyer.
SECTION 5.12. Noncompetition Agreements. Buyer shall have received
counterpart executed copies of the "Noncompetition Agreements" in the form of
Exhibit F attached hereto from certain of the Corporation's stockholders.
SECTION 5.13. Additional Agreements. The Corporation shall have
entered into such additional agreements as may reasonably be required to be
entered into by such parties on or before the Closing.
ARTICLE VI. CONDITIONS TO THE CORPORATION'S OBLIGATIONS
The obligation of the Corporation to deliver the Transferred Assets to
Buyer and to consummate the other transactions contemplated hereby is subject
to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by the Corporation in its discretion:
SECTION 6.1. Representations and Warranties True. All of the
representations and warranties made by Buyer in Article IV of this Agreement
shall be true and correct on and as of the Closing Date as though such
representations and warranties were made on and as of the Closing Date, except
to the extent such representations and warranties are expressly made as of an
earlier specified date. The Buyer shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing Date. An executive officer of the
Corporation shall deliver a certificate to the Corporation to the effect that
each of the above conditions are satisfied in all respects.
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SECTION 6.2. Closing Documents. The Buyer shall have delivered all of
the Schedules, resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 6.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any governmental authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 6.4. Approval of the Corporation and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the direction of, the Buyer hereunder or incident to its performance
hereunder, and all other related matters, shall be reasonably satisfactory as
to form and substance to the Corporation and its counsel.
SECTION 6.5. Opinion of Counsel to Buyer. The Corporation shall have
received an opinion from the Buyer's General Counsel, dated as of the Closing
Date, in form and substance reasonably satisfactory to Corporation.
SECTION 6.6. Earnout Agreement. The Corporation shall have received a
counterpart executed copy of the Earnout Agreement from StaffMark.
SECTION 6.7. Registration Rights Agreement. The Corporation shall have
received a counterpart executed copy of the "Registration Rights Agreement" in
the form of Exhibit G attached hereto.
SECTION 6.8. Employment Agreement. Xxxxx Xxxxxx and Xxxx Xxxxxxx shall
have received executed counterpart executed copies of their respective
Employment Agreement from the Buyer.
SECTION 6.9. Additional Agreements. Buyer shall have entered into
such additional agreements as may reasonably be required to be entered into by
it on or before the Closing.
ARTICLE VII. THE CLOSING, AND CERTAIN CLOSING DELIVERIES
AND OTHER MATTERS
SECTION 7.1. Time and Place of the Closing. Upon the terms and subject
to the satisfaction or waiver of the conditions contained in this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Xxxxxx & Xxxx, LLP, 0000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxx, XX 00000, on August ____, 1997, or on such other place, date and
time as may be mutually agreed upon by the parties (the "Closing Date"). The
transactions contemplated by this Agreement shall be effective solely for
accounting purposes as of 12:01 a.m. Central time (the "Effective Time") as of
July 1, 1997. At the Closing: (i) the Corporation will deliver to Buyer the
various certificates, instruments and documents referred to in Article V and
any other certificates and documents reasonably requested by Buyer, (ii) Buyer
will deliver the various certificates, instruments and documents referred to in
Article VI; and (iii) Buyer
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will deliver to the Corporation that portion of the Purchase Price required to
be paid at the Closing pursuant to and in accordance with this Agreement.
SECTION 7.2. Survival of Representations, Warranties and Covenants. All
of the representations and warranties of the parties contained in this
Agreement shall survive for two (2) years following the Closing Date; except,
that, the survivability periods as to the representations and warranties in
Sections 2.17, 2.25 and 2.27, respectively, shall survive for the full period
of the statute of limitations applicable to the matters described in such
sections. Certain covenants of the parties in this Agreement shall survive the
Closing Date for the time periods so indicated in each such section.
SECTION 7.3 Remedies. In the event that a party (the "Breaching Party")
breaches or in the event any third party alleges facts that, if true, would
mean that the Breaching Party has breached any provision of this Agreement,
then the other Party may exercise all of its remedies under this Agreement. The
Breaching Party shall be liable to the other party for any claim, liability,
obligation, loss, damage, assessment, judgment, cost, and expense of any kind
or character, including reasonable attorney's fees and paralegal fees.
ARTICLE VIII. TERMINATION
SECTION 8.1. Termination of Agreement. The parties may terminate
this Agreement as provided below:
(a) Buyer and the Corporation may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement at any time prior to the
Closing; (i) in the event the Corporation has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect; (ii) in the event that Buyer is not satisfied
with its business, legal, accounting, environmental, labor, employee
matters, operational or financial due diligence; (iii) if there is
discovered or should there occur any event or condition which could
reasonably be expected to have a material adverse effect on the
Corporation; or (iv) if the Closing shall not have occurred on or
before August 31, 1997;
(c) The Corporation may terminate this Agreement any time prior
to the Closing; (i) in the event Buyer has breached any representation,
warranty or covenant contained in this Agreement in any material
respect; (ii) if there is discovered or should there occur any event or
condition which could reasonably be expected to have a material adverse
effect on Buyer but such event shall not include any effects or changes
on the price of Buyer's common stock; or (iii) if the Closing shall not
have occurred on or before August 31, 1997;
(d) Buyer may terminate this Agreement at any time prior to the
Closing if a governmental authority adopts, enters, enacts or issues a
final and nonappealable order, or adopts, enacts, enforces, or holds
applicable to the Agreement a law, or a suit, action, or
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proceeding is threatened (in writing) or pending before a governmental
authority, that directly or indirectly: (A) declares this Agreement to
be illegal; (B) permanently enjoins, restrains or otherwise prohibits
the acquisition of the Transferred Assets by Buyer pursuant to this
Agreement or the transactions contemplated hereby; (C) prohibits the
ownership or operation by Buyer (or any of its affiliates) of all or a
material portion of the Transferred Assets; or (D) compels Buyer (or
any of their Affiliates) to segregate or dispose of all or a material
portion of the Transferred Assets; or
(e) The Corporation may terminate this Agreement at any time
prior to the Closing if a governmental authority adopts, enters, enacts
or issues a final and nonappealable order, or adopts, enacts, enforces
or holds applicable to this Agreement a law or a suit, action or
proceeding is threatened (in writing) or pending before a governmental
authority that directly or indirectly: (A) declares the Agreement to be
illegal; or (B) permanently enjoins, restrains, or otherwise prohibits
this Agreement or the transactions contemplated hereby.
Termination of this Agreement by any Party pursuant to clauses (b) or (c) above
will be valid only if a notice of termination, signed by or on behalf of the
Party electing the termination, is given to the other Party to this Agreement.
Termination of this Agreement in accordance with clause (a) above will be
effective as of the date specified in the Parties' written agreement of
termination. Termination of this Agreement in accordance with clauses (d) or
(e) above will be effective on the effective date of the law or order that
makes the Agreement illegal or permanently enjoins, restrains, or prohibits
consummation of the Agreement, ownership of the Transferred Assets.
SECTION 8.2. Effect of Termination. If this Agreement is terminated in
accordance with the provisions of Section 8.1, a party will not have any
further right, liability or obligation with respect to the other party (except
for any liability of any party then in breach).
SECTION 8.3. Other Termination Matters. The confidentiality provisions
contained in Section 4.8 of this Agreement shall survive termination pursuant
to Section 8.1 above for a period of one (1) year following any such
termination date.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1. Knowledge of the Corporation. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
best knowledge of the Corporation, the Corporation confirms that it has made
due and diligent inquiry of the Corporation's directors, officers and
stockholders as to the matters that are the subject of such representations and
warranties.
SECTION 9.2. Knowledge of Buyer. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the best of
knowledge of Buyer, Buyer confirms that it has made due and diligent inquiry of
its President, Vice Presidents and Chief Financial Officer as to the matters
that are the subject of such representations and warranties.
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SECTION 9.3. "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 9.4. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by recognized overnight courier, (iii) made by telecopy or facsimile
transmission, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
If to the Buyer:
StaffMark, Inc.
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Executive
Vice President - General Counsel
If to Corporation: (before the Closing)
Xxxxx Xxxxxx
President
Expert Business Systems, Inc.
000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
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All notices, requests, consents and other communications hereunder
shall be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, (iii) if made by telecopy or
facsimile transmission, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, or (iv) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
sent. The address of any party herein may be changed at any time by written
notice to the other party given in accordance with this Section 9.2.
SECTION 9.5. Entire Agreement. This Agreement and the other Documents
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the other Documents shall affect or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
SECTION 9.6. Modifications and Amendments. The terms and provisions
of this Agreement may be modified or amended only by written agreement executed
by all parties hereto.
SECTION 9.7. Assignment/Binding Effect. Neither this Agreement, nor any
right hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties; provided, however, Buyer may assign its
rights (but not its obligations) hereunder to a wholly-owned subsidiary formed
for the purpose of owning and operating the Business. This Agreement shall be
binding upon, and inure to the benefit of, the representatives, successors and
permitted assigns.
SECTION 9.8. Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement shall be construed to create any rights or obligations except among
the parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
SECTION 9.9. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of Arkansas, except that the
noncompetition provisions contained herein shall be governed by the laws of the
State of Texas.
SECTION 9.10. Severability. In the event that any arbitral tribunal of
competent jurisdiction shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or unenforceable in
any respect, then such provision shall be deemed limited to the extent that
such arbitral tribunal determines it enforceable, and as so limited shall
remain in full force and effect. In the event that such arbitral tribunal shall
determine any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in full force
and effect.
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SECTION 9.11. Interpretation. The parties hereto acknowledge and agree
that: (i) the rule of construction to the effect that any ambiguities are
resolved against the drafting party shall not be employed in the interpretation
of this Agreement, and (ii) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party, regardless of which party was generally responsible for the preparation
of this Agreement.
SECTION 9.12. Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only
and shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 9.13. Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any
other party to this Agreement, the party having such right to investigate shall
have the right to rely fully upon the representations and warranties of the
other party expressly contained herein, unless such party has actual knowledge
otherwise, which shall be proved by the other party.
SECTION 9.14. Expenses. Each party shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such party) incurred in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
SECTION 9.15. Gender. All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or entity or the context may require.
SECTION 9.16. Publicity. Except by the mutual agreement between the
Corporation and Buyer, no party shall issue any press release or otherwise make
any public statement with respect to the execution of, or the transactions
contemplated by, this Agreement except as may be required by law, rule or
regulation.
SECTION 9.17. Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 9.18. Telecopy Execution and Delivery. A facsimile telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction thereof.
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IN WITNESS WHEREOF, the Buyer and the Corporation have each caused this
Agreement to be executed by their respective duly authorized officers all as of
the day and year first above written.
BUYER:
STAFFMARK, INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
STAFFMARK ACQUISITION CORPORATION TEN
By: /s/ XXXXX X. XXXXXX
----------------------------------
Xxxxx X. Xxxxxx, President
THE CORPORATION:
EXPERT BUSINESS SYSTEMS, INCORPORATED
By: /s/ XXXXX XXXXXX
----------------------------------
Xxxxx Xxxxxx, President
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