AGREEMENT AND PLAN OF MERGER
AMONG
ACSYS RESOURCES, INC.,
ACSYS STAFFING ACQUISITION CORP.,
ACSYS SEARCH ACQUISITION CORP.,
ACSYS CAREER ACQUISITION CORP.
AND
C.P.A. STAFFING, INC.,
C.P.A. SEARCH, INC.,
CAREER PLACEMENT ASSOCIATES, INC.
AND
XXXX XXXXXXXXX,
AND
XXXXX XXXXXXXX
DATED AS OF AUGUST 12, 1997
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS..........................................................1
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1.1 Definitions.........................................1
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1.2 Knowledge...........................................7
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ARTICLE II
MERGERS.........................................................8
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2.1 Mergers.............................................8
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2.2 Effective Times.....................................8
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2.3 Closing.............................................9
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2.4 Articles of Incorporation; By-Laws..................9
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2.5 Directors and Officers..............................9
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ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SHARES.....................10
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3.1 Merger Consideration...............................10
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3.2 Conversion of Shares...............................10
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3.3 Lost, Stolen or Destroyed Certificates.............12
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3.4 Taking of Necessary Action; Further Action.........12
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF C.P.A. STAFFING,
C.P.A. SEARCH AND CAREER PLACEMENT AND THE SHAREHOLDERS........12
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4.1 Corporate Status..................................12
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4.2 Authorization.....................................12
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4.3 Capitalization....................................13
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4.4 No Conflict.......................................13
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4.5 Consents and Approvals............................14
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4.6 Stock Ownership...................................14
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4.7 Financial Statements..............................14
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4.8 Title to Assets and Related Matters...............15
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4.9 Accounts Receivable...............................15
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4.10 Accounts Payable..................................15
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4.11 Product Warranties and Price Guarantees...........15
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4.12 No Undisclosed Liabilities........................16
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4.13 Taxes.............................................16
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TABLE OF CONTENTS (continued)
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4.14 Legal Proceedings and Compliance with Law.........16
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4.15 Contracts.........................................18
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4.16 Insurance.........................................19
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4.17 Intellectual Property and Software Products.......20
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4.18 Employee Relations................................20
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4.19 ERISA.............................................21
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4.20 Corporate Records.................................24
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4.21 Absence of Certain Changes........................24
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4.22 Clients...........................................25
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4.23 Finder's Fees.....................................25
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4.24 Securities Laws Matters...........................25
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4.25 Additional Information............................28
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4.26 Transactions with Affiliates......................28
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4.27 Reports...........................................28
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4.28 Full Disclosure...................................28
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACSYS........................29
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5.1 Corporate Status..................................29
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5.2 Authorization.....................................29
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5.3 Capitalization....................................29
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5.4 No Conflict.......................................30
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5.5 Consents and Approvals............................30
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5.6 Financial Statements..............................30
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5.7 Title to Assets and Related Matters...............31
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5.8 Accounts Receivable...............................31
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5.9 Accounts Payable..................................31
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5.10 Product Warranties and Price Guarantees...........31
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5.11 No Undisclosed Liabilities........................31
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5.12 Taxes.............................................31
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5.13 Legal Proceedings and Compliance with Law.........32
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5.14 Contracts.........................................33
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5.15 Insurance.........................................34
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5.16 Intellectual Property and Software Products.......35
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5.17 Employee Relations................................35
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5.18 ERISA.............................................36
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5.19 Corporate Records.................................38
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5.20 Absence of Certain Changes........................38
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TABLE OF CONTENTS (continued)
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5.21 Clients...........................................39
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5.22 Finder's Fees.....................................40
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5.23 Transactions with Affiliates......................40
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5.24 Full Disclosure...................................40
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARIES.........40
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6.1 Corporate Status..................................40
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6.2 Authorization.....................................40
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6.3 Capitalization....................................40
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6.4 No Conflict.......................................41
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6.5 Consents and Approvals............................41
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ARTICLE VII
COVENANTS OF C.P.A. STAFFING, C.P.A SEARCH,
CAREER PLACEMENT AND THE SHAREHOLDERS........................41
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7.1 Access............................................41
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7.2 Regulatory Matters................................41
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7.3 Exclusivity.......................................41
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7.4 Financial Information.............................42
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7.5 Restrictive Covenants.............................42
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7.6 Required Consents.................................44
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7.7 Conduct of the Business Prior to the Closing......44
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7.8 Shareholder Releases..............................45
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ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ACSYS............................46
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8.1 No Court Order or Litigation......................46
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8.2 Representations, Warranties and Agreements........46
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8.3 Actions and Proceedings...........................46
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8.4 Employment Agreements.............................47
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8.5 Shareholders Agreement............................47
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8.6 Escrow Agreement..................................47
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8.7 Legal Opinion.....................................47
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8.8 Due Diligence.....................................47
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8.9 Regulatory Approvals..............................47
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TABLE OF CONTENTS (continued)
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8.10 Financing..........................................47
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8.11 Termination of Existing Agreements.................47
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ARTICLE IX
CONDITION TO OBLIGATIONS OF C.P.A. STAFFING, C.P.A. SEARCH,
CAREER PLACEMENT AND THE SHAREHOLDERS..........................48
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9.1 No Court Order or Litigation........................48
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9.2 Representations, Warranties and Agreements..........48
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9.3 Actions and Proceedings.............................48
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9.4 Employment Agreements...............................49
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9.5 Regulatory Approvals................................49
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ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...................49
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10.1 Survival of Representations, Etc....................49
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10.2 Indemnification by the Shareholders.................49
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10.3 Indemnification by ACSYS...........................50
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10.4 Limitation on Liabilities..........................50
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10.5 Procedure for Claims...............................50
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10.6 Third Party Claims.................................51
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10.7 Exceptions to Limitations..........................51
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10.8 Escrow.............................................51
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10.9 Effect of Investigation............................52
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10.10 Contingent Claims..................................52
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ARTICLE XI
TERMINATION....................................................52
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11.1 Termination........................................52
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11.2 Effect of Termination..............................53
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ARTICLE XII
MISCELLANEOUS..................................................53
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12.1 Payment of Expenses................................53
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12.2 Entire Agreement...................................53
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TABLE OF CONTENTS (continued)
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12.3 Amendment, Parties in Interest, Assignment, Etc...53
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12.4 Interpretation....................................53
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12.5 Notices...........................................54
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12.6 Governing Law.....................................55
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12.7 Counterparts......................................55
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of the 12th
day of August, 1997, by and among ACSYS Resources, Inc., a Pennsylvania
corporation ("ACSYS"), ACSYS Staffing Acquisition Corp., a Georgia corporation
and wholly owned subsidiary of ACSYS ("Staffing Acquisition"), ACSYS Search
Acquisition Corp., a Georgia corporation and wholly owned subsidiary of ACSYS
("Search Acquisition"), ACSYS Career Acquisition Corp., a Georgia corporation
and wholly owned subsidiary of ACSYS ("Career Acquisition"), and C.P.A.
Staffing, Inc., a Georgia corporation ("C.P.A. Staffing"), C.P.A. Search, Inc.,
a Georgia corporation ("C.P.A. Search"), Career Placement Associates, Inc., a
Georgia corporation ("Career Placement"), and Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxx
(together, the "Shareholders").
R E C I T A L S:
- - - - - - - -
WHEREAS, in consideration of the mutual agreements of the parties as set
forth herein, the boards of directors of ACSYS, Staffing Acquisition, Search
Acquisition, Career Acquisition, C.P.A. Staffing, C.P.A. Search and Career
Placement deem it in the best interests of their respective shareholders that
Staffing Acquisition be merged with and into C.P.A. Staffing, Search Acquisition
be merged with and into C.P.A. Search and Career Acquisition be merged with and
into Career Placement, in each case upon the terms and subject to the conditions
of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that each such
merger shall qualify as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"),
pursuant to which the common stock of each of C.P.A. Staffing, C.P.A. Search and
Career Placement shall be converted into the right to receive cash and common
stock of ACSYS;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, intending to be legally bound hereby, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. In addition to the terms defined elsewhere herein, the
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following terms have the meanings specified or referred to in this Article 1.1
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and shall be equally applicable to both the singular and plural forms. Any
agreement referred to below shall mean such agreement as amended, supplemented
and modified from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement
"Acquisition Proposal" is defined in Section 7.3.
"ACSYS" is defined in the preamble to this Agreement.
"ACSYS Balance Sheet" is defined in Section 5.6.
"ACSYS Balance Sheet Date" is defined in Section 5.6.
"ACSYS Disclosure Schedule" is defined in the preamble to Article V.
"ACSYS Interim Balance Sheet" is defined in Section 5.6.
"ACSYS Interim Balance Sheet Date" is defined Section 5.6.
"ACSYS Financial Statements" is defined in Section 5.6.
"ACSYS Preliminary Audited Financial Statements" is defined in Section 5.6.
"ACSYS Required Consents" is defined in Section 5.5.
"ACSYS Unaudited Financial Statements" is defined in Section 5.6.
"ACSYS Shares" means shares of the common stock of ACSYS issued to the
Shareholders in the Staffing Merger, the Search Merger and the Career Merger.
"Action" is defined in Section 10.6
"Affiliates" means, with respect to a particular party, persons or entities
controlling, controlled by or under common control with that party, as well as
the officers, directors and majority-owned entities of that party and of its
other Affiliates.
"Agent" is defined in Section 7.3.
"Agreement" means this Agreement.
"Balance Sheet Date" is defined in Section 4.7.
"Benefit Plan" is defined in Section 4.19.
"Career Certificate" is defined in Section 3.2(c).
"Career Certificate of Merger" is defined in Section 2.2(c).
"Career Merger" is defined in Section 2.1(c).
"Career Merger Effective Time" is defined in Section 2.2(c).
"Career Per Share Cash Consideration" is defined in Section 3.2(c).
2
"Career Placement Shares" is defined in Section 3.2(c).
"Career Per Share Stock Consideration" is defined in Section 3.2(c).
"Certificate" means any Staffing Certificate, Search Certificate or Career
Certificate, as the context requires.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Claim Notice" is defined in Section 10.5(a).
"Claim Response" is defined in Section 10.5(a).
"Closing" is defined in Section 2.3.
"Closing Date" is defined in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means C.P.A. Staffing, C.P.A. Search or Career Placement, as the
context requires.
"Company Balance Sheet" is defined in Section 4.7.
"Company Disclosure Schedule" is defined in the preamble to Article IV.
"Confidential Information" means any confidential information or trade
secrets, including, without limitation, information and knowledge pertaining to
products and services offered, innovations, designs, ideas, plans, trade
secrets, proprietary information, know-how and other technical information,
advertising, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships with dealers,
distributors, wholesalers, customers, clients, suppliers and others who have
business dealings with the Business.
"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document or commitment, arrangement, undertaking, practice
or authorization that is or may be binding on any Person or its property under
applicable law.
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
3
"Court Order" means any judgment, decree, injunction, order or ruling of
any federal, state, local or foreign court or governmental or regulatory body or
arbitrator or authority that is binding on any Person or its property under
applicable law.
"Damages" is defined in Section 10.2.
"Default" means (a) a breach, default or violation, (b) the occurrence of
an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (c) with respect to any
Contract, the occurrence of an event that with or without the passage of time or
the giving of notice, or both, would give rise to a right of termination,
renegotiation or acceleration.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability or voting, defect of title or other claim, charge
or encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" is defined in Section 4.14(b).
"Environmental Law" is defined in Section 4.14(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means Mellon Bank, N.A.
"Escrow Agreement" means the Escrow Agreement to be entered into at the
Closing by and among ACSYS, the Shareholders and the Escrow Agent substantially
in the form attached as Exhibit C hereto.
"Escrow Deposit" is defined in Section 10.8.
"Financial Statements" is defined in Section 4.7.
"GAAP" means United States generally accepted accounting principles.
"GBCC" is defined in Section 2.1(a).
"Governmental Body" means any foreign, federal, state, local or other
governmental authority or regulatory or judicial body.
"Hazardous Substances" means (i) any gasoline, fuel oil or any other
petroleum products, explosives, alcohols or chemical solvents or polychlorinated
biphenyls, (ii) any substance, waste, material or product defined as hazardous,
radioactive, extremely hazardous or toxic under any Environmental Law, and (iii)
asbestos, asbestos-containing substances or urea formaldehyde insulation.
4
"Indemnified ACSYS Party" is defined in Section 10.2.
"Indemnified Party" is defined in Section 10.5(a).
"Indemnified Seller Party" is defined in Section 10.3.
"Indemnitor" is defined in Section 10.5(a).
"Interim Company Balance Sheet" is defined in Section 4.7.
"Interim Company Balance Sheet Date" is defined in Section 4.7.
"Intellectual Property" means any Copyrights, Patents, Trademarks, know-
how, trade secrets (including, without limitation, all results of research and
development), product formulae, franchises, inventions, rights-to-use and other
industrial or intellectual property rights.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"Liquidated Claim Notice" is defined in Section 10.5(a).
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Material Adverse Effect" means, with respect to any party, a material
adverse effect on the business, assets, financial condition, results of
operations, liquidity, products, prospects, competitive position, customers or
customer relations of such party.
"Xxxxx Financial Statements" is defined in Section 4.7.
"Merger Cash Portion" is defined in Section 3.1.
"Merger Share Portion" is defined in Section 3.1.
"Merger Consideration" is defined in Section 3.1.
"Merger Debt Repayment Portion" is defined in Section 3.1.
"Merger Subsidiary" means ACSYS Staffing Acquisition Corp., ACSYS Search
Acquisition Corp. or ACSYS Career Acquisition Corp., as the context requires.
"Mergers" is defined in Section 3.1.
5
"Ordinary course" or "ordinary course of business" means the ordinary
course of business that is consistent in nature and, where relevant, amount with
past practices.
"Patents" means all patents and patent applications.
"Pension Plan" is defined in Section 4.19(b).
"Permit" means any governmental permit, license, registration, certificate
of occupancy, approval and other authorization.
"Permitted Encumbrances" means those encumbrances specifically set forth on
the Company Disclosure Schedule.
"Person" means any natural person, corporation, partnership,
proprietorship, association, trust or other legal entity.
"Plan" is defined in Section 4.19.
"Preliminary Audited Financial Statements" is defined in Section 4.7.
"Regulation" means any statute, law, ordinance, regulation, order or rule
of any Governmental Body.
"Released Claims" is defined in Section 7.8.
"Releases" is defined in Section 7.8.
"Required Consents" is defined in Section 4.5.
"Response Period" is defined in Section 10.5(a).
"Restricted Business" is defined in Section 7.5(a).
"Search Certificate" is defined in Section 3.2(b).
"Search Certificate of Merger" is defined in Section 2.2(b).
"Search Merger" is defined in Section 2.1(b).
"Search Merger Effective Time" is defined in Section 2.2(b).
"Search Per Share Cash Consideration" is defined in Section 3.2(b).
"Search Per Share Stock Consideration" is defined in Section 3.2(b).
6
"Search Shares" is defined in Section 3.2(b).
"Securities Act" is defined in Section 4.24(a).
"Shareholders" is defined in the preamble to this Agreement.
"Staffing Certificate" is defined in Section 3.2(a).
"Staffing Certificate of Merger" is defined in Section 2.2(a).
"Staffing Merger" is defined in Section 2.1(a).
"Staffing Merger Effective Time" is defined in Section 2.2(a).
"Staffing Per Share Cash Consideration" is defined in Section 3.2(a).
"Staffing Per Share Stock Consideration" is defined in Section 3.2(a).
"Staffing Shares" is defined in Section 3.2(a).
"Taxes" means any taxes, duties, assessments, fees, levies, or similar
governmental charges, together with any interest, penalties, and additions to
tax, imposed by any taxing authority, wherever located (i.e. whether federal,
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state, local, municipal, or foreign), including, without limitation, all net
income, gross income, gross receipts, net receipts, sales, use, transfer,
franchise, privilege, profits, social security, disability, withholding,
payroll, unemployment, employment, excise, severance, property, windfall
profits, value added, ad valorem, occupation, or any other similar governmental
-- -------
charge or imposition.
"Tax Returns" is defined in Section 4.13.
"Trademarks" means registered trademarks, registered service marks,
trademark and service xxxx applications and unregistered trademarks and service
marks.
"Unaudited Financial Statements" is defined in Section 4.7.
"Unliquidated Claim" is defined in Section 10.5(a).
1.2 Knowledge. The term "to the knowledge of", or words to that effect as
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used herein, shall mean those facts that are known or should reasonably have
been known after due inquiry by the corporate executive officers of the
corporation and the knowledge that would have been obtained from a reasonable
investigation.
7
ARTICLE II
MERGERS
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2.1 Mergers.
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(a) Upon the terms and subject to the conditions of this Agreement
and in accordance with the Georgia Business Corporation Code (the "GBCC"), at
the Staffing Merger Effective Time (as defined in Section 2.2(a)), Staffing
Acquisition shall be merged with and into C.P.A. Staffing (the "Staffing
Merger") and the separate corporate existence of Staffing Acquisition shall
thereupon cease, C.P.A. Staffing shall be the successor or surviving corporation
in the Staffing Merger and shall continue to be governed by the laws of the
State of Georgia and the separate corporate existence of C.P.A. Staffing with
all its rights, privileges and immunities, powers and franchises shall continue
unaffected by the Staffing Merger.
(b) Upon the terms and subject to the conditions of this Agreement
and in accordance with the GBCC, at the Search Merger Effective Time (as defined
in Section 2.2(b)), Search Acquisition shall be merged with and into C.P.A.
Search (the "Search Merger") and the separate corporate existence of Search
Acquisition shall thereupon cease, C.P.A. Search shall be the successor or
surviving corporation in the Search Merger and shall continue to be governed by
the laws of the State of Georgia and the separate corporate existence of C.P.A.
Search with all its rights, privileges and immunities, powers and franchises
shall continue unaffected by the Search Merger.
(c) Upon the terms and subject to the conditions of this Agreement
and in accordance with the GBCC, at the Career Merger Effective Time (as defined
in Section 2.2(c)), Career Acquisition shall be merged with and into Career
Placement (the "Career Merger") and the separate corporate existence of Career
Acquisition shall thereupon cease, Career Placement shall be the successor or
surviving corporation in the Career Merger and shall continue to be governed by
the laws of the State of Georgia and the separate corporate existence of Career
Placement with all its rights, privileges and immunities, powers and franchises
shall continue unaffected by the Career Merger.
2.2 Effective Times.
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(a) On the Closing Date, upon the terms and subject to the conditions
hereof, Staffing Acquisition and C.P.A. Staffing shall file a Certificate of
Merger (the "Staffing Certificate of Merger") with the Secretary of State of the
State of Georgia, in such form as may be required by, and executed in accordance
with, the GBCC. The Staffing Merger shall become effective at such time as such
document is so filed or at such time as is set forth in the Staffing Certificate
of Merger, if different, which time is hereinafter referred to as the "Staffing
Merger Effective Time." The Staffing Merger shall have the effects set forth in
the applicable provisions of the GBCC and this Agreement.
8
(b) On the Closing Date, upon the terms and subject to the conditions
hereof, Search Acquisition and C.P.A. Search shall file a Certificate of Merger
(the "Search Certificate of Merger") with the Secretary of State of the State of
Georgia, in such form as may be required by, and executed in accordance with,
the GBCC. The Search Merger shall become effective at such time as such
document is so filed or at such time as is set forth in the Staffing Certificate
of Merger, if different, which time is hereinafter referred to as the "Search
Merger Effective Time." The Search Merger shall have the effects set forth in
the applicable provisions of the GBCC and this Agreement.
(c) On the Closing Date, upon the terms and subject to the conditions
hereof, Career Acquisition and Career Placement shall file a Certificate of
Merger (the "Career Certificate of Merger") with the Secretary of State of the
State of Georgia, in such form as may be required by, and executed in accordance
with, the GBCC. The Career Merger shall become effective at such time as such
document is so filed or at such time as is set forth in the Career Certificate
of Merger, if different, which time is hereinafter referred to as the "Career
Merger Effective Time." The Career Merger shall have the effects set forth in
the applicable provisions of the GBCC and this Agreement.
2.3 Closing. The closing of the Staffing Merger, the Search Merger and
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the Career Merger (the "Closing") shall take place on August ___, 1997 at the
offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, Philadelphia, Pennsylvania, at 10:00
a.m. or such other place, time and date as the parties may mutually agree. The
consummation of the Staffing Merger shall occur immediately prior to the
consummation of the Search Merger and the consummation of the Search Merger will
occur immediately prior to the consummation of the Career Merger. The date on
which the Closing shall occur is hereinafter referred to as the "Closing Date".
2.4 Articles of Incorporation; By-Laws.
----------------------------------
(a) The Articles of Incorporation and By-Laws of C.P.A. Staffing at
the Staffing Merger Effective Time shall be the Articles of Incorporation and
By-Laws of the surviving corporation of the Staffing Merger until thereafter
amended as provided therein and the GBCC.
(b) The Articles of Incorporation and By-Laws of C.P.A. Search at the
Search Merger Effective Time shall be the Articles of Incorporation and By-Laws
of the surviving corporation of the Search Merger until thereafter amended as
provided therein and the GBCC.
(c) The Articles of Incorporation and By-Laws of Career Placement at
the Career Merger Effective Time shall be the Articles of Incorporation and By-
Laws of the surviving corporation of the Career Merger until thereafter amended
as provided therein and the GBCC.
2.5 Directors and Officers.
----------------------
(a) The directors and officers of C.P.A. Staffing after the Staffing
Merger Effective Time shall be as set forth on Schedule 2.5 hereto until their
successors have been duly elected, appointed or qualified or until their earlier
death, resignation or removal in accordance with the Articles of Incorporation
and Bylaws of the surviving corporation of the Staffing Merger.
9
(b) The directors and officers of C.P.A. Search after the Search
Merger Effective Time shall be as set forth on Schedule 2.5 hereto until their
successors have been duly elected, appointed or qualified or until their earlier
death, resignation or removal in accordance with the Articles of Incorporation
and Bylaws of the surviving corporation of the Search Merger.
(c) The directors and officers of Career Placement after the Career
Merger Effective Time shall be as set forth on Schedule 2.5 hereto until their
successors have been duly elected, appointed or qualified or until their earlier
death, resignation or removal in accordance with the Articles of Incorporation
and Bylaws of the surviving corporation of the Career Merger.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OF SHARES
------------------------------------------
3.1 Merger Consideration. The aggregate purchase price payable by ACSYS
--------------------
in the Staffing Merger, the Search Merger and the Career Merger (collectively,
the "Mergers") shall be $9,570,245 (the "Merger Consideration"), of which
$7,023,825.83 shall be payable in the Staffing Merger, $2,545,419.17 shall be
payable in the Search Merger and $1,000 shall be payable in the Career Merger.
The Merger Consideration shall consist of $1,634,049, without interest (the
"Merger Cash Portion"), $280,000 less applicable withholding taxes, without
interest, to be paid to Xxxx Xxxxxxxx in repayment of a $280,000 principal
amount demand note from C.P.A. Staffing to Xxxx Xxxxxxxx (the "Merger Debt
Repayment Portion") and 3,247,762 ACSYS Shares (the "Merger Share Portion"). The
Merger Cash Portion shall be allocated $1,124,765.17 to the Staffing Merger,
$509,083.83 to the Search Merger and $200 to the Career Merger. The Merger Debt
Repayment Portion shall be allocated entirely to the Staffing Merger. The Merger
Share Portion shall be allocated pro rata to the Staffing Merger, the Search
Merger and the Career Merger based on the purchase price payable by ACSYS in
each such merger as set forth in this Section 3.1 bears to the Merger
Consideration.
3.2 Conversion of Shares.
--------------------
(a) At the Staffing Merger Effective Time, by virtue of the Staffing
Merger and without any action on the part of C.P.A. Staffing, Staffing
Acquisition or the holder of any of the securities thereof, (i) each share of
C.P.A. Staffing common stock issued and outstanding immediately prior to the
Staffing Merger Effective Time ("Staffing Shares") shall be canceled and
extinguished and be converted into and represent the right to receive (A)
$5623.83 in cash, without interest (the "Staffing Per Share Cash
Consideration"), and (B) 11,918.041 ACSYS Shares (the "Staffing Per Share Stock
Consideration"). All Staffing Shares, by virtue of the Staffing Merger and
without any action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate representing any Staffing Shares ("Staffing
Certificate") shall thereafter cease to have any rights with respect thereto,
except the right to receive the Staffing Per Share Cash Consideration and the
Staffing Per Share Stock Consideration for such Staffing Shares upon the
surrender of such certificate in accordance with this Section 3.2(a).
10
At the Closing, upon surrender of Staffing Certificates representing all the
Staffing Shares to ACSYS for cancellation, each of the Shareholders shall be
entitled to receive, subject to Section 10.8 hereof, $562,383 in cash, without
interest, and a certificate representing 1,191,804.1 ACSYS Common Shares. At the
Staffing Merger Effective Time, each share of common stock of Staffing
Acquisition issued and outstanding immediately prior thereto shall, by virtue of
the Staffing Merger and without any action on the part of the holder thereof, be
converted into one share of common stock of C.P.A. Staffing as the surviving
corporation.
(b) At the Search Merger Effective Time, by virtue of the Search
Merger and without any action on the part of C.P.A. Search, Search Acquisition
or the holder of any of the securities thereof, (i) each share of C.P.A. Search
common stock issued and outstanding immediately prior to the Search Merger
Effective Time ("Search Shares") shall be canceled and extinguished and be
converted into and represent the right to receive (A) $2,545.42 in cash, without
interest (the "Search Per Share Cash Consideration"), and (B) 4,319.072 ACSYS
Shares (the "Search Per Share Stock Consideration"). All Search Shares, by
virtue of the Search Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of a certificate representing any Search
Shares ("Search Certificate") shall thereafter cease to have any rights with
respect thereto, except the right to receive the Search Per Share Cash
Consideration and the Search Per Share Stock Consideration for such Search
Shares upon the surrender of such certificate in accordance with this Section
3.2(b). At the Closing, upon surrender of Search Certificates representing all
the Search Shares to ACSYS for cancellation, each of the Shareholders shall be
entitled to receive, subject to Section 10.8 hereof, $254,542 in cash, without
interest, and a certificate representing 431,907.2 ACSYS Common Shares. At the
Search Merger Effective Time, each share of common stock of Search Acquisition
issued and outstanding immediately prior thereto shall, by virtue of the Search
Merger and without any action on the part of the holder thereof, be converted
into one share of common stock of C.P.A. Search as the surviving corporation.
(c) At the Career Merger Effective Time, by virtue of the Career
Merger and without any action on the part of Career Placement, Career
Acquisition or the holder of any of the securities thereof, (i) each share of
Career Placement common stock issued and outstanding immediately prior to the
Career Merger Effective Time ("Career Placement Shares") shall be canceled and
extinguished and be converted into and represent the right to receive (A) $0.20
in cash, without interest (the "Career Per Share Cash Consideration"), and (B)
0.3394 ACSYS Shares (the "Career Per Share Stock Consideration"). All Career
Placement Shares, by virtue of the Career Merger and without any action on the
part of the holders thereof, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any Career Placement Shares ("Career Certificate") shall thereafter
cease to have any rights with respect thereto, except the right to receive the
Career Per Share Cash Consideration and the Career Per Share Stock Consideration
for such Career Placement Shares upon the surrender of such certificate in
accordance with this Section 3.2(c). At the Closing, upon surrender of Career
Certificates representing all the Career Placement Shares to ACSYS for
cancellation, each of the Shareholders shall be entitled to receive, subject to
Section 10.8 hereof, $100.00 in cash, without interest, and a certificate
representing 169.7 ACSYS Common Shares. At the Career Merger Effective Time,
each share of
11
common stock of Career Acquisition issued and outstanding immediately prior
thereto shall, by virtue of the Career Merger and without any action on the part
of the holder thereof, be converted into one share of common stock of Career
Placement as the surviving corporation.
3.3 Lost, Stolen or Destroyed Certificates. In the event any Certificate
--------------------------------------
shall have been lost, stolen or destroyed, ACSYS may, in its discretion and as a
condition precedent to the disbursement of the Merger Cash Consideration and the
Merger Share Consideration in respect of shares represented by such Certificate,
require the owner of such lost, stolen or destroyed Certificate to make an
affidavit of that fact containing such indemnification provisions as ACSYS may
reasonably deem appropriate, including, without limitation, the posting of a
bond as indemnity against any claim that may be made against it or the surviving
corporation with respect to such Certificate.
3.4 Taking of Necessary Action; Further Action. If any further action is
------------------------------------------
necessary or desirable to carry out the purposes of this Agreement and to vest
any of the surviving corporations with full rights and title to and possession
of all assets, properties, rights, privileges, immunities and franchises of
either of the constituent corporations, the officers and directors of each such
corporation are fully authorized in the name of such corporation or otherwise to
take, and shall take, all such lawful and necessary action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF C.P.A. STAFFING,
C.P.A. SEARCH AND CAREER PLACEMENT AND THE SHAREHOLDERS
-------------------------------------------------------
Except as disclosed in a schedule attached to this Agreement (the
"Company Disclosure Schedule") which identifies with particularity an exception
to a representation and warranty in this Agreement, C.P.A. Staffing, C.P.A.
Search, Career Placement and the Shareholders jointly and severally represent
and warrant to ACSYS and the Merger Subsidiaries as set forth below.
4.1 Corporate Status. Each of C.P.A. Staffing, C.P.A. Search and Career
----------------
Placement is a corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties or the nature or conduct of its business requires
it to be so qualified, except where the failure to so qualify is not likely to
have, individually or in the aggregate, a Material Adverse Effect. C.P.A.
Staffing, C.P.A. Search and Career Placement do not own or control, or have any
equity interest in any other Person.
4.2 Authorization. Each of C.P.A. Staffing, C.P.A. Search and Career
-------------
Placement has the requisite power and authority to own, lease and operate its
properties and carry on its business as currently conducted, and to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the performance of the transactions
contemplated herein have been duly authorized by all necessary corporate action
on the part of C.P.A. Staffing, C.P.A. Search and Career Placement, including,
without limitation, approval by the requisite
12
vote of the shareholders of each such Company. Each Shareholder has the
requisite power, capacity, legal right and authority to execute and deliver this
Agreement and to perform the transactions contemplated herein. This Agreement
has been duly executed and delivered by each of C.P.A. Staffing, C.P.A. Search
and Career Placement and constitutes a valid and binding obligation of C.P.A.
Staffing, C.P.A. Search and Career Placement, enforceable against each of them
in accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and except that such enforceability
is subject to general principles of equity). This Agreement has been duly
executed and delivered by each Shareholder and constitutes a valid and binding
obligation of each such Shareholder, enforceable against each such Shareholder
in accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and except that such enforceability
is subject to general principles of equity).
4.3 Capitalization. The authorized capital stock of C.P.A. Staffing
--------------
consists of 10,000 shares of common stock, $1.00 par value per share, of which
200 Staffing Shares are issued and outstanding and owned by the Shareholders.
All of the issued and outstanding Staffing Shares have been duly authorized and
are validly issued, fully paid and non-assessable. The authorized capital stock
of C.P.A. Search consists of 10,000 shares of common stock, $1.00 par value per
share, of which 200 Search Shares are issued and outstanding and owned by the
Shareholders. All of the issued and outstanding Search Shares have been duly
authorized and are validly issued, fully paid and non-assessable. The authorized
capital stock of Career Placement consists of 100,000 shares of common stock, no
par value per share, of which 1,000 Career Placement Shares are issued and
outstanding and owned by the Shareholders. All of the issued and outstanding
Career Placement Shares have been duly authorized and are validly issued, fully
paid and non-assessable. The Company Disclosure Schedule contains a true and
complete list of the record holders of all issued and outstanding Shares of each
Company and sets forth the full name and number of Shares of each Company owned
by each. Except as set forth on the Company Disclosure Schedule, none of C.P.A.
Staffing, C.P.A. Search or Career Placement has outstanding (i) any
subscription, option, put, call, warrant or other right or commitment to issue,
nor any obligation or commitment to redeem or purchase, any of its authorized
capital stock, or securities or other instruments convertible into, or
exchangeable or exercisable for its capital stock, or (ii) any securities
convertible into, or exchangeable or exercisable for any of its capital stock.
There are no shares of capital stock of C.P.A. Staffing, C.P.A. Search or Career
Placement that have been issued in violation of, or are subject to, any
preemptive rights or subscription agreements. Except as set forth on the Company
Disclosure Schedule, there are no stockholder agreements, voting agreements,
voting trusts or any such other similar arrangements which have the effect of
restricting or limiting the transfer, voting or other rights associated with the
capital stock of C.P.A. Staffing, C.P.A. Search or Career Placement.
4.4 No Conflict. Except as set forth on the Company Disclosure Schedule,
-----------
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein by C.P.A. Staffing, C.P.A. Search, Career
Placement and the Shareholders, will (i) violate or conflict with any of the
provisions of any of the Charter Documents or bylaws of C.P.A. Staffing,
13
C.P.A. Search or Career Placement, (ii) violate or constitute a default, an
event of default or an event creating rights of acceleration, termination,
cancellation or other additional rights, or loss of rights under, any mortgage,
indenture, deed of trust, lease, contract, agreement, license or other
instrument or any statute, rule, regulation, injunction, decree, order, judgment
or ruling of any Governmental Body to which C.P.A. Staffing, C.P.A. Search,
Career Placement or any Shareholder is a party, or by which they or any of their
assets or property are bound other than those which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect, or (iii)
result in the creation of any Encumbrances upon any of the assets or property of
C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder other than
those which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect.
4.5 Consents and Approvals. Except for the consents specified in the
----------------------
Company Disclosure Schedule (the "Required Consents"), neither the execution or
delivery by C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder
of this Agreement, nor the performance of the transactions hereunder, will
require any filing, consent or approval, constitute a Default or cause any
payment obligation to arise under (a) any Regulation or Court Order to which
C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder is subject,
(b) the Charter Documents or bylaws of C.P.A. Staffing, C.P.A. Search or Career
Placement or (c) any Contract, Permit or other document to which C.P.A.
Staffing, C.P.A. Search, Career Placement or any Shareholder is a party or by
which they or their properties may be bound, including, with respect to (a), (b)
and (c), ACSYS or any of the Companies becoming subject to or liable for the
payment of any Taxes or any of the properties owned by ACSYS or any of the
Companies being reassessed or revalued by any tax authority.
4.6 Stock Ownership. Each Shareholder owns of record and beneficially all
---------------
title, right and interest to the number of Staffing Shares, Search Shares and
Career Shares set forth opposite his or her name on the Company Disclosure
Schedule free and clear of all Encumbrances.
4.7 Financial Statements. The Company Disclosure Schedule includes
--------------------
correct and complete copies of financial statements of the combined Companies
consisting of a balance sheet as of December 31, 1996 and the related statements
of income, retained earnings and cash flows for the year then ended (the
"Preliminary Audited Financial Statements"), which were prepared by Xxxxxx
Xxxxxxxx LLP. The Company Disclosure Schedule also includes correct and complete
copies of unaudited financial statements of the combined Companies consisting of
a balance sheet of as of the end of the period ended June 30, 1997 and the
related statements of income for the twelve-month period then ended (the
"Unaudited Financial Statements," and together with the Preliminary Audited
Financial Statements, the "Financial Statements"). The Financial Statements of
the combined Companies are consistent with the books and records of the
Companies, and there are no material transactions required by GAAP to be
recorded in accounting records that have not been recorded in the accounting
records underlying such Financial Statements. The Financial Statements have been
prepared in accordance with GAAP consistently applied (including, in each case,
any related notes thereto) and present fairly the financial position and assets
and liabilities of the combined Companies as of the dates thereof and the
results of their operations for the year and twelve-month period then ended,
subject to the absence of notes and a cash flow statement in the case of the
Unaudited Financial Statements. The balance sheet of the combined Companies as
of December 31, 1996 that
14
is included in the Preliminary Audited Financial Statements is referred to
herein as the "Company Balance Sheet" and the date thereof is referred to as the
"Balance Sheet Date." The balance sheet of the combined Companies as of June 30,
1997 that is included in the Unaudited Financial Statements is referred to
herein as the "Interim Company Balance Sheet" and the date thereof is referred
to as the "Interim Balance Sheet Date."
4.8 Title to Assets and Related Matters.
-----------------------------------
(a) Each of C.P.A. Staffing, C.P.A. Search and Career Placement has
good and marketable title to, or valid leasehold interests in, all its
properties and assets, free and clear of all Encumbrances other than (i)
mechanics and other statutory liens and the lien of current taxes not yet due
and payable, and (ii) possible minor liens which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of C.P.A. Staffing, C.P.A. Search and Career Placement, and which
have not arisen otherwise than in the ordinary course of business. Except as set
forth on the Company Disclosure Schedule, all of the assets used in the
operations of C.P.A. Staffing, C.P.A. Search and Career Placement are in good
working condition and repair, subject to normal wear and tear, (b) are usable in
the ordinary course of business and (c) conform in all material respects with
all applicable Regulations relating to their construction, use and operation.
C.P.A. Staffing, C.P.A. Search and Career Placement own or have valid licenses
to use all the assets and properties required to operate their business as
currently conducted.
(b) Each of C.P.A. Staffing, C.P.A. Search and Career Placement has
complied in all material respects with the terms of all leases to which it is a
party and under which it is in occupancy, all such leases are in full force and
effect and, to the best knowledge of C.P.A. Staffing, C.P.A. Search and Career
Placement, the parties thereto other than C.P.A. Staffing, C.P.A. Search and
Career Placement have complied, and are complying, with all of their material
obligations and are not in material default under (nor does there exist any
condition which, upon the passage of time or the giving of notice, would cause
such a material violation of default under) any of such leases. C.P.A. Staffing,
C.P.A. Search and Career Placement enjoy peaceful and undisturbed possession
under all such leases.
4.9 Accounts Receivable. The accounts receivable of C.P.A. Staffing,
-------------------
C.P.A. Search and Career Placement are bona fide accounts receivable created in
the ordinary course of business and are not subject to defenses, set-offs or
counterclaims and are and will be collectible in the ordinary course of business
no later than 90 days after billing at the full recorded amounts thereof (net of
any allowance for bad debts reflected on the Interim Company Balance Sheet).
4.10 Accounts Payable. All accounts payable as set forth on the Interim
----------------
Company Balance Sheet or arising since the date thereof have been incurred in
the ordinary course of business.
4.11 Product Warranties and Price Guarantees. The Company Disclosure
---------------------------------------
Schedule sets forth all express product or service warranties and price
guarantees made by C.P.A. Staffing, C.P.A. Search or Career Placement.
15
4.12 No Undisclosed Liabilities. None of C.P.A. Staffing, C.P.A. Search or
--------------------------
Career Placement has any Liabilities except (a) as specifically disclosed on the
Interim Company Balance Sheet, (b) Liabilities incurred in the ordinary course
since the Interim Balance Sheet Date, and (c) Liabilities under any Contracts
specifically disclosed on the Company Disclosure Schedule (or not required to be
disclosed because of the term or amount involved) that were not required under
GAAP to have been specifically disclosed or reserved for on the Interim Company
Balance Sheet.
4.13 Taxes. Except as disclosed on the Company Disclosure Schedule, with
-----
respect to C.P.A. Staffing, C.P.A. Search and Career Placement, (i) all reports,
returns, statements (including estimated reports, returns, or statements), and
other similar filings required to be filed on or before the Closing Date (the
"Tax Returns") with respect to any Taxes have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns correctly reflect the
liability of C.P.A. Staffing, C.P.A. Search and Career Placement for Taxes for
the periods, properties, or events covered thereby; (ii) all Taxes payable with
respect to the Tax Returns referred to in the preceding clause have been paid;
(iii) none of C.P.A. Staffing, C.P.A. Search or Career Placement has knowledge
of any unassessed Tax deficiencies or of any audits or investigations pending or
threatened against any of them with respect to any Taxes; (iv) all Taxes and
other Liabilities due with respect to completed and settled examinations have
been paid; (v) there is in effect no extension for the filing of any Tax Return
and none of C.P.A. Staffing, C.P.A. Search or Career Placement has extended or
waived the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any Tax; (vi) no claim has ever been
made by any Tax authority in a jurisdiction in which any of C.P.A. Staffing,
C.P.A. Search or Career Placement does not file Tax returns that it is or may be
subject to taxation by that jurisdiction; (vii) there are no liens for Taxes
upon any asset of C.P.A. Staffing, C.P.A. Search or Career Placement except for
liens for current Taxes not yet due; (viii) C.P.A. Staffing, C.P.A. Search and
Career Placement have maintained all records necessary to comply with applicable
tax laws and have timely made, or caused to be made, all deposits required to be
made with respect to employees' withholding and other payroll, employment, or
other withholding taxes. Each of C.P.A. Staffing, C.P.A. Search and Career
Placement has been appropriately taxable as an S corporation for Federal, State
and local tax purposes for all periods of their existence. No action has been
taken that would have the effect of causing the S Corporation election of C.P.A.
Staffing, C.P.A. Search or Career Placement to be terminated. None of C.P.A.
Staffing, C.P.A. Search or Career Placement is or has been a party to any tax
allocation or sharing agreement and none of them is or has been a member of an
affiliated group within the meaning of Section 1504 of the Code.
4.14 Legal Proceedings and Compliance with Law.
-----------------------------------------
(a) Except as disclosed on the Company Disclosure Schedule, there is
no Litigation that is pending or, to knowledge of C.P.A. Staffing, C.P.A.
Search, Career Placement or any Shareholder, threatened or unasserted but
considered probable of assertion, against or related to C.P.A. Staffing, C.P.A.
Search or Career Placement, any Shareholder or any director thereof or against
any property or interest of any of them that is likely to have, individually or
in the aggregate, a Material Adverse Effect. There has been no Default under
any Regulation applicable to C.P.A. Staffing, C.P.A. Search or Career Placement
or the employees conducting their business, including
16
any Regulation relating to pollution or protection of the environment, except
for any Defaults that have been cured without material cost or that would not
have a Material Adverse Effect, and none of C.P.A. Staffing, C.P.A. Search or
Career Placement has ever received any notices from any governmental entity
regarding any alleged Default under, or failure to comply with, any Regulation
except those that have been cured without material cost or that would not have a
Material Adverse Effect. None of C.P.A. Staffing, C.P.A. Search or Career
Placement is a party to any Court Order.
(b) Without limiting the generality of Section 4.14(a), except as
described on the Company Disclosure Schedule, there has not been any
Environmental Condition (i) at any premises at which the business of C.P.A.
Staffing, C.P.A. Search or Career Placement (or any predecessor of C.P.A.
Staffing, C.P.A. Search or Career Placement) is currently conducted, (ii) at any
property owned, leased or operated at any time by C.P.A. Staffing, C.P.A. Search
or Career Placement (or any predecessor of C.P.A. Staffing, C.P.A. Search or
Career Placement) or any Person controlled by any Affiliate of C.P.A. Staffing,
C.P.A. Search or Career Placement, or (iii) at any property at which wastes have
been deposited or disposed by or at the behest or direction of C.P.A. Staffing,
C.P.A. Search or Career Placement (or any predecessor of C.P.A. Staffing, C.P.A.
Search or Career Placement) or any Person controlled by any Affiliate of C.P.A.
Staffing, C.P.A. Search or Career Placement, and none of C.P.A. Staffing, C.P.A.
Search or Career Placement has received written notice of any such Environmental
Condition. "Environmental Condition" means any condition or circumstance,
including the presence of Hazardous Substances, whether created by C.P.A.
Staffing, C.P.A. Search or Career Placement (or any predecessor of C.P.A.
Staffing, C.P.A. Search or Career Placement) or any third party, at or relating
to any such property or premises that would (i) require abatement or correction
under an Environmental Law, (ii) give rise to any civil or criminal liability
under an Environmental Law,or (iii) create a public or private nuisance.
"Environmental Law" means all Regulations and Court Orders relating to pollution
or protection of the environment as well as any principles of common law under
which a Person may be held liable for the release or discharge of any materials
into the environment.
(c) C.P.A. Staffing, C.P.A. Search and Career Placement have
delivered to ACSYS correct and complete copies of any written reports, studies
or assessments in the possession or control of C.P.A. Staffing, C.P.A. Search,
Career Placement or any Shareholder that relate to any Environmental Condition.
None of C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder
knows of any other written reports, studies or assessments, whether or not in
the possession or control of C.P.A. Staffing, C.P.A. Search, Career Placement or
any Shareholder, that relate to any Environmental Condition.
(d) Except in those cases where the failure would not have a Material
Adverse Effect, (i) C.P.A. Staffing, C.P.A. Search and Career Placement have
obtained and are in full compliance with all Permits that are required for the
operations currently conducted by them, (ii) all of the Permits are currently
valid and in full force and (iii) C.P.A. Staffing, C.P.A. Search and Career
Placement have filed such timely and complete renewal applications as may be
required with respect to their Permits. To the knowledge of C.P.A. Staffing,
C.P.A. Search, Career Placement and each Shareholder, no revocation,
cancellation or withdrawal of a Permit has been threatened.
17
4.15 Contracts.
---------
(a) The Company Disclosure Schedule lists each Contract of the
following types to which any of C.P.A. Staffing, C.P.A. Search or Career
Placement is a party or by which it is bound:
(i) Contracts with any present or former shareholder,
director, officer, employee, partner or consultant or with any
Affiliate of any Shareholder providing for aggregate payments in any
calendar year in excess of $50,000;
(ii) Contracts for the purchase of, or payment for, supplies
or products, or for the performance of services, from or by a third
party, in excess of $20,000 with respect to any one supplier or other
party;
(iii) Contracts to sell or supply products, inventory or other
property to, or to perform services for, a third party, that involve
an amount in excess of $20,000 with respect to any one customer or
other party;
(iv) Contracts to sell any product or provide any service to a
governmental or regulatory body;
(v) Contracts limiting or restraining it from engaging or
competing in any lines of business with any Person;
(vi) Contracts with any customer providing for a volume
refund, retrospective price adjustment or price guarantee;
(vii) Contracts to lease to or from any other party any assets
that involve an amount in excess of $20,000 in any individual case;
(viii) Any notes, debentures, bonds, conditional sale
agreements, equipment trust agreements, letter of credit agreements,
reimbursement agreements, loan agreements or other Contracts for the
borrowing or lending of money (including loans to or from officers,
directors, partners or stockholders or with Affiliates of any
Shareholder or any members of such Shareholder's immediate family), or
agreements or arrangements for a line of credit or for a guarantee of,
or other undertaking in connection with, the indebtedness of any other
Person;
(ix) Contracts creating or recognizing any Encumbrances with
respect to any assets or properties of the Company;
(x) Contracts with distributors, manufacturers sales
representatives or other sales agents;
18
(xi) Contracts which relate in whole or in part to any
software, technical assistance or other know-how or other Intellectual
Property right;
(xii) Contracts for any capital expenditure or leasehold
improvement in excess of $20,000;
(xiii) Contracts not terminable without penalty on not more than
thirty (30) days' notice.
(xiv) Any other Contracts (other than those that may be
terminated on not more than 30 days' notice without Liability and
those described in any of (i) through (xii) above) not made in the
ordinary course of business or which are material to the Company.
(b) None of C.P.A. Staffing, C.P.A. Search or Career Placement is in
Default under any Contract. None of C.P.A. Staffing, C.P.A. Search or Career
Placement has received any communication from, or given any communication to,
any other party indicating that C.P.A. Staffing, C.P.A. Search, Career Placement
or such other party, as the case may be, is in Default under any Contract. To
the knowledge of C.P.A. Staffing, C.P.A. Search, Career Placement and each
Shareholder, none of the other parties to any such Contract to which C.P.A.
Staffing, C.P.A. Search or Career Placement is a party is in Default thereunder.
The Contracts are in full force and effect and are enforceable in accordance
with their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and except that such enforceability
is subject to general principles of equity).
4.16 Insurance. The Company Disclosure Schedule lists all policies or
---------
binders of insurance held by or on behalf of C.P.A. Staffing, C.P.A. Search or
Career Placement or relating to their operations, specifying with respect to
each policy the insurer, the type of insurance, the amount of the coverage, the
insured, the expiration date, the policy number and any pending claims
thereunder. There is no Default with respect to any such policy or binder, nor
has there been any failure to give any notice or present any claim under any
such policy or binder in a timely fashion or in the manner or detail required by
the policy or binder, except for any of the foregoing that would not,
individually or in the aggregate, have a Material Adverse Effect. There is no
notice of nonrenewal, cancellation, reduction in coverage or substantial
increase in premiums with respect to, or disallowance of any claim under, any
such policy or binder that has been received by C.P.A. Staffing, C.P.A. Search
or Career Placement, except for any of the foregoing that would not,
individually or in the aggregate, have a Material Adverse Effect. Such policies
will continue in full force and effect following the consummation of the Merger
and, except as disclosed on the Company Disclosure Schedule, do not provide for
any retrospective premium based adjustment or other experience-based liability
on the part of C.P.A. Staffing, C.P.A. Search or Career Placement. The Company
Disclosure Schedule describes any self-insurance arrangements maintained by
C.P.A. Staffing, C.P.A. Search or Career Placement. Such policies and self-
insurance arrangements are reasonable and adequate in amount, scope and
coverage, in light of the risks attendant to the businesses conducted by them.
19
4.17 Intellectual Property and Software Products. None of C.P.A. Staffing,
-------------------------------------------
C.P.A. Search or Career Placement currently uses nor has any of them previously
used in their operations (including in the development or marketing of products
and services) any Copyright, Patent or Trademark except for those listed on the
Company Disclosure Schedule. Except as listed in the Company Disclosure
Schedule, C.P.A. Staffing, C.P.A. Search and Career Placement own or have the
lawful right to use all Intellectual Property that is used or has been used in
their operations. All of the Intellectual Property listed on the Company
Disclosure Schedule is owned by C.P.A. Staffing, C.P.A. Search or Career
Placement free and clear of all Encumbrances, or is used pursuant to an
agreement that is identified and described in the Company Disclosure Schedule.
None of C.P.A. Staffing, C.P.A. Search or Career Placement infringes upon or
unlawfully or wrongfully uses any Intellectual Property rights owned or claimed
by another Person. Except as disclosed on the Company Disclosure Schedule, none
of C.P.A. Staffing, C.P.A. Search or Career Placement is obligated to pay
royalties to any Person. None of C.P.A. Staffing, C.P.A. Search or Career
Placement is in Default, nor has any of them received any notice of any claim of
infringement or any other claim or proceeding, with respect to any Intellectual
Property. No current or former employee of C.P.A. Staffing, C.P.A. Search or
Career Placement or any other Person owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, and including any right
to royalties or other compensation, in any Intellectual Property to C.P.A.
Staffing, C.P.A. Search or Career Placement and are not required to assign any
such interest to any other Person. All such officers and directors have executed
agreements not to disclose the confidential and proprietary information of
C.P.A. Staffing, C.P.A. Search or Career Placement to any Person. None of such
officers or directors is a party to any agreement that restricts such officer or
director from competing with any Person.
4.18 Employee Relations.
------------------
(a) Except as described in the Company Disclosure Schedule, none of
C.P.A. Staffing, C.P.A. Search or Career Placement is (i) a party to or
otherwise bound by any collective bargaining or other type of union agreement,
(ii) a party to, involved in or, to the knowledge of C.P.A. Staffing, C.P.A.
Search, Career Placement or any Shareholder, threatened by, any labor dispute or
unfair labor practice charge, or (iii) currently negotiating any collective
bargaining agreement, and none of C.P.A. Staffing, C.P.A. Search or Career
Placement has experienced any work stoppage during the last three years. The
Company Disclosure Schedule sets forth the names and current annual salary rates
or current hourly wages of all present employees of the Company.
(b) C.P.A. Staffing, C.P.A. Search and Career Placement are in
compliance with all applicable Regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. There are no outstanding claims against
C.P.A. Staffing, C.P.A. Search or Career Placement (whether under any
Regulation, Contract, policy or otherwise) asserted by or on behalf of any
present or former employee or job applicant of C.P.A. Staffing, C.P.A. Search or
Career Placement on account of or for (i) overtime pay, other than overtime pay
for work done in the current payroll period, (ii) wages or
20
salary for any period other than the current payroll period, (iii) any amount of
vacation pay or pay in lieu of vacation time off, other than vacation time off
or pay in lieu thereof earned in or in respect of the current fiscal year, (iv)
any amount of severance pay or similar benefits, (v) unemployment insurance
benefits, (vi) workers' compensation or disability benefits, (vii) any violation
of any statute, ordinance, order, rule or regulation relating to plant closings,
employment terminations or layoffs, including but not limited to the Worker
Adjustment and Retraining Notification Act, (viii) any violation of any statute,
ordinance, order, rule or other Regulation relating to employee "whistle blower"
or "right-to-know" rights and protection, (ix) any violation of any statute,
ordinance, order, rule or other Regulation relating to the employment
obligations of federal contractors or subcontractors or (x) any violation of any
Regulation relating to minimum wages or maximum hours of work, and none of
C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder is aware of
any such claims which have not been asserted. No Person (including any
governmental body) has asserted or threatened any claims against C.P.A.
Staffing, C.P.A. Search or Career Placement arising under or arising out of any
Regulation relating to discrimination or occupational safety in employment or
employment practices.
4.19 ERISA. Except as set forth in the Company Disclosure Schedule, none
-----
of C.P.A. Staffing, C.P.A. Search or Career Placement is, or has previously
been, a party, or contributed, to (1) any "employee benefit plan" as defined in
Section 3(3) of ERISA ("Plan") or (2) any deferred compensation, bonus,
performance compensation, stock purchase, stock option, stock appreciation,
severance, vacation, sick leave, holiday pay, fringe benefits, personnel policy,
reimbursement program, incentive, insurance, welfare or similar plan, program,
policy or arrangement ("Benefit Plan"). None of C.P.A. Staffing, C.P.A. Search
or Career Placement has any intent or commitment to create any additional Plan
or amend any Plan so as to increase benefits thereunder except in the ordinary
course of business consistent with past practice. A current, accurate and
complete copy of each such Plan and each Benefit Plan has been made available to
ACSYS.
(a) Each Plan is in compliance with all reporting, disclosure and
other requirements of ERISA and the Code and other laws applicable to such Plan
the breach or violation of which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect.
(b) Each Plan which is an employee pension benefit plan (a "Pension
Plan"), as defined in Section 3(2) of ERISA, and which is intended to be
qualified under Section 401(a) of the Code, has been determined by the Internal
Revenue Service to be so qualified and, to the best of the Company's knowledge,
no condition exists that would adversely affect any such determination.
(c) Neither any Plan nor any of C.P.A. Staffing, C.P.A. Search or
Career Placement, nor any trustee or agent has been or are presently engaged in
any prohibited transactions as defined by Section 406 of ERISA or Section 4975
of the Code for which an exemption is not applicable which could subject C.P.A.
Staffing, C.P.A. Search or Career Placement to the tax or penalty imposed by
Section 4975 of the Code or Section 502 of ERISA.
(d) There is no event or condition existing which could be deemed a
"reportable event" (within the meaning of Section 4043 of ERISA) with respect to
which the thirty-day notice
21
requirement has not been waived; to the best of C.P.A. Staffing, C.P.A. Search
or Career Placement's knowledge, no condition exists which could subject C.P.A.
Staffing, C.P.A. Search or Career Placement to a penalty under Section 4071 of
ERISA.
(e) None of C.P.A. Staffing, C.P.A. Search or Career Placement is, or
has been, a party to any "multi-employer plan," as that term is defined in
Section 3(37) of ERISA.
(f) With respect to each Plan and Benefit Plan, there are no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
pending or, to the best of C.P.A. Staffing, C.P.A. Search or Career Placement's
knowledge, threatened against any Plan or Benefit Plan, C.P.A. Staffing, C.P.A.
Search or Career Placement or any trustee or agent of any Plan or Benefit Plan.
(h) With respect to each welfare benefit plan to which C.P.A.
Staffing, C.P.A. Search or Career Placement is a party which constitutes a group
health plan subject to Section 4980B of the Code, each such Plan substantially
complies, and in each case has substantially complied, with all applicable
requirements of Section 4980B of the Code.
(i) Except as set forth in the Company Disclosure Schedule:
(i) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Pension Plan;
(ii) neither the Pension Benefit Guaranty Corporation nor
C.P.A. Staffing, C.P.A. Search or Career Placement has instituted
proceedings to terminate any Pension Plan and the Pension Benefit
Guaranty Corporation has not informed C.P.A. Staffing, C.P.A. Search
or Career Placement of its intent to institute proceedings to
terminate any Pension Plan;
(iii) full payment has been made of all amounts which C.P.A.
Staffing, C.P.A. Search or Career Placement was required to have paid
as a contribution to the Plans as of the last day of the most recent
fiscal year of each of the Plans ended prior to the date of this
Agreement, and none of the Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of each such Plan ended prior to the date of this
Agreement;
(iv) to the best of C.P.A. Staffing, C.P.A. Search or Career
Placement's knowledge, the actuarial assumptions utilized, where
appropriate, in connection with determining the funding of each
Pension Plan which is a defined benefit pension plan (as set forth in
the actuarial report for such Pension Plan) are reasonable. Based on
such actuarial assumptions, as of June 30, 1997, the fair market value
of the assets or properties held under each such Pension Plan exceeds
the actuarially determined present value of all accrued benefits of
such Pension Plan (whether or not vested)
22
determined as if such Pension Plan were terminated in accordance with
all applicable legal requirements;
(v) each of the Plans and Benefit Plans is, and its
administration is and has been during the six-year period preceding
the date of this Agreement, in substantial compliance with, and none
of C.P.A. Staffing, C.P.A. Search or Career Placement has received any
claim or notice that any such Plan or Benefit Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including without limitation, to the extent
applicable, the requirements of ERISA;
(vi) none of C.P.A. Staffing, C.P.A. Search or Career
Placement is in default in performing any of its contractual
obligations under any of the Plans or Benefit Plans or any related
trust agreement or insurance contract;
(vii) there are no material outstanding liabilities of any Plan
or Benefit Plan other than liabilities for benefits to be paid to
participants in such Plan or Benefit Plan and their beneficiaries in
accordance with the terms of such Plan or Benefit Plan;
(viii) each Plan or Benefit Plan may be amended or modified by
C.P.A. Staffing, C.P.A. Search or Career Placement at any time without
liability except under any defined pension benefit plan;
(ix) no Plan or Benefit Plan other than a Pension Plan
provides benefits to any individual after termination of employment;
(x) the consummation of the transactions contemplated by this
Agreement will not (in and of itself) (i) entitle any employee of
C.P.A. Staffing, C.P.A. Search or Career Placement to severance pay,
unemployment compensation or any other payment; (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due
to any such employee; (iii) result in any liability under Title IV of
ERISA; (iv) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code for which an exemption is not
available or (v) result (either alone or in conjunction with any other
event) in the payment or series of payments by the Company or any of
its Affiliates to any person of an Aexcess parachute payment@ within
the meaning of Section 280G of the Code;
(xi) with respect to each Benefit Plan that is funded wholly
or partially through an insurance policy, all premiums required to
have been paid to date under the insurance policy have been paid, all
premiums required to be paid under the insurance policy through the
Closing will have been paid on or before the Closing and, as of the
Closing, there will be no liability of the Company under any insurance
policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Closing; and
23
(xii) each Plan that constitutes a "welfare benefit plan,"
within the meaning of Section 3(1) of ERISA, and for which
contributions are claimed by C.P.A. Staffing, C.P.A. Search or Career
Placement as deductions under any provision of the Code, is in
material compliance with all applicable requirements pertaining to
such deduction, (ii) with respect to any welfare benefit fund (within
the meaning of Section 419 of the Code) related to a welfare benefit
plan, there is no disqualified benefit (within the meaning of Section
4976(b) of the Code) that would result in the imposition of a tax
under Section 4976(a) of the Code, and (iii) all welfare benefit funds
intended to be exempt from tax under Section 501(a) of the Code have
been determined by the Internal Revenue Service to be so exempt and no
event or condition exists which would adversely affect any such
determination.
4.20 Corporate Records. The minute books of the C.P.A. Staffing, C.P.A.
-----------------
Search and Career Placement contain complete and correct copies of their Charter
Documents and bylaws and accurately reflect in all material respects all minutes
of meetings, resolutions and other proceedings of their Boards of Directors and
shareholders. The stock record books of C.P.A. Staffing, C.P.A. Search and
Career Placement are complete and correct.
4.21 Absence of Certain Changes. Except as contemplated by this Agreement,
--------------------------
since the Balance Sheet Date, C.P.A. Staffing, C.P.A. Search and Career
Placement have conducted their business in the ordinary course and there has not
been:
(a) any material adverse change in the financial condition, results
of operations, liabilities, or assets of C.P.A. Staffing, C.P.A. Search or
Career Placement, or any other events or conditions that, in the aggregate,
would reasonably be expected to have a material adverse effect on the financial
condition, results of operations, liabilities, or assets of C.P.A. Staffing,
C.P.A. Search or Career Placement.
(b) any damage, destruction or loss (whether or not covered by
insurance), which reasonably may be expected to materially and adversely affect
the financial condition or results of operations of C.P.A. Staffing, C.P.A.
Search or Career Placement;
(c) except for the sale of products in the ordinary course of
business, any sale, lease, mortgage, pledge or Encumbrance of any properties or
assets of C.P.A. Staffing, C.P.A. Search or Career Placement having a value,
individually or in the aggregate, in excess of $20,000;
(d) any loss of any supplier, distributor or customer which
materially and adversely affects, or could reasonably be expected to materially
and adversely affect, the financial condition or results of operations of C.P.A.
Staffing, C.P.A. Search or Career Placement;
(e) any increase by C.P.A. Staffing, C.P.A. Search or Career
Placement, except as consistent with past practices, in the wages, salaries,
compensation, pension or other benefits payable to any employee who, as of the
date hereof, receives from C.P.A. Staffing, C.P.A. Search or Career Placement
annual compensation in excess of $50,000;
24
(f) the payment of any bonus or other compensation in excess of
regular salary to any employee who, as of the date hereof, receives from C.P.A.
Staffing, C.P.A. Search or Career Placement, annual compensation in excess of
$50,000;
(g) any cancellation, release or waiver of debts owed to C.P.A.
Staffing, C.P.A. Search or Career Placement outside the ordinary course of
business;
(h) any issuance or sale of any of its capital stock or grant of any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(i) any declaration or payment of any dividend or distribution with
respect to its capital stock or redemption, purchase or other acquisition of any
capital stock;
(j) any increase in indebtedness for borrowed money, except current
borrowings from banks in the ordinary course of business;
(k) any change in any method of accounting or accounting practice; or
(l) any agreement, whether or not in writing, to do any of the
foregoing.
4.22 Clients. C.P.A. Staffing, C.P.A. Search and Career Placement have
-------
used their reasonable business efforts to maintain and currently maintain, good
working relationships with all of their clients. The Company Disclosure
Schedule contains a list of the names of each of the ten clients that, for the
twelve months ended June 30, 1997, were the largest dollar volume clients of
products and services sold and provided by C.P.A. Staffing, C.P.A. Search and
Career Placement. Except as specified on the Company Disclosure Schedule, none
of such clients has given C.P.A. Staffing, C.P.A. Search or Career Placement
notice terminating, canceling or threatening to terminate or cancel any Contract
or relationship with such Company.
4.23 Finder's Fees. No Person retained by C.P.A. Staffing, C.P.A. Search,
-------------
Career Placement or any Shareholder is or will be entitled to any commission or
finder's or similar fee in connection with the Merger.
4.24 Securities Laws Matters. Each Shareholder acknowledges, represents and
-----------------------
warrants to ACSYS and Merger Sub as follows:
(a) Each Shareholder understands that the ACSYS Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and applicable state securities laws by reason of specific exemptions under the
provisions thereof which depend in part upon the representations made by each
Shareholder in this Agreement. Each Shareholder understands that ACSYS is
relying upon each Shareholder's representations and agreements contained in this
Agreement for the purpose of determining whether the issuance of the ACSYS
Shares pursuant to this Agreement meets the requirements for such exemptions.
25
(b) Each Shareholder has such knowledge, skill and experience in
business, financial and investment matters so that each Shareholder is capable
of evaluating the merits and risks of an investment in the ACSYS Shares. To the
extent that each Shareholder has deemed it appropriate to do so, each
Shareholder has retained, and relied upon, appropriate professional advice
regarding the tax, legal and financial merits and consequences of the investment
in the ACSYS Shares.
(c) Each Shareholder has made, either alone or together with his
advisors (if any), such independent investigation of ACSYS, its management, and
related matters as each Shareholder deems to be, or such advisors (if any) have
advised to be, necessary or advisable in connection with an investment in the
ACSYS Shares; and each Shareholder and his advisors (if any) have received all
information and data which they believe to be necessary in order to reach an
informed decision as to the advisability of an investment in the ACSYS Shares.
Each Shareholder is satisfied that there are no material facts regarding ACSYS
or the ACSYS Shares as to which they have not been fully informed.
(d) Each Shareholder represents that he has reviewed his financial
condition and commitments, alone and together with his advisors (if any), and
that, based on such review, he is satisfied that (i) each Shareholder has
adequate means of providing for his financial needs and possible contingencies
and has assets or sources of income which, taken together, are more than
sufficient so that each Shareholder could bear the risk of loss of his entire
investment in the ACSYS Shares, (ii) each Shareholder has no present or
contemplated future need to dispose of all or any portion of the ACSYS Shares to
satisfy any existing or contemplated undertaking, need or indebtedness and (iii)
each Shareholder is capable of bearing the economic risk of an investment in the
ACSYS Shares for the indefinite future. Each Shareholder agrees to furnish any
additional information requested by ACSYS to assure compliance of the issuance
of the ACSYS Shares with applicable federal and state securities laws in
connection with the purchase and sale of the ACSYS Shares.
(e) Each Shareholder understands that the ACSYS Shares are
"restricted securities" under applicable federal securities laws and that the
Securities Act and the rules of the Securities and Exchange Commission provide
in substance that each Shareholder may dispose of the ACSYS Shares only pursuant
to an effective registration statement under the Securities Act or an exemption
from such registration if available. Each Shareholder further understands that
ACSYS has no obligation or intention to register any of the ACSYS Shares under
or to take action so as to permit sales pursuant to the Securities Act.
Accordingly, each Shareholder may dispose of the ACSYS Shares only in certain
transaction which are exempt from registration under the Securities Act,
including "private placements," in which event the transferee will acquire
"restricted securities" subject to the same limitations as in the hands of each
Shareholder. Each Shareholder further understands that applicable states
securities laws allow sales of the ACSYS Shares only if the ACSYS Shares are
registered or the transaction is subject to an applicable exemption. As a
consequence, each Shareholder understands that he must bear the economic risks
of the investment in the ACSYS Shares for an indefinite period of time.
26
(f) Each Shareholder hereby confirms that he is acquiring the ACSYS
Shares for investment for his own account only and not with a view to or in
connection with any resale or distribution of the ACSYS Shares. Each
Shareholder hereby affirms that he has no present intention of making any sale,
assignment, pledge, gift, transfer or other disposition of the ACSYS Shares or
any interest therein.
(g) Each Shareholder acknowledges and agrees that ACSYS may sell
shares of its capital stock at a price greater or less than the effective price
per share of ACSYS Shares issued to such Shareholder pursuant to this Agreement.
Each Shareholder acknowledges and agrees that the ACSYS Shares may ultimately
prove to be worth significantly more or significantly less than they perceive
them to be worth now, and that no representation or warranty is made by ACSYS as
to the "fair value" of the ACSYS Shares or the interest in ACSYS that they
represent, either now or in the future.
(h) Each Shareholder acknowledges and agrees that the certificate(s)
evidencing the ACSYS Shares will bear the following legends:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN
RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-
5-9 OF THE "GEORGIA SECURITIES ACT OF 1973,"
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER SUCH ACT.
In addition, such certificates shall also bear such other legends as counsel for
ACSYS reasonably determines are required under the applicable laws of any state.
(i) Each Shareholder has had an adequate opportunity to ask questions
and receive answers from the officers of ACSYS concerning any and all matters
relating to the transactions described herein; including, without limitation,
the background and experience of the officers and directors of ACSYS, the plans
for the operations of the business of ACSYS, and the business, operations and
financial condition of ACSYS. The Shareholders have asked any and all questions
in the nature described in the preceding sentence and all questions have been
answered to their satisfaction.
27
4.25 Additional Information. The Company Disclosure Schedule accurately
----------------------
lists the following:
(a) the names of all officers and directors of C.P.A. Staffing,
C.P.A. Search and Career Placement;
(b) the names and addresses of every bank or other financial
institution in which C.P.A. Staffing, C.P.A. Search or Career Placement
maintains an account (whether checking, saving or otherwise), lock box or safe
deposit box, and the account numbers and names of the Persons having signing
authority or other access thereto;
(c) the names of all Persons authorized to borrow money or incur or
guarantee indebtedness on behalf of C.P.A. Staffing, C.P.A. Search and Career
Placement;
(d) the names of all Persons holding powers of attorney from C.P.A.
Staffing, C.P.A. Search or Career Placement and a summary statement of the terms
thereof; and
(e) all names under which C.P.A. Staffing, C.P.A. Search and Career
Placement have conducted any business or which they have otherwise used at any
time during the past five years.
4.26 Transactions with Affiliates. Except as set forth on the Company
----------------------------
Disclosure Schedule, no Affiliate of C.P.A. Staffing, C.P.A. Search or Career
Placement and no Shareholder or member of his immediate family, owns or has a
controlling ownership interest in any corporation or other entity that is a
party to any Contract with C.P.A. Staffing, C.P.A. Search or Career Placement.
The Company Disclosure Schedule sets forth a summary of all purchases of goods
or services by Affiliates of C.P.A. Staffing, C.P.A. Search or Career Placement,
or any Shareholder or any member of his immediate family in the three years
prior to the date hereof.
4.27 Reports. Since inception, C.P.A. Staffing, C.P.A. Search and Career
-------
have timely filed all reports and statements, together with any amendments
required to be made with respect thereto, that they were required to file with
any Governmental Body (except, in the case of state securities authorities,
failures to file which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect). As of their respective dates, each of
such reports and documents, including, without limitation, the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
4.28 Full Disclosure. There are and will be no materially misleading
---------------
misstatements in any of the representations and warranties made by C.P.A.
Staffing, C.P.A. Search, Career Placement or any Shareholder in this Agreement,
the Company Disclosure Schedule or in any of the documents, certificates and
instruments delivered or to be delivered by C.P.A. Staffing, C.P.A. Search,
Career Placement or any Shareholder pursuant to this Agreement and none of
C.P.A. Staffing, C.P.A.
28
Search, Career Placement and each Shareholder has omitted to state any fact
necessary to make statements made herein or therein not materially misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACSYS
---------------------------------------
Except as disclosed in a schedule attached to this Agreement (the
"ACSYS Disclosure Schedule") which identifies with particularity an exception to
a representation and warranty in this Agreement, ACSYS represents and warrants
to C.P.A. Staffing, C.P.A. Search, Career Placement and the Shareholders as set
forth below.
5.1 Corporate Status. ACSYS is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the Commonwealth of Pennsylvania
and is qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where it is required to be so qualified, except where the
failure to so qualify would not have a Material Adverse Effect. ACSYS does not
own or control, or have any equity interest in any other Person.
5.2 Authorization. ACSYS has the requisite power and authority to own its
-------------
properties and carry on its business as currently conducted, and to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the performance of the transactions
contemplated herein have been duly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by ACSYS and constitutes a
valid and binding obligation of ACSYS, enforceable against it in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and except that such enforceability is subject to
general principles of equity).
5.3 Capitalization. The authorized capital stock of ACSYS consists of
--------------
60,000,000 shares of Common Stock, no par value per share, of which 6,499,998
ACSYS Shares are issued and outstanding. All of the issued and outstanding ACSYS
Shares have been duly authorized and are validly issued, fully paid and non-
assessable. The ACSYS Disclosure Schedule contains a true and complete list of
the record holders of all issued and outstanding ACSYS Shares and sets forth the
full name and number of ACSYS Shares owned by each. Except as set forth on the
ACSYS Disclosure Schedule, ACSYS does not have outstanding (i) any subscription,
option, put, call, warrant or other right or commitment to issue, nor any
obligation or commitment to redeem or purchase, any of its authorized capital
stock, or securities or other instruments convertible into, or exchangeable or
exercisable for, its capital stock, or (ii) any securities convertible into, or
exchangeable or exercisable for, any of its capital stock. There are no shares
of capital stock that have been issued in violation of, or are subject to, any
preemptive rights or subscription agreements. Except as set forth on the ACSYS
Disclosure Schedule, there are no stockholder agreements, voting agreements,
voting trusts or any such other similar arrangements which have the effect of
restricting or limiting the transfer, voting or other rights associated with the
capital stock of ACSYS.
29
5.4 No Conflict. Except as set forth on the ACSYS Disclosure Schedule,
-----------
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein by ACSYS will (i) violate or conflict with
any of the provisions of any of the Charter Documents or bylaws of ACSYS, (ii)
violate or constitute a default, an event of default or an event creating rights
of acceleration, termination, cancellation or other additional rights, or loss
of rights under, any mortgage, indenture, deed of trust, lease, contract,
agreement, license or other instrument or any statute, rule, regulation,
injunction, decree, order, judgment or ruling of any Governmental Body to which
ACSYS is a party, or by which it or any of its assets or property is bound other
than those which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect, or (iii) result in the creation of any
Encumbrances upon any of the assets or property of ACSYS other than those which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.
5.5 Consents and Approvals. Except for the consents specified in the ACSYS
----------------------
Disclosure Schedule (the "ACSYS Required Consents"), neither the execution or
delivery by ACSYS of this Agreement, nor the performance of the transactions
hereunder, will require any filing, consent or approval, constitute a Default or
cause any payment obligation to arise under (a) any Regulation or Court Order to
which ACSYS is subject, (b) the Charter Documents or bylaws of ACSYS or (c) any
Contract, Permit or other document to which ACSYS is a party or by which its
properties may be bound.
5.6 Financial Statements. The ACSYS Disclosure Schedule includes correct
--------------------
and complete copies of ACSYS's preliminary audited financial statements
consisting of a balance sheet of ACSYS as of December 31, 1996 and the related
statements of income, retained earnings and cash flows for the year then ended
(collectively, the "ACSYS Preliminary Audited Financial Statements"). The ACSYS
Disclosure Schedule also includes correct and complete copies of unaudited
financial statements of ACSYS consisting of a balance sheet of as of the end of
the period ended June 30, 1997 and the related statement of income for the
period then ended (the "ACSYS Unaudited Financial Statements," and together with
the ACSYS Preliminary Audited Financial Statements, the "ACSYS Financial
Statements"). The ACSYS Financial Statements are consistent with the books and
records of ACSYS, and there are no material transactions required by GAAP to be
recorded in accounting records that have not been recorded in the accounting
records underlying such ACSYS Financial Statements. The ACSYS Financial
Statements have been prepared in accordance with GAAP consistently applied and
present fairly the financial position and assets and liabilities of ACSYS as of
the date thereof and its cash flows and the results of its operations for the
year and period then ended, subject to the absence of notes and cash flow
statements in the case of the ACSYS Unaudited Financial Statements. The balance
sheet of ACSYS as of December 31, 1996 that is included in the ACSYS Preliminary
Financial Statements is referred to herein as the "ACSYS Balance Sheet" and the
date thereof is referred to as the "ACSYS Balance Sheet Date." The balance sheet
of ACSYS as of June 30, 1997 that is included in the ACSYS Unaudited Financial
Statements are referred to herein as the "ACSYS Interim Balance Sheet" and the
date thereof is referred to as the "ACSYS Interim Balance Sheet Date."
30
5.7 Title to Assets and Related Matters.
-----------------------------------
(a) Except as set forth on the ACSYS Disclosure Schedule, ACSYS has
good and marketable title to, or valid leasehold interests in, all its
properties and assets, free and clear of all Encumbrances other than (i)
mechanics and other statutory liens and the lien of current taxes not yet due
and payable, and (ii) possible minor liens which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of ACSYS, and which have not arisen otherwise than in the ordinary
course of business. Except as set forth on the ACSYS Disclosure Schedule, all of
the assets used in the operations of ACSYS are in good working condition and
repair, subject to normal wear and tear, (b) are usable in the ordinary course
of business and (c) conform in all material respects with all applicable
Regulations relating to its construction, use and operation. ACSYS owns or has
valid licenses to use all the assets and properties required to operate its
business as currently conducted.
(b) ACSYS has complied in all material respects with the terms of all
leases to which it is a party and under which it is in occupancy, all such
leases are in full force and effect and, to the best knowledge of ACSYS, the
parties thereto other than ACSYS have complied, and are complying, with all of
their material obligations and are not in material default under (nor does there
exist any condition which, upon the passage of time or the giving of notice,
would cause such a material violation of or default under) any of such leases.
ACSYS enjoys peaceful and undisturbed possession under all such leases.
5.8 Accounts Receivable. The accounts receivable of ACSYS are bona fide
-------------------
accounts receivable created in the ordinary course of business and are not
subject to defenses, set-offs or counterclaims and are and will be collectible
at the aggregate recorded amounts thereof in the ordinary course of business no
later than 90 days after billing at the full recorded amounts thereof (net of
any allowance for bad debts reflected on the ACSYS Interim Balance Sheet).
5.9 Accounts Payable. All accounts payable as set forth on the ACSYS
----------------
Interim Balance Sheet or arising since the date thereof have been incurred in
the ordinary course of business.
5.10 Product Warranties and Price Guarantees. The ACSYS Disclosure
---------------------------------------
Schedule sets forth all express product or service warranties and price
guarantees made by ACSYS.
5.11 No Undisclosed Liabilities. ACSYS does not have any Liabilities
--------------------------
except (a) as specifically disclosed on the ACSYS Interim Balance Sheet, (b)
Liabilities incurred in the ordinary course since the ACSYS Interim Balance
Sheet Date, and (c) Liabilities under any Contracts specifically disclosed on
the ACSYS Disclosure Schedule (or not required to be disclosed because of the
term or amount involved) that were not required under GAAP to have been
specifically disclosed or reserved for on the ACSYS Interim Balance Sheet.
5.12 Taxes. Except as set forth on the ACSYS Disclosure Schedule (i) Tax
-----
Returns with respect to any Taxes have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns correctly
31
reflect the liability of ACSYS for Taxes for the periods, properties, or events
covered thereby; (ii) all Taxes payable with respect to the Tax Returns referred
to in the preceding clause, and all Taxes accruable or otherwise attributable to
events occurring prior to the Closing Date, whether disputed or not, whether or
not shown on any Tax Return, and whether or not currently due or payable, will
have been paid in full prior to the Closing Date, or an adequate accrual in
accordance with generally accepted accounting principles has been provided with
respect thereto; (iii) ACSYS has no knowledge of any unassessed Tax deficiencies
or of any audits or investigations pending or threatened against ACSYS with
respect to any Taxes; (iv) there is in effect no extension for the filing of any
Tax Return and ACSYS has not extended or waived the application of any statute
of limitations of any jurisdiction regarding the assessment or collection of any
Tax; (v) no claim has ever been made by any Tax authority in a jurisdiction in
which ACSYS does not file Tax returns that it is or may be subject to taxation
by that jurisdiction; (vi) there are no liens for Taxes upon any asset of ACSYS
except for liens for current Taxes not yet due; (vii) ACSYS has timely made all
deposits required by law to be made with respect to employees' withholding and
other payroll, employment, or other withholding taxes. ACSYS has been
appropriately taxable as an S corporation for all periods since January 1, 1994.
ACSYS has taken no action that would have the effect of causing ACSYS's S
corporation election to be terminated.
5.13 Legal Proceedings and Compliance with Law.
-----------------------------------------
(a) Except as disclosed on the ACSYS Disclosure Schedule, there is no
Litigation that is pending or, to the knowledge of ACSYS, threatened against or
related to ACSYS. There has been no Default under any Regulation applicable to
ACSYS, including any Regulation relating to pollution or protection of the
environment, except for any Defaults that have been cured without material cost
or that would not have a Material Adverse Effect, and ACSYS has not received any
notices from any governmental entity regarding any alleged Default under any
Regulation except those that have been cured without material cost or that would
not have a Material Adverse Effect. ACSYS is not subject to any Court Order.
(b) Without limiting the generality of Section 5.13(a), except as
described on the ACSYS Disclosure Schedule, there has not been any Environmental
Condition (i) at any premises at which the business of ACSYS (or any predecessor
of ACSYS) is currently conducted, (ii) at any property owned, leased or operated
at any time by ACSYS (or any predecessor of ACSYS) or any Person controlled by
any Affiliate of ACSYS, or (iii) at any property at which wastes have been
deposited or disposed by or at the behest or direction of ACSYS (or any
predecessor of ACSYS) or any Person controlled by any Affiliate of ACSYS, nor
has ACSYS received written notice of any such Environmental Condition.
(c) ACSYS has delivered to the Shareholders correct and complete
copies of any written reports, studies or assessments in the possession or
control of ACSYS that relate to any Environmental Condition. ACSYS knows of no
other written reports, studies or assessments, whether or not in the possession
or control of ACSYS, that relate to any Environmental Condition.
32
(d) Except in those cases where the failure would not have a Material
Adverse Effect, (i) ACSYS has obtained and is in full compliance with all
Permits that are required for the operations currently conducted by ACSYS, (ii)
all of the Permits are currently valid and in full force and (iii) ACSYS has
filed such timely and complete renewal applications as may be required with
respect to its Permits. To the knowledge of ACSYS, no revocation, cancellation
or withdrawal of a Permit has been threatened.
5.14 Contracts.
---------
(a) The ACSYS Disclosure Schedule lists each Contract of the
following types to which ACSYS is a party or by which it is bound:
(i) Contracts with any present or former shareholder, director,
officer, employee, partner or consultant providing for aggregate
payments in any calendar year in excess of $50,000;
(ii) Contracts for the purchase of, or payment for, supplies or
products, or for the performance of services, from or by a third
party, in excess of $20,000 with respect to any one supplier or other
party;
(iii) Contracts to sell or supply products, inventory or other
property to, or to perform services for, a third party, that involve
an amount in excess of $20,000 with respect to any one customer or
other party;
(iv) Contracts to sell any product or provide any service to a
governmental or regulatory body;
(v) Contracts limiting or restraining it from engaging or
competing in any lines of business with any Person;
(vi) Contracts with any customer providing for a volume refund,
retrospective price adjustment or price guarantee;
(vii) Contracts to lease to or from any other party any assets
that involve an amount in excess of $50,000 in any individual case;
(viii) Any notes, debentures, bonds, conditional sale
agreements, equipment trust agreements, letter of credit agreements,
reimbursement agreements, loan agreements or other Contracts for the
borrowing or lending of money (including loans to or from officers,
directors, partners or stockholders or any members of such
stockholder's immediate family), or agreements or arrangements for a
line of credit or for a guarantee of, or other undertaking in
connection with, the indebtedness of any other Person;
33
(ix) Contracts creating or recognizing any Encumbrances with
respect to any assets or properties of the Company;
(x) Contracts with distributors, manufacturers sales
representatives or other sales agents;
(xi) Contracts which relate in whole or in part to any
software, technical assistance or other know-how or other Intellectual
Property right;
(xii) Contracts for any capital expenditure or leasehold
improvement in excess of $20,000; and
(xiii) Any other Contracts (other than those that may be
terminated on not more than 30 days' notice without Liability and
those described in any of (i) through (xii) above) not made in the
ordinary course of business or which are material to the Company.
(b) ACSYS is not in Default under any such Contract. ACSYS has not
received any communication from, or given any communication to, any other party
indicating that ACSYS or such other party, as the case may be, is in Default
under any such Contract. To the knowledge of ACSYS, none of the other parties
to any such Contract to which ACSYS is a party is in Default thereunder. Such
Contracts are enforceable in accordance with their respective terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and except that such enforceability is subject to general principles
of equity).
5.15 Insurance. The ACSYS Disclosure Schedule lists all policies or
---------
binders of insurance held by or on behalf of ACSYS or relating to its
operations, specifying with respect to each policy the insurer, the type of
insurance, the amount of the coverage, the insured, the expiration date, the
policy number and any pending claims thereunder. There is no Default with
respect to any such policy or binder, nor has there been any failure to give any
notice or present any claim under any such policy or binder in a timely fashion
or in the manner or detail required by the policy or binder, except for any of
the foregoing that would not, individually or in the aggregate, have a Material
Adverse Effect. There is no notice of nonrenewal, cancellation, reduction in
coverage or substantial increase in premiums with respect to, or disallowance of
any claim under, any such policy or binder that has been received by ACSYS,
except for any of the foregoing that would not, individually or in the
aggregate, have a Material Adverse Effect. Such policies will continue in full
force and effect following the consummation of the Merger and, except as
disclosed on the ACSYS Disclosure Schedule, do not provide for any retrospective
premium based adjustment or other experience-based liability on the part of
ACSYS. The ACSYS Disclosure Schedule describes any self-insurance arrangements
maintained by ACSYS. Such policies and self-insurance arrangements are
reasonable and adequate in amount, scope and coverage, in light of the risks
attendant to the businesses conducted by it.
34
5.16 Intellectual Property and Software Products. ACSYS does not currently
-------------------------------------------
use nor has it previously used in its operations (including in the development
or marketing of products and services) any Copyright, Patent or Trademark except
for those listed on the ACSYS Disclosure Schedule. Except as listed in the
ACSYS Disclosure Schedule, ACSYS owns or has the lawful right to use all
Intellectual Property that is used or has been used in its operations. All of
the Intellectual Property listed on the ACSYS Disclosure Schedule is owned by
ACSYS free and clear of all Encumbrances, or is used pursuant to an agreement
that is identified and described in the ACSYS Disclosure Schedule. ACSYS does
not infringe upon or unlawfully or wrongfully use any Intellectual Property
rights owned or claimed by another Person. The Company is not in Default, nor
has it received any notice of any claim of infringement or any other claim or
proceeding, with respect to any Intellectual Property. No current or former
employee of ACSYS and no other Person owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, and including any right
to royalties or other compensation, in any of the Intellectual Property, or in
any application therefor.
5.17 Employee Relations.
------------------
(a) Except as described in the ACSYS Disclosure Schedule, ACSYS is
not (i) a party to or otherwise bound by any collective bargaining or other type
of union agreement, (ii) a party to, involved in or, to the knowledge of ACSYS,
threatened by, any labor dispute or unfair labor practice charge, or (iii)
currently negotiating any collective bargaining agreement, and ACSYS has not
experienced any work stoppage during the last three years. The ACSYS Disclosure
Schedule sets forth the names and current annual salary rates or current hourly
wages of all present employees of ACSYS.
(b) ACSYS is in compliance with all applicable Regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice.
There are no outstanding claims against ACSYS (whether under any Regulation,
Contract, policy or otherwise) asserted by or on behalf of any present or former
employee or job applicant of ACSYS on account of or for (i) overtime pay, other
than overtime pay for work done in the current payroll period, (ii) wages or
salary for any period other than the current payroll period, (iii) any amount of
vacation pay or pay in lieu of vacation time off, other than vacation time off
or pay in lieu thereof earned in or in respect of the current fiscal year, (iv)
any amount of severance pay or similar benefits, (v) unemployment insurance
benefits, (vi) workers' compensation or disability benefits, (vii) any violation
of any statute, ordinance, order, rule or regulation relating to plant closings,
employment terminations or layoffs, including but not limited to the Worker
Adjustment and Retraining Notification Act, (viii) any violation of any statute,
ordinance, order, rule or other Regulation relating to employee "whistle blower"
or "right-to-know" rights and protection, (ix) any violation of any statute,
ordinance, order, rule or other Regulation relating to the employment
obligations of federal contractors or subcontractors or (x) any violation of any
Regulation relating to minimum wages or maximum hours of work, and ACSYS is not
aware of any such claims which have not been asserted. No Person (including any
governmental body) has asserted or threatened any claims against ACSYS under or
arising out of any Regulation relating to discrimination or occupational safety
in employment or employment practices.
35
5.18 ERISA. Except as set forth in the ACSYS Disclosure Schedule, ACSYS is
-----
not, and has not previously been, a party, or contributed, to (1) any "employee
benefit plan" as defined in Section 3(3) of ERISA ("Plan") or (2) any deferred
compensation, bonus, performance compensation, stock purchase, stock option,
stock appreciation, severance, vacation, sick leave, holiday pay, fringe
benefits, personnel policy, reimbursement program, incentive, insurance, welfare
or similar plan, program, policy or arrangement ("Benefit Plan").
(a) Each Plan is in compliance with all reporting, disclosure and
other requirements of ERISA and the Code and other laws applicable to such Plan
the breach or violation of which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect.
(b) Each Plan which is an employee pension benefit plan (a "Pension
Plan"), as defined in Section 3(2) of ERISA, and which is intended to be
qualified under Section 401(a) of the Code, has been determined by the Internal
Revenue Service to be so qualified and, to the best of ACSYS's knowledge, no
condition exists that would adversely affect any such determination.
(c) Neither any Plan nor ACSYS, nor any trustee or agent has been or
are presently engaged in any prohibited transactions as defined by Section 406
of ERISA or Section 4975 of the Code for which an exemption is not applicable
which could subject ACSYS to the tax or penalty imposed by Section 4975 of the
Code or Section 502 of ERISA.
(d) There is no event or condition existing which could be deemed a
"reportable event" (within the meaning of Section 4043 of ERISA) with respect to
which the thirty-day notice requirement has not been waived; to the best of
ACSYS's knowledge, no condition exists which could subject ACSYS to a penalty
under Section 4071 of ERISA.
(e) ACSYS is not a party to any "multi-employer plan," as that term
is defined in Section 3(37) of ERISA.
(g) With respect to each Plan and Benefit Plan, there are no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
pending or, to the best of ACSYS's knowledge, threatened against any Plan or
Benefit Plan, ACSYS or any trustee or agent of any Plan or Benefit Plan.
(h) With respect to each welfare benefit plan to which ACSYS is a
party which constitutes a group health plan subject to Section 4980B of the
Code, each such Plan substantially complies, and in each case has substantially
complied, with all applicable requirements of Section 4980B of the Code.
(i) Except as set forth in the ACSYS Disclosure Schedule:
(i) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Pension Plan;
36
(ii) neither the Pension Benefit Guaranty Corporation nor ACSYS
has instituted proceedings to terminate any Pension Plan and the
Pension Benefit Guaranty Corporation has not informed ACSYS of its
intent to institute proceedings to terminate any Pension Plan;
(iii) full payment has been made of all amounts which ACSYS was
required to have paid as a contribution to the Plans as of the last
day of the most recent fiscal year of each of the Plans ended prior to
the date of this Agreement, and none of the Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each such Plan ended prior to
the date of this Agreement;
(iv) to the best of ACSYS's knowledge, the actuarial
assumptions utilized, where appropriate, in connection with
determining the funding of each Pension Plan which is a defined
benefit pension plan (as set forth in the actuarial report for such
Pension Plan) are reasonable. Based on such actuarial assumptions, as
of June 30, 1997, the fair market value of the assets or properties
held under each such Pension Plan exceeds the actuarially determined
present value of all accrued benefits of such Pension Plan (whether or
not vested) determined on an ongoing Pension Plan basis;
(v) each of the Plans and Benefit Plans is, and its
administration is and has been during the six-year period preceding
the date of this Agreement, in substantial compliance with, and ACSYS
has not received any claim or notice that any such Plan or Benefit
Plan is not in compliance with, all applicable laws and orders and
prohibited transaction exemptions, including without limitation, to
the extent applicable, the requirements of ERISA;
(vi) ACSYS is not in default in performing any of its
contractual obligations under any of the Plans or Benefit Plans or any
related trust agreement or insurance contract;
(vii) there are no material outstanding liabilities of any Plan
or Benefit Plan other than liabilities for benefits to be paid to
participants in such Plan or Benefit Plan and their beneficiaries in
accordance with the terms of such Plan or Benefit Plan;
(viii) each Plan or Benefit Plan may be amended or modified by
ACSYS at any time without liability except under any defined pension
benefit plan;
(ix) no Plan or Benefit Plan other than a Pension Plan or
severance plan provides benefits to any individual after termination
of employment;
(x) the consummation of the transactions contemplated by this
Agreement will not (in and of itself) (i) entitle any employee of
ACSYS to severance pay,
37
unemployment compensation or any other payment; (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due
to any such employee; (iii) result in any liability under Title IV of
ERISA; (iv) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code for which an exemption is not
available or (v) result (either alone or in conjunction with any other
event) in the payment or series of payments by ACSYS or any of its
Affiliates to any person of an Aexcess parachute payment@ within the
meaning of Section 280G of the Code;
(xi) with respect to each Benefit Plan that is funded wholly
or partially through an insurance policy, all premiums required to
have been paid to date under the insurance policy have been paid, all
premiums required to be paid under the insurance policy through the
Closing will have been paid on or before the Closing and, as of the
Closing, there will be no liability of ACSYS under any insurance
policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Closing; and
(xii) each Plan that constitutes a "welfare benefit plan,"
within the meaning of Section 3(1) of ERISA, and for which
contributions are claimed by ACSYS as deductions under any provision
of the Code, is in material compliance with all applicable
requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code)
related to a welfare benefit plan, there is no disqualified benefit
(within the meaning of Section 4976(b) of the Code) that would result
in the imposition of a tax under Section 4976(a) of the Code, and
(iii) all welfare benefit funds intended to be exempt from tax under
Section 501(a) of the Code have been determined by the Internal
Revenue Service to be so exempt and no event or condition exists which
would adversely affect any such determination.
5.19 Corporate Records. The minute books of ACSYS contain complete and
-----------------
correct copies of its Charter Documents and bylaws and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors and
stockholders. The stock record book of ACSYS is complete and correct.
5.20 Absence of Certain Changes. Except as contemplated by this Agreement,
--------------------------
since the ACSYS Interim Balance Sheet Date, ACSYS has conducted its business in
the ordinary course and there has not been:
(a) any material adverse change in the financial condition, results
of operations, liabilities, or assets of ACSYS, or any other events or
conditions that, in the aggregate, would reasonably be expected to have a
material adverse effect on the financial condition, results of operations,
liabilities, or assets of ACSYS.
38
(b) any damage, destruction or loss (whether or not covered by
insurance), which reasonably may be expected to materially and adversely affect
the financial condition or results of operations of ACSYS;
(c) except for the sale of products in the ordinary course of
business, any sale, lease, mortgage, pledge or Encumbrance of any properties or
assets of ACSYS having a value, individually or in the aggregate, in excess of
$20,000;
(d) any loss of any supplier, distributor or customer which
materially and adversely affects, or could reasonably be expected to materially
and adversely affect, the financial condition or results of operations of ACSYS;
(e) any increase by ACSYS, except as consistent with past practices,
in the wages, salaries, compensation, pension or other benefits payable to any
employee who, as of the date hereof, receives from the Company annual
compensation in excess of $50,000;
(f) the payment of any bonus or other compensation in excess of
regular salary to any employee who, as of the date hereof, receives from ACSYS,
annual compensation in excess of $50,000;
(g) any cancellation, release or waiver of debts owed to ACSYS
outside the ordinary course of business;
(h) any issuance or sale of any of its capital stock, or grant of
any options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(i) any declaration or payment of any dividend or distribution to the
Shareholders or redemption, purchase or other acquisition of any capital stock
of the Shareholders;
(j) any increase in indebtedness for borrowed money, except current
borrowings from banks in the ordinary course of business;
(k) any change in any method of accounting or accounting practice; or
(l) any agreement, whether or not in writing, to do any of the
foregoing.
5.21 Clients. ACSYS has used its reasonable business efforts to maintain
-------
and currently maintains, good working relationships with all of its clients.
The ACSYS Disclosure Schedule contains a list of the names of each of the ten
clients that, for the twelve months ended June 30, 1997 were the largest dollar
volume customers of services sold and provided by the Company. Except as
specified on the ACSYS Disclosure Schedule, none of such clients has given ACSYS
notice terminating, canceling or threatening to terminate or cancel any Contract
or relationship with ACSYS.
39
5.22 Finder's Fees. No Person retained by ACSYS is or will be entitled to
-------------
any com mission or finder's or similar fee in connection with the Mergers.
5.23 Transactions with Affiliates. Except as set forth on the ACSYS
----------------------------
Disclosure Schedule, no Affiliate of ACSYS or member of his immediate family,
owns or has a controlling ownership interest in any corporation or other entity
that is a party to any Contract with ACSYS. The ACSYS Disclosure Schedule sets
forth a summary of all purchases of goods or services from ACSYS by Affiliates
of ACSYS or member of their immediate families in excess of $10,000 in the
aggregate in the three years prior to the date hereof.
5.24 Full Disclosure. There are and will be no materially misleading
---------------
misstatements in any of the representations and warranties made by ACSYS in this
Agreement, the ACSYS Disclosure Schedule or in any of the documents,
certificates and instruments delivered or to be delivered by ACSYS pursuant to
this Agreement and ACSYS has not omitted to state any fact necessary to make
statements made herein or therein not materially misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARIES
-----------------------------------------------------
Except as disclosed in the ACSYS Disclosure Schedule, each of the
Merger Subsidiaries represents and warrants to C.P.A. Staffing, C.P.A. Search,
Career Placement and the Shareholders as set forth below.
6.1 Corporate Status. The Merger Subsidiary is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Georgia and is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect.
6.2 Authorization. The Merger Subsidiary has the requisite power and
-------------
authority to own its properties and carry on its business as currently
conducted, and to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
performance of the transactions contemplated herein have been duly authorized by
all necessary corporate action. This Agreement has been duly executed and
delivered by the Merger Subsidiary and constitutes a valid and binding
obligation of the Merger Subsidiary, enforceable against it in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and except that such enforceability is subject to
general principles of equity).
6.3 Capitalization. The authorized capital stock of the Merger
--------------
Subsidiary consists of 1,000 shares of Common Stock, of which 100 shares are
issued and outstanding. All of the issued
40
and outstanding shares of the Merger Subsidiary have been duly authorized and
are validly issued, fully paid and non-assessable.
6.4 No Conflict. Except as set forth on the ACSYS Disclosure Schedule,
-----------
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein by the Merger Subsidiary will (i) violate
or conflict with any of the provisions of any of the Charter Documents or bylaws
of the Merger Subsidiaries, (ii) violate or constitute a default, an event of
default or an event creating rights of acceleration, termination, cancellation
or other additional rights, or loss of rights under, any mortgage, indenture,
deed of trust, lease, contract, agreement, license or other instrument or any
statute, rule, regulation, injunction, decree, order, judgment or ruling of any
Governmental Body to which the Merger Subsidiary is a party, or by which it or
any of its assets or property is bound other than those which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect, or
(iii) result in the creation of any Encumbrances upon any of the assets or
property of the Merger Subsidiary other than those which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
6.5 Consents and Approvals. Except for the consents specified in the
----------------------
ACSYS Disclosure Schedule, neither the execution or delivery by the Merger
Subsidiary of this Agreement, nor the performance of the transactions hereunder,
will require any filing, consent or approval, constitute a Default or cause any
payment obligation to arise under (a) any Regulation or Court Order to which the
Merger Subsidiary is subject, (b) the Charter Documents or bylaws of the Merger
Subsidiary or (c) any Contract, Permit or other document to which the Merger
Subsidiary is a party or by which its properties may be bound.
ARTICLE VII
COVENANTS OF C.P.A. STAFFING, C.P.A SEARCH,
CAREER PLACEMENT AND THE SHAREHOLDERS
-------------------------------------
7.1 Access. Between the date of this Agreement and the Closing Date,
------
C.P.A. Staffing, C.P.A. Search and Career Placement shall (a) give ACSYS and its
authorized representatives and legal counsel full access to all their
properties, books, Contracts, assets and records, (b) permit ACSYS to make
inspections thereof, and (c) cause their officers and its advisors to furnish
ACSYS with such financial and operating data and other information with respect
to their business and operations and to discuss with ACSYS and its authorized
representatives and legal counsel their affairs, all as ACSYS may from time to
time request.
7.2 Regulatory Matters. C.P.A. Staffing, C.P.A. Search and Career
------------------
Placement shall file with applicable regulatory authorities any applications and
related documents required to be filed by them in order to consummate the
transactions contemplated herein.
7.3 Exclusivity. Except with respect to this Agreement and the
-----------
transactions contemplated hereby, none of C.P.A. Staffing, C.P.A. Search, Career
Placement or any Shareholder nor any of their
41
Affiliates shall, and they shall cause their employees, agents and
representatives (including, without limitation, any investment banking, legal or
accounting firm retained by them and any individual member or employee of the
foregoing) (each, an "Agent") not to, (a) initiate, solicit or seek, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders
or any of them) with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or any portion of the assets or any equity securities of
(including, without limitation, any investment by any venture capital investor
or other financial or strategic investor), the Companies (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal"), or (b) engage
in any negotiations concerning, or provide any confidential information or data
to, or have any substantive discussions with, any person relating to an
Acquisition Proposal, (c) otherwise cooperate in any effort or attempt to make,
implement or accept an Acquisition Proposal, or (d) enter into or consummate any
agreement or understanding with any Person relating to an Acquisition Proposal,
except for the Merger contemplated hereby. C.P.A. Staffing, C.P.A. Search,
Career Placement, the Shareholders and their respective Agents shall immediately
cease and cause to be terminated any existing activities, including discussions
or negotiations with any parties, conducted heretofore with respect to any
Acquisition Proposal and shall take the necessary steps to inform the
individuals and entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.3. If C.P.A. Staffing, C.P.A. Search,
Career Placement, the Shareholders, or their respective Agents have provided any
Person (other than ACSYS) with any Confidential Information or data relating to
an Acquisition Proposal, they shall request the immediate return thereof. C.P.A.
Staffing, C.P.A. Search, Career Placement and the Shareholders shall notify
ACSYS immediately if any inquiries, proposals or offers related to an
Acquisition Proposal are received by, any Confidential Information or data is
requested from, or any negotiations or discussions related to an Acquisition
Proposal are sought to be initiated or continued with, it or any individual or
entity referred to in the first sentence of this Section 7.3.
7.4 Financial Information. Until the Closing, C.P.A. Staffing, C.P.A.
---------------------
Search and Career Placement shall provide ACSYS, within 15 days after the end of
each month, with an unaudited consolidated balance sheet and income statement of
the Companies as of and for the month then ended, consistent with the books and
records of the Companies prepared in accordance with GAAP consistently applied,
presenting fairly the financial position and assets and liabilities of the
Companies as of the dates thereof and the results of its operations for the
periods then ended, subject to normal recurring year-end adjustments and the
absence of notes, all certified as such by the chief financial officers of the
Companies.
7.5 Restrictive Covenants.
---------------------
(a) Each Shareholder covenants that for the period ending five years
after the Closing Date, he or she will not, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as a partner, principal,
agent, representative, consultant or otherwise, with or use or permit his or her
name to be used in connection with, any business or enterprise which is engaged
directly or indirectly in competition anywhere in the United States with ACSYS,
C.P.A. Staffing, C.P.A. Search, Career
42
Placement or any of their Affiliates during such period in interviewing or
placing job candidates for temporary or permanent employment as financial
personnel (the "Restricted Business"). It is recognized by each Shareholder that
the Restricted Business is expected to be conducted throughout the United States
and that more narrow geographical limitations of any nature on this non-
competition covenant (and the non-solicitation covenant set forth in Section
6.6(b)) are therefore not appropriate. The foregoing restriction shall not be
construed to prohibit the ownership by a Shareholder as a passive investment of
not more than five percent (5%) of any class of securities of any corporation
which is engaged in any of the foregoing businesses having a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
(b) Each Shareholder further covenants that for the period ending five
years after the Closing Date, he or she will not, either directly or indirectly,
(i) call on or solicit any clients or prospective clients of ACSYS, C.P.A.
Staffing, C.P.A. Search or Career Placement to perform services in the
Restricted Business anywhere in the United States or (ii) solicit the employment
of any person who is employed by ACSYS, C.P.A. Staffing, C.P.A. Search or Career
Placement during such period on a full- or part-time basis.
(c) Each Shareholder recognizes and acknowledges that by reason of his
ownership of and employment by the Company he has had access to Confidential
Information relating to the Restricted Business. Each Shareholder acknowledges
that such Confidential Information is a valuable and unique asset and covenants
that he will not disclose any such Confidential Information after the Closing
Date to any person for any reason whatsoever, unless he can show that such
information (a) is in the public domain through no wrongful act of such
Shareholder, (b) has been rightfully received from a third party without
restriction and without breach of this Agreement or (c) is required by law so to
be disclosed (provided that such Shareholder shall have given ACSYS notice of
such requirement and full opportunity to contest such disclosure).
(d) Each Shareholder acknowledges that the restrictions contained in
this Section 6.6 are reasonable and necessary to protect the legitimate
interests of ACSYS, and that any violation will result in irreparable injury to
ACSYS.
(e) Each Shareholder agrees that ACSYS shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Section 6.5, which rights
shall be cumulative and in addition to any other rights or remedies to which
ACSYS may be entitled. In the event that any of the provisions of this Section
7.5 should ever be adjudicated to exceed the time, geographic, product or
service, or other limitations permitted by applicable law in any jurisdiction,
then such provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted by
applicable law.
(f) The covenants set forth in this Section 7.5 shall be in addition
to and not in limitation of any similar covenants set forth in any employment
agreement between ACSYS or any of its Affiliates and any Shareholder.
43
7.6 Required Consents. C.P.A. Staffing, C.P.A. Search, Career Placement
-----------------
and each Shareholder shall use their best efforts to take, or cause to be taken,
such action to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable to obtain the Required Consents.
7.7 Conduct of the Business Prior to the Closing.
--------------------------------------------
(a) Between the date of this Agreement and the Closing Date, C.P.A.
Staffing, C.P.A. Search and Career Placement shall conduct their business in all
material respects in the ordinary course and shall use commercially reasonable
efforts to maintain all current business relationships.
(b) Between the date of this Agreement and the Closing Date, C.P.A.
Staffing, C.P.A. Search and Career Placement shall use commercially reasonable
efforts to preserve substantially intact their business organizations and keep
available the services of the current officers and employees of such Companies.
(c) Between the date of this Agreement and the Closing Date, C.P.A.
Staffing, C.P.A. Search and Career Placement shall not amend their Charter
Documents or bylaws and shall not:
(i) issue, sell or otherwise dispose of any of their capital
stock, or create, sell or otherwise dispose of any options, rights,
conversion rights or other agreements or commitments of any kind
relating to the issuance, sale or disposition of any of their capital
stock;
(ii) reclassify, split up or otherwise change their capital
stock;
(iii) be party to any merger, consolidation or other business
combination;
(iv) sell, lease, license or otherwise dispose of any of their
assets, except in the ordinary course of business; or
(v) organize any subsidiary or acquire any equity securities
of any Person or any equity or ownership interest in any business.
(d) Between the date of this Agreement (the Interim Balance Sheet Date
with respect to Section 7.7(d)(i)) and the Closing Date, except as mutually
agreed, C.P.A. Staffing, C.P.A. Search and Career Placement shall not:
(i) except as set forth in the Company Disclosure Schedule,
declare, make or pay any dividends or other distributions;
44
(ii) borrow any funds or otherwise become subject to, whether
directly or by way of guarantee or otherwise, any indebtedness for
borrowed money;
(iii) create any Encumbrance on any of their assets;
(iv) except in the ordinary course of business, increase in any
manner the compensation of any director or officer or increase in any
manner the compensation of any class of employees;
(v) create or materially modify any bonus, deferred
compensation, pension, profit sharing, retirement, insurance, stock
purchase, stock option, or other fringe benefit plan, arrangement or
practice or any other employee benefit plan (as defined in section
3(3) of ERISA);
(vi) make any capital expenditure or acquire any property or
assets (other than raw materials and supplies) for a cost in excess of
$5,000 in any one case or $25,000 in the aggregate;
(vii) enter into any agreement that materially restricts them
from carrying on their business;
(viii) cancel any material debts of others or waive any material
claims or rights; or
(ix) act or omit from taking any action which would cause any
of the representations and warranties in Section 4 to be inaccurate.
(e) The Shareholders shall cause C.P.A. Staffing, C.P.A. Search and
Career Placement to take or refrain from taking, as applicable, the actions
set forth elsewhere in this Section 6.7.
7.8 Shareholder Releases. Each Shareholder hereby releases and discharges
--------------------
C.P.A. Staffing, C.P.A. Search and Career Placement and their respective
Affiliates, successors and assigns (collectively, the "Releasees") of and from
any and all claims, demands, debts, accounts, covenants, agreements,
obligations, costs, expenses, actions or causes of action of every nature,
character or description, now accrued or which may hereafter accrue, in law,
equity or otherwise, based in whole or in part on any facts, conduct,
activities, transactions, events or occurrences known or unknown, which have or
allegedly have existed, occurred, happened, arisen or transpired prior to the
Effective Times (the "Released Claims"). Each Shareholder represents and
warrants that he or she has the sole authority to release the Released Claims.
Each Shareholder agrees that such holder shall forever refrain and forbear from
commencing, instituting or prosecuting any lawsuit, action or proceeding,
judicial, administrative, or otherwise, or otherwise attempting to collect or
enforce any Released Claims which are released and discharged herein.
45
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ACSYS
----------------------------------
The obligations of ACSYS to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by ACSYS:
8.1 No Court Order or Litigation. No Court Order or Litigation shall have
----------------------------
been commenced or threatened, and no investigation by any Governmental Body
shall have been threatened, against any of the parties to this Agreement or any
of the principals, officers or directors of any of them seeking to restrain,
prevent or change the transactions contemplated hereby or questioning the
validity or legality of any of such transactions or seeking damages in
connection with any of such transactions.
8.2 Representations, Warranties and Agreements.
------------------------------------------
(a) The representations and warranties of C.P.A. Staffing, C.P.A.
Search, Career Placement and the Shareholders set forth in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing Date
with the same force and effect as though made as of the Closing Date (except
where a representation and warranty is qualified by its terms by a reference to
materiality in which case such representation and warranty as so qualified shall
be true and correct in all respects). C.P.A. Staffing, C.P.A. Search, Career
Placement and each Shareholder shall have delivered to ACSYS certificates to
such effect, dated as of the Closing Date, signed by the Presidents of C.P.A.
Staffing, C.P.A. Search and Career Placement and each Shareholder, in form and
substance reasonably satisfactory to counsel to ACSYS.
(b) C.P.A. Staffing, C.P.A. Search, Career Placement and the
Shareholders shall have each performed or tendered performance in all material
respects of all covenants and agreements contained in this Agreement required to
be performed and complied with by them at or prior to the Closing. C.P.A.
Staffing, C.P.A. Search, Career Placement and the Shareholders shall have
delivered to ACSYS certificates to such effect, dated as of the Closing Date,
signed by the Presidents of C.P.A. Staffing, C.P.A. Search, Career Placement and
each Shareholder, in form and substance reasonably satisfactory to counsel to
ACSYS.
(c) There shall have been no material adverse change in the business,
financial condition, results of operations or assets of C.P.A. Staffing, C.P.A.
Search or Career Placement from the date hereof through the Closing Date, and
ACSYS shall have received certificates, dated as of the Closing Date, signed by
the Presidents of C.P.A. Staffing, C.P.A. Search and Career Placement in form
and substance reasonably satisfactory to counsel to ACSYS.
8.3 Actions and Proceedings. All corporate actions and proceedings
-----------------------
required to perform the transactions contemplated herein shall have been taken
and counsel to ACSYS shall have been furnished with copies of all such corporate
actions and proceedings certified by the Secretaries of C.P.A. Staffing, C.P.A.
Search and Career Placement.
46
8.4 Employment Agreements. Xxxxx Xxxxxxxx and Xxxx Xxxxxxxxx shall have
---------------------
executed and delivered to ACSYS Employment Agreements substantially in the form
attached hereto as Exhibit A-1 and Xxxx Xxxxxxxx shall have executed and
delivered to ACSYS an Employment Agreement substantially in the form attached
hereto as Exhibit A-2.
8.5 Shareholders Agreement. Each of the Shareholders shall have executed
----------------------
and delivered to ACSYS a Shareholders Agreement substantially in the form
attached hereto as Exhibit B.
8.6 Escrow Agreement. Each of the Shareholders shall have executed and
----------------
delivered to ACSYS an Escrow Agreement substantially in the form attached hereto
as Exhibit C.
8.7 Legal Opinion. C.P.A. Staffing, C.P.A. Search, Career Placement and
-------------
the Shareholders shall have tendered a legal opinion of Xxxxxx, Deal & Xxxxxxxx
PC, counsel to C.P.A. Staffing, C.P.A. Search, Career Placement and the
Shareholders, in the form attached hereto as Exhibit D.
8.8 Due Diligence. ACSYS shall have completed its due diligence
-------------
investigation of C.P.A. Staffing, C.P.A. Search and Career Placement the results
of which shall have been satisfactory to ACSYS in its sole discretion,
including, without limitation, the delivery of financial statements of the
combined Companies for the year ended December 31, 1996 audited by the firm of
Xxxxxx Xxxxxxxx LLP.
8.9 Regulatory Approvals. All authorizations, approvals or consents of any
--------------------
and all Governmental Bodies or other Persons required to be obtained by C.P.A.
Staffing, C.P.A. Search, Career Placement and the Shareholders to consummate the
transactions contemplated by this Agreement shall have been validly obtained and
copies thereof shall have been delivered to ACSYS.
8.10 Financing. ACSYS shall have entered into a borrowing facility to
---------
obtain, on terms satisfactory to ACSYS, all funds necessary for the payment of
the Merger Cash Portion.
8.11 Termination of Existing Agreements. All employment, compensation or
----------------------------------
benefit agreements, arrangements or understandings, oral or written, between any
of C.P.A. Staffing, C.P.A. Search and Career Placement, on the one hand, and any
of the Shareholders and/or Xxxx Xxxxxxxx, on the other, shall have been
terminated without liability to any of the Companies other than the payment of
$702,465 to Xxxx Xxxxxxxx in lieu of Section 9 of that certain Compensation
Agreement dated as of July 16, 1996, by and between Xxxx Xxxxxxxx and C.P.A.
Staffing, Inc., which obligation is comprised of (i) a $280,000 demand note from
C.P.A. Staffing to Xxxx Xxxxxxxx that is being repaid on the Closing Date by
ACSYS as part of the Merger Consideration and (ii) a $422,465 installment note
from C.P.A. Staffing to Xxxx Xxxxxxxx that has been assumed by the Shareholders
prior to the Closing. Evidence of such terminations and assumption shall have
been provided to ACSYS to its satisfaction.
47
ARTICLE IX
CONDITION TO OBLIGATIONS OF C.P.A. STAFFING, C.P.A. SEARCH,
CAREER PLACEMENT AND THE SHAREHOLDERS
-------------------------------------
The obligations of C.P.A. Staffing, C.P.A. Search and Career placement to
effect the Closing shall be subject to the satisfaction at or prior to the
Closing of the following conditions, any one or more of which may be waived by
such Companies:
9.1 No Court Order or Litigation. No Court Order or Litigation shall have
----------------------------
been commenced or threatened, and no investigation by any Governmental Body
shall have been threatened, against any of the parties to this Agreement or any
of the principals, officers or directors of any of them seeking to restrain,
prevent or change the transactions contemplated hereby or questioning the
validity or legality of any of such transactions or seeking damages in
connection with any of such transactions.
9.2 Representations, Warranties and Agreements.
------------------------------------------
(a) The representations and warranties of ACSYS set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date with the same force and effect as though made as of the Closing
Date (except where a representation and warranty is qualified by its terms by a
reference to materiality in which case such representation and warranty as so
qualified shall be true and correct in all respects). ACSYS shall have
delivered to C.P.A. Staffing, C.P.A. Search and Career Placement a certificate
to such effect, dated as of the Closing Date, signed by the President of ACSYS,
in form and substance reasonably satisfactory to counsel to C.P.A. Staffing,
C.P.A. Search and Career Placement.
(b) ACSYS shall have performed or tendered performance in all material
respects of all covenants and agreements contained in this Agreement required to
be performed and complied with by it at or prior to the Closing. ACSYS shall
have delivered to C.P.A. Staffing, C.P.A. Search and Career Placement a
certificate to such effect, dated as of the Closing Date, signed by the
President of ACSYS, in form and substance reasonably satisfactory to counsel to
C.P.A. Staffing, C.P.A. Search and Career Placement.
(c) There shall have been no material adverse change in the business,
financial condition, results of operations or assets of ACSYS from the date
hereof through the Closing Date, and C.P.A. Staffing, C.P.A. Search and Career
Placement shall have received a certificate, dated as of the Closing Date,
signed by the Presidents of ACSYS in form and substance reasonably satisfactory
to counsel to C.P.A. Staffing, C.P.A. Search and Career Placement.
9.3 Actions and Proceedings. All corporate actions and proceedings on the
-----------------------
part of ACSYS required to perform the transactions contemplated herein shall
have been taken and counsel
48
to C.P.A. Staffing, C.P.A. Search and Career Placement shall have been furnished
with copies of all such corporate actions and proceedings certified by the
Secretary of ACSYS.
9.4 Employment Agreements. ACSYS shall have executed and delivered to
---------------------
Xxxxx Xxxxxxxx and Xxxx Xxxxxxxxx an Employment Agreement substantially in the
form attached hereto as Exhibit A-1 and to Xxxx Xxxxxxxx an Employment Agreement
substantially in the form attached hereto as Exhibit A-2..
9.5 Regulatory Approvals. All authorizations, approvals or consents of any
--------------------
and all Governmental Bodies or other Persons required to be obtained by ACSYS to
consummate the transactions contemplated by this Agreement shall have been
validly obtained and copies thereof shall have been delivered to the Company.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
10.1 Survival of Representations, Etc. The representations and warranties
--------------------------------
given by C.P.A. Staffing, C.P.A. Search, Career Placement, each Shareholder and
ACSYS under this Agreement shall survive the Closing for a period of one (1)
year after the Closing Date, except that all representations and warranties
contained in Sections 4.2, 4.4, 4.8, 4.13, 4.14(b), 4.19, 5.2, 5.4, 5.7, 5.12,
5.13(b) and 5.18 shall survive the Closing for a period of 45 days beyond the
period of the applicable statute of limitations plus any extensions or waivers
thereof. Except as expressly provided in this Agreement, all covenants,
agreements, undertakings and indemnities set forth in this Agreement shall
survive indefinitely.
10.2 Indemnification by the Shareholders. The Shareholders hereby agree to
-----------------------------------
indemnify and hold harmless jointly and severally ACSYS, its officers,
directors, employees, representatives, Affiliates, and their successors and
assigns, (each, an "Indemnified ACSYS Party") from and against any and all
Liabilities, claims, demands, judgments, settlement payments, losses, costs,
damages, penalties and expenses whatsoever (including reasonable attorneys',
consultants' and other professional fees and disbursements of every kind, nature
and description incurred by such Indemnified ACSYS Party in connection
therewith) (collectively, "Damages") that such Indemnified ACSYS Party may
sustain, suffer or incur that result from, arise out of or relate to (a) any
breach of or any inaccuracy in any representation, warranty, covenant or
agreement of C.P.A. Staffing, C.P.A. Search, Career Placement or any Shareholder
contained in this Agreement, including any breach of the obligation to indemnify
hereunder, and (b) any failure to file a Tax Return for the year ended December
31, 1995 that correctly reflected the Companies' level of income or liability
for taxes in the period covered thereby. For purposes of this Section 10.2, any
qualification of such representations and warranties by reference to materiality
or knowledge shall be disregarded in determining the inaccuracy, untruth,
incompleteness or breach thereof.
49
10.3 Indemnification by ACSYS. ACSYS hereby agrees to indemnify and hold
------------------------
harmless the Shareholders ("Indemnified Seller Party") from and against any
Damages that such Indemnified Seller Party may sustain, suffer or incur that
result from, arise out of or relate to any breach of or inaccuracy in any
representation, warranty, covenant or agreement of ACSYS contained in this
Agreement, including any breach of the obligation to indemnify hereunder. For
purposes of this Section 10.3, any qualification of such representations and
warranties by reference to materiality or knowledge shall be disregarded in
determining the inaccuracy, untruth, incompleteness or breach thereof.
10.4 Limitation on Liabilities. Notwithstanding anything in this
-------------------------
Agreement to the contrary, an indemnifying party shall not have any liability to
an indemnified party in respect of any claim for indemnification unless a Claim
Notice with respect thereto is delivered to the indemnifying party specifying
the factual basis of the claim in reasonable detail to the extent then known by
the indemnified party prior to the termination of the survival period for such
representation and warranty set forth in Section 10.1 hereof.
10.5 Procedure for Claims.
--------------------
(a) An Indemnified ACSYS Party or an Indemnified Seller Party that
desires to seek indemnification under any part of this Article X (each, an
"Indemnified Party") shall give notice (a "Claim Notice") to each party
responsible or alleged to be responsible for indemnification hereunder (an
"Indemnitor"). Such notice shall briefly explain the nature of the claim and
the parties known to be involved, and shall specify the amount thereof. If the
matter to which a claim relates shall not have been resolved as of the date of
the Claim Notice, the Indemnified Party shall estimate the amount of the claim
in the Claim Notice, but also specify therein that the claim has not yet been
liquidated (an "Unliquidated Claim"). If an Indemnified Party gives a Claim
Notice for an Unliquidated Claim, the Indemnified Party shall also give a second
Claim Notice (the "Liquidated Claim Notice") within 60 days after the matter
giving rise to the claim becomes finally resolved, and the Liquidated Claim
Notice shall specify the amount of the claim. Each Indemnitor to which or whom
a Claim Notice is given shall respond to any Indemnified Party that has given a
Claim Notice (a "Claim Response") within 30 days (the "Response Period") after
the later of (i) the date that the Claim Notice is given or (ii) if a Claim
Notice is first given with respect to an Unliquidated Claim, the date on which
the Liquidated Claim Notice is given. Any Claim Notice or Claim Response shall
be given in accordance with the notice requirements hereunder, and any Claim
Response shall specify whether or not the Indemnitor giving the Claim Response
disputes the claim described in the Claim Notice. If any Indemnitor fails to
give a Claim Response within the Response Period, such Indemnitor shall be
deemed not to dispute the claim described in the related Claim Notice. If any
Indemnitor elects not to dispute a claim described in a Claim Notice, whether by
failing to give a timely Claim Response or otherwise, then the amount of such
claim shall be conclusively deemed to be an obligation of such Indemnitor.
(b) If any Indemnitor shall be obligated to indemnify an Indemnified
Party hereunder, such Indemnitor shall pay to such Indemnified Party within 30
days after the last day of the applicable Response Period the amount to which
such Indemnified Party shall be entitled. If there
50
shall be a dispute as to the amount or manner of indemnification under this
Article X, the Indemnitor and the Indemnified Party shall seek to resolve such
dispute through negotiations and, if such dispute is not resolved within twenty
days, the Indemnified Party may pursue whatever legal remedies may be available
for recovery of the Damages claimed from any Indemnitor. If any Indemnitor fails
to pay all or part of any indemnification obligation when due, then such
Indemnitor shall also be obligated to pay to the applicable Indemnified Party
interest on the unpaid amount for each day during which the obligation remains
unpaid at an annual rate equal to 10% or the maximum rate permitted by
applicable law, whichever is less.
10.6 Third Party Claims. An Indemnified Party that desires to seek
------------------
indemnification under any part of this Article X with respect to any actions,
suits or other administrative or judicial proceedings (each, an "Action") that
may be instituted by a third party shall give each Indemnitor prompt notice of a
third party's institution of such Action. After such notice, any Indemnitor
may, or if so requested by such Indemnified Party, any Indemnitor shall,
participate in such Action or assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that such
Indemnified Party shall have the right to participate at its own expense in the
defense of such Action; and provided, further, that the Indemnitor shall not
consent to the entry of any judgment or enter into any settlement, except with
the written consent of such Indemnified Party (which consent shall not be
unreasonably withheld), that (a) fails to include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect of any such Action or (b) grants the
claimant or plaintiff any injunctive relief against the Indemnified Party. Any
failure to give prompt notice under this Section 10.6 shall not bar an
Indemnified Party's right to claim indemnification under this Article X, except
to the extent that an Indemnitor shall have been harmed by such failure.
10.7 Exceptions to Limitations. Nothing herein shall be deemed to limit or
-------------------------
restrict in any manner any rights or remedies which any party has, or might
have, at law, in equity or otherwise, based on a willful misrepresentation or
willful breach of warranty hereunder.
10.8 Escrow. At the Closing, each Shareholder shall deliver to the Escrow
------
Agent a certificate representing that number of ACSYS Shares received by him or
her in the Mergers which equal ten percent (10%) of the Merger Consideration
received by such Shareholders in the Mergers (based on a price of $2.35737611
per ACSYS Share) together with three stock powers endorsed in blank
(collectively, the "Escrow Deposit") to be held, subject to the terms of the
Escrow Agreement, for a period ending on the day prior to the first anniversary
of the Closing Date. The Escrow Deposit shall be held and disbursed by the
Escrow Agent in accordance with the terms of the Escrow Agreement. In addition
to any other remedies ACSYS may have for Damages described in Section 10.2
hereof, ACSYS may make a claim against the Escrow Deposit for the amount of such
Damages by sending a Claim Notice described in Section 10.5 to the Escrow Agent.
The Escrow Deposit shall be held and disbursed by the Escrow Agent in accordance
with the terms of the Escrow Agreement. The parties agree and acknowledge that
ACSYS's recourse to the Escrow Deposit shall be without prejudice to any and all
other remedies ACSYS may have pursuant to this Article X or otherwise. ACSYS's
remedies for Damages shall not be limited to the assets comprising the Escrow
Deposit
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10.9 Effect of Investigation. Any party's right to indemnification or
-----------------------
other remedies based upon the representations and warranties, covenants,
agreements and undertakings of the other party will not be affected by any
investigation, knowledge or waiver of any condition of such party. Any
investigation by such party shall be for its own protection only and shall not
affect or impair any right or remedy hereunder.
10.10 Contingent Claims. Nothing herein shall be deemed to prevent an
-----------------
Indemnified Party from making a claim hereunder for potential or contingent
claims or demands provided the Claim Notice sets forth the specific basis for
any such potential or contingent claim to the extent then feasible and the
Indemnified Party has reasonable grounds to believe that such a claim or demand
may be made.
ARTICLE XI
TERMINATION
-----------
11.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) by mutual written consent of ACSYS and C.P.A. Staffing, C.P.A.
Search and Career Placement;
(b) by C.P.A. Staffing, C.P.A. Search and Career Placement or ACSYS,
if there shall be any Regulation that makes consummation of the Merger illegal
or otherwise prohibited or if any Court Order enjoining C.P.A. Staffing, C.P.A.
Search, Career Placement or ACSYS from consummating the Merger is entered and
such Court Order shall have become final and nonappealable;
(c) by ACSYS or C.P.A. Staffing, C.P.A. Search and Career Placement,
if the Merger shall not have been consummated by August 31, 1997.
(d) by ACSYS if its due diligence investigation and review of the
Company shall not have been completed to its sole satisfaction;
(e) by ACSYS, if C.P.A. Staffing, C.P.A. Search, Career Placement or
the Shareholders shall have breached any of their covenants hereunder or if
their representations and warranties contained in this Agreement or in any
certificate or other writing delivered by them pursuant hereto shall not be true
and correct, except for such changes as are contemplated by this Agreement; and
(f) by C.P.A. Staffing, C.P.A. Search and Career Placement, if the
representations and warranties of ACSYS contained in this Agreement or in any
certificate or other writing delivered
52
by ACSYS pursuant hereto shall not be true and correct, except for such changes
as are contemplated by this Agreement.
11.2 Effect of Termination. If this Agreement is terminated pursuant to
---------------------
Section 11.1, any party may pursue any legal or equitable remedies that may be
available if such termination is based on a breach of another party.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Payment of Expenses. The Shareholders shall pay their own fees and
-------------------
expenses and all fees and expenses incurred by C.P.A. Staffing, C.P.A. Search
and Career Placement in connection with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby, including without
limitation, the fees and expenses of lawyers, accountants, consultants,
investment bankers, brokers, finders and other advisors with respect to the
transactions contemplated hereby whether or not the Merger is consummated. ACSYS
shall pay its own fees and expenses.
12.2 Entire Agreement. This Agreement, together with the Escrow Agreement,
----------------
the Employment Agreements and the Shareholders Agreement, sets forth the entire
understanding of the parties hereto with respect to the Merger and the other
transactions contemplated herein and supersedes all prior agreements or
understandings among the parties regarding those matters.
12.3 Amendment, Parties in Interest, Assignment, Etc. This Agreement may
-----------------------------------------------
be amended, modified or supplemented only by a written instrument duly executed
by each of the parties hereto. If any provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the parties
hereto. Any term or provision of this Agreement may be waived at any time by the
party entitled to the benefit thereof by a written instrument duly executed by
such party. The parties hereto shall execute and deliver any and all documents
and take any and all other actions that may be deemed reasonably necessary by
their respective counsel to consummate the Merger.
12.4 Interpretation. Unless the context of this Agreement clearly requires
--------------
otherwise, (a) references to the plural include the singular, the singular the
plural, and the part the whole, (b) "or" has the inclusive meaning frequently
identified with the phrase "and/or" and (c) "including" has the inclusive
meaning frequently identified with the phrase "but not limited to." The section
and other headings contained in this Agreement are for reference purposes only
and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified. Each
53
accounting term used herein that is not specifically defined herein shall have
the meaning given to it under GAAP.
12.5 Notices. All notices that are required or permitted hereunder shall
-------
be in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other delivery service. Any notices
shall be deemed given upon the earlier of the date when received at, or the
third day after the date when sent by registered or certified mail or the day
after the date when sent by Federal Express to, the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
party hereto given in accordance with the foregoing notice procedures:
If to ACSYS or the Merger Subsidiaries:
ACSYS Resources, Inc.
Xxxxx 000, 000 X. Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxx, President
with a required copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx
If to C.P.A. Staffing, C.P.A. Search or Career Placement:
C.P.A. Staffing, Inc.
0000-X Xxxxxxxxx-Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx or Xxxxx Xxxxxxxx
with a required copy to:
Xxxxxx, Deal and Xxxxxxxx, P.C.
Spalding Exchange
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx
54
If to Xxxx Xxxxxxxxx:
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to Xxxxx Xxxxxxxx:
0000 Xxxxxxx Xxx
Xxxxxx, XX 00000
12.6 Governing Law. This Agreement shall be construed and interpreted in
-------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its provisions concerning conflict of laws.
12.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first written above.
ACSYS RESOURCES, INC.
By:/s/ Xxxxxx X. Xxxxxxxxx
_______________________
Xxxxxx X. Xxxxxxxxx
President
ACSYS STAFFING ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxxxxxx
_______________________
Xxxxxx X. Xxxxxxxxx
President
ACSYS SEARCH ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxxxxxx
_______________________
Xxxxxx X. Xxxxxxxxx
President
ACSYS CAREER ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxxxxxx
_______________________
Xxxxxx X. Xxxxxxxxx
President
C.P.A. STAFFING, INC.
By:/s/ Xxxxx X. Xxxxxxxx
_____________________
Xxxxx X. Xxxxxxxx
President
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C.P.A. SEARCH, INC.
By:/s/ Xxxxx X. Xxxxxxxx
_____________________
Xxxxx X. Xxxxxxxx
President
CAREER PLACEMENT ASSOCIATES, INC.
By:/s/ Xxxxx X. Xxxxxxxx
_____________________
Xxxxx X. Xxxxxxxx
President
/s/ Xxxx Xxxxxxxxx
-------------------------
Xxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxx
-------------------------
Xxxxx Xxxxxxxx
57