EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER is entered into on August 3, 1998, by and
among Acsys, Inc., a Georgia corporation ("Acquiror"), SE Merger Subsidiary,
Inc., a Delaware corporation and wholly-owned subsidiary of Acquiror ("Acquiror
Sub"), Staffing Edge, Inc., a Delaware corporation (the "Company"), and the
individual signatories hereto (each a "Stockholder" and collectively the
"Stockholders").
RECITALS
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The parties hereto desire to enter into this Agreement and Plan of Merger
pursuant to which Acquiror Sub will merge with and into the Company (the
"Merger").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, unless otherwise
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defined herein or unless the context otherwise requires, the following terms
shall have the following meanings:
"Acquiror Common Stock" has the meaning specified in Section 2.05(a)
hereof.
"Acquiror SEC Reports" has the meaning specified in Section 5.06 hereof.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agent" has the meaning specified in Section 11.10.
"Agreement" means this Agreement and Plan of Merger, all schedules hereto
and all amendments, modifications, and supplements hereto.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"Balance Sheet Date" is June 30, 1998.
"Balance Sheet" is the unaudited balance sheet of the Company, dated June
30, 1998.
"Benefit Plans" has the meaning specified in Section 3.19 hereof.
"Business Day" means a day when commercial banks are open in New York, New
York.
"Closing" has the meaning specified in Section 2.02 hereof.
"Closing Date" has the meaning specified in Section 2.02 hereof.
"Code" has the meaning specified in Section 3.19 hereof.
"Company" means Staffing Edge, Inc., a Delaware corporation.
"Company's Knowledge" shall mean the actual knowledge of Xxx Xxxxx, Xx
Xxxxx, Xxxx Xxxxxx and Xxxxx Xxxxx, without any duty to inquire or attribution
of knowledge from any other person to the foregoing persons.
"Confidentiality Agreement" has the meaning specified in Section 5.01(b)
hereof.
"Contracts" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease or obligation
of any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets or business.
"DGCL" has the meaning specified in Section 2.01 hereof.
"Effective Time" has the meaning specified in Section 2.02 hereof.
"Employee Leasing" shall mean an arrangement whereby a client of the
Company places some or all of its workforce onto the payroll of the Company in a
co-employment relationship in which the Company assumes responsibility for
administration of payroll, benefits, and other human resources activities for
the client, but does not include a temporary help arrangement, whereby an
organization hires its own employees and assigns them to a client to support or
supplement the client's workforce in special work situations, such as employee
absences, temporary skill shortages, seasonal workloads, and special assignments
and projects.
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"ERISA" has the meaning specified in Section 3.19(a) hereof.
"GAAP" has the meaning specified in Section 3.12 hereof.
"Indemnification Cap" has the meaning specified in Schedule 9.06.
"Indemnification Threshold" has the meaning specified in Schedule 9.06.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"IRS" has the meaning specified in Section 3.19(a) hereof.
"Law" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities, or business, including those promulgated,
interpreted or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien Losses" shall have the meaning set forth in Schedule 9.02.
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"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, governmental or other hearing, administrative
or other proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the transactions contemplated by this
Agreement.
"Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other such changes or effects, is,
or would reasonably be considered to be, Materially (as defined below) adverse
to the condition (financial or otherwise), results of operations, businesses,
properties, assets or liabilities of the Company or would adversely effect the
Company's or the Stockholders' ability to consummate the transactions
contemplated by this Agreement or to perform their respective obligations
hereunder; provided, however, that the occurrence of any or all of the changes
or events disclosed in the Schedules hereto shall not, individually or in the
aggregate, constitute a "Material Adverse Effect." Solely for purposes of the
foregoing definition of "Material Adverse Effect, "Materially" shall mean, in
relation to a matter that is reasonably capable of quantification, a value or
impact that is or may become, individually or in the aggregate, an amount
greater than $100,000.
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"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
permit, or right to which any Person is a party or that is or may be binding
upon or inure to the benefit of any Person or its securities, Assets, or
business.
"Permitted Liens" means: (a) Liens imposed by law for taxes, assessments
or charges of any Governmental Authority for claims not yet due or which are
being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP and which liens are not yet enforceable
against other creditors; (b) statutory Liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or created
in the ordinary course of business and in existence less than 90 days from the
date of creation thereof for amounts not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP and which Liens are not yet enforceable against other
creditors; (c) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness) statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts; (d) Liens consisting of encumbrances in the nature of
zoning restrictions, easements, rights and restrictions of record on the use of
real property on the date of Acquisition thereof which do not materially detract
from the value of such property or impair the use thereof; and (e) any Lien in
favor of the United States of America or any department or agency thereof, or in
favor of any state government or political subdivision thereof, or in favor of a
prime contractor under a government contract of the United States, or of any
state government or any political subdivision thereof, and, in each case,
resulting from acceptance of partial, progress, advance or other payments in the
ordinary course of business under government contracts of the United States, or
of any state government or any political subdivision thereof, or subcontracts
thereunder.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, the SEC, the Federal
Trade Commission, the United States Department of Justice, and all other
federal, state, county, local or other governmental or regulatory agencies,
authorities (including self-regulatory authorities),
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instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"Schedule" shall mean the written information attached to this Agreement
describing in reasonable detail the matters contained therein and, with respect
to each disclosure made therein, specifically referencing each section of this
Agreement under which such disclosure is being made. Information disclosed with
respect to one section shall not be deemed to be disclosed for purposes of any
other section not specifically referenced with respect thereto.
"SEC" means the Securities and Exchange Commission of the United States
government.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in Section 3.04 hereof.
"Specified Litigation Losses" shall have the meaning set forth in Schedule
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9.02.
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"Specified Litigation Deductible" shall have the meaning set forth in
Schedule 9.02.
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"Stockholder Guarantees" means any and all guarantees of indebtedness,
obligations and other liabilities of the Company that have been entered into by
any Stockholder or a spouse of any Stockholder and any pledges or grants of a
security interest in Shares or other property of a Stockholder or a spouse of
any Stockholder given by such Stockholder or spouse to secure any indebtedness,
obligation or other liability of the Company.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either (i) owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (provided, there
shall not be included any such entity the equity securities of which are owned
or controlled in a fiduciary capacity), (ii) in the case of partnerships, serves
as a general partner, (iii) in the case of a limited liability company, serves
as a managing member, or (iv) otherwise has the ability to elect a majority of
the directors, trustees or managing members thereof.
"Tax Return" shall mean any report, return, information return, or other
information required to be supplied to a taxing authority in connection with
Taxes, including any return of an affiliated or combined or unitary group that
includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local, or foreign
taxes, charges, fees, levies, imposts, duties, or other assessments, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment,
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disability, real property, personal property, registration, ad valorem, value
added, alternative or add-on minimum, estimated, or other tax or governmental
fee of any kind whatsoever, imposes or required to be withheld by the United
States or any state, county, local, or foreign government or subdivision or
agency thereof, including any interest, penalties, and additions imposed thereon
or with respect thereto.
Section 1.02. Accounting Terms. All accounting terms not specifically
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defined herein shall be construed in accordance with GAAP.
ARTICLE II
THE MERGER
Section 2.01. The Merger. Upon the terms and subject to the conditions of
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this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined below), the parties
hereto shall effect the Merger of the Acquiror Sub with and into the Company.
As a result of the Merger, the separate corporate existence of the Acquiror Sub
shall cease and the Company shall continue as the surviving corporation of the
Merger and be the wholly-owned subsidiary of Acquiror (the "Surviving
Corporation").
Section 2.02. Effective Time. The parties hereto shall execute and
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acknowledge a certificate of merger and cause the same to be filed with the
Secretary of State of the State of Delaware on the Closing Date, all in
accordance with the relevant provisions of the DGCL, and the parties shall take
all such further actions as may be required by law to make the Merger effective.
The Merger shall become effective at 11:59 p.m. on the Closing Date (the
"Effective Time").
Section 2.03. Date and Place of Closing. The closing of the transactions
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contemplated in this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx, Mag & Fizzell, P.C., 0000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, at
9:00 a.m. (local time) on the date hereof, or at such other place or at such
other time or on such other date as the parties hereto may mutually agree (the
"Closing Date").
Section 2.04. Effect of Merger. When the Merger has been effected at the
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Effective Time:
(a) The separate existence of the Acquiror Sub shall cease, with all
debts, liabilities, duties and obligations of the Acquiror Sub becoming the
debts, liabilities, duties and obligations of the Surviving Corporation as
provided in Section 2.04(f) hereof.
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(b) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation.
(c) The bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation.
(d) The persons comprising the board of directors of Acquiror Sub
immediately prior to the Effective Time shall comprise the board of
directors of the Surviving Corporation, in each case until their respective
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and bylaws.
(e) The officers of Acquiror Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation
and bylaws.
(f) The Merger shall have the other effects set forth in the
applicable provisions of the DGCL, including Section 259 thereof. Without
limiting the generality of the foregoing, and subject to the provisions of
the DGCL, at the Effective Time, all the assets, property, rights,
privileges, interests, powers and franchises of the Company and of Acquiror
Sub shall vest in the Surviving Corporation, and all debts, liabilities,
duties and obligations of the Company and Acquiror Sub shall become the
debts, liabilities, duties and obligations of the Surviving Corporation.
The assets, liabilities and stockholders' equity of the Company and of
Acquiror Sub shall be taken up or continued on the books of the Surviving
Corporation at the amounts at which they are respectively recorded,
immediately prior to the effectiveness of the Merger, on the books of the
Company and Acquiror Sub, with any appropriate adjustments as may be made
in accordance with the terms hereof and with GAAP.
Section 2.05. Effect on Common Stock and Options.
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(a) Cancellation of the Common Stock of the Company. By virtue of the
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Merger, automatically and without any action on the part of the holder
thereof, subject to Section 2.05(c) below, the Shares shall be canceled and
extinguished, and at or following the Closing, the holders of the Shares
shall be entitled to receive from Acquiror, in exchange for and upon
surrender to Acquiror of the stock certificate evidencing such Shares the
consideration set forth on Schedule 2.05(a)(i). In addition, the holders
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of Shares shall be entitled receive on a pro rata basis the payments, if
any, to be made by Acquiror pursuant to the Earnout Provisions set forth on
Schedule 2.05(a)(ii).
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(b) Cancellation of Options. By virtue of the Merger, automatically
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and without any action on the part of the holder thereof, each outstanding
option to purchase Shares issued and outstanding immediately prior to the
Effective Time shall be substituted with options for Acquiror Common Stock
on such basis as shall be fair and equitable to the optionees and as
Acquiror and the Company shall approve.
(c) Dissenting Shares. Notwithstanding anything in this Agreement to
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the contrary, if the DGCL respecting dissenter's rights shall be applicable
to the Merger, each share of Common Stock that is issued and outstanding
immediately prior to the Effective Time and which is held by a stockholder
of the Company exercising dissenter's rights in accordance with the DGCL
and who, as of the Effective Time, shall not have effectively withdrawn or
lost such right to dissenter's rights ("Dissenting Shares") shall not be
canceled or represent a right to receive the Acquiror Common Stock
deliverable in respect thereof pursuant to Section 2.05(a) above, but such
holder thereof shall be entitled only to such rights as are granted by the
DGCL. Each holder of Dissenting Shares who becomes entitled to payment for
such shares pursuant to the DGCL shall receive payment therefor from the
Surviving Corporation in accordance with the DGCL; provided, however, that
if any such holder of Dissenting Shares shall have effectively withdrawn
such holder's demand for appraisal of such shares or lost such holder's
right to appraisal and payment of such shares under the DGCL, such holder
or holders (as the case may be) shall forfeit the right to appraisal of
such shares and each such share shall thereupon be deemed to have been
canceled and extinguished, as of the Effective Time, and represent the
right to receive the Acquiror Common Stock deliverable in respect thereof
pursuant to Section 2.05(a) above.
(d) Acquiror Sub Shares. Each share of common stock of Acquiror Sub
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issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
Section 2.06. Taking Necessary Action; Further Action. Acquiror, Acquiror
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Sub and the Company, respectively, each shall use its reasonable efforts to take
all such action as may be necessary or appropriate to effectuate the Merger
under the DGCL at the time specified in Section 2.02 hereof. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all properties, interests, assets, rights,
privileges, immunities, powers and franchises of the Company or Acquiror Sub,
the officers of the Surviving Corporation are fully authorized in the name of
the Company and Acquiror Sub or otherwise to take, and shall take, all such
lawful and necessary action.
Section 2.07. Expenses. The Company and Acquiror shall each pay their
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respective expenses incurred in connection with the negotiation, execution,
closing, and performance of this Agreement, in each case regardless of whether
the Closing occurs.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDERS
The Company and the Stockholders hereby represent and warrant to Acquiror
as follows:
Section 3.01. Corporate Organization. The Company is a corporation duly
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organized, validly existing, and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own or lease and operate
its properties and to conduct its business as now conducted. Except as set
forth in Schedule 3.01 and other than short term investments in money market
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instruments, the Company has no investment in any corporation, partnership,
joint venture, proprietorship or other entity. The Company has no Subsidiaries.
Section 3.02. Due Qualification. At the date of this Agreement, the
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Company is duly qualified to do business and is in good standing under the laws
of each jurisdiction in which the nature of its business or properties makes
such qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect.
Section 3.03. Corporate Documentation. The copies of the certificate of
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incorporation and bylaws, and all amendments thereto, of the Company, heretofore
delivered to Acquiror, are complete and correct. The minute books of the
Company are complete and reflect all proceedings (including actions taken by
written consent) of the stockholders and directors and all committees thereof of
the Company in all material respects. The stock transfer books of the Company
are complete and accurately reflect all transactions in the shares of capital
stock of the Company.
Section 3.04. Capitalization of the Company. The authorized capital stock
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of the Company consists of 500,000 shares of Preferred Stock, par value $.01 per
share, and 500,000 shares of Common Stock, par value $.01 per share, of which
51,801 shares of Common Stock are issued and outstanding (the "Shares"), and no
shares of Preferred Stock are issued and outstanding. The Shares have been
validly issued, are fully paid and nonassessable and have not been issued in
violation of any preemptive rights. Except for options to purchase an aggregate
of 1,112 shares of the Common Stock of the Company, as described in Schedule
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3.04 hereto, no options, warrants or other rights to acquire, sell, or issue
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shares of the Company are outstanding.
Section 3.05. Authority; Binding Effect. The Company has full right,
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power, authority, and capacity to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Company. This Agreement constitutes the
legal, valid, and binding obligations of the Company, enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other
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similar laws relating to or affecting creditors' rights generally and to general
equity principles (whether such enforceability is considered in a proceeding at
law or in equity).
Section 3.06. No Creation of Violation, Default, Breach or Encumbrance.
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The execution and delivery of this Agreement by the Company does not, and the
consummation by the Company of the transactions contemplated herein will not (i)
violate (A) any statute, rule or regulation to which the Company is subject or
(B) any Order of any court, administrative agency or governmental body to which
the Company is subject, (ii) conflict with or violate any provision of the
certificate of incorporation or bylaws of the Company, (iii) assuming receipt of
the consents set forth on Schedule 3.06 hereto and except as may be disclosed in
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any schedule to this Agreement, result in the breach of or constitute a default,
or result in the creation of a lien on any asset, under any mortgage, indenture,
note or other instrument or obligation for the payment of money or any material
contract, agreement, lease or license, in each case to which the Company is a
party.
Section 3.07. No Present Material Default. The Company is not in material
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default under or in material breach of any mortgage, indenture, note or other
instrument or obligation for the payment of money or any material contract,
agreement, lease or license.
Section 3.08. Compliance With Law. Except as set forth in Schedule 3.08
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hereto, the Company is not in violation of any statute, rule or regulation, or
any Order of any court, administrative agency, governmental body or arbitration
tribunal, to which it or any of its properties or assets is subject (including
the Immigration Reform and Control Act of 1986, as amended, and all applicable
regulations promulgated thereunder and Laws requiring the licensing of temporary
employee staffing companies or otherwise subjecting temporary employee staffing
companies to regulation), excluding any such violation which is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
Since January 1, 1994, Company has received no written notification or
communication, or to Company's Knowledge there is no other notification or
communication, from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, or (iii) requiring
Company to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking.
Section 3.09. Governmental Approvals and Filings. No consent, approval or
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authorization of, or notice to, declaration, filing or registration with, any
governmental or regulatory authority on the part of the Company is required in
connection with the execution, delivery and performance of this Agreement,
except for filings set forth in Schedule 3.09. The Stockholders know of no
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reason why any of the consents, approvals or authorizations set forth in
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Schedule 3.09 will not be issued, granted or otherwise obtained after the
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Closing by the appropriate governmental authority.
Section 3.10. Real Property.
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(a) Set forth in Schedule 3.10 hereto is a list of real property
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owned or leased (as lessor or lessee) by the Company.
(b) The Company has the right to quiet enjoyment of the real
properties leased by it as tenant for the full term of the lease thereof to
the extent provided in each such lease. To the Company's knowledge, each
lease referred to in Schedule 3.10 is legal, valid, binding and
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enforceable, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and to general equity principles
(whether such enforceability is considered in a proceeding at law or in
equity), and except as set forth in Schedule 3.10 there are no defaults, or
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any condition or event which, after notice or lapse of time or both, would
constitute a material default, thereunder. Except as set forth in Schedule
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3.10, no consents or approvals will be required under the terms of any such
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lease in connection with the consummation of the transactions contemplated
by this Agreement.
(c) The Company has heretofore made available to Acquiror true and
complete copies of all deeds, leases (including any amendments and renewal
letters), title insurance policies, title reports, surveys, and similar
documents that are in the Company's possession with respect to the real
property owned by the Company.
Section 3.11. Personal Property. Except as set forth in Schedule 3.11
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hereto, the Company is in possession of and has good title to all personal
property reflected on the Balance Sheet, other than such items of personal
property as have been disposed of by the Company since that Balance Sheet Date
in the ordinary course of business, in each case free and clear of all
mortgages, liens and encumbrances, including, without limitation, any
conditional sale or other retention agreement, other than Permitted Liens. All
personal property used in the business of the Company is in reasonably good
condition, reasonable wear and tear excepted, and is reasonably suitable for the
uses for which they are intended and are sufficient to conduct the business of
the Company consistent with Company's past practices.
Section 3.12. Financial Statements.
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(a) Attached hereto as Schedule 3.12 is the following: (i) the
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audited balance sheets of the Company as of December 31, 1996 and December
31, 1997 and the related statements of income, stockholders' equity and
cash flows for the fiscal years then ended, and the notes thereto, together
with the report of Deloitte & Touche, LLP, independent certified public
accountants, thereon; and (ii) the Balance Sheet and the related statements
of income, stockholders' equity and cash flow for the six months ended June
30, 1998.
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(b) The financial statements referred to in Section 3.12(a) above have
been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), provided that such unaudited financial
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statements have not been prepared in accordance with GAAP insofar as such
financial statements do not include footnotes and do not reflect
appropriate year-end adjustments.
(c) Except as set forth in the Balance Sheet or in the schedules
hereto, the Company has no liabilities or obligations, direct or
contingent, accrued or otherwise, of a nature customarily reflected in
financial statements in accordance with GAAP, except those incurred after
the Balance Sheet Date in the ordinary course of business consistent with
past practice and except lease and other contract obligations and other
obligations or liabilities which are disclosed in this Agreement or the
schedules hereto or which, by the terms of this Agreement, are not required
to be disclosed. Except with respect to the loan from Mercantile Bank to
Xxx Xxxxx which is guaranteed by the Company, the Company is not directly
or indirectly liable, by guarantee, indemnity or otherwise, upon or with
respect to, or obligated, by discount or repurchase agreement or in any
other way, to provide funds in respect to, or obligated to guarantee or
assume any liability or any person for any amounts in excess of $10,000 in
the aggregate.
Section 3.13. Patents, Trademarks, Service Marks, Trade Names, Trade
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Secrets, Copyrights. The Company has interests in or uses only the registered
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or unregistered patents, trademarks, service marks, trade names, trade secrets
and copyrights other than publications purchased in the ordinary course or
"shrink-wrap" software licenses (the "Intellectual Property") set forth in
Schedule 3.13 hereto, and no other patents, trademarks, service marks, trade
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names, trade secrets or copyrights are used in the conduct of the business of
the Company, other than the trademarks, service marks, trade names and
copyrights appearing on merchandise sold by the Company in the ordinary course
of its business, the rights to which are held by others. The Company has
received no notice that the Company is infringing any patent, trademark, service
xxxx, trade name, trade secret or copyright, registered or unregistered, and no
claim is pending or has been made to such effect that has not been resolved.
The Company is not obligated to pay any recurring royalties to any Person with
respect to any such Intellectual Property. Except as disclosed in Schedule
--------
3.13, every officer of director of Company is a party to a Contract which
requires such officer or director to keep confidential any trade secrets,
proprietary data, customer information, or other business information of
Company, and, to the Company's Knowledge, no such officer or director is party
to any Contract with any Person other than Company which requires such officer
or director to assign any interest in any Intellectual Property to any Person
other than the Company or to keep confidential any trade secrets, proprietary
data, customer information, or other business information of any Person other
than Company and its customers. To the Company's Knowledge, no officer or
director of Company is party to any Contract which restricts or prohibits such
officer or director from engaging in activities competitive with any Person,
including the Company.
12
Section 3.14. Contracts, Agreements and Obligations. Except as set forth
-------------------------------------
in Schedule 3.14 hereto, the Company is not a party to, or is not in any way
-------------
obligated under:
(a) any Contract with any officer or employee which does not expire or
is not terminable at the option of the Company within a ninety (90) day
period (excluding any item required to be listed on any schedule provided
under Section 3.19);
(b) any franchise or similar agreement, whether written or oral;
(c) any written collective bargaining or other labor or union contract
or agreement;
(d) any note, bond, indenture or agreement, whether written or oral,
to borrow money or any agreement of guarantee or indemnification, whether
written or oral, running to any person or entity other than the Company;
(e) any Contract relating to capital expenditures involving total
payments of more than $50,000;
(f) any Contract relating to the future disposition or acquisition of
assets (excluding inventory) or any interest in any business enterprise for
a price of more than $50,000;
(g) any Contract which (i) calls for annual aggregate payments in
excess of $50,000 and (ii) does not expire or is not terminable without
substantial cost or penalty at the option of the Company within a ninety
(90) day period, excluding purchase orders made in the ordinary course of
business and contracts and other agreements disclosed pursuant to this
Agreement;
(h) any Contract which limits the amount of indebtedness that can be
incurred by the Company or restricts the ability of the Company to grant a
security interest in or a lien, mortgage or other encumbrance on any of its
properties or assets;
(i) any Contract regarding indebtedness of the Company for money
borrowed which is not prepayable at any time by Company without penalty or
premium;
(j) any Contract which prohibits or restricts the Company from
engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person;
(k) any Contract involving Intellectual Property (other than Contracts
entered into in the ordinary course with customers and "shrink-wrap"
software licenses); or
13
(l) any Contract relating to the provision of data processing, network
communication, or any other technical services to the Company.
Section 3.15. Insurance. Set forth in Schedule 3.15 hereto is a list of
--------- -------------
all policies of insurance maintained by or on behalf of the Company, including
for each the name of the insurer, the amount of coverage, the amount of the
premium and the term of the policy. Since January 15, 1995, the Company has
received no notice from any insurance carrier that (i) any policy of insurance
will be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased. On the date hereof, there are no claims for amounts
exceeding in any individual case $15,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by
Company under such policies.
Section 3.16. Absence of Certain Changes. Except as set forth in Schedule
-------------------------- --------
3.16 hereto, since the Balance Sheet Date, there has not been: (a) any physical
----
damage, destruction or loss in excess of Fifty Thousand Dollars ($50,000) to any
asset or property of the Company, whether covered by insurance or not, ordinary
wear and tear excepted; (b) any declaration, setting aside or payment of any
dividend, or any distribution, in respect of shares of capital stock of the
Company, or any redemption, purchase or other acquisition of any such shares of
capital stock of the Company; (c) any increase in the compensation payable or to
become payable by the Company to any of its directors, officers or employees,
other than as in conformity with the policies and practices of the Company in
the usual and ordinary course of its business or as reasonably required to
maintain the efficient business operations of the Company; (d) any change in the
authorized and unissued capital stock of the Company or any grant of options,
warrants or other rights or convertible or exchangeable securities calling for
the issuance thereof; (e) any payment by the Company, direct or indirect, of any
material liability of the Company before the same becomes due in accordance with
its terms or otherwise than in the ordinary course of its business; (f) except
in the ordinary course of business in an aggregate amount not material to the
Company, any sale or transfer of, or agreement to sell or transfer, any assets
of the Company (excluding inventory and assets having a book value of less than
Fifty Thousand Dollars ($50,000)), (g) any change in the outstanding long-term
debt of the Company other than in the ordinary course of business; (h) any
change in any accounting principle or practice of the Company; or (i) any
Material Adverse Effect.
Section 3.17. Tax Returns and Payments. Except as set forth in Schedule
------------------------ --------
3.17 hereto, the Company has filed all Federal, state and local Tax Returns
----
which are required to have been filed and has paid, or made provisions for the
payment of, all Taxes required to be paid pursuant to such Tax Returns. Except
as set forth in Schedule 3.17 there does not exist and will not after the
-------------
Effective Time exist any liability for Taxes which may be asserted by any taxing
authority against, and no lien or other encumbrance for Taxes will attach to,
the Company or any of its Assets other than Taxes reserved for in the financial
statements of the Company. All Tax Returns required to be filed by or on behalf
of any of the Company have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended
14
on or before December 31, 1997, and on or before the date of the most recent
fiscal year end immediately preceding the Effective Time, and all Tax Returns
filed are complete and accurate in all material respects. All Taxes shown on
filed Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded Litigation have
been paid or have been reserved for on the financial statements of the Company.
There are no Liens with respect to Taxes upon any of the Assets of the Company,
except for any such Liens which are not reasonably likely to have a Material
Adverse Effect.
The Company has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
The provision for any Taxes due or to become due for the Company for the
period or periods through and including the date of the financial statements
that has been made and is reflected on such financial statements is sufficient
to cover all such Taxes.
The Company is not a party to any Tax allocation or sharing agreement and
the Company has not been a member of an affiliated group filing a consolidated
federal income Tax Return and has no Liability for Taxes of any Person (other
than Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign Law) as a transferee or
successor or by Contract or otherwise.
The Company is in compliance with, and its records contain all information
and documents necessary to comply in all material respects with, all applicable
information reporting and Tax withholding requirements under federal, state and
local Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code.
The Company does not or has not had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
Section 3.18. No Litigation, Proceeding or Inquiry. Except as set forth
------------------------------------
in Schedule 3.18 hereto, there is no suit, action, claim or other legal,
-------------
administrative or arbitration proceeding pending, or, to the Company's
Knowledge, threatened before any court or governmental commission, bureau or
other regulatory authority, and, to the Company's knowledge, there is no
investigation or inquiry by any administrative agency or governmental body
pending or threatened (a) against the Company or any of its property or assets,
or (b) which challenges the validity or propriety of the transactions
contemplated by this Agreement.
15
Section 3.19. Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Schedule 3.19(a) lists or describes any pension, retirement,
----------------
savings, disability, medical, dental, health, life (including any
individual life insurance policy as to which the Company is the owner,
beneficiary or both), death benefit, group insurance, profit sharing,
deferred compensation, stock options, bonus incentive, vacation pay,
severance or termination pay, "cafeteria" or "flexible benefit" plan under
Section 125 of the Internal Revenue Code as in effect on the date of this
Agreement (the "Code"), or other employee or director benefit plan, trust,
arrangement, contract, agreement, policy or commitment, under which
employees, dependents, spouses, retirees, former employees, directors or
former directors of the Company are entitled to participate by reason of
their current or prior employment, or current or former directorship, with
the Company, (i) to which the Company is a party or a sponsor or a
fiduciary thereof or (ii) with respect to which the Company has made
payments, contributions or commitments, or may otherwise have any liability
(collectively, the "Benefit Plans"). With respect to the Benefit Plans,
individually and in the aggregate, the Company has made available to
Acquiror, a true and correct copy of (a) the most recent annual report
(Form 5500) filed with the Internal Revenue Service ("IRS"), if any, (b)
such Benefit Plan, (c) any summary plan description relating to such
Benefit Plan, (d) each trust agreement and group annuity contract, if any,
relating to such Benefit Plan and (e) the most recent actuarial report or
valuation relating to each Benefit Plan subject to Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) The Benefit Plans have been operated and administered by the
Company in compliance in all material respects with all applicable laws
relating to employment or labor matters including, without limitation,
ERISA and the Code. With respect to the Benefit Plans no event has
occurred which would subject the Company to a material liability (except
liability for benefits, claims and funding obligations payable in the
ordinary course) under ERISA, the Code, or any other applicable Law or
Order. With respect to the Benefit Plans, individually and in the
aggregate, there has been no prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code which would result in a
material liability to the Company, and there has been no action, suit,
grievance, arbitration or other claim with respect to the administration or
investment of assets of the Benefit Plans (other than routine claims for
benefits made in the ordinary course of plan administration) pending, or to
the knowledge of the Company, threatened.
(c) Each Benefit Plan that is intended to be tax qualified under
Section 401(a) of the Code has received, or the Company has applied for or
will in a timely manner apply for, a favorable determination letter from
the IRS stating that the Plan meets the requirements of the Code and that
any trust or trusts associated with the Plan are tax exempt under Section
501(a) of the Code.
16
(d) Neither the Company nor any entity which together with the Company
would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code now maintains or contributes to or has
ever maintained or contributed to any defined benefit plan within the
meaning of Section 3(35) of ERISA.
(e) The Company is the subject of no Litigation asserting that it has
committed an unfair labor practice (within the meaning of the National
Labor Relations Act or comparable state law) or seeking to compel it to
bargain with any labor organization as to wages or conditions of
employment, nor is Company party to any collective bargaining agreement,
nor is there any strike or other labor dispute involving Company, pending
or threatened, or to the Knowledge of Company, is there any activity
involving any of Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity. Company
has never engaged in Employee Leasing.
(f) Schedule 3.19(f) sets forth a copy of the form of each employment
----------------
agreement entered into by the Company and its employees. There are no
other written or, to the Company's Knowledge, material oral employment
agreements, employment contracts or understandings relating to employment
(other than relating to "at-will" employment) to which the Company is a
party.
(g) Except as set forth in Schedule 3.19(g) neither the execution and
----------------
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, or otherwise) becoming due to
any director or any employee of Company from Company under any Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any
Benefit Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefit.
Section 3.20. Brokers and Finders. No broker or finder has acted for the
-------------------
Company in connection with this Agreement and the transactions contemplated
hereby, except for Xxxxxx X. Xxxx & Company, all of whose fees and expenses
shall be the responsibility of the Company and shall not exceed the amount set
forth in Schedule 3.20.
Section 3.21. Bank and Brokerage Accounts; Securities. Schedule 3.21
--------------------------------------- -------------
hereto sets forth (a) a true and complete list of the names and locations of all
banks, trust companies, securities, brokers, and other financial institutions at
which the Company has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; (b) a true and complete list
and description of each such account, box and relationship, indicating in each
case the account number and the names of the respective officers, employees,
agents, or other similar representatives of the Company having signatory power
with respect thereto and; (c) a list of all securities, time certificates and
other investments in securities in excess of One Hundred Thousand Dollars
($100,000) owned by the Company, the name of the registered holder thereof,
17
the location of the certificates therefor, the maturity date, if any, and any
stock powers or other authority for transfer granted with respect thereto.
Section 3.22. No Powers of Attorney. Except as set forth in Schedule 3.22
--------------------- -------------
hereto, the Company has no power of attorney or comparable delegations of
authority outstanding.
Section 3.23. Environmental Laws and Regulations. To the knowledge of the
----------------------------------
Company, (a) no claim, lawsuit, agency proceeding, or other legal or
administrative challenge has been brought concerning the real property leased by
the Company (the "Real Property"), the operation of the Real Property or the
existence of any hazardous condition thereon during the Company's period of
occupancy, (b) the Company has not used the Real Property for an industrial or
commercial operation which utilizes hazardous substances and the Company is not
aware of any such prior use of the Real Property, (c) the Company has not
spilled, discharged, released, or deposited any hazardous substance on the Real
Property, whether in containers or other impoundments, or directly in the ground
or waters of the Real Property and the Company is not aware of any such
substances in or on the Real Property, (d) the Company has not installed or
affixed any asbestos-containing material in the structures on the Real Property,
(e) the Company has not affixed or installed any electrical transformers,
fluorescent light fixtures or other electrical equipment containing PCBs in or
on the Real Property, (f) the Company has not installed any storage tanks,
barrels, sumps, or other containers or equipment (moveable or fixed) for the
containment of hazardous substances in any part of the Real Property and the
Company is not aware of any such prior installations, and (g) no governmental
entity has served upon the Company any notice claiming any violation of any
statute, ordinance or regulations or noting the need for any repair,
construction, alteration or installation with respect to the Real Property, or
requiring any change in the means or methods of those conducting operations
thereon.
Section 3.24. Statements True and Correct. No representation or warranty
---------------------------
of the Company or the Stockholders in this Agreement, and no statement in the
Schedules omits to state a material fact necessary to make the statements herein
or therein, in light of the circumstances in which they were made, not
misleading. There is no fact known to either the Company or the Stockholders
that has specific application to the Company (other than general economic or
industry conditions) and that materially adversely affects the assets, business,
financial condition, or results of operations of the Company that has not been
set forth in this Agreement or the Schedules hereto.
18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Stockholder severally, but not jointly, represents and warrants to
Acquiror as follows:
19
Section 4.01. Authority of Stockholder. Such Stockholder has the
------------------------
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to be consummated by such
Stockholder. The execution and delivery of this Agreement by such Stockholder
and the performance of such Stockholder's obligations under this Agreement have
been duly and validly authorized by all necessary action, if any, of such
Stockholder, and this Agreement has been duly and validly executed and delivered
by such Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
Such Stockholder has good and marketable title to all Shares shown as owned by
such Stockholder on the signature page hereto, free and clear of any mortgage,
pledge, lien, claim or encumbrance of any kind. The foregoing is qualified as
to Shares owned by certain Stockholders that have been pledged to secure certain
Company indebtedness, all as described on Schedule 4.01 hereto.
-------------
Section 4.02. No Conflicts. Neither the execution and delivery of this
------------
Agreement nor the consummation of the transactions contemplated hereby by such
Stockholder will (i) violate, conflict with, or result in the breach or
termination of, or otherwise give any other contracting party (which has not
consented to such execution, delivery and consummation) the right to change the
terms of or to terminate or accelerate the maturity of, or constitute a default
under the terms of, any agreement or instrument to which such Stockholder is a
party, except those pledges described on Schedule 4.01 hereto, or (ii) except
-------------
for the requirements set forth in Schedule 3.09 hereto and applicable
-------------
requirements, if any, of state securities or blue sky laws, violate or conflict
with (or require any filing, consent or similar action under) any Law or Order
that applies to or binds such Stockholder.
Section 4.03. Stockholder Consent. Each of the Stockholders of the
-------------------
Company have executed a written stockholder consent to action without a meeting
under the DGCL approving and adopting the Agreement and approving the Merger, in
accordance with the provisions of the DGCL. Each Stockholder waives any right
to object to the Merger under Section 262 of the DGCL.
Section 4.04. Termination of Stockholder Agreements. Such Stockholder
-------------------------------------
waives all rights under any stockholder agreement to which such Stockholder is a
party with respect to the transactions contemplated by this Agreement, and
agrees that any such Stockholder Agreement shall be deemed terminated, without
any liability of the Company thereby, and be of no further force and effect
immediately prior to the Closing.
Section 4.05. Brokers and Finders. No broker or finder has acted for the
-------------------
Stockholders in connection with this Agreement and the transactions contemplated
hereby.
20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company and the Stockholders
as follows:
Section 5.01. Corporate Existence and Good Standing; Corporate Power for
----------------------------------------------------------
Business; Corporate Documentation. Each of Acquiror and Acquiror Sub is a
---------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, and has full corporate power and authority to own
or lease and operate its properties and to carry on its business as presently
conducted by it.
Section 5.02. Corporate Authority; Binding Effect. Each of Acquiror and
-----------------------------------
Acquiror Sub has full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement and the performance by each of Acquiror and Acquiror Sub of
all obligations to be performed by it hereunder have been duly approved by all
necessary corporate action. When executed and delivered, this Agreement shall
constitute the legal, valid and binding obligations of Acquiror and Acquiror
Sub, enforceable against it in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, moratorium or other similar laws
relating to or affecting creditors' rights generally and to general equity
principles (whether such enforceability is considered in a proceeding at law or
in equity).
Section 5.03. No Creation of Violation, Default, Breach or Encumbrance;
---------------------------------------------------------
Third Party Consents; Filings. Except as set forth in Schedule 5.03, the
----------------------------- -------------
execution and delivery by Acquiror and Acquiror Sub of this Agreement do not,
and the consummation by Acquiror and Acquiror Sub of the transactions
contemplated hereby will not (i) conflict with or violate any provision of the
articles of incorporation or by-laws (or comparable organizational document) of
such corporations; (ii) result in the breach of or constitute a default under
any contract, agreement, lease, license, mortgage, indenture, note or other
instrument or obligation to which either of them is a party, or by which either
of them or any of their assets or properties may be bound or adversely affected,
which could adversely affect the ability of either of them to consummate the
transactions contemplated by this Agreement; (iii) require the consent of any
party to any such contract, agreement, lease, license, mortgage, indenture, note
or other instrument or obligation referred to in clause (ii) of this Section
5.03; or (iv) violate any statute, rule or regulation to which Acquiror or
Acquiror Sub is subject or any Order of any court, administrative agency or
governmental body to which Acquiror or Acquiror Sub is subject.
Section 5.04. No Proceeding or Inquiry. There is no suit, action, claim
------------------------
or other legal, administrative or arbitration proceeding pending before any
court or governmental commission, bureau or other regulatory authority, and
there is no investigation or inquiry by any administrative agency or
governmental body pending which challenges the validity or propriety of the
transactions contemplated by this Agreement.
21
Section 5.05. Acquiror's Common Stock. The shares of Acquiror Common
-----------------------
Stock to be issued pursuant to this Agreement, when issued in accordance with
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and such shares will be issued without any violation of
preemptive rights.
Section 5.06. SEC Filings; Financial Statements. Acquiror has delivered
---------------------------------
or made available to the Company and the Stockholders, in the form filed with
the SEC (i) its Annual Report to Shareholders and Form 10-K for the fiscal year
ended December 31, 1997, (ii) all Quarterly Reports on Form 10-Q filed by it
since December 31, 1997, (iii) its Proxy Statement for Annual Meeting of
Shareholders on May 29, 1998, (iv) any reports on Form 8-K filed by it since
December 31, 1997, and (v) any amendments and supplements to all such reports
filed by it with the SEC (collectively, the "Acquiror SEC Reports"). The
Acquiror SEC Reports did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
Section 5.07. Brokers and Finders. No broker or finder has acted for
-------------------
Acquiror in connection with this Agreement and the transactions contemplated
hereby, except for X.X. Xxxxxxxx & Co., L.L.C., all of whose fees and expenses
shall be the responsibility of Acquiror.
Section 5.08. Governmental Approvals and Filings. No consent, approval or
----------------------------------
authorization of, or notice to, declaration, filing or registration with, any
governmental or regulatory authority on the part of Acquiror is required in
connection with the execution, delivery and performance of this Agreement.
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.01. Access to Properties and Records; Confidentiality.
-------------------------------------------------
(a) Between the date of this Agreement and the Closing Date, the
Company will (i) provide Acquiror, and its accountants, counsel and other
authorized representatives, full access, during reasonable business hours
and under reasonable circumstances, to any and all premises, properties,
contracts, commitments, books, records and other information (including Tax
Returns filed and those in preparation) of the Company, and will cause its
officers to furnish to Acquiror and its authorized representatives any and
all financial, operating data and other information pertaining to the
business of the Company, as Acquiror shall from time to time reasonably
request, and (ii) make available for inspection and copying by Acquiror and
its authorized representatives true and correct copies of all documents
referred to in Article III or in the schedules hereto. All such access,
inspections, copying, contacts and other investigations
22
will be conducted in such a manner as not to interfere unreasonably with
the normal conduct of the business of the Company.
(b) Acquiror acknowledges that it has entered into a confidentiality
agreement with the Company, dated May 29, 1998 (the "Confidentiality
Agreement") and Acquiror agrees that all such access and investigations
referred to in Section 6.01(a) hereof will be conducted in accordance with
and will be governed by the terms thereof.
Section 6.02. Sharing Information to be Furnished to Government; Public
---------------------------------------------------------
Announcements. The Company and Acquiror will as soon as practicable after
-------------
request thereof furnish to the other party all the information concerning the
Company or Acquiror required for inclusion in any statement or application made
by such party, or any affiliate of any of them, to any governmental body in
connection with the transactions contemplated by this Agreement. Prior to the
Effective Time, the Company and Acquiror shall not issue any press release or
make any public announcement with respect to the transactions contemplated by
this Agreement without the prior consent of the other, except as may be required
by law in the opinion of counsel or by GAAP in the opinion of independent
certified public accountants.
Section 6.03. Further Assurances. Consistent with the terms and
------------------
conditions hereof, each party hereto will execute and deliver such other
instruments and take such other action as any other party hereto may reasonably
require in order to carry out this Agreement and the transactions contemplated
hereby.
Section 6.04. Conduct of Business Prior to the Closing Date. The Company
----------------------------------------------
agrees that on and after the date hereof and prior to the Closing Date and
except as otherwise consented to or approved by Acquiror or as contemplated or
required by this Agreement or as referenced on Schedule 6.04 hereof:
-------------
(a) The business, operations, activities and practices of the Company
shall be conducted in the ordinary course of business, and the Company
shall use commercially reasonable efforts (i) to keep and maintain in good
operating condition and repair, reasonable wear and tear excepted, all of
its properties and assets (whether owned or leased), (ii) to preserve the
business organization of the Company intact, (iii) to keep available to the
Company the present services of its employees and (iv) to preserve for the
Company the goodwill of its suppliers and customers and others with whom it
has business relationships.
(b) No change shall be made in the certificate of incorporation or by-
laws (or comparable organizational documents) of the Company, and no action
shall be taken in furtherance of the liquidation or dissolution of the
Company.
(c) No change shall be made in the number or classification of shares
of authorized or issued capital stock of the Company; nor shall any option,
warrant, call,
23
right, commitment or agreement of any character be granted or made by the
Company relating to its authorized or issued capital stock; nor shall the
Company issue, grant or sell any securities or obligations convertible into
or exchangeable for shares of capital stock of the Company; nor shall any
dividend or distribution payable in cash, securities or other property be
declared or paid on the capital stock of the Company.
(d) The Company shall not grant any irrevocable powers of attorney or
comparable delegations of authority.
(e) No change shall be made in the accounting methods or practices
followed by the Company or in the depreciation or amortization policies or
rates heretofore adopted, or affecting the banking and safe deposit
arrangements of the Company.
(f) The Company shall not enter into or assume any lease, contract,
agreement or commitment, except for any normal and ordinary contract,
agreement or commitment for the performance of services or supplies,
services or utilities which does not involve payments or receipts by the
Company of more than $50,000 and is terminable by the Company without
penalty or is to be fully performed on or before ninety (90) days after the
Closing.
(g) The Company shall not grant any increase in the compensation
payable or to become payable by the Company to any officer or director of
the Company, or grant any general wage or salary increase to any of the
employees of the Company, other than as is in conformity with the written
policies and practices of the Company and in the usual and ordinary course
of its business or as reasonably required to maintain the efficient
business operations of the Company, or enter into any new Benefit Plan, or
amend, modify or change in any material respect (except by addition of new
employees under the same benefit arrangements as existing employees and
deleting terminated employees) any existing Benefit Plan.
(h) The Company shall not (i) incur any indebtedness for money
borrowed in addition to such indebtedness outstanding on the date hereof
(or any renewals thereof) or in addition to borrowing funds under existing
lines of credit, (ii) incur any liability other than as referenced under
clause (i), contingent or otherwise, except in the ordinary and normal
course of its business, (iii) mortgage, pledge or otherwise subject to lien
or encumbrance any of its properties or assets, (iv) make any modification
or change in any of its existing contracts, commitments or agreements,
except in the ordinary and normal course of its business, or (v) make any
capital expenditure except in the ordinary and normal course of business
and in an amount not exceeding $50,000.
Section 6.05. Commercially Reasonable Efforts. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper
24
or advisable to consummate the transactions contemplated hereby and will use
commercially reasonable efforts (i) to obtain all Permits, approvals,
authorizations and consents of all third parties necessary or, in the reasonable
opinion of the Company or Acquiror, desirable (A) for the consummation of the
transactions contemplated by this Agreement and (B) for the conduct of the
business of the Company, (ii) to effect all registrations, filings and notices
with or to third parties or governmental or public bodies or authorities which
are necessary or, in the reasonable opinion of the Company or Acquiror,
desirable in connection with the transactions contemplated by this Agreement,
and (iii) to resolve any action, suit, proceeding or investigation of the type
described in Sections 6.06 or 6.07 below which shall have been instituted or
which a governmental authority or representative of such authority or other
third party shall have indicated the intention to institute or recommend
instituting.
Section 6.06. Certain Tax Matters.
-------------------
(a) The Company and Acquiror will (i) each provide the other with such
assistance as may reasonably be requested by the other in connection with
the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, (ii) each retain and provide the other with any
records or information which may be relevant to such Tax Return, audit or
examination, proceeding or determination, and (iii) each provide the other
with the final determination of any such audit or examination, proceeding
or determination that affects any amount required to be shown on any Tax
Return of the other for any period. The party requesting assistance
hereunder shall reimburse the other for reasonable expenses incurred in
providing such assistance. Without limiting in any way the foregoing
provision of this Section 6.06, Acquiror hereby agrees that it will retain,
and that it will cause its subsidiaries to retain, until the appropriate
statutes of limitation (including any extensions) expire, copies of all Tax
Returns, supporting work schedules and other records of information which
may be relevant to such Tax Returns for all taxable periods on or prior to
the date of this Agreement which have not been closed prior to the date of
this Agreement and on or prior to the Closing Date, inclusive, and that it
will not destroy or otherwise dispose of such records without first
providing the Stockholders with a reasonable opportunity to review and copy
such records.
(b) The Company and the Stockholders shall prepare all Federal, state
or local income tax returns for the Company for all taxable periods ending
on or prior to the Closing Date, and the Company and the Stockholders shall
timely file all such tax returns to be filed at their sole expense.
Acquiror shall have Acquiror Sub name the Agent as an officer of the
Surviving Corporation for the sole purpose of executing and filing such
income tax returns. For purposes of apportioning income and deductions for
Federal income tax purposes before and after the Closing Date, the parties
hereto agree to treat the Closing Date as the last day of the period (i.e.,
the Company shall close its books as of the end of such day) and such
income and deductions through and including the Closing Date shall be
reported by the Company on its separate Federal income tax return (and any
25
such state and local income tax returns) ending on the Closing Date.
Except for the merger of the Company with and into Acquiror Sub pursuant to
the terms of this Agreement, Acquiror Sub hereby agrees that it shall not
do or fail to do anything or cause Company to do or fail to do anything
which results in the Company being required to include any net income on
its Federal, state or local income tax returns for the Closing Date.
Section 6.07. Continuing Indemnification. Following the Effective Date
--------------------------
Acquiror agrees that it will retain and continue for at least a seven year
period thereafter indemnification provisions in the Surviving Corporation's
bylaws pursuant to which those persons who were the directors and officers of
the Company prior to the Effective Time shall be indemnified from claims arising
out of actions or omissions arising out of such directors' or officers' service
as a director or officer of the Company prior to the Effective Time, and such
indemnification provision shall provide indemnity to the fullest extent
permitted by the DGCL.
Section 6.08. Non-Compete Agreements. For a period commencing on the
----------------------
Closing Date and continuing for three (3) years thereafter (the "Covenant
Period"), each Stockholder agrees that he will not, directly or indirectly, (i)
within fifty (50) miles of any existing office or branch of the Company at the
time of Closing engage in the business of providing temporary staffing,
consulting personnel, staff leasing, payrolling, executive placement, permanent
placement, or employee testing, or providing information system or information
technology, consulting or contract staffing; or (ii) enter the employ of or
render any services to or consult with, any business or entity that is engaged
in any business described in clause (i) and within the area described in clause
(i) (a "Competing Entity"); or (iii) acquire an ownership interest in any
Competing Entity or act as partner, officer, director, principal, agent or
trustee for any Competing Entity; or (iv) hire or assist any Competing Entity in
the hiring of any person who is an employee of the Company at the time of
Closing. Notwithstanding the foregoing, a Stockholder may own, directly or
indirectly, securities of any person traded on any national securities exchange
or over-the-counter if such Stockholder is not a controlling person of, or a
member of a group which controls, such person and does not, directly or
indirectly, own 5% or more of any class of securities of such person.
Section 6.09. Release of Stockholder Guarantees. Each of the parties
---------------------------------
hereto agrees to use their respective reasonable efforts to cause the release
and termination on or as soon as practicable after the Closing of all
Stockholder Guarantees of which the parties are or become aware.
Section 6.10. Severance. Set forth on Schedule 6.10 are severance
--------- -------------
amounts which will be paid to the employees of the Company indicated thereon
upon termination of the employment of each such employee by the Surviving
Corporation within twelve (12) months after the Closing Date, which payment
obligation shall be assumed by the Surviving Corporation.
26
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF ACQUIROR
The obligations of Acquiror and Acquiror Sub under this Agreement to effect
the Merger and take the other actions contemplated at the Closing shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, each of which may be waived by Acquiror as provided herein
except as otherwise provided by law:
Section 7.01. Certifications.
--------------
(a) At the Closing, the representations and warranties made by the
Company shall be true and correct in all material respects, and the Company
shall have delivered to Acquiror a certificate reconfirming that the
representations and warranties made by the Company hereunder were, when
made, true and correct in all material respects and that each of the
agreements or obligations of the Company to be performed on or before the
Closing Date pursuant to the terms hereof have been duly performed and
complied with in all material respects.
(b) At the Closing, the representations and warranties made by the
Stockholders shall be true and correct in all material respects, and each
Stockholder shall have delivered to Acquiror a certificate reconfirming
that the representations and warranties made by such Stockholder hereunder
were, when made, true and correct in all material respects and that each of
the agreements or obligations of such Stockholder to be performed on or
before the Closing Date by such party pursuant to the terms hereof have
been duly performed and complied with in all material respects.
Section 7.02. Opinion of Counsel. Acquiror shall have been furnished
------------------
with the opinion of Xxxxxxx, Mag & Fizzell, P.C., counsel to the Stockholders
and the Company, dated the Closing Date and addressed to Acquiror, set forth in
Schedule 7.02 hereto.
-------------
Section 7.03. No Injunctions, etc. Neither the Stockholders, the Company,
--------------------
nor Acquiror shall be subject to any Law or Order of any government, a court or
agency of competent jurisdiction enacted, issued or obtained after the date of
this Agreement which makes illegal, enjoins or prohibits the consummation of the
Merger.
Section 7.04. Authorization of Transactions. All corporate action
-----------------------------
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by the Company
shall have been duly and validly taken in a manner reasonably satisfactory to
Acquiror and its counsel.
Section 7.05. Third Party Consents. The consents (or in lieu thereof
--------------------
waivers) from the parties listed on Schedule 5.03 shall have been obtained.
-------------
27
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE STOCKHOLDERS
The obligations of the Stockholders and the Company under this Agreement to
effect the Merger and take the other actions contemplated at the Closing shall
be subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, each of which may be waived by the Stockholders and the
Company as provided herein except as otherwise provided by law:
Section 8.01. Acquiror's Certification. At the Closing, the
------------------------
representations and warranties made by Acquiror shall be true and correct in all
material respects, and Acquiror shall have delivered to the Stockholders and the
Company a certificate signed by the Acquiror's Chief Executive Officer
reconfirming that the representations and warranties made by Acquiror hereunder
were, when made, true and correct in all material respects and that each of the
agreements or obligations of Acquiror to be performed on or before the Closing
Date pursuant to the terms hereof have been duly performed and complied with in
all material respects.
Section 8.02. Authorization of Transactions. All corporate action
-----------------------------
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by Acquiror shall
have been duly and validly taken in a manner reasonably satisfactory to the
Company and its counsel.
Section 8.03. Opinion of Counsel. The Company and the Stockholders
------------------
shall have been furnished with the opinion of Xxxxxx & Bird LLP, counsel to
Acquiror, dated the Closing Date and addressed to the Company and the
Stockholders, set forth in Schedule 8.03 hereto.
-------------
Section 8.04. No Injunctions, etc. Neither the Stockholders, the Company,
--------------------
nor Acquiror shall be subject to any Law or Order of any government, court or
agency of competent jurisdiction enacted, issued or obtained after the date of
this Agreement which makes illegal, enjoins or prohibits the consummation of the
Merger.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 9.01. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the parties made in this Agreement shall
survive through the close of business on February 3, 2000, after which date no
claim for indemnification or otherwise not theretofore asserted may be brought
in respect of any breach of representation or warranty contained in this
Agreement or the Schedules hereto.
28
Section 9.02. Indemnification by Stockholders. Each Stockholder shall
-------------------------------
severally, but not jointly, indemnify and hold harmless Acquiror, and each of
its subsidiaries (including, after the Effective Date, the Company), affiliates,
stockholders, officers, directors, agents, employees, successors and assigns
(collectively, "Acquiror Indemnitees"), from any liability, obligations, fines,
penalties, losses, settlements, damages, claims, awards and judgments, costs and
expenses (including reasonable attorneys' fees) (collectively, "Losses"),
suffered or incurred by any of them for, or arising out of or based upon, or
relating to any of the following:
(a) Any and all Specified Litigation Losses incurred by the Acquiror
Indemnitees after the Effective Date, but only to the extent that the
aggregate amount of the Specified Litigation Losses suffered or incurred by
the Acquiror Indemnitees after the Effective Date exceeds the Specified
Litigation Deductible;
(b) Any and all Lien Losses suffered or incurred by the Acquiror
Indemnitees; and
(c) Any breach of any representation, warranty, agreement or covenant
of the Company or such Stockholder contained in this Agreement or the
schedules hereto and for purposes of this Section 9.02, any qualification
of such representations and warranties by reference to the materiality of
matters stated therein or as to matters having or not having a "Material
Adverse Effect," (other than the representations and warranties set forth
in Sections 3.16(i) and 3.17) shall be disregarded, in determining any
inaccuracy, untruth, incompleteness or breach thereof.
Section 9.03. Indemnification by Acquiror. Acquiror shall indemnify and
---------------------------
hold harmless the Stockholders, their affiliates, trustees, agents, employees,
successors and assigns from any Losses suffered or incurred by any of them for,
or arising out of or based upon, or relating to any of the following:
(a) Any and all liabilities and obligations of the Company arising
from and after the Effective Date (including any Loss incurred by a
Stockholder in connection with a Stockholder Guarantee), except to the
extent Acquiror is otherwise entitled to be indemnified by the Stockholders
therefor under Section 9.02;
(b) Any and all Specified Litigation Losses, provided that no claim
shall be made for indemnification under this Section 9.03(b) by any
Stockholder to the extent that the aggregate amount of the Specified
Litigation Losses suffered or incurred by the Acquiror Indemnitees after
the Effective Date exceeds the Specified Litigation Deductible; and
(c) Any breach of any representation, warranty, agreement or covenant
of Acquiror contained in this Agreement or the Schedules hereto and for
purposes of this Section 9.03(b), any qualification of such representations
and warranties by reference to
29
the materiality of matters stated therein or as to matters having or not
having a "material adverse effect," shall be disregarded, in determining
any inaccuracy, untruth, incompleteness or breach thereof.
Section 9.04. Third-Party Claims. Within ten (10) days after receipt by
------------------
a person entitled or claiming to be entitled to indemnification pursuant to this
Article IX ("Indemnitee") of written notice of the commencement of any action or
the assertion of any claim, liability or obligation by a third party, against
which claim, liability or obligation a person is, or may be, required under this
Article IX to indemnify Indemnitee ("Indemnitor"), Indemnitee will, if a claim
thereon is to be made against Indemnitor, notify Indemnitor in writing of the
commencement or assertion thereof (the "Claim Notice") and give Indemnitor a
copy of such claim, process and all legal pleadings relating thereto.
Indemnitor shall have the right to contest and conduct the defense of such
action with counsel reasonably acceptable to Indemnitee by giving written notice
to Indemnitee of its election to do so within ten (10) days of the receipt of
the Claim Notice, and Indemnitee may participate in such defense by counsel of
its own choosing at its own expense. If Indemnitee shall be required by final
judgment not subject to appeal or by a settlement agreement to pay any amount in
respect of any obligation or liability against which Indemnitor has agreed to
indemnify Indemnitee under this Agreement, such amount plus all reasonable
expenses incurred by such Indemnitee in accordance with such obligation or
liability (including, without limitation, reasonable attorneys' fees (other than
fees incurred by counsel to Indemnitee employed pursuant to the immediately
preceding sentence) and costs of investigations) shall be promptly paid by
Indemnitor to Indemnitee, subject to reasonable documentation. Indemnitee shall
not settle or compromise any claim, action or proceeding without the prior
written consent of Indemnitor, which shall not be unreasonably withheld.
Indemnitee shall use reasonable efforts to mitigate any damage, loss, cost,
expense, liability or obligation with respect to which it shall be entitled to
indemnification hereunder. Failure of Indemnitee to give the Claim Notice to
Indemnitor within the ten-day period required hereunder shall not affect
Indemnitee's rights to indemnification hereunder, except if (and then only to
the extent that) Indemnitor incurs additional expenses or Indemnitor's defense
of such claim is actually prejudiced by reason of such failure to give timely
notice.
Section 9.05. Direct Claims. With respect to claims other than third-
-------------
party claims, Indemnitee shall use reasonable efforts promptly to notify
Indemnitor of such claims, but failure of Indemnitee so to give notice to
Indemnitor shall not affect the rights of Indemnitee to indemnification
hereunder if (and then only to the extent that) Indemnitor incurs additional
expenses or Indemnitor is actually prejudiced by reason of such failure to give
timely notice.
Section 9.06. Minimum Amount of Claim. No claim under Sections 9.02(c) or
-----------------------
9.03(c) shall be made by a party hereunder for breach of any representation or
warranty made by any other party hereunder unless and until the aggregate amount
of Loss suffered or incurred from such breach exceeds the Indemnification
Threshold at which time the liability of such other party shall be for the full
amount of the Loss. In no event shall any Stockholder be liable for a claim
under Section 9.02(c) for an amount greater than the Indemnification Cap times a
fraction, the
30
numerator of which is the number of Shares held by such Stockholder immediately
prior to the Effective Time and the denominator which is the total number of
Shares held by all Stockholders immediately prior to the Effective Time.
Section 9.07. Exclusive Remedy. The provisions of this Article IX shall
----------------
be the sole and exclusive remedy for any claim made by a party against any other
party hereto for breach of a representation, warranty, agreement or covenant
made by such other party, other than damages arising out of actual fraud or
equitable remedies.
ARTICLE X
TERMINATION
Section 10.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing: (i) by mutual consent of the parties, or (ii) by
either the Company or Acquiror if the Merger shall not have been consummated on
or before August 31, 1998, for reasons other than the failure of the terminating
party to perform its obligations hereunder.
Section 10.02. Effect of Termination. Except as set forth in Sections
---------------------
2.07 and 6.01(b) hereof, if this Agreement is terminated pursuant to this
Article X by any party hereto for any reason other than the breach of a
warranty, representation, covenant or agreement contained herein by any of the
others, all further obligations of the parties hereunder will terminate without
further liability of the parties.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Headings. The descriptive headings of the Articles and
--------
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
Section 11.02. Notices. Any notices or other communications required
-------
or permitted hereunder shall be given in writing and shall be delivered
personally, sent by certified or registered mail, return receipt requested and
postage prepaid, or sent by nationally recognized overnight delivery service to
the address set forth below:
If to the Company or the Stockholders:
Xxxxxx X. Xxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
31
Copies to: Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx Xxxxxx
P.O. Box 419251
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
If to Acquiror: Acsys, Inc.
00 00xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx, Xx.
Copies to: Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
or such other address as shall be furnished in writing by such party, and any
such notice or communications shall be effective and be deemed to have been
given only upon its delivery in accordance with this Section 11.02.
Section 11.03. Assignment. This Agreement and all of the provisions
----------
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors, heirs, legal representatives and permitted assigns,
but neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any of the parties hereto (other than by
operation of Law) without the prior written consent of the other parties.
Section 11.04. Complete Agreement. This Agreement and the
------------------
Confidentiality Agreement contain the entire understanding of the parties with
respect to the sale and purchase of the Shares and the related transactions and
supersede all prior arrangements or understandings with respect thereto, and
there are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth in this Agreement
and the Confidentiality Agreement.
Section 11.05. Modifications, Amendments and Waivers. At any time
-------------------------------------
prior to the Closing Date, (i) the parties hereto may, by written agreement,
modify, amend or supplement any term or provision of this Agreement and (ii) any
term or provision of this Agreement may be waived by the party which is entitled
to the benefits thereof.
Section 11.06. Counterparts. This Agreement may be executed in two or
------------
more counterparts all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
Section 11.07. No Third Party Beneficiary. The terms and provisions
--------------------------
of this Agreement are intended solely for the benefit of the Company, the
Stockholders, Acquiror
32
and Acquiror Sub and their respective successors or permitted assigns, and it is
not the intention of the parties to confer third-party beneficiary rights upon
any other person.
Section 11.08. Invalid Provisions. If any provision of this Agreement
------------------
is held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable; (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof;
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
Section 11.09. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Delaware (regardless of the laws that might be applicable
under principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect and performance.
Section 11.10. Designation of Agent. Each of the Stockholders hereby
--------------------
designates and appoints Xxxxxx X. Xxxxx (the "Agent") as the agent and attorney-
in-fact (with full power of substitution), with full power and authority on
behalf of such Stockholder to do anything necessary or appropriate to carry out
or enforce any obligations or rights of such Stockholder under this Agreement.
The Agent shall have all of the rights of the Stockholders hereunder and any
action taken by, or the failure to take action by, the Agent, shall be deemed to
be the action of, or the failure to take action by, each of the Stockholders.
Each of the Stockholders is hereby deemed to have constituted and appointed the
Agent as agent for such Stockholders for the purpose of receiving or accepting
any notice under this Agreement and any notice or process insofar as the same
relates to or arises from any dispute or difference hereunder, and the giving or
delivery of notice to, or service of process on, the Agent shall be deemed to be
notice or service on each of the Stockholders. Any notice or instructions given
by the Agent under this Agreement shall be deemed to be notice and instruction
from, and on behalf of, each of the Stockholders and any party receiving said
notice or instruction shall be entitled to rely conclusively thereon as if such
notice or instructions had been signed and delivered by each of the
Stockholders. Agent shall have no liability or responsibility to the
Stockholders for any action or failure to act pursuant to the provisions of this
Section 11.10, provided such action or failure to act is in good faith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
STOCKHOLDERS: ACSYS, INC.
______________________________
Name: Xxxxxx X. Xxxxx By __________________________________
No. of Shares: 45,000 Name: Xxxxxxx Xxxx, Xx.
Title: Chief Executive Officer
33
_____________________________
Name: Xxxxxx Xxxxx STAFFING EDGE, INC.
No. of Shares: 2,500
_____________________________ By____________________________
Name: Xxxx Xxxxxx Name: Xxxxxx X. Xxxxx
No. of Shares: 901 Title: President
_____________________________ SE MERGER SUBSIDIARY, INC.
Name: Xxxxx Xxxxx
No. of Shares: 2,500
By____________________________
Name: Xxxxxxx Xxxx, Xx.
Title:
34
EXECUTION COPY
--------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ACSYS, INC.,
SE MERGER SUBSIDIARY, INC.,
STAFFING EDGE, INC.
AND
THE STOCKHOLDERS OF STAFFING EDGE, INC.
AUGUST 3, 1998
35
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS......................................................... 1
Section 1.01. Definitions......................................................... 1
Section 1.02. Accounting Terms.................................................... 6
ARTICLE II THE MERGER.......................................................... 6
Section 2.01. The Merger.......................................................... 6
Section 2.02. Effective Time...................................................... 6
Section 2.03. Date and Place of Closing........................................... 6
Section 2.04. Effect of Merger.................................................... 6
Section 2.05. Effect on Common Stock and Options.................................. 7
Section 2.06. Taking Necessary Action; Further Action............................. 8
Section 2.07. Expenses............................................................ 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDERS.................................................... 9
Section 3.01. Corporate Organization.............................................. 9
Section 3.02. Due Qualification................................................... 9
Section 3.03. Corporate Documentation............................................. 9
Section 3.04. Capitalization of the Company....................................... 9
Section 3.05. Authority; Binding Effect........................................... 9
Section 3.06. No Creation of Violation, Default, Breach or Encumbrance............ 10
Section 3.07. No Present Material Default......................................... 10
Section 3.08. Compliance With Law................................................. 10
Section 3.09. Governmental Approvals and Filings.................................. 10
Section 3.10. Real Property....................................................... 11
Section 3.11. Personal Property................................................... 11
Section 3.12. Financial Statements................................................ 11
Section 3.13. Patents, Trademarks, Service Marks, Trade Names, Trade Secrets,
Copyrights.......................................................... 12
Section 3.14. Contracts, Agreements and Obligations............................... 13
Section 3.15. Insurance........................................................... 14
Section 3.16. Absence of Certain Changes.......................................... 14
Section 3.17. Tax Returns and Payments............................................ 14
Section 3.18. No Litigation, Proceeding or Inquiry................................ 15
Section 3.19. Employee Benefit Plans; Labor Matters............................... 16
Section 3.20. Brokers and Finders................................................. 17
Section 3.21. Bank and Brokerage Accounts; Securities............................. 17
Section 3.22. No Powers of Attorney............................................... 18
Section 3.23. Environmental Laws and Regulations.................................. 18
i
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS...................... 18
Section 4.01. Authority of Stockholder............................................ 19
Section 4.02. No Conflicts........................................................ 19
Section 4.03. Stockholder Consent................................................. 19
Section 4.04. Termination of Stockholder Agreements............................... 19
Section 4.05. Brokers and Finders................................................. 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR.......................... 20
Section 5.01. Corporate Existence and Good Standing; Corporate Power for
Business; Corporate Documentation................................... 20
Section 5.02. Corporate Authority; Binding Effect................................. 20
Section 5.03. No Creation of Violation, Default, Breach or Encumbrance; Third
Party Consents; Filings............................................. 20
Section 5.04. No Proceeding or Inquiry............................................ 21
Section 5.05. Acquiror's Common Stock............................................. 21
Section 5.06. SEC Filings; Financial Statements................................... 21
Section 5.07. Brokers and Finders................................................. 21
Section 5.08. Governmental Approvals and Filings.................................. 21
ARTICLE VI COVENANTS OF THE PARTIES............................................ 21
Section 6.01. Access to Properties and Records; Confidentiality................... 21
Section 6.02. Sharing Information to be Furnished to Government; Public
Announcements....................................................... 22
Section 6.03. Further Assurances.................................................. 22
Section 6.04. Conduct of Business Prior to the Closing Date....................... 22
Section 6.05. Commercially Reasonable Efforts..................................... 24
Section 6.06. Certain Tax Matters................................................. 24
Section 6.07. Continuing Indemnification.......................................... 25
Section 6.08. Non-Compete Agreements.............................................. 25
Section 6.09. Release of Stockholder Guarantees................................... 25
Section 6.10. Severance........................................................... 26
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF ACQUIROR........................... 26
Section 7.01. Certification....................................................... 26
Section 7.02. Opinion of Counsel.................................................. 26
Section 7.03. No Injunctions, etc................................................. 26
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE STOCKHOLDERS.................................... 27
Section 8.01. Acquiror's Certification............................................ 27
Section 8.02. Authorization of Transactions....................................... 27
Section 8.03. Opinion of Counsel.................................................. 27
Section 8.04. No Injunctions, etc................................................. 27
ii
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................... 28
Section 9.01. Survival of Representations and Warranties.......................... 28
Section 9.02. Indemnification by Stockholders..................................... 28
Section 9.03. Indemnification by Acquiror......................................... 28
Section 9.04. Third-Party Claims.................................................. 29
Section 9.05. Direct Claims....................................................... 29
Section 9.06. Minimum Amount of Claim............................................. 30
Section 9.07. Exclusive Remedy.................................................... 30
ARTICLE X TERMINATION......................................................... 30
Section 10.01. Termination......................................................... 30
Section 10.02. Effect of Termination............................................... 30
ARTICLE XI MISCELLANEOUS....................................................... 30
Section 11.01. Headings............................................................ 30
Section 11.02. Notices............................................................. 30
Section 11.03. Assignment.......................................................... 31
Section 11.04. Complete Agreement.................................................. 31
Section 11.05. Modifications, Amendments and Waivers............................... 32
Section 11.06. Counterparts........................................................ 32
Section 11.07. No Third Party Beneficiary.......................................... 32
Section 11.08. Invalid Provisions.................................................. 32
Section 11.09. Governing Law....................................................... 32
Section 11.10. Designation of Agent................................................ 32
LIST OF SCHEDULES
Schedule 2.05 (a)(i) Merger Consideration
Schedule 2.05 (a)(ii) Earnout Provisions
Schedule 3.01 Investments
Schedule 3.04 Outstanding Options of the Company
Schedule 3.06 Required Consents
Schedule 3.08 Notice of Violations
Schedule 3.09 Governmental Consents
Schedule 3.10 Real Property, Mortgages, Etc.
Schedule 3.11 Title to Personal Property
Schedule 3.12 Financial Statements
Schedule 3.13 Intellectual Property
Schedule 3.14 Contracts, Agreements, and Obligations
Schedule 3.15 Insurance
Schedule 3.16 Certain Changes
Schedule 3.17 Tax Returns
Schedule 3.18 Litigation
Schedule 3.19 (a) Benefit Plans
Schedule 3.19 (f) Employment Agreements
Schedule 3.19 (g) Payments to Key Employees
Schedule 3.20 Brokers and Finders
Schedule 3.21 Bank and Brokerage Accounts; Securities
Schedule 3.22 Powers of Attorney
Schedule 4.01 Stockholder Pledges
Schedule 5.03 Required Consents
Schedule 6.04 Conduct of Business Exceptions
Schedule 6.10 Severance Payments
Schedule 7.02 Opinion of Counsel to the Company and the stockholders
Schedule 8.03 Opinion of Acquiror's Counsel
Schedule 9.02 Certain Definitions
Schedule 9.06 Limitations on Claims
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