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Exhibit 2.03
STOCK PURCHASE AGREEMENT
Dated as of February 23, 1998
between
PURCHASER:
Corporate Staffing Resources, Inc.
AND
SELLERS:
Richard Niermann
Mary Ann Niermann
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of February ___, 1998
(this "Agreement"), is by and among Corporate Staffing Resources, Inc., a
Delaware corporation (the "Purchaser") and Richard Niermann and Mary Ann
Niermann (individually, a Seller and, collectively, the "Sellers").
RECITALS
A. The Purchaser desires to purchase from the Sellers, and the
Sellers desire to sell to Purchaser all of the issued and outstanding capital
stock of NPS Atlanta, Inc. and NPS Staffing Specialists, Inc, both Georgia
corporations (individually, a "Subject Company," and collectively, the "Subject
Companies") upon the terms and subject to the conditions contained herein (the
"Acquisition.
B. In connection with the Acquisition, the parties desire to
set forth certain agreements, representations, warranties and covenants made by
one or more parties to the other or others as an inducement to the consummation
of the Acquisition, upon the terms and subject to the conditions contained
herein.
C. In connection with the Acquisition, the Sellers are willing
to indemnify the Purchaser against certain losses and liabilities they may incur
as a result of the Acquisition, upon the terms and subject to the conditions
contained herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
1.1 Defined Terms. As used herein, the terms below shall have
the following meanings. Any of such terms, unless the context otherwise
requires, may be used in the singular or plural, depending upon the reference.
"Accounts Receivable" shall have the meaning set forth in
Section 5.8.
"Acquisition" shall have the meaning set forth in recital (A)
to this Agreement.
"Advisors" shall have the meaning set forth in Section 7.1.
"Affiliate" shall have the meaning set forth in the Exchange
Act. Without limiting the foregoing, all directors and officers of a Person that
is a corporation and all managing members of
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a Person that is a limited liability company, shall be deemed Affiliates of such
Person for all purposes hereunder.
"Agreement" shall mean this Stock Purchase Agreement.
"Applicable Contract" shall mean any Contract (a) under which
any Subject Company has or may acquire any rights, (b) under which any Subject
Company has or may become subject to any obligation or liability, or (c) by
which any Subject Company or any of the assets owned or used by it is or may
become bound.
"Balance Sheet" shall have the meaning set forth in Section
5.4.
"Best Efforts" shall mean the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible; provided, however, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a Material
Adverse Change in the benefits to such Person of this Agreement and the
Transactions.
"Breach" shall mean and a breach of a representation,
warranty, covenant, obligation, or other provision of this Agreement or any
Transaction Documents will be deemed to have occurred if there is or has been
(a) any inaccuracy in or breach of, or any failure to perform or comply with,
such representation, warranty, covenant, obligation, or other provision, or (b)
any claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision.
"CERCLA" shall mean the United States Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et. seq.,
as amended.
"Claim" shall have the meaning set forth in Section 10.2(d).
"Claim Notice" shall have the meaning set forth in Section
10.2(d).
"Cleanup" shall mean any investigation, cleanup, removal,
containment or other remediation or response actions.
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Date" shall have the meaning set forth in Section 11.
l(d).
"Closing Payment" shall have the meaning set forth in Section
2.2(a).
"Confidential Information" shall have the meaning set forth in
Section 12.10(b).
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"Consent" shall mean any approval, consent, ratification,
waiver, or other authorization (including any Governmental Authorization).
"Consideration" shall have the meaning set forth in Section
2.2(b).
"Consulting Agreement" shall have the meaning set forth in
Section 4.3(b).
"Contingent Amounts" shall have the meaning set forth in
Section 2.2(b).
"Contingent Amount Payment Event" shall have the meaning set
forth in Section 2.2(b).
"Contract" shall mean any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether express or implied)
that is legally binding.
"Copyrights" shall have the meaning set forth in Section
5.20(a).
"Covenant Payment" shall have the meaning set forth in Section
3.1.
"Damages" shall have the meaning set forth in Section 10.2(a).
"Deferred Compensation Liability" shall mean the aggregate
amount owing by the Subject Companies to former employees, shareholders,
officers or directors of any of the Subject Companies which is payable on or
after the Closing Date and which has not been paid prior to the Closing Date.
"Disclosure Schedules" shall mean the schedules prepared and
delivered by the Sellers for and to the Purchaser and dated as of the date
hereof, which set forth the exceptions to the representations and warranties
contained herein and certain other information called for by this Agreement, and
all referenced attachments thereto. Unless otherwise specified, each reference
in this Agreement to any numbered schedule is a reference to that numbered
schedule which is included in the Disclosure Schedules.
"EBITDA" shall mean earnings before interest, taxes,
depreciation and amortization.
"Encumbrance" shall mean any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
"Environment" shall mean soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins and wetlands),
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groundwater, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life and any other environmental medium or natural
resource.
"Environmental. Health and Safety Liabilities" shall mean any
cost, damage, expense, Liability, obligation or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(a) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial or inspection costs and expenses
arising under any Environmental Law or Occupational Safety and Health
Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any Cleanup required by applicable Environmental Law
or Occupational Safety and Health Law (whether or not such Cleanup has
been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative or
remedial measures required under any Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial" and "response action" include
the types of activities covered by CERCLA.
"Environmental Law" shall mean all federal, state, district,
local and foreign laws, all rules or regulations promulgated thereunder and all
orders, consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the Environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation
(i) laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, materials, wastes or other substances into
the Environment and (ii) laws relating to the identification, generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
recovery, transport or other handling of pollutants, contaminants, chemicals,
industrial materials, wastes or other substances. Environmental Laws shall
include, without limitation, CERCLA, the Toxic Substances Control Act, as
amended, the Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Water Act, as amended, the
Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the
Occupational Safety and Health Act, as amended, the California Health & Safety
Code (Section 25100 et seq., 39000 et seq.) and the California Water Code
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(Section 13000, et seq.) and all analogous laws promulgated or issued by any
state or other governmental authority.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"ERISA Affiliate" shall mean any other Person that, together
with the Target or any Subsidiary of Target, is or was required to be treated as
a single employer under IRC Section 414(b) or (c), and solely for the purposes
of potential liability under ERISA Section302(c)(ii) and IRC Section412(c)(ii)
and the lien created under ERISA Section302(f) and IRC Section412(n), under IRC
Section414(m) or (o).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Facilities" shall mean any real property, leaseholds or other
interests currently or formerly owned or operated by any Subject Company and any
buildings, plants, structures or equipment (including motor vehicles, tank cars
and rolling stock) currently or formerly owned or operated by any Subject
Company.
"Family" shall mean, with respect to any individual (i) the
individual, (i) the individual's spouse, (iii) any other natural Person who is
related to the individual or the individual's spouse within the second degree
and (iv) any other natural Person who resides with such individual.
"Financial Statements" shall have the meaning set forth in
Section 5.4(a).
"Fixed Amount" shall have the meaning set forth in Section
2.2(a).
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorization" shall mean any approval, Consent,
license, permit, waiver or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or
entity and any court or other tribunal);
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(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Gross Margin" shall mean the excess of (1) Gross Billings
during a business week over (ii) the sum of Wages and Direct Payroll Costs
payable with respect to that business week. "Gross Billings" shall mean the
amount billed for staffing employees to New Clients and for all New Business.
"Wages" shall mean the gross compensation payable to staffing employees for
services performed for New Clients and in connection with New Business. "Direct
Payroll Costs" shall mean the employer's share of federal social security taxes,
federal and state unemployment taxes and contributions, and worker's
compensation premiums, all with respect to Wages. "New Clients" shall mean
clients for whom the Subject Companies have not provided any staffing employees
since January 1, 1997 from any of the offices of the Subject Companies existing
on the Closing Date and whose business locations to which staffing employees are
assigned after the Closing Date are geographically closer to one of the New
Offices than to any of the offices of the Subject Companies existing on the
Closing Date. "New Business" shall mean staffing business (1) provided to client
business locations which are geographically closer to one of the New Offices
than to any of the existing offices of the Subject Companies, (2) which was not
provided from any of the existing offices of the Subject Companies to the client
business locations between January 1, 1997 and the Closing Date and (3) which is
provided pursuant to the authorization and approval of a client representative
who is not the same client representative (or successor thereof) who has
authorized or approved the providing of staffing employees by the Subject
Companies to the client prior to the Closing Date.
Staffing Business which is not New Business and not with New
Clients shall continue to be serviced from the existing office which currently
services the business for a period of not less than 12 months following the
Closing Date.
"Hazardous Activity" shall mean the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about or from the Facilities or any part thereof into the
Environment and any other act, business, operation or thing that increases the
danger or risk of danger or poses an unreasonable risk of harm to Persons or
property on or off the Facilities or that may affect the value of the Facilities
or the Subject Companies.
"Hazardous Materials" shall mean any waste or other substance
that is listed, defined, designated or classified as, or otherwise determined to
be, hazardous, radioactive or toxic or a pollutant or a contaminant subject to
regulation, control or remediation under any Environmental Law (whether solids,
liquids or gases), including any mixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor, polychlorinated biphenyls and asbestos or asbestos-containing
materials.
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"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Intellectual Property Assets" shall have the meaning set
forth in Section 5.20(a).
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, or any successor law
"IRS" shall mean the United States Internal Revenue Service or
any successor agency.
"Knowledge" shall mean and an individual will be deemed to
have "Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
"Knowledge of the Sellers" or other similar phrases shall mean
the Knowledge of the Sellers and the actual knowledge of any other executive
officer of any Subject Company.
"Leases" shall have the meaning set forth in Section 4.3(b).
"Legal Requirement" shall mean any federal, state, local,
municipal, foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Liability" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether known, unknown, accrued,
absolute, contingent, matured or unmatured.
"Marks" shall have the meaning set forth in Section 5.20(a).
"Material Adverse Effect" or "Material Adverse Change" shall
mean any significant and substantial adverse effect or change (being in excess
of $10,000) in the condition (financial or other), business, results of
operations, liabilities or operations of any party, its business and/or assets
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or on the ability of such party or its stockholders or shareholders, as the case
may be, to consummate the Transactions, or any event or condition which would,
with the passage of time, be reasonably expected to constitute a "Material
Adverse Effect" or "Material Adverse Change."
"Material Interest" shall mean direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing at least 10% of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.
"Multiemployer Plan" shall have the meaning set forth in ERISA
Section3(37)(A).
"Net Debt" shall mean the excess of (a) all Liabilities of the
Subject Companies for borrowed money over (b) the sum of (i) cash and cash
equivalents of the Subject Companies and (ii) all receivables of the Subject
Companies by the Sellers, in each case as of the Closing Date.
"New Offices" shall have the meaning set forth in Section
2.2(b).
"Noncompetition Period" shall have the meaning set forth in
Section 3.4.
"Occupational Safety and Health Law" shall mean any Legal
Requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.
"Order" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" shall describe any action taken
by a Person if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be authorized by
the parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
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"Organizational Documents" shall mean (a) the articles or
certificate of incorporation, all certificates of determination and designation,
and the bylaws of a corporation; (b) the partnership agreement and any statement
of partnership of a general partnership; (c) the limited partnership agreement
and the certificate or articles of limited partnership of a limited partnership;
(d) the operating agreement, limited liability company agreement and the
certificate or articles of organization or formation of a limited liability
company; (e) any charter or similar document adopted or filed in connection with
the creation, formation or organization of a Person; and (f) any amendment to
any of the foregoing.
"Other Benefit Obligations" shall mean all obligations,
arrangements or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
present or former directors, employees or agents, other than obligations,
arrangements and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies and
fringe benefits within the meaning of IRC Section132.
"Patents" shall have the meaning set forth in Section 5.20(a).
"Pension Plan" shall have the meaning set forth in ERISA
3(2)(A).
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Governmental Body.
"Plan" shall have the meaning set forth in ERISA Section3(3).
"Plan Sponsor" shall have the meaning set forth in ERISA
Section 3(16)(B).
"Post-Closing Partial Period" shall have the meaning set forth
in Section 10.3(b).
"Pre-Closing Partial Period" shall have the meaning set forth
in Section 10.3(a).
"Proceeding" shall mean any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.
"Proposed Acquisition Transaction" shall have the meaning set
forth in Section 7.6.
"Purchaser" shall have the meaning set forth in the first
paragraph of this Agreement.
"Purchaser Indemnified Parties" shall have the meaning set
forth in Section 10.2(b).
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"Qualified Plan" shall mean any Plan that meets or purports to
meet the requirements of IRC Section401(a).
"Related Person" shall mean with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause
(b) or (c).
"Release" shall mean any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping or other releasing into the
Environment, whether intentional or unintentional.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
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"Seller Indemnified Party" shall have the meaning set forth in
Section 10.2(a).
"Sellers" shall have the meaning set forth in the first
paragraph of this Agreement.
"Sellers' Accountant" shall have the meaning set forth in
Section 2.3(a).
"Sellers' Closing Documents" shall have the meaning set forth
in Section 5.2(a).
"Staffing Services Business" shall have the meaning set forth
in Section 3.4.
"Stock" shall have the meaning set forth in Section 2.1(b).
"Straddle Period" shall have the meaning set forth in Section
10.3(b).
"Subject Companies" shall have the meaning set forth in the
first paragraph of this Agreement. "Subject Company" shall refer to any one of
the Subject Companies.
"Subsidiary" shall mean, with respect to any Person (for the
purposes of this definition, the "Owner"), any corporation or other Person of
which securities or other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred) are
held by the Owner or one or more of its Subsidiaries .
"Tax" or "Taxes" shall mean any federal, state, local, foreign
or other tax, levy, impost, fee, assessment or other governmental charge,
including without limitation income, estimated income, gross receipts, business,
occupation, franchise, property, payroll, personal property, sales, transfer,
use, employment, commercial rent, occupancy, franchise or withholding taxes, and
any premium, including without limitation, interest, penalties and additions in
connection therewith.
"Tax Return" shall mean any return (including any information
return), report, statement, schedule, notice, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of, or compliance with, any Legal
Requirement relating to any Tax.
"Territory" shall have the meaning set forth in Section 3.4.
"Threat of Release" shall mean a substantial likelihood of a
Release that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
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"Threatened" shall describe any claim, Proceeding, dispute,
action or other matter if (i) any demand or statement has been made (orally or
in writing) with respect to such claim, Proceeding, dispute, action or other
matter, (ii) any notice has been given (orally or in writing) with respect
thereto or (iii) any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action or other matter is likely to be asserted, commenced, taken or
otherwise pursued in the future.
"Threshold" shall have the meaning set forth in Section
10.2(d).
"Title IV Plans" shall mean all Pension Plans that are subject
to regulation under Title IV of ERISA, 29 U.S.C. Section1301 et seq., other than
Multiemployer Plans.
"Trade Secrets" shall have the meaning set forth in Section
5.20(a).
"Transaction Documents" shall mean this Agreement, the
Consulting Agreement, the Leases, and all instruments executed, filed or
otherwise prepared, exchanged or delivered in accordance with this Agreement.
"Transactions" shall mean the Acquisition and the other
transactions contemplated by the Transaction Documents.
"Welfare Plan" shall have the meaning given in ERISA
Section3(1).
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Transfer of Stock.
(a) Upon the terms and subject to the conditions set forth
herein, on the Closing Date each of the Sellers shall sell, convey,
transfer, assign and deliver to the Purchaser, and the Purchaser shall
purchase from the Sellers, all of the outstanding shares of capital
stock of the Subject Companies (the "Stock"), which Stock is owned by
each of the Sellers in the amounts set forth next to the name of each
such Seller in Schedule 2.1.
2.2 Consideration. Upon the terms and subject to the
conditions set forth herein, in consideration for the transfer of the Stock
pursuant to Section 2.1 of this Agreement:
(a) On the Closing Date, the Purchaser shall pay to the
Sellers an aggregate of Six Million Sixty One Thousand Dollars
($6,061,000) in cash, less the sum of (i) Net Debt and (ii) Deferred
Compensation Liability (the "Closing Payment). The Closing Payment as
adjusted pursuant to Section 2.3 is referred to herein as the "Fixed
Amount, and together with the Contingent Amounts, collectively referred
to herein as the "Consideration."
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(b) On or before the times hereinafter set forth, the
Purchaser shall pay to the Sellers, the additional cash amounts
hereinafter described (the "Contingent Amounts"). Prior to the first
anniversary of the Closing Date, the Subject Companies shall open three
(3) additional staffing offices in Georgia at locations strategically
selected by the Sellers and approved by the Purchaser (Individually a
"New Office" and collectively the "New Offices"). Upon Sellers
selecting a New Office location, Sellers shall identify in writing to
the Purchaser the specific location and shall simultaneously tender the
proposed lease agreement for the New Office (the "New Office Lease").
The New Office location and the New Office Lease shall be deemed to be
accepted by the Purchaser unless Purchaser shall have delivered to
Sellers, within ten (10) days after receipt of the New Office location
and New Office Lease, a written notice stating its objection (and
reasons therefor) to the location and/or its objections and suggested
revisions to the New Office Lease. If the objections proposed by the
Purchaser are not agreed to by Sellers, then the Purchaser and Sellers
shall negotiate in good faith to resolve their disagreements and make
reasonably requested changes to the New Office Lease. However,
notwithstanding the above, the approval by the Purchaser of the New
Office location and of the New Office Lease Agreement shall not be
unreasonably withheld, and if (1) the identified location is not within
an unreasonably close proximity to a present office of the Subject
Companies, (2) the cost of leasing the New Office location pursuant to
the New Office Lease is within the parameters of the budget attached
hereto as Schedule 2.2(b) (the "Budget") and (3) the terms of the New
Office Lease are commercially reasonable and similar to other lease
agreements entered into by the Subject Companies with non-Affiliates
for their business offices and do not involve a lease term in excess of
three (3) years, Purchaser shall approve the location and cause one of
the Subject Companies to sign the New Office Lease. If, after a period
of ten (10) days following the date on which the Purchaser gives the
Sellers notice of its objections, the approval of the Purchaser has not
been provided in writing to Sellers, then the Sellers shall immediately
have the right, exercisable within ten (10) days thereafter, to submit
the matter to binding arbitration before the American Arbitration
Association pursuant to its rules for expedited arbitration. The
authority of the arbitrator shall be limited to a determination of
whether the Purchaser's refusal of approval was reasonable or
unreasonable under the forgoing provisions. If the arbitrator's award
is that the Purchaser's refusal was unreasonable, the one year period
for the opening of New Offices shall be extended for the period of time
between the filing of the demand for arbitration and the date of the
arbitrator's award. The Purchaser agrees to immediately make available
to the Subject Companies the appropriate funds and cause one of the
Subject Companies to execute the New Office Lease within five (5) days
of an arbitrator's award if in favor of the Sellers and shall
immediately afford Sellers access to the Subject Companies' employees
to implement the opening of the New Office if the expense of opening
the New Office (excluding any expenses associated with the arbitration)
remains within the parameters of the Budget.
Purchaser shall pay to the Sellers the following Contingent Amounts
upon the first occurrence of the following events (each, a "Contingent Amount
Payment Event");
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(i) Three Hundred Twenty Four Thousand Dollars
($324,000) if and when the New Offices have been opened and
actively conducting staffing business by soliciting New
Clients and assigning staffing employees to New Clients for
three (3) consecutive months; plus
(ii) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Twelve Thousand Dollars ($12,000) per week during
any consecutive 4-week period during the 12-month period after
the Closing Date (a "4-week period"); plus
(iii) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Fifteen Thousand Dollars ($15,000) during a 4-week
period; plus
(iv) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Eighteen Thousand Dollars ($18,000) during a 4-week
period; plus
(v) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Twenty Two Thousand Five Hundred Dollars ($22,500)
during a 4-week period; plus
(vi) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Twenty Seven Thousand Dollars ($27,000) during a
4-week period; plus
(vii) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Thirty-Two Thousand Dollars ($32,000) during a
4-week period; plus
(viii) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Thirty Five Thousand Dollars ($35,000) during a
4-week period; plus
(ix) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Forty Thousand Dollars ($40,000) during a 4-week
period; plus
(x) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Forty Five Thousand Dollars ($45,000) during a
4-week period; plus
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(xi) Two Hundred Thousand Dollars ($200,000) if and
when the New Offices achieve in aggregate an average Gross
Margin of Fifty Thousand Dollars ($50,000) during a 4-week
period.
Each Contingent Amount shall be payable in cash within thirty
(30) days after the end of the month in which the applicable Contingent
Amount Payment Event occurs ("Due Date") provided, however, that each
Contingent Amount payable with respect to a Contingent Amount Payment
Event that occurs after the three New Offices have accumulated a
deficit (computed in a manner specifically identified in the Budget) in
excess of $178,500 ("Excess Deficit"), shall be reduced by the amount
of Excess Deficit not previously deducted from payments of Contingent
Amounts. For the purpose of this section, the parties acknowledge that
the Budget contains an operating budget for a single New Office and for
all three New Offices and a capital budget for the single New Office
and for all three New Offices. The parties understand and agree that
the Purchaser hereby approves and authorizes the capital expenditures
identified in the capital budget for each single New Office and for the
three New Offices and the operating expenditures contained in the
operating budget for each single New Office and the three New Offices.
Therefore, the parties agree that any of the New Offices may be opened
and Purchaser shall cause the appropriate Subject Company to expend the
funds in accordance with the capital budget and operating budget
identified within the Budget and that the Excess Deficit, if any, shall
be determined by comparing the actual operating deficit incurred
(computed in the same manner identified in the Budget) to the sum of
$178,500. The parties acknowledge that the Excess Deficit adjustment
shall not apply to the payment of the $324,000 identified in subsection
2.2(b) (i) above. Further, the parties agree that if the Excess Deficit
is eliminated and subsequently reduced below $178,500, such Excess
Deficit reversal shall be paid to Sellers in a manner consistent with
the payment of Contingent Amounts pursuant to this section to the
extent of earlier reductions for Excess Deficits.
In addition, if one or more, but less than all, of the
Contingent Amount Payment Events occur on or before the first
anniversary of the Closing Date, the Purchaser shall pay to the Sellers
a prorata portion of the Contingent Amount that would have been paid if
the next Contingent Amount Payment Event had occurred. The prorata
amount shall be a fraction of the Contingent Amount, the numerator of
which is the excess of the aggregate average Gross Margin for the
highest 4-week period over the aggregate average Gross Margin for the
last occurred Contingent Amount Payment Event and the denominator of
which is the Gross Margin difference between the last occurred
Contingent Amount Payment Event and the next following Contingent
Amount Payment Event. (For purposes of illustration, if the aggregate
average Gross Margin for the highest 4-week period is more than $32,000
and less than $35,000, the Sellers will be entitled to a prorata
portion of the $200,000 Contingent Amount for the $35,000 Gross Margin
payment event, the numerator of which would be the Gross Margin excess
over $32,000 for the highest 4-week period and the denominator of which
would be $3,000.)
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(c) Within fifteen (15) days after each month end following
the opening of the first New Office, the Purchaser shall deliver to the
Sellers a written report setting forth the Purchaser's computation of
the Gross Margin of each of the New Offices for each weekly period
ending in the month and the aggregate Excess Deficit of the New Offices
to date. The Sellers will be entitled to access during normal business
hours to the relevant records and documents of the Subject Companies to
aid in their review of the Gross Margin and Excess Deficit computations
for the New Offices. Each report shall be deemed to be accepted by and
shall be conclusive for purposes of determining the Gross Margin of the
New Offices for each week included in a report and the Excess Deficit
to date except to the extent, if any, that the Sellers shall have
delivered to the Purchaser, within fifteen (15) days after the date on
which the report is delivered to the Sellers, a written notice to the
Purchaser stating in detail the Sellers' exceptions and the Sellers'
computations of Gross Margin and Excess Deficit, if any. If a change
proposed by the Sellers is disputed by the Purchaser, then the
Purchaser and the Sellers will negotiate in good faith to resolve the
dispute. If, after a period of twenty (20) days following the date on
which the Sellers give the Purchaser notice of any such proposed
change, any such proposed change still remains disputed, then the
Purchaser and the Sellers shall together choose an independent firm of
public accountants of regional or national standing (the "Accounting
Firm") to resolve any remaining disputes. The Accounting Firm shall act
as an arbitrator to determine, based solely on presentations by the
Purchaser and the Sellers, and not by independent review, only those
issues still in dispute. The decision of the Accounting Firm shall be
final and binding and shall be in accordance with the terms of this
Section 2.2. All of the fees and expenses of the Accounting Firm, if
any, shall be paid by the Purchaser and the Sellers in the proportion
that the Contingent Amount determined by the Accounting Firm bears to
the Contingent Amount proposals submitted by the parties to the
Accounting Firm; provided, however, that if the Accounting Firm
determines that either party's position is totally correct, then the
other party shall pay all of the fees and expenses of the Accounting
Firm.
(d) Any Contingent Amount not paid on or before its Due Date
shall be payable with interest at the rate of ten percent (10%) per
annum accruing from the Due Date to the date of payment.
(e) On the Closing Date, the Purchaser shall deliver to the
Sellers the Closing Payment in cash by wire transfer of immediately
available funds to the respective bank accounts designated by the
Sellers in a writing delivered to the Purchaser not less than two (2)
business days prior to the Closing. On or before the due date for
payment of each Contingent Amount, the Purchaser shall deliver to the
Sellers the Contingent Amount in cash by wire transfer of immediately
available funds to the bank account designated by the Sellers or their
legal counsel identified in Section 12.2.
2.3 Post-Closing Adjustment
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(a) As promptly as practicable after the Closing Date (but in
no event more than sixty (60) days after the Closing Date), the Sellers
shall cause Brooks, Holmes, Williams & Cook LLC (the "Sellers'
Accountant") to prepare and deliver to the Purchasers a compiled
combined balance sheet of the Subject Companies as of the close of
business on the day immediately preceding the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet will be prepared in
accordance with GAAP, applied on a basis consistent with the Balance
Sheet. Sellers' Accountant will be entitled to reasonable access during
normal business hours to the relevant records and working papers of the
Subject Companies and its personnel, including Noel Johnson, to aid in
its preparation of the Closing Balance Sheet. The Sellers will be
solely responsible for all costs of the Sellers' Accountant. The
Closing Balance Sheet shall be deemed to be accepted by and shall be
conclusive for the purposes of the adjustment described in Sections
2.3(b) hereof with respect to the Subject Companies except to the
extent, if any, that the Purchaser shall have delivered, within thirty
(30) days after the date on which the Closing Balance Sheet is
delivered to the Purchaser, a written notice to the Seller stating each
and every item to which the Purchaser takes exception as not being in
accordance with GAAP applied on a basis consistent with the Balance
Sheet or as having computational errors, specifying in reasonable
detail the nature and extent of any such exception (it being understood
that any amounts not disputed shall be paid promptly). If a change
proposed by the Purchaser is disputed by the Sellers then the Purchaser
and the Sellers shall negotiate in good faith to resolve such dispute.
If, after a period of twenty (20) days following the date on which the
Purchaser gives the Sellers notice of any such proposed change, any
such proposed change still remains disputed, then the Purchaser and the
Sellers shall together choose an independent firm of public accountants
of nationally recognized standing (the "Accounting Firm") to resolve
any remaining disputes. The Accounting Firm shall act as an arbitrator
to determine, based solely on presentations by the Sellers and the
Purchaser and not by independent review, only those issues still in
dispute. The decision of the Accounting Firm shall be final and binding
and shall be in accordance with the provisions of this Section 2.3(a).
All of the fees and expenses of the Accounting Firm, if any, shall be
paid by the Purchaser and the Sellers in the proportions that the
Accounting Firm's determination of Shareholders' Equity Deficiency
bears to the Shareholders' Equity Deficiency proposals submitted by the
parties to the Accounting Firm; provided, however, that, if the
Accounting Firm determines that either party's position is totally
correct, then the other party shall pay one hundred percent (100%) of
the costs and expenses incurred by the Accounting Firm in connection
with any such determination.
(b) If a Closing Balance Sheet prepared as provided in Section
2.3(a) is not delivered to the Purchaser within sixty (60) days after
the Closing Date, then the Closing Balance Sheet shall mean the Closing
Balance Sheet prepared by the Purchaser (rather than the Sellers'
Accountant) in accordance with GAAP, applied on a basis consistent with
the Balance Sheet and submitted to the Sellers within 120 days after
the Closing, which Closing Balance Sheet shall be conclusive and
binding on the Sellers and the Purchaser is the determination of the
amount, if any, of the Shareholders' Equity Deficiency.
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(c) In the event that there is a Shareholders' Equity
Deficiency (as defined below) of Twenty Thousand Dollars ($20,000) or
more, the Sellers shall pay to the Purchaser, as an adjustment to the
consideration, an amount equal to the entire Shareholders' Equity
Deficiency. Any payments required to be made by the Sellers pursuant to
this Section 3.1(b) shall be made within ten (10) days of the Closing
Financial Statements Delivery Date (as defined below) by wire transfer
of immediately available funds to an account designated by the
Purchaser.
(d) The term "Shareholders Equity Deficiency" shall mean with
respect to the Subject Companies (i) the amount, if any, by which the
Shareholders' Equity is less than Five Hundred Eighty-One Thousand Four
Hundred Eighty-Nine Dollars ($581,489).
(e) The term Shareholders' Equity" shall mean, with respect to
the Subject Companies, the amount by which the total assets of the
Subject Companies exceeds the total liabilities of the Subject
Companies, in each case as set forth on the Closing Balance Sheet;
provided, however, that if any change to the Closing Balance Sheet is
agreed to by the Purchaser and the Sellers in accordance with Section
2.3(a), or any dispute between the Purchaser and the Sellers with
respect to the Closing Balance Sheet is resolved in accordance with
Section 2.3(a), then "Shareholders' Equity" shall be calculated after
giving effect to any such change or resolution.
(f) All payments required to be made pursuant to this Section
2.3 shall be paid with interest thereon at the rate of ten percent
(10%) per annum and accruing from the Closing Date to the date of
payment.
2.4 Allocation of Consideration. The Consideration shall be allocated
among the Sellers as set forth in Schedule 2.4 hereto. The Consideration shall
also be allocated between the Stock of each of the Subject Companies as set
forth in Schedule 2.4 hereto.
ARTICLE III
SELLERS' AGREEMENTS RESPECTING
POST-CLOSING COMPETITION
3.1 Reasons For Agreements. The Purchaser is making a
substantial investment pursuant to this Agreement in reliance upon the fact that
the knowledge and expertise developed by the Sellers in their management of the
business and affairs of the Subject Companies will be preserved and will not be
used in competition with the Purchaser, the Subject Companies or their
Affiliates. It is necessary for the protection of the Purchaser, the Subject
Companies and their Affiliates that the Sellers provide the agreements and
assurances set forth in this Article III and the Sellers do so in consideration
of the additional payment by the Purchaser to each of the Sellers of Fifty
Thousand Dollars ($50,000) (the "Covenant Payment").
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3.2 The Sellers' Agreements. The Sellers individually and
collectively agree that none of the Sellers will, directly or indirectly, except
for the benefit of the Purchaser or its Affiliates, or with the consent of the
Purchaser, which consent may be granted or withheld at the Purchaser's sole
discretion:
(a) during the Noncompetition Period (as defined in Section
3.4 thereof), become a stockholder, partner, member, manager,
associate, employee, owner, agent, creditor, independent contractor,
co-venturer, a consultant or otherwise, or encourage, counsel, advise
or financially assist or support a spouse of a Seller or any other
member of the immediate family that resides with him to be or become,
or a Seller to himself be, or be interested in or associated with any
other Person, firm or business engaged in the Staffing Services
Business in the Territory (as defined in Section 3.4 hereof), or in any
Staffing Services Business directly competitive with that of the
Purchaser or its Affiliates, as then constituted, or himself engage in
such business; provided, however, that nothing herein shall be
construed to prohibit owning not more than five percent (5%) of any
class of securities issued by an entity in the Staffing Services
Business which is subject to the reporting requirements of the Exchange
Act or traded in the over-the-counter market; or
(b) during the Noncompetition Period, in the Territory,
solicit, cause or authorize, directly or indirectly, to be solicited
for or on behalf of such Seller or third parties, from parties who were
customers of the Subject Companies or of Purchaser or its Affiliates,
any Staffing Services Business transacted by or with such customer by
the Subject Companies or by the Purchaser or its Affiliates; or
(c) during the Noncompetition Period, in the Territory, accept
or cause or authorize, directly or indirectly, to be accepted for or on
behalf of such Seller or for third parties, any such Staffing Services
Business from any such customers of the Subject Companies or of the
Purchaser or its Affiliates; or
(d) during the Noncompetition Period, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used by the
Purchaser or its Affiliates or by the Subject Companies relating to the
business or the operations, employees or customers of the Subject
Companies or the Purchaser or its Affiliates which constitutes
proprietary or confidential information of the Subject Companies or the
Purchaser or its Affiliates ("Confidential Information"), including
without limitation any Confidential Information contained in any
customer lists, mailing lists and sources thereof, statistical data and
compilations, patents, copyrights, trademarks, trade names, inventions,
formulae, methods, processes, agreements, contracts, manuals or any
other documents, and (2) from and after the date hereof, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used by the
Purchaser which constitutes Confidential Information, but excluding any
Confidential Information which has become part of common knowledge or
understanding in the Staffing Services Business industry or otherwise
in the public domain (other than from
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disclosure by Sellers in violation of this Agreement); provided,
however, that this Section shall not be applicable to the extent that
any of the Sellers is required to testify in a judicial or regulatory
proceeding pursuant to the order of a judge or administrative law judge
after such Seller requests that the confidentiality of such
Confidential Information be preserved, and in the event that the
Sellers receive a subpoena or other order to produce or testify as to
Confidential Information, the Sellers shall notify the Purchaser in
order to provide the Purchaser with an opportunity to quash at the
Purchaser's expense; or
(e) during the noncompetition Period, in the Territory,
(1) solicit, entice, persuade or induce, directly or
indirectly, any employee (or person who within the preceding
three hundred and sixty (360) days was an employee) of the
Subject Companies or of the Purchaser or its Affiliates or any
other person who is under contract with or rendering services
to the Subject Companies or to the Purchaser or its
Affiliates, to terminate his or her employment, by, or
contractual relationship with, such Person or to refrain from
extending or renewing the same (upon the same or new terms) or
to refrain from rendering services to or for such Person or to
become employed by or to enter into contractual relations with
any Persons other than such Person or to enter into a
relationship with a competitor of the Subject Companies; the
Purchaser or its Affiliates,
(2) approach any such employee or other person for
any of the foregoing purposes, or
(3) authorize or approve or assist in the taking of
any such actions by any person other than the Subject
Companies, the Purchaser or its Affiliates.
3.3 Interpretation and Remedies.
(a) The invalidity or non-enforceability of Section 3.2 in any
respect shall not affect the validity or enforceability of Section 3.2
in any other respect or of any other provisions of this Article III. In
the event that any provision of Section 3.2 shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the
geographic or business scope or the duration thereof, such invalidity
or unenforceability shall attach only to the scope or duration of such
provision and shall not affect or render invalid or unenforceable any
other provision of Section 3.2 and, to the fullest extent permitted by
law, this Section 3.2 shall be construed as if the geographic or
business scope or the duration of such provision had been more narrowly
drafted so as not to be invalid or unenforceable and further, to the
extent permitted by law, such geographic or business scope or the
duration thereof may be re-written by a court of competent jurisdiction
to make such sufficiently limited to be enforceable.
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(b) The Sellers acknowledge that the Purchaser's remedy at law
for any breach of the provisions of Section 3.2 is and will be
insufficient and inadequate and that the Purchaser shall be entitled to
equitable relief, including by way of temporary restraining order,
temporary injunction, and permanent injunction, in addition to any
remedies the Purchaser may have at law. If either party files suit to
enforce or to enjoin the enforcement of any of the provisions of this
Section 3.2, the Purchaser shall be entitled to recover, in addition to
all other damages or remedies provided for herein, all of its costs
incurred in prosecuting or defending such suit, including reasonable
attorneys' fees, if the Purchaser prevails in such suit.
3.4 Definitions. " Noncompetition Period" shall mean the period
commencing on the Closing Date and ending five (5) years after the Closing Date,
provided, however, that if a Seller violates any of the provisions of Section
3.2, the term of the Noncompetition Period shall be automatically extended for a
like period of time from the date on which the Seller permanently ceases such
violation or from the date of the entry by a court of competent jurisdiction of
a final order of judgment enforcing such provision, whichever period is later.
"Staffing Services Business" shall mean (A) a firm which
recruits, trains and/or tests employees and assigns them to clients (i) to
provide staffing help services for such client to support or supplement the
client's work force in work situations such as employee absences, temporary
skill shortages, seasonal workloads and special assignments and projects, (ii)
to provide staffing help services for such client for short-term and long-term
temporary placement and temporary to permanent arrangements for the client to
eventually hire the service provider as its own employee, and (iii) to provide
permanent individual employees for permanent employment placement fees, or (B)
any of the business activities described in (A).
"Territory" shall mean the State of Georgia, and outside such
state, within a radius of fifty (50) miles from any office (including any client
location where employees provide staffing services on site) operated during the
Noncompetition Period by the Subject Companies, or by the Purchaser or any of
its Affiliates.
ARTICLE IV
CLOSING
4.1 Closing. Upon the terms and subject to the conditions set
forth herein, the closing of the Transactions (the "Closing") shall be held at
10:00 a.m. local time on the Closing Date at the offices of the Purchaser, 100
Michiana Square, 100 E. Wayne Street, Suite 100, South Bend, Indiana 46601,
unless the parties hereto otherwise agree.
4.2 Deliveries at Closing.
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(a) Closing Payment. The Purchaser will deliver the Closing
Payment (allocated among the Sellers as set forth in Schedule 2.4) to
each of the Sellers.
(b) Covenant Payment. The Purchaser will deliver the Covenant
Payment to each of the Sellers.
(c) Payment of Bank Debt. The Purchaser will pay to the
respective obligees thereof the amount of indebtedness for borrowed
money in the amounts and to the obligees set forth in the Sellers'
certificate delivered pursuant to Section 4.2(g)(iv) hereof.
(d) Payment of Seller Receivables. The Sellers will repay to
the Subject Companies the amount of the Subject Companies' receivables
from the Sellers in the amount set forth in the Sellers' certificate
delivered pursuant to Section 4(g)(iv) hereof.
(e) Stock Certificates. At the Closing, the Sellers shall
deliver to the Purchaser certificates evidencing the Stock (duly
endorsed in blank for transfer or accompanied by stock powers duly
executed in blank).
(f) Purchaser Certificates. The Purchaser will furnish the
Sellers with such certificates of its officers and others to evidence
compliance with the conditions set forth in this Agreement as may be
reasonably requested by the Sellers, which shall include, but not be
limited to a certificate executed by the Secretary or an Assistant
Secretary of the Purchaser, certifying, as of the Closing Date, (A) a
true and complete copy of the Organizational Documents of the
Purchaser, certified as of a recent date by the Secretary of State of
Delaware, (B) a true and complete copy of the resolutions of the board
of directors of the Purchaser, authorizing the execution, delivery and
performance of this Agreement by the Purchaser, and the consummation of
the transactions contemplated hereby and (C) incumbency matters.
(g) Sellers' Certificates. The Sellers will furnish the
Purchaser with such certificates of the Sellers and the officers of the
Subject Companies and others to evidence compliance with the conditions
set forth in this Agreement as may be reasonably requested by the
Purchaser, which shall include, but not be limited to:
(i) A certificate executed by the Secretary or an
Assistant Secretary of each Subject Company certifying as of
the Closing Date (A) a true and complete copy of the
Organizational Documents of such Subject Company, certified as
of a recent date by the appropriate Secretary of State and (B)
incumbency matters;
(ii) A certificate of the appropriate Secretary of
State certifying the good standing of each Subject Company in
its state of incorporation and all states in which it is
qualified to do business;
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(iii) A certificate of each of the Sellers'
non-foreign status, pursuant to Treasury Regulation section
1.1445-2(b)(2); and
(iv) A certificate of the Sellers certifying the
amount and the obligees of the Deferred Compensation Liability
and each amount required in the computation of Net Debt and
the obligees of the indebtedness for borrowed money.
4.3 Other Closing Transactions.
(a) Consulting Agreement and Employment Agreement. At the
Closing, a Subject Company shall enter into the consulting agreement
with the Sellers in the form of Exhibit A-2 hereto (the "Consulting
Agreement") and a Subject Company shall enter into the employment
agreement with Richard Niermann in the form of Exhibit A-2 (the
"Employment Agreement').
(b) Leases. At the Closing, a Subject Company, the
Shareholder(s) and the Purchaser shall enter into real estate leases in
the form of Exhibit B-1 and B-2 hereto (the "Leases").
(c) IRC Section 338(h)(10) Election. At the Closing, the
Purchaser and the Sellers will execute such documents and forms as
shall be required for an effective election under Section 338(h)(10) of
the IRC with respect to the purchase and sale of the Stock of NPS
Staffing Specialists, Inc. The deemed purchase price of the assets of
NPS Staffing Specialists, Inc. shall be allocated as set forth in
Schedule 2.4 hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby, jointly and severally, represents
and warrants to the Purchaser that the following representations and warranties
are, as of the date hereof, and will be, as of the Closing Date, true and
correct:
5.1 Organization and Good Standing.
(a) Each of the Subject Companies is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
formation, with full power and authority to conduct its business as it
is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
Contracts to which it is a party. Each of the Subject Companies is duly
qualified to do business and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure
to be so qualified or in good standing would not reasonably be expected
to have a Material Adverse Effect on such Subject Company.
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Schedule 5.1 contains a complete and accurate list of jurisdictions in
which each of the Subject Companies is authorized to do business.
(b) Subsidiaries. None of the Subject Companies has any
Subsidiaries and, except as otherwise set forth on Schedule 5.1, none
of the Subject Companies has any direct or indirect stock or other
equity or ownership interest (whether controlling or not) in any
corporation, association, partnership, joint venture or other entity.
5.2 Authority; No Conflict.
(a) This Agreement and the other Transaction Documents to
which the Sellers or the Subject Companies are a party (the "Sellers'
Closing Documents") have been duly executed and delivered by the
Sellers and the Subject Companies, to the extent that they are a party
thereto, and constitute the legal, valid, and binding obligations of
the Sellers and/or the Subject Companies, as the case may be,
enforceable against the Sellers and/or the Subject Companies in
accordance with their respective terms, in each case except as such
enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors'
rights generally and (ii) the general principles of equity, regardless
of whether asserted in a proceeding in equity or at law. The Sellers
and the Subject Companies have all requisite power, authority and
capacity to execute and deliver this Agreement and the Sellers' Closing
Documents and to perform their respective obligations under this
Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Schedule 5.2, neither the execution
and delivery of this Agreement and the Sellers' Closing Documents nor
the consummation or performance of any of the Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents
of any of the Subject Companies or (B) any resolution adopted
by the board of directors of any of the Subject Companies or
the shareholders or other equity owners of any of the Subject
Companies;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement
or any Order to which any of the Subject Companies or any of
the assets owned or used by any of the Subject Companies, may
be subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Governmental Authorization
that is held by any of the Subject Companies or that otherwise
relates to the business of, or any of the assets owned or used
by, any of the Subject Companies;
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(iv) contravene, conflict with or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Applicable Contract; or
(v) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or
used by any of the Subject Companies,
except in the case of each of clauses (ii) through (v) above, for such
contraventions, conflicts, violations, Liabilities, reassessments, revaluations,
breaches or creations of Encumbrances which, individually and in the aggregate,
would not have a Material Adverse Effect on the Subject Companies.
Except as set forth in Schedule 5.2, neither of the Subject
Companies is, or will be, required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Transactions.
5.3 Capitalization. Schedule 5.3 contains a complete and
accurate description of the capitalization of each of the Subject Companies
(including the identity of each shareholder (or holder of other equity interest)
of each Subject Company and the number of shares (or other equity interests)
held by each such Person). The Sellers have, or will have at Closing, title to
all of the Stock, in each case, free and clear of all Encumbrances. All of the
Stock is and will be, as of the Closing Date, duly authorized, validly issued,
fully paid and non-assessable. Except as set forth on Schedule 5.3, there are no
outstanding subscriptions, calls, commitments, warrants or options for the
purchase of shares of any capital stock or other securities of any of the
Subject Companies or any securities convertible into or exchangeable for shares
of capital stock or other securities issued by any of the Subject Companies, or
any other commitments of any kind for the issuance of additional shares of
capital stock or other securities issued by any of the Subject Companies. None
of the outstanding capital stock or equity interests or other securities of any
Subject Company was issued in violation of the Securities Act.
5.4 Financial Statements. The Sellers have delivered to the
Purchaser (a) compiled combined balance sheet of the Subject Companies as of
October 31 for each of the fiscal years 1995 and 1996 and the related combined
statement of income for each of the fiscal years then ended, together with the
report thereon of Brooks, Holmes, Williams & Cook, LLC, independent certified
public accountants, (b) an audited combined balance sheet of the Subject
Companies as of October 31, 1997 (including the notes thereto, the "Balance
Sheet"), and the related combined statements of income, changes in shareholders'
equity, and cash flow for the 12-month period then ended, together with the
report thereon of Brooks, Holmes, Williams & Cook, LLC, independent certified
public accountants (including the notes thereto), and (c) compiled combined
balance sheet of the Subject Companies as of January 31, 1998 and the related
combined statement of income for the three month
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period then ended together with the report thereon of Brooks, Holmes, Williams &
Cook LLC, independent certified public accountants (collectively, clauses (a),
(b) and (c) above are referred to herein as the "Financial Statements"). The
Financial Statements fairly and accurately present the financial condition and
the results of operations, income, expenses, assets, liabilities, changes in
stockholders' equity, and cash flow of the Subject Companies on a combined basis
as of the respective dates of, and for the periods referred to in, the Financial
Statements, all in accordance with GAAP. The Financial Statements reflect the
consistent application of such accounting principles throughout the periods
involved, except for the accounting treatment of the Deferred Compensation
Liability. No financial statements of any Person other than the Subject
Companies are required by GAAP to be included in the Financial Statements. The
Balance Sheet and the income statement contain adequate accruals for, and pro
rated anticipated expenses for, periodic and annual bonuses, incentive
compensation, vacation, "flex time" and other similar benefits (based on then
existing compensation arrangements and past practices).
5.5 Books and Records. The books of account, minute books,
stock record books, and other records of the Subject Companies, all of which
have been made available to the Purchaser, are complete and correct and, in all
material respects, have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Exchange Act
(regardless of whether or not any of the Subject Companies is subject to that
Section), including the maintenance of an adequate system of internal controls,
and, with respect to the books of account, fairly and accurately reflect the
income, expenses, assets and liabilities of the Subject Companies. The minute
books of the Subject Companies contain, in all material respects, accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the board of directors, and committees of the board of directors
of the Subject Companies, and no meeting of any such stockholders, board of
directors or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Subject Companies.
5.6 Title to Properties: Encumbrances. The Subject Companies
do not own, and since their respective inceptions have not owned, any real
property or any interest, other than a leasehold interest, in any real property.
Schedule 5.6 contains a complete and accurate list of all leasehold interests in
real property owned by any of the Subject Companies. Schedule 5.6 lists and
describes all real property leased by any Subject Company. The Sellers have
delivered a copy of all such leases to the Purchaser and all such leases are
legal, valid, binding, enforceable and in full force and effect, and following
the Closing, such leases will continue to be legal, valid, binding and
enforceable by the Subject Companies that are party thereto and in full force
and effect. There are no disputes, oral agreements or forbearances in effect as
to any such leases. Each of the Subject Companies owns all the properties and
assets (whether real, personal or mixed and whether tangible or intangible) that
it purports to own, including all of the properties and assets reflected in the
Balance Sheet (except for personal property sold since the date of the Balance
Sheet in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by any of the Subject Companies since the date
of the Balance Sheet (except for personal property acquired and sold since the
date of the Balance Sheet in the Ordinary Course of Business), which
subsequently purchased or acquired properties and assets are listed in Schedule
5.6. Except as set forth in Schedule
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5.6, all material properties and assets reflected in the Balance Sheet are free
and clear of all Encumbrances.
5.7 Condition and Sufficiency of Assets. The buildings,
plants, structures and equipment which comprise the office space of the Subject
Companies are in good operating condition and repair, except where failure to be
in such condition would not have a Material Adverse Effect on each such Subject
Company. The building, plants, structures and equipment which comprise the
office space of the Subject Companies are adequate for the uses to which they
are being put, and none of such buildings, plants, structures or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, plants,
structures and equipment which comprise the office space of the Subject
Companies are sufficient for the continued conduct of the business of the
Subject Companies after the Closing in substantially the same manner as
conducted prior to the Closing.
5.8 Accounts Receivable. All accounts receivable of the
Subject Companies that are reflected on the accounting records of any of the
Subject Companies as of the Closing and, unless paid prior to Closing, all
accounts receivable of the Subject Companies that are reflected on the Balance
Sheet (collectively, the "Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business. Unless paid prior to the Closing,
the Accounts Receivable are or will be as of the Closing current and collectible
net of the respective reserves shown on the Balance Sheet or on the accounting
records of any of the Subject Companies as of the Closing (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserves as of the Closing, will not represent a greater percentage of the
Accounts Receivable as of the Closing than the reserve reflected in the Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a Material Adverse Change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any setoff,
within ninety days after the day on which it first becomes due and payable.
There is no contest, claim or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
5.9 No Undisclosed Liabilities. Except as set forth in
Schedule 5.9, none of the Subject Companies has any Liabilities except for
Liabilities reflected or reserved against in the Balance Sheet and current
Liabilities incurred in the Ordinary Course of Business since the date thereof.
5.10 Taxes.
(a) Except as set forth in Schedule 5.10, there have been
properly completed and filed on a timely basis and in correct form all
Tax Returns required to be filed by any of the Subject Companies on or
prior to the date hereof. As of the time of filing, the foregoing Tax
Returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities, status
or other matters of the applicable entity or any other
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information required to be shown thereon. In particular, the foregoing
returns are not subject to penalties under Section 6662 of the IRC,
relating to accuracy-related penalties (or any corresponding provision
of the state, local or foreign Tax law) or any predecessor provision of
law. Except as set forth in Schedule 5.10, an extension of time within
which to file any Tax Return that has not been filed has not been
requested or granted.
(b) With respect to all amounts in respect of Taxes imposed on
any of the Subject Companies or for which any of the Subject Companies
is or could be liable, whether to taxing authorities (as, for example,
under law) or to other Persons or entities (as, for example, under Tax
allocation agreements), with respect to all taxable periods or portions
of periods ending on or before the Closing, all applicable Tax laws and
agreements have been complied with in all material respects, and all
such amounts required to be paid by the Subject Companies to taxing
authorities or others on or before the date hereof have been paid.
(c) No material issues have been raised (and are currently
pending) by any taxing authority in connection with any of the Tax
Returns of any of the Subject Companies. No waiver of statute of
limitation with respect to any Tax Return has been given by or
requested from any of the Subject Companies. Schedule 5.10 sets forth
(i) the taxable years of the Subject Companies as to which the
respective statutes of limitations with respect to Taxes have not
expired, and (ii) with respect to such taxable years, (A) those years
for which examinations have been completed, (B) those years for which
examinations are presently being conducted, (C) those years for which
examinations have not been initiated, and (D) those years for which
required Tax Returns have not yet been filed. Except to the extent
shown in Schedule 5.10, all deficiencies asserted or assessments made
as a result of any examinations have been fully paid, or are fully
reflected as a liability in the Financial Statements, or are being
contested and an adequate reserve therefor has been established and is
fully reflected in the Financial Statements.
(d) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on the assets of any of the Subject Companies.
(e) None of the Subject Companies is a party to or bound by
any Tax indemnity, Tax sharing or Tax allocation agreement.
(f) None of the Subject Companies has ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of
the IRC.
(g) None of the Subject Companies has filed a consent pursuant
to the collapsible corporation provisions of Section 341(f) of the IRC
(or any corresponding provision of state, local or foreign income Tax
law) or agreed to have Section 341(f)(2) of the IRC (or any
corresponding provision of state, local or foreign income Tax law)
apply to any disposition of any asset owned by it.
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(h) None of the assets of any of the Subject Companies is
property that any of the Subject Companies is required to treat as
being owned by any other Person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the IRC.
(i) None of the assets of any of the Subject Companies
directly or indirectly secures any debt, the interest on which is
Tax-exempt under Section 103(a) of the IRC.
(j) None of the assets of any of the Subject Companies is
"tax-exempt use property" within the meaning of Section 168(h) of the
IRC.
(k) None of the Subject Companies has agreed to make nor is
any Subject Company required to make any adjustment under Section
481(a) of the IRC by reason of a change in accounting method or
otherwise.
(l) None of the Subject Companies has participated in or will
participate in an international boycott within the meaning of Section
999 of the IRC.
(m) None of the Subject Companies is a party to any agreement,
Contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the IRC.
(n) None of the Subject Companies has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax
treaty or convention between the United States and such foreign
country.
(o) No stockholder of any of the Subject Companies is a Person
other than a United States Person within the meaning of the IRC.
(p) None of the Subject Companies is a party to any joint
venture, partnership or other arrangement or contract that could be
treated as a partnership for federal and applicable state income Tax
purposes.
(q) The unpaid Taxes of the Companies do not exceed the
reserve for Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
set forth or included in the Balance Sheet, as adjusted for the passage
of time through the Closing, in accordance with the past custom and
practice of the Subject Companies.
(r) NPS Staffing Specialists, Inc. has at all times during its
existence properly been treated as an S Corporation (as defined in the
IRC) for federal and applicable state income tax purposes.
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5.11 No Material Adverse Change. Since the date of the Balance
Sheet, other than changes in net worth there has not been any Material Adverse
Change in the business or operations of any of the Subject Companies, and, to
the Knowledge of the Sellers, no event has occurred or circumstance exists that
may result in such a Material Adverse Change.
5.12 Employee Benefits.
(a) (i) Schedule 5.12 contains a complete and accurate list of
all Plans and Other Benefit Obligations of the Subject
Companies, and identifies as such all Plans that are Qualified
Plans.
(ii) Schedule 5.12 contains a complete and accurate
list of (A) all ERISA Affiliates of the Subject Companies, and
(B) all Plans of which any such ERISA Affiliate is or was a
Plan Sponsor, in which any such ERISA Affiliate participates
or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(iii) Schedule 5.12 sets forth the financial cost of
all obligations owed under any Plan of any of the Subject
Companies or Other Benefit Obligation of any of the Subject
Companies that is not subject to the disclosure and reporting
requirements of ERISA.
(b) the Sellers and the Subject Companies have delivered to
the Purchaser:
(i) all documents that set forth the terms of each
Plan and Other Benefit Obligations of the Subject Companies
and of any related trust, including (A) all plan descriptions
and summary plan descriptions of the Plans of the Subject
Companies for which plan descriptions and summary plan
descriptions are required to be prepared, filed and
distributed and (B) all summaries and descriptions furnished
to participants and beneficiaries regarding the Plans and the
Other Benefit Obligations of the Subject Companies for which a
plan description or summary plan description is not required;
(ii) all personnel, payroll and employment manuals
and policies of the Subject Companies;
(iii) a written description of any Plan or Other
Benefit Obligation of the Subject Companies that is not
otherwise in writing;
(iv) all registration statements filed with respect
to any Plan of the Subject Companies;
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(v) all insurance policies purchased by or to provide
benefits under any Plan of the Subject Companies;
(vi) all contracts with third party administrators,
actuaries, investment managers, consultants and other
independent contractors that relate to any Plan or Other
Benefit Obligation of the Subject Companies;
(vii) all reports submitted within the four years
preceding the date of this Agreement by third party
administrators, actuaries, investment managers, consultants or
other independent contractors with respect to any Plan or
Other Benefit Obligation of the Subject Companies;
(viii) all notifications to employees of the Subject
Companies of their rights under ERISA Section601 et seq. and
IRC Section4980B;
(ix) the Form 5500 filed with respect to each Plan of
the Subject Companies for the most recent three plan years,
including all schedules thereto and the opinions of
independent accountants;
(x) all notices that were given by the Subject
Companies or any ERISA Affiliate of any of the Subject
Companies or any Plan of the Subject Companies to the IRS or
any participant or beneficiary, pursuant to statute, within
the four years preceding the date of this Agreement, including
notices that are expressly mentioned elsewhere in this Section
5.12;
(xi) all notices that were given by the IRS or the
Department of Labor to any of the Subject Companies, any of
their ERISA Affiliates or any Plan of the Subject Companies
within the four years preceding the date of this Agreement;
and
(xii) the most recent IRS determination letter for
each Qualified Plan which is a Plan of the Subject Companies.
(c) Except as set forth in Schedule 5.12:
(i) Each of the Subject Companies has performed all
of its respective obligations under all the Plans and Other
Benefit Obligation of the Subject Companies. Each of the
Subject Companies has made appropriate entries in its
respective financial records and statements for all
obligations and liabilities under such Plans and Other Benefit
Obligations that have accrued but are not due.
(ii) No statement, either written or, to the
Knowledge of the Sellers, oral, has been made by any of the
Subject Companies to any Person with regard to any Plan or
Other Benefit Obligation that was not in accordance with the
Plan or Other
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Benefit Obligation and that could have an adverse economic
consequence to any of the Subject Companies.
(iii) Each of the Subject Companies, with respect to
all the Plans and the Other Benefit Obligations of the Subject
Companies, is, and each Plan and Other Benefit Obligation of
the Subject Companies is in full compliance with ERISA, the
IRC, and other applicable Laws including the provisions of
such Laws expressly mentioned in this Section 5. 12.
(1) No transaction prohibited by ERISA 406
and no "prohibited transaction" under IRC 4975(c) has
occurred with respect to any Plan of the Subject
Companies.
(2) None of the Subject Companies has any
liability to the IRS with respect to any Plan,
including any liability imposed by Chapter 43 of the
IRC.
(3) None of the Subject Companies has any
liability under ERISA 502.
(4) All filings required by ERISA and the
IRC as to each Plan of the Subject Companies have
been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have
been timely provided.
(5) All contributions and payments made or
accrued by Subject Companies and the ERISA Affiliates
of the Subject Companies with respect to all the
Plans and Other Benefit Obligations of the Subject
Companies are deductible under IRC 162 or 404. No
amount, nor any asset of any Plan of the Subject
Companies is subject to Tax as unrelated business
taxable income.
(iv) None of the Subject Companies nor any ERISA
Affiliate of any of the Subject Companies sponsors or
maintains, previously sponsored or maintained, or has or had
any obligation to contribute to any Title IV Plan,
Multiemployer Plan or any Welfare Plan that provides or will
provide benefits described in Section 3(1) of ERISA to any
former employee or retiree of the Subject Companies or any
ERISA Affiliate of any of the Subject Companies, except as
required under Part 6 of Title I of ERISA and Section 4980B of
the Code.
(v) Each Plan of the Subject Companies which is not a
Multi-Employer Plan can be terminated within thirty days,
without payment of any additional contribution or amount and
without the vesting or acceleration of any benefits
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promised by such Plan, other than vesting of any accrued
benefits under any Pension Plan.
(vi) No event has occurred or circumstance exists
that could result in a material increase in premium costs of
the Plans and Other Benefit Obligations of the Subject
Companies that are insured or a material increase in benefit
costs of such Plans and Other Benefit Obligations that are
self-insured.
(vii) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal
proceeding involving, any Plan or Other Benefit Obligation of
the Subject Companies is pending or, to the Knowledge of the
Sellers, is Threatened.
(viii) Each Qualified Plan of the Subject Companies
is qualified in form and operation under IRC Section 401(a);
each trust for each such Plan is exempt from federal income
Tax under IRC Section 501(a). No event has occurred or
circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan
or trust.
(ix) Each of the Subject Companies has complied with
the provisions of ERISA Section601 et seq. and IRC
Section 4980B.
(x) No payment that is owed or may become due to any
director, officer, employee or agent of any of the Subject
Companies will be non-deductible to any of the Subject
Companies or subject to Tax under IRC Section 280G or
Section 4999; nor will any of the Subject Companies be
required to "gross up" or otherwise compensate any such
Person because of the imposition of any excise Tax on a
payment to such Person.
(xi) Neither the execution of the Transaction
Documents nor the consummation of the Transactions will result
in the payment, vesting or acceleration of any benefit.
5.13 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Schedule 5.13:
(i) each of the Subject Companies is, and at all
times since January 1, 1995 has been, in all material
respects, in compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
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(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may
constitute or result in a violation by any of the Subject
Companies of, or a failure on the part of any of the Subject
Companies to comply with, any Legal Requirement or (B) may
give rise to any obligation on the part of any of the Subject
Companies to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature; and
(iii) no Subject Company has received, at any time
since January 1, 1995, any written or, to the Knowledge of the
Sellers, other notice or other communication from any
Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or (B) any
actual, alleged, possible or potential obligation on the part
of any of the Subject Companies to undertake, or to bear all
or any portion of the cost of, any remedial action of any
nature.
(b) Schedule 5.13 contains a complete and accurate list of
each material Governmental Authorization that is held by any of the
Subject Companies or that otherwise relates to the business of, or to
any of the assets owned or used by, any of the Subject Companies. Each
Governmental Authorization listed or required to be listed in Schedule
5.13 is valid and in full force and effect. Except as set forth in
Schedule 5.13:
(i) each of the Subject Companies is, and at all
times since January 1, 1995, has been, in all material
respects, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Schedule 5.13;
(ii) no event has occurred or circumstance exists
that (A) constitutes or results directly or indirectly in a
violation of or a failure to comply with any term or
requirement of any Governmental Authorization or (B) results
directly or indirectly in the revocation, withdrawal,
suspension, cancellation or termination of, or any
modification to, any Governmental Authorization;
(iii) none of the Subject Companies has received, at
any time since January 1, 1995, any written or, to the
Knowledge of the Sellers, other notice or communication from
any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure
to comply with any term or requirement of any Governmental
Authorization or (B) any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental
Authorization; and
(iv) all material applications required to have been
filed for the renewal of the Governmental Authorizations have
been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other material filings required
to have been
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made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Schedule 5.13
collectively constitute all of the material Governmental Authorizations
necessary to permit each of the Subject Companies to lawfully conduct and
operate its business in the manner it currently conducts and operates such
business and to permit the Subject Companies to own and use their assets in the
manner in which they currently own and use such assets.
5.14 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 5.14, there is no pending
Proceeding:
(i) that has been commenced by or against any of the
Subject Companies or, to the Knowledge of the Sellers, that
otherwise relates to or may affect the business of, or any of
the assets owned or used by, any of the Subject Companies; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering
with, any of the Transactions.
Except as set forth in Schedule 5.14, to the Knowledge of the
Sellers, (1) no such Proceeding has been Threatened, and (2) no event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any such Proceeding. The Sellers have delivered to the
Purchaser copies of all pleadings, correspondence, and other documents relating
to each Proceeding listed in Schedule 5.14. The Proceedings listed in Schedule
5.14 will not, individually or in the aggregate, have a Material Adverse Effect
on the business, operations, assets, condition or prospects of any of the
Subject Companies.
(b) Except as set forth in Schedule 5.14:
(i) there is no Order to which any of the Subject
Companies or any of the assets owned or used by any of the
Subject Companies, is subject;
(ii) none of the Sellers is subject to any Order that
relates to the business of, or any of the assets owned or used
by, any of the Subject Companies; and
(iii) to the Knowledge of the Sellers, no officer,
director, agent or employee of any of the Subject Companies is
subject to any Order that prohibits such officer, director,
agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of any of the
Subject Companies.
(c) Except as set forth in Schedule 5.14:
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(i) each of the Subject Companies is, and at all
times since January 1, 1995, has been, in full compliance with
all of the terms and requirements of each Order to which it,
or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which any of the Subject
Companies or any of the assets owned or used by any of the
Subject Companies, is subject; and
(iii) none of the Subject Companies has received, at
any time since January 1, 1995, any written or, to the
Knowledge of the Sellers, other notice or communication from
any Governmental Body or any other Person regarding any
actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order
to which any of the Subject Companies or any of the assets
owned or used by any of the Subject Companies, is or has been
subject.
5.15 Absence of Certain Changes and Events.
Except as set forth in Schedule 5.15, since the date of the
Balance Sheet, each of the Subject Companies has conducted its business only in
the Ordinary Course of Business and there has not been any:
(a) change in authorized or issued capital stock of, or other
equity interests in, any of the Subject Companies; grant of any stock
option or right to purchase shares of capital stock, of or other equity
interests in, any of the Subject Companies; issuance of any security
convertible into such capital stock or other equity interests; grant of
any registration rights; purchase, redemption, retirement or other
acquisition by any of the Subject Companies of any shares of any such
capital stock or other equity interests; or declaration or payment of
any dividend or other distribution or payment in respect of shares of
capital stock or other equity interests;
(b) amendment to the Organizational Documents of any of the
Subject Companies;
(c) payment or increase by any of the Subject Companies of any
bonuses, salaries, or other compensation to any stockholder, director,
officer or (except in the Ordinary Course of Business) employee or
entry into any employment, severance or similar Contract with any
director, officer or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any employees of any of the Subject Companies;
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(e) damage to or destruction or loss of any asset or property
of any of the Subject Companies, whether or not covered by insurance,
that would have a Material Adverse Effect on any of the Subject
Companies;
(f) entry into, termination or acceleration of, or receipt of
notice of termination of (i) any material license, distributorship,
dealer, sales representative, joint venture, credit or similar
agreement or (ii) any Contract or transaction involving a Liability by
or to any of the Subject Companies of at least $10,000;
(g) sale (other than sales in the Ordinary Course of
Business), lease or other disposition of any material asset or property
of any of the Subject Companies or mortgage, pledge or imposition of
any lien or other Encumbrance on any material asset or property of any
of the Subject Companies, including the sale, lease or other
disposition of any of the Intellectual Property Assets;
(h) delay or failure to repay when due any obligation,
including without limitation, accounts payable and accrued expenses;
(i) accrual of any expenses except for such accruals in the
Ordinary Course of Business;
(j) capital expenditures in excess of $10,000;
(k) cancellation or waiver of any claims or rights with a
value to any of the Subject Companies in excess of $10,000;
(l) any payment, discharge or satisfaction of any Liability by
any Subject Company, other than the payment, discharge or satisfaction
of Liabilities, in the Ordinary Course of Business;
(m) incurrence of or increase in, any Liability, except in the
Ordinary Course of Business, or any deferred payment of or failure to
pay when due, any Liability;
(n) material change in the accounting methods used by any of
the Subject Companies;
(o) material disagreement or dispute with any key employee
with respect to compensation, equity ownership, duties or authority; or
(p) agreement, whether oral or written, by any of the Subject
Companies to do any of the foregoing.
5 . 16 Contracts; No Defaults.
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(a) Schedule 5.16 contains a complete and accurate list, and
the Sellers have made available to the Purchaser true and complete
copies, of:
(i) each written Applicable Contract that involves
performance of services or delivery of goods by any of the
Subject Companies of an amount or value, individually or, for
a series of related Applicable Contracts, in the aggregate, in
excess of $10,000;
(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to
any of the Subject Companies of an amount or value,
individually or, for a series of related Applicable Contracts,
in the aggregate, in excess of $20,000;
(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves
expenditures of any of the Subject Companies, individually or,
for a series of related Applicable Contracts, in the
aggregate, in excess of $10,000, or receipts of any of the
Subject Companies, individually or, for a series of related
Applicable Contracts, in the aggregate, in excess of $20,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Applicable Contract of any of the Subject Companies affecting
the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property
(except personal property leases and installment and
conditional sales agreements having a value per item or
aggregate payments of less than $10,000 and with terms of less
than one year);
(v) each licensing agreement or other Applicable
Contract of any of the Subject Companies with respect to
patents, trademarks, copyrights or other intellectual
property, except agreements with current or former employees,
regarding the appropriation or the non-disclosure of any of
the Intellectual Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract of any of the Subject Companies to or with
any labor union or other employee representative of a group of
employees and each other written employment or consulting
agreement with any employees or consultants;
(vii) each joint venture, partnership and other
Applicable Contract of any of the Subject Companies (however
named) involving a sharing of profits, losses, costs or
liabilities by any of the Subject Companies with any other
Person;
(viii) each Applicable Contract of any of the Subject
Companies containing covenants that in any way purport to
restrict the business activity of any of the Subject Companies
or any Affiliate of any of the Subject Companies or limit the
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freedom of any of the Subject Companies or any Affiliate of
any of the Subject Companies to engage in any line of business
or to compete with any Person;
(ix) each Applicable Contract of any of the Subject
Companies providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for
goods;
(x) each power of attorney that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides
for an express undertaking by any of the Subject Companies to
be responsible for consequential damages;
(xii) each Applicable Contract of any of the Subject
Companies for capital expenditures in excess of $10,000;
(xiii) each Applicable Contract which, to the
Knowledge of the Sellers, will result in a material loss to
the Subject Companies;
(xiv) each Applicable Contract between a Subject
Company and its former or current stockholders, directors,
officers and employees (other than standard employment
agreements previously furnished to or approved by the
Purchaser);
(xv) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by any of the Subject Companies other than in the
Ordinary Course of Business; and
(xvi) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Schedule 5.16 sets forth reasonably complete details
concerning such Contracts, including the parties to the Contracts, the amount of
the remaining commitment of any of the Subject Companies under the Contracts,
and the place where details relating to the Contracts are located.
(b) Except as set forth in Schedule 5.16, no officer,
director, agent, employee, consultant or contractor of any of the
Subject Companies is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant or
contractor to (A) engage in or continue any conduct, activity or
practice relating to the business of any of the Subject Companies or
(B) assign to any of the Subject Companies or to any other Person any
rights to any invention, improvement or discovery.
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(c) Except as set forth in Schedule 5.16, each Contract
identified or required to be identified in Schedule 5.16 is in full
force and effect and is valid and enforceable in accordance with its
terms.
(d) Except as set forth in Schedule 5.16:
(i) each of the Subject Companies is, and at all
times since January 1, 1995, has been, in compliance with all
material terms and requirements of each material Contract
under which any of the Subject Companies has or had any
obligation or Liability or by which any of the Subject
Companies or any of the assets owned or used by any of the
Subject Companies is or was bound;
(ii) each other Person that has or had any obligation
or Liability under any material Contract under which any of
the Subject Companies has or had any rights is, and at all
times since January 1, 1995 has been, in compliance with all
material terms and requirements of such Contract;
(iii) to the Knowledge of the Sellers, no event has
occurred or circumstance exists that (with or without notice
or lapse of time) may contravene, conflict with, or result in
a violation or breach of, or give any of the Subject Companies
or any other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate or modify, any Applicable
Contract; and
(iv) neither of the Subject Companies has given to or
received from any other Person, at any time since January 1,
1995, any written or, to the Knowledge of the Sellers, other
notice or other communication regarding any actual, alleged,
possible or potential violation or breach of, or default
under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or
payable to any of the Subject Companies under current or completed
Contracts with any Person and no such Person has made written demand
for such renegotiation.
(f) The Contracts relating to the provision of products or
services by the Subject Companies have been entered into in the
Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in
violation of any Legal Requirement.
5. 17 Insurance.
(a) The Subject Companies have delivered to the Purchaser:
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(i) a true and complete list of all policies of
insurance to which any of the Subject Companies is a party or
under which any of the Subject Companies or any director or
officer of any of the Subject Companies, is or has been
covered at any time within the three years preceding the date
of this Agreement; and
(ii) any statement by the auditor of the Financial
Statements prepared in connection with such Financial
Statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Schedule 5.17 describes:
(i) any self-insurance arrangement by or affecting
any of the Subject Companies, including any reserves
established thereunder; and
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by any
of the Subject Companies.
(c) Schedule 5.17 sets forth, by year, for the current policy
year and each of the three preceding policy years:
(i) a summary of the loss experience under each
policy; and
(ii) a statement describing the loss experience for
all claims that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth in Schedule 5.17:
(i) All policies to which any of the Subject
Companies is a party or that provide coverage to any of the
Subject Companies or any director or officer of any of the
Subject Companies:
(l) are valid, outstanding and enforceable;
(2) taken together, provide adequate
insurance coverage for the assets and the operations
of the Subject Companies for all risks normally
insured against by a Person carrying on the same
business as any of the Subject Companies;
(3) are sufficient for compliance with all
Legal Requirements and Contracts to which any of the
Subject Companies is a party or by which it is bound;
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(4) will continue in full force and effect
following the consummation of the Transactions; and
(5) do not provide for any retrospective
premium adjustment or other experienced-based
liability on the part of any of the Subject
Companies.
(ii) neither of the Subject Companies has received
(A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) To the Knowledge of the Sellers, each of the
Subject Companies has given notice to the insurer of all
claims that may be insured thereby.
5 .18 Environmental Matters .
Except as set forth in Schedule 5.18:
(a) Each of the Subject Companies is, and at all times has
been, in full compliance with, and has not been and is not in violation
of or liable under, any Environmental Law, except where such
noncompliance or violations would not, individually or in the
aggregate, have a Material Adverse Effect on any of the Subject
Companies. To the Knowledge of the Sellers, none of the Subject
Companies has any basis to expect, nor has it or any other Person for
whose conduct any of the Subject Companies is or may be held to be
responsible received, any actual or Threatened order or written or
other notice or communication from (i) any Governmental Body or private
citizen acting in the public interest or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of any
actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal or
mixed) in which any of the Subject Companies has had an interest, or
with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported,
used or processed by the Subject Companies or any other Person for
whose conduct any of the Subject Companies is or may be held
responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
(b) There are no pending or Threatened claims, Encumbrances or
other restrictions of any nature, resulting from any Environmental,
Health and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting (i) to the Knowledge of
the Sellers, any of the Facilities or (ii) any other properties and
assets (whether real, personal or mixed) in which any of the Subject
Companies has or had an interest.
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(c) Neither the Subject Companies nor any other Person for
whose conduct any of the Subject Companies is or may be held
responsible, has received any citation, directive, inquiry, notice,
Order, summons, warning or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual or
potential violation or failure to comply with any Environmental Law, or
of any alleged, actual or potential obligation to undertake or bear the
cost of any Environmental, Health and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether
real, personal or mixed) in which any of the Subject Companies has or
had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred,
imported, used or processed by the Subject Companies or any other
Person for whose conduct any of the Subject Companies is or may be held
responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(d) Neither the Subject Companies nor any other Person for
whose conduct any of the Subject Companies is or may be held
responsible, has any Environmental, Health and Safety Liabilities with
respect to the Facilities or, to the Knowledge of the Sellers, with
respect to any other properties and assets (whether real, personal or
mixed) in which any of the Subject Companies (or any predecessor), has
or had an interest, or at any property geologically or hydrologically
adjoining the Facilities or any such other property or assets.
(e) To the Knowledge of the Sellers, there are no Hazardous
Materials present on or in the Environment at the Facilities or at any
geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, dumps or any other part of the
Facilities or such adjoining property, or incorporated into any
structure therein or thereon. None of the Subject Companies, any other
Person for whose conduct any of the Subject Companies is or may be held
responsible, or, to the Knowledge of the Sellers, any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or
assets (whether real, personal or mixed) in which any of the Subject
Companies has or had an interest.
(f) To the Knowledge of the Sellers, there has been no Release
or Threat of Release of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used
or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal or mixed) in which any of
the Subject Companies has or had an interest, or, to the Knowledge of
the Sellers, any geologically or hydrologically adjoining property,
whether by the Subject Companies or any other Person.
(g) The Subject Companies have delivered to the Purchaser true
and complete copies and results of any reports, studies, analyses,
tests or monitoring possessed or initiated by any of the Subject
Companies pertaining to Hazardous Materials or Hazardous Activities
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in, on or under the Facilities or concerning compliance by the Subject
Companies or any other Person for whose conduct it is or may be held
responsible with Environmental Laws.
5.19 Labor Relations; Compliance: Employees. Except as set
forth in Schedule 5.19, since January 1, 1995, neither of the Subject Companies
has been nor is a party to any collective bargaining or other labor Contract.
Except as set forth in Schedule 5.19, since January 1, 1995, there has not been,
there is not presently pending or existing, and, to the Knowledge of the
Sellers, there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage or employee grievance process, (b) any Proceeding against or affecting
any of the Subject Companies relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
Governmental Body, organizational activity or other labor or employment dispute
against or affecting any of the Subject Companies or their respective premises
or (c) any application for certification of a collective bargaining agent. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
any of the Subject Companies, and no such action is contemplated by any of the
Subject Companies. Except as set forth in Schedule 5.19, the Subject Companies
have complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closing. Except as set
forth in Schedule 5.19, none of the Subject Companies is liable for the payment
of any compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
Schedule 5.19 sets forth the names of all Persons employed by any of the Subject
Companies who are expected to receive more than $50,000 annualized cash
compensation for the 1998 calendar year from any of the Subject Companies
(including without limitation, salary, commission and bonus) and who are
expected to be employed by any of the Subject Companies on the Closing Date.
Except as set forth in Schedule 5.19, neither of the Subject Companies has
entered into any severance or similar arrangement in respect of any personnel
that provides for any obligation (absolute or contingent) of any of the Subject
Companies or any other Person to make any payment to any such personnel
following termination of employment.
5.20 Intellectual Property.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the name "NPS" and all fictional business names,
trade names, registered and unregistered trademarks, service
marks and applications owned by, used by or licensed to any of
the Subject Companies (collectively, "the Marks");
(ii) all of the patents, patent applications and
inventions and discoveries that may be patentable of any of
the Subject Companies (collectively, "the Patents");
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(iii) all of the copyright rights in both published
works and unpublished works of any of the Subject Companies
(collectively, "the Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings and blue prints
owned, used or licensed by any of the Subject Companies as
licensee or licensor (collectively, "the Trade Secrets").
(b) Agreements. Schedule 5.20 contains a complete and accurate
list and summary description, including any royalties paid or received
by any of the Subject Companies, of all Contracts relating to the
Intellectual Property Assets to which any of the Subject Companies is a
party or by which any of the Subject Companies is bound, except for any
license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of less
than $1,000 under which any of the Subject Companies is the licensee.
There are no outstanding and, to the Knowledge of the Sellers, no
Threatened disputes or disagreements with respect to any such contract.
(c) Know-How Necessary for the Business. The Intellectual
Property Assets are all those necessary for the operation of the
business of any of the Subject Companies as it is currently conducted.
(d) Patents. None of the Subject Companies has been issued any
Patents or has any Patents pending No process or know-how used by any
of the Subject Companies is known to infringe or is alleged to infringe
any patent or other proprietary right of any other Person.
(e) Trademarks.
(i) Schedule 5.20 contains a complete and accurate
list and summary description of all the Marks of the Subject
Companies. Except as set forth in Schedule 5.20, the Subject
Companies are the owners of such right, title and interest in
and to each of the Marks as is necessary to conduct the
business of the Subject Companies, free and clear of all
liens, security interests, charges, Encumbrances, equities and
other adverse claims.
(ii) Except as set forth in Schedule 5.20, all the
Marks of the Subject Companies that have been registered with
the United States Patent and Trademark Office are, to the
Knowledge of the Sellers, currently in compliance with all
formal legal requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the
Closing.
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(iii) Except as set forth in Schedule 5.20, no Mark
of the Subject Companies has been or is now involved in any
opposition, invalidation or cancellation and, to the Knowledge
of the Sellers, no such action is Threatened with the respect
to any of the Marks of the Subject Companies.
(iv) Except as set forth in Schedule 5.20, to the
Knowledge of the Sellers, there is no potentially interfering
trademark or trademark application of any third party.
(v) Except as set forth in Schedule 5.20, no Mark of
any Subject Company is infringed or, to the Knowledge of the
Sellers, has been challenged or threatened in any way. None of
the Marks of the Subject Companies used by any of the Subject
Companies is known to infringe or is alleged to infringe any
trade name, trademark or service mark of any third party.
(f) Copyrights.
(i) Schedule 5.20 contains a complete and accurate
list and summary description of all the Copyrights of the
Subject Companies. The Subject Companies are the owners of
such right, title and interest in and to each of the
Copyrights as is necessary to conduct the business of the
Subject Companies, free and clear of all material liens,
security interests, charges, Encumbrances, equities and other
adverse claims.
(ii) All the material Copyrights of the Subject
Companies that have been registered are currently in
compliance with formal legal requirements, are valid and
enforceable and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the date
of Closing.
(iii) No Copyright of the Subject Companies is
infringed or, to the Knowledge of the Sellers, has been
challenged or threatened in any way. None of the subject
matter of any of the Copyrights of the Subject Companies is
known to infringe or is alleged to infringe any copyright of
any third party or is a derivative work based on the work of a
third party.
(g) Trade Secrets. None of the Subject Companies has any Trade
Secrets and no Trade Secrets are necessary or currently used by any of
the Subject Companies to conduct its business as it is presently
conducted.
5.21 Certain Payments. To the knowledge of the Sellers, since
January 1, 1995, none of the Subject Companies, nor any director, officer, agent
or employee of any of the Subject Companies or any other Person affiliated with
or acting for or on behalf of any of the Subject Companies, has directly or
indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence
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payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of any of the Subject Companies or any Affiliate of
any of the Subject Companies or (iv) in violation of any Legal Requirement or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of any of the Subject Companies.
5.22 No Other Agreements to Sell Assets or Capital Stock of
any of the Subject Companies. None of the Subject Companies, nor any officers,
directors or Affiliates of the Subject Companies have any commitment or legal
obligation, absolute or contingent, to any other Person or firm, other than as
contemplated by the Transactions, to sell, assign, transfer or effect a sale of
any of the assets (other than inventory and products in the Ordinary Course of
Business), to sell or effect a sale of the capital stock or other equity
interests of any of the Subject Companies, to effect any merger, consolidation,
liquidation, dissolution or other reorganization of any of the Subject
Companies, to enter into any agreement or cause the entering into of an
agreement with respect to any of the foregoing.
5.23 Relationships with Related Persons. Except as set forth
in Schedule 5.23, none of the Subject Companies, nor any of their respective
Related Persons is or has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in a Person that has (i) had
business dealings or a material financial interest in any transaction with any
of the Subject Companies other than business dealings or transactions conducted
in the Ordinary Course of Business with any of the Subject Companies at
substantially prevailing market prices and on substantially prevailing market
terms or (ii) engaged in a business competing with any of the Subject Companies
with respect to any line of the products or services of any of the Subject
Companies in any market presently served by any of the Subject Companies, except
for less than one percent (1%) of the outstanding capital stock of any such
competing business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in Schedule 5.23, no Related Person
of any of the Subject Companies is a party to any Contract with, or has any
claim or right against, any of the Subject Companies.
5.24 Customers and Suppliers. Schedule 5.24 contains a
complete and accurate list of the twenty (20) largest suppliers and twenty (20)
largest customers of the Subject Companies during the last fiscal year, showing
the approximate total purchases by the Subject Companies from each such supplier
during such fiscal year and the total sales by the Subject Companies to each
such customer during such fiscal year. Since the date of the Balance Sheet,
there has been no adverse change in the business relationship with any supplier
or customer named in Schedule 5.24 and no threat or indication that any such
change is reasonably foreseeable.
5.25 Bank Accounts. Schedule 5.25 sets forth an accurate and
complete list showing the name and address of each bank in which any of the
Subject Companies has any account, safe
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deposit box, borrowing arrangement or certificate of deposit, the number of any
such account or any such box and the names of all Persons authorized to draw
thereon or to have access thereto.
5.26 Brokers and Finders; Advisors. Neither the Sellers nor
any of the Subject Companies nor their respective agents have incurred any
obligation or Liability for brokerage or finders' fees or agents' commissions or
other similar payment in connection with this Agreement. The Sellers agree to
indemnify the Purchaser and the Subject Companies against and to hold the
Purchaser and the Subject Companies harmless from, any claims for brokerage or
similar commission or other compensation which may be made against the Purchaser
or the Subject Companies by any third party in connection with the Transactions,
which claim is based upon such third party having acted as broker, finder,
investment banker, advisor, consultant or appraiser or in any similar capacity
on behalf of any of the Subject Companies, the Sellers or any of their
respective Affiliates.
5.27 Disclosure. No representation or warranty of the Sellers
in this Agreement and no statement in the Disclosure 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.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers as
follows:
6.1 Organization of Purchaser. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and corporate authority to own,
lease and operate its properties and to carry on its business in the manner in
which such business is now being conducted, to own the Stock being acquired in
the Acquisition pursuant to this Agreement and to enter into and perform its
obligations under this Agreement.
6.2 Corporate Authority and Ability. All requisite corporate
authorizations for the execution, delivery and performance by the Purchaser of
this Agreement and the consummation of the Transactions have been obtained. No
further corporate action shall be necessary on the part of the Purchaser to
authorize the execution, delivery and performance of this Agreement or the
consummation of the Transactions.
6.3 Authorization: No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms. Upon the execution and delivery by the
Purchaser of the Transaction Documents to which it is a party, such
Transaction Documents will constitute the legal, valid and binding
obligations of the
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Purchaser, enforceable against the Purchaser in accordance with their
respective terms, except where such enforceability may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (ii) the general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. The Purchaser has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and
the Transaction Documents to which it is a party and to perform its
obligations under this Agreement and the Transaction Documents to which
it is a party.
(b) Neither the execution and delivery of this Agreement by
the Purchaser nor the consummation or performance of any of the
Transactions by the Purchaser will give any Person the right to
prevent, delay, or otherwise interfere with any of the Transactions
pursuant to: (i) any provision of the Purchaser's Organizational
Documents; (ii) any resolution adopted by the board of directors or the
stockholders of the Purchaser; (iii) any Legal Requirement or Order to
which the Purchaser may be subject; or (iv) any Contract to which the
Purchaser is a party or by which the Purchaser may be bound, except in
the case of each of clauses (iii) and (iv) above, for such
contraventions, conflicts, violations, Liabilities, reassessments,
revaluations, breaches or creations of Encumbrances which, individually
and in the aggregate, would not have a Material Adverse Effect with
respect to the Purchaser. Except as set forth in Schedule 6.3, the
Purchaser is not and will not be required to obtain any Consent from
any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Transactions.
6.4 Proceedings. There is no pending Proceeding that has been
commenced against the Purchaser and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Transactions. To the Purchaser's knowledge, no such Proceeding has been
Threatened.
6.5 Investment. The Purchaser is purchasing the Stock for its
own account for investment, without a view to their distribution within the
meaning of Section 2(11) of the Securities Act.
6.6 Brokers or Finders. The Purchaser and its respective
officers and agents have incurred no obligation or Liability, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Sellers harmless from any such
payment alleged to be due by or through the Purchaser as a result of the action
of the Purchaser or its respective officers or agents.
6.7 Disclosure. No representation or warranty of the Purchaser
in this Agreement and no statement in Schedule 6.2 omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. The copies of the charter
documents and bylaws of the Purchaser delivered to the Sellers prior to the
Closing shall be true, correct and complete.
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ARTICLE VII
ACTIONS OF THE SELLERS, AND THE PURCHASER BEFORE AND
AFTER THE CLOSING DATE
Each of the Sellers and the Purchaser covenant and agree with
each other as follows:
7.1 Access and Investigation. Between the date of this
Agreement and the Closing, the Sellers will (a) afford the Purchaser and its
Representatives and prospective lenders and their Representatives (collectively,
"Advisors") full and free access to the Subject Companies' personnel,
properties, Contracts, books and records and other documents and data, (b)
furnish the Purchaser and its Advisors with copies of all such Contracts, books
and records and other existing documents and data as they may reasonably request
and (c) furnish the Purchaser and its Advisors with such additional financial,
operating and other data and information as they may reasonably request.
7.2 Operation of Business. Between the date of this Agreement
and the Closing, the Sellers will cause each of the Subject Companies to:
(a) conduct its business only in the Ordinary Course of
Business;
(b) use its Best Efforts to preserve intact its current
business organization, keep available the services of its current
officers, employees and agents and maintain the relations and good will
with its suppliers, customers, landlords, creditors, employees, agents
and others having business relationships with it;
(c) confer with the Purchaser and its Advisors concerning
operational matters of a material nature; and
(d) otherwise report periodically to the Purchaser concerning
the status of its business, operations and finances.
7.3 Negative Covenants.
(a) Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing, the Subject
Companies and the Sellers will not, without the prior consent of the
Purchaser, take any affirmative action or fail to take any reasonable
action within its control, as a result of which any of the changes or
events listed in Section 5.15 is likely to occur.
7.4 Required Approvals.
As promptly as practicable after the date of this Agreement,
each party will make all filings required by Legal Requirements to be made by it
in order to consummate the Transactions
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(including all filings under the HSR Act, if any). Between the date of this
Agreement and the Closing, the parties will (a) cooperate with respect to all
filings that they may elect to make or may be required by Legal Requirements to
make in connection with the Transactions and (b) cooperate in obtaining all
consents identified in Schedules 5.2 or 6.2 (including taking all actions
requested to cause early termination of any applicable waiting period under the
HSR Act).
7.5 Notification.
Between the date of this Agreement and the Closing, each party to this Agreement
will promptly notify each other party hereto in writing if such party becomes
aware of any fact or condition that causes or constitutes a Breach of any of its
representations and warranties as of the date of this Agreement, or if such
party becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition; provided, however, that such disclosure
shall not be deemed to cure any Breach of a representation or warranty. Should
any such fact or condition require any change in the Disclosure Schedules if
such Schedules were dated the date of the occurrence or discovery of any such
fact or condition, the discovering party will promptly deliver to each other
party a supplement to the Disclosure Schedules specifying such change. During
the same period, each party to this Agreement will promptly notify each other
party hereto of the occurrence of any Breach of any covenant or agreement by
such party in this Article VII or of the occurrence of any event that may make
the satisfaction of the conditions in Articles VIII and IX impossible or
unlikely; provided, however, that such disclosure shall not be deemed to cure
any Breach of a covenant or agreement or to satisfy a condition. Each party to
this Agreement shall promptly notify each other party hereto of any default, the
threat or commencement of any Proceeding or any development that occurs before
the Closing that could in any way materially affect such party, the business or
assets of such party or the ability of such party to consummate the
Transactions.
7.6 No Negotiation.
Until thirty (30) days from the date hereof or unless this
Agreement is earlier terminated pursuant to Article XI, neither the Subject
Companies nor the Sellers nor any of their respective Representatives will
directly or indirectly solicit, initiate or encourage any inquiries or proposals
from, discuss or negotiate with, provide any non-public information to or
consider the merits of any unsolicited inquiries or proposals from, any Person
(other than the Purchaser) relating to any transaction involving the sale of all
or a substantial portion of its business or assets of any of the Subject
Companies or any of their capital stock or other equity interests or any merger,
consolidation, business combination or similar transaction involving any of the
Subject Companies (each such transaction referred to herein as a "Proposed
Acquisition Transaction"). The Subject Companies and the Sellers will
immediately notify the Purchaser if any discussions or negotiations are sought
to be initiated, any inquiry or proposal is made or any information is requested
with respect to any Proposed Acquisition Transaction and notify the Purchaser of
the terms of any
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proposal which they or their respective Representatives may receive in respect
of any such Proposed Acquisition Transaction, including without limitation the
identity of the prospective purchaser or soliciting party. The Subject Companies
and the Sellers shall also provide the Purchaser with a copy of any offer.
7.7 New Office Organization and Related Cooperation. Following
the Closing, Sellers and Purchaser agree to openly communicate and cooperate
with one another in connection with the selection of New Office locations and
the negotiation of appropriate terms, conditions and covenants to be contained
in New Office Leases. Purchaser agrees to provide the Subject Companies, in a
timely manner, appropriate funds for the payment of organizational and operating
expenses pursuant to the Budget and to cause the Subject Companies to use best
efforts to provide employees for the locating, organizing, staffing and
operating each New Office in the manner consistent with the mutual benefit to be
derived by Sellers and the Subject Companies from the organization and operation
of the New Offices and the reasonable needs of the Subject Companies with
respect to the staffing and operation of their existing offices. The provision
of operating funds and employees of the Subject Companies shall be provided in a
manner consistent with the Budget.
Staffing business that is not New Business and is not with New
Clients shall continue to be serviced from the existing office which currently
services the business for a period of not less than 12 months following the
Closing Date.
7.8 Purchaser's Payment of Deferred Compensation Liability. On
the first business day after the Closing Date, the Purchaser will pay to the
obligee thereof the amount of the Deferred Compensation Liablity as set forth in
the Sellers' Certificate delivered pursuant to Section 4.2(g)(iv) hereof.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to pay the Consideration and to
take the other actions required to be taken by the Purchaser at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Purchaser, in whole or
in part):
8.1 Accuracy of Representations. All of the representations
and warranties of the Sellers in this Agreement (considered collectively) and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing.
8.2 Sellers' and Subject Companies' Performance.
(a) All of the covenants and obligations that the Sellers and
the Subject Companies are required to perform or to comply with
pursuant to this Agreement at or prior
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to the Closing (considered collectively) and each of these covenants
and obligations (considered individually), must have been performed and
complied with in all material respects.
(b) The Sellers and the Subject Companies must have delivered
each of the documents required to be delivered by the Sellers and the
Subject Companies pursuant to Section 4.2.
8.3 Consents. Each of the Consents identified in Schedule 5.2
must have been obtained and must be in full force and effect.
8.4 Additional Documents.
Sellers must have delivered to the Purchaser such documents as
the Purchaser may reasonably request for the purpose of (i) evidencing the
accuracy of any representation or warranty of the Sellers, (ii) evidencing the
performance by the Subject Companies and the Sellers, or the compliance by the
Subject Companies and the Sellers with, any covenant or obligation required to
be performed or complied with by the Subject Companies and the Sellers, (iii)
evidencing the satisfaction of any condition referred to in this Article VIII or
(iv) otherwise facilitating the consummation of any of the Transactions.
8.5 No Claim Regarding Stock Ownership or Sale Proceeds. There
must not have been made or Threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Subject Companies, or (b) is
entitled to all or any portion of the Consideration payable for the Stock.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLERS'
OBLIGATION TO CLOSE
The Sellers' obligation to sell the Stock in exchange for the
Consideration and to take the other actions required to be taken by the Sellers
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by the Sellers, in
whole or in part):
9.1 Accuracy of Representations. All of the representations
and warranties of the Purchaser in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement,
and must be accurate in all material respects as of the Closing.
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9.2 The Purchaser's Performance.
(a) All of the covenants and obligations that the Purchaser is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
(b) Each document required to be delivered by the Purchaser
pursuant to Section 4.2 must have been delivered.
9.3 Consents. Each of the Consents identified in Schedule 6.2
must have been obtained and must be in full force and effect.
9.4 Additional Documents.
The Purchaser must have delivered to the Sellers such
documents as the Sellers may reasonably request for the purpose of (i)
evidencing the accuracy of any of Purchaser's representations and warranties,
(ii) evidencing the performance by the Purchaser of, or the compliance by the
Purchaser with, any covenant or obligation required to be performed or complied
with by the Purchaser, (iii) evidencing the satisfaction of any condition
referred to in this Article IX or (iv) otherwise facilitating the consummation
or performance of any of the Transactions.
ARTICLE X
INDEMNIFICATION; REMEDIES
10.1 Survival of Representations. Etc. The representations and
warranties of the Sellers and the Purchaser contained herein shall survive until
two (2) years after the Closing; provided, however, that the representations and
warranties contained in Section 5.10, Section 5.12 and Section 5.18 shall
continue to survive until sixty (60) days after the expiration of the applicable
statute of limitations (giving effect to any waiver or extension thereof). The
right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedies based on such representations, warranties, covenants
and obligations.
10.2 Indemnifications.
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(a) By the Sellers. The Sellers shall indemnify, save and hold
harmless the Purchaser and its Affiliates and Subsidiaries and each of
their respective Representatives (individually, a Seller Indemnified
Party, and collectively, the "Seller Indemnified Parties"), from and
against any and all costs, losses, Liabilities, obligations, damages,
lawsuits, deficiencies, claims, demands and expenses (whether or not
arising out of third-party claims), including without limitation losses
in connection with workers compensation claims, interest, penalties,
costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up, remedial correction or
responsive action), damages to the Environment, attorneys' fees and all
amounts paid in investigation, defense or settlement of any of the
foregoing (herein, "Damages"), incurred in connection with, arising out
of, resulting from or incident to (i) any Breach of any representation
or warranty (including, but not limited to, the representations and
warranties contained in Section 5.10) made by the Sellers in this
Agreement; (ii) any Breach of any covenant or agreement made by the
Sellers in this Agreement or any certificate delivered by the Seller at
the Closing; or (iii) any products or services provided by any of the
Subject Companies prior to the Closing.
The term "Damages" as used in this Section 10.2 is not limited
to matters asserted by third parties against any Indemnified Party, but includes
Damages incurred or sustained by an Indemnified Party in the absence of third
party claims. Payments by any Indemnified Party of amounts for which such
Indemnified Party is indemnified hereunder shall not be a condition precedent to
recovery. The rights and remedies provided in this Article X shall be exclusive
as to any Damages incurred by a party under this Agreement; provided, however,
that nothing herein shall preclude a party from exercising its rights under this
Agreement and applicable law to such equitable remedies, including without
limitation specific performance and injunctions.
(b) By Purchaser. Purchaser shall indemnify, save and hold
harmless the Sellers and their respective Affiliates and
Representatives (the "Purchaser Indemnified Parties") from and against
any and all Damages incurred in connection with, arising out of,
resulting from or incident to (i) any Breach of any representation or
warranty made by the Purchaser in this Agreement; or (ii) any Breach of
any covenant or agreement made by the Purchaser in this Agreement.
(c) Cooperation. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and its Representatives
(including without limitation their attorneys) in the investigation,
trial and defense of such lawsuit or action and any appeal arising
therefrom; provided, however, that the indemnified party may, at its
own cost, participate in negotiations, arbitrations and the
investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom. The parties shall cooperate with each other
in any notifications to insurers.
(d) Defense of Claims. If a claim for Damages (a "Claim") is
to be made by an indemnified party hereunder against the indemnifying
party, the indemnified party shall give written notice (a "Claim
Notice") to the indemnifying party as soon as practicable after the
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indemnified party becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under
this Section 10.2. If any lawsuit or enforcement action is filed
against an indemnified party, written notice thereof shall be given to
the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or
summons). The failure of any indemnified party to give timely notice
hereunder shall not affect rights to indemnification hereunder, except
to the extent that the indemnifying party has been damaged by such
failure. After such notice, if the indemnifying party shall acknowledge
in writing to the indemnified party that the indemnifying party shall
be obligated under the terms of their indemnity hereunder in connection
with such lawsuit or action, then the indemnifying party shall be
entitled, if it so elects at the indemnifying party's own cost, risk
and expense, (i) to take control of the defense and investigation of
such lawsuit or action, (ii) to employ and engage attorneys of its own
choice, but, in any event, reasonably acceptable to the indemnified
party, to handle and defend the same unless the named parties to such
action or proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and the indemnified party
has been advised in writing by counsel that there may be one or more
legal defenses available to such indemnified party that are different
from or additional to those available to the indemnifying party, in
which event the indemnified party shall be entitled, at the
indemnifying party's cost, risk and expense, to separate counsel of its
own choosing and (iii) to compromise or settle such lawsuit or action,
which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably
withheld.
If the indemnifying party fails to assume the defense of such
lawsuit or action within fifteen (15) calendar days after receipt of the Claim
Notice, the indemnified party against which such lawsuit or action has been
asserted will (upon delivering notice to such effect to the indemnifying party)
have the right to undertake, at the indemnifying party's cost and expense, the
defense, compromise or settlement of such lawsuit or action on behalf of and for
the account and risk of the indemnifying party; provided, however, that such
lawsuit or action shall not be compromised or settled without the written
consent of the indemnifying party which consent shall not be unreasonably
withheld. If the indemnified party settles or compromises such lawsuit or action
without the prior written consent of the indemnifying party, the indemnifying
party will bear no liability hereunder for or with respect to such lawsuit or
action. In the event the indemnified party assumes the defense of the lawsuit or
action, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section 10.2 and for any final judgment
(subject to any right of appeal) and the indemnifying party agrees to indemnify
and hold harmless an indemnified party from and against any Damages by reason of
such settlement or Judgment.
(e) Representatives. No individual Representative of any party
shall be personally liable for any Damages under the provisions
contained in this Section 10.2 (except to the extent any such Person is
party hereto in his or her individual capacity). Nothing
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herein shall relieve either party of any Liability to make any payment
expressly required to be made by such party pursuant to this Agreement.
(f) Limitation on Indemnity/Commitments.
(i) The indemnification obligation of the Sellers and
the Purchaser with respect to any Breach of any representation
or warranty pursuant to Section 10.2(a)(i) or (b)(i) shall be
limited to Claims for Damages made prior to the last date of
survival thereof referred to in Section 10.1. The
indemnification obligation of the Sellers and the Purchaser
with respect to any Breach of any covenant or agreement
pursuant to Section 10.2(a)(ii) or (b)(ii) shall survive
indefinitely subject to the terms of this Agreement.
(ii) The Seller Indemnified Parties may not recover
Damages from the Sellers pursuant to Section 10.2(a)(i) or
10.3(a)(iii) until the aggregate amount of Damages relating to
such Claims for which the Indemnified Parties, in the
aggregate, are entitled to indemnification under Section
10.2(a)(i) or 10.3(a)(iii) exceeds One Hundred Thousand
Dollars ($100,000) (the "Threshold"); provided, however, in
the event that the aggregate amount of Damages for which the
Indemnified Parties are seeking indemnification under Section
10.2(a)(i) or 10.3(a)(iii) exceeds such amount, the
Indemnified Parties may recover the full amount of such
Damages. Except as provided in Section 10.2(e)(iii), the
maximum amount of Damages for which the Sellers shall be
liable pursuant to this Section 10.2 shall be Two Million
Dollars ($2,000,000). The Indemnified Parties shall have the
right to make a Claim hereunder prior to the time at which the
Threshold that is applicable to such Claim has been surpassed
for the purpose of asserting such Claim within the relevant
survival period of the applicable indemnification obligation
and any such Claim made within such period shall, to the
extent such Threshold ultimately is met, survive until its
final resolution.
(iii) The maximum damages limitations in Section
10.2(f) (ii) shall not apply to any Damages incurred in
connection with, arising out of, or resulting from any Breach
of any representation or warranty made by the Sellers in
Sections 5.3, 5.10, 5.11, 5.12 and 5.18.
(iv) The Purchaser Indemnified Parties may not
recover Damages from the Purchaser pursuant to Section
10.2(b)(i) until the aggregate amount of Damages for which the
Purchaser Indemnified Parties, in the aggregate, are entitled
to indemnification exceeds the Threshold; provided, however,
in the event that the aggregate amount of Damages for which
the Purchaser Indemnified Parties are seeking indemnification
under Section 10.2(b)(i) exceeds such amount, the Purchaser
Indemnified Parties may recover the full amount of such
Damages. Notwithstanding the foregoing, the maximum aggregate
amount of Damages for which the Purchaser
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shall be liable pursuant to this Section 10.2 shall be an
amount equal to Two Million Dollars ($2,000,000). The
Purchaser Indemnified Parties shall have the right to make a
Claim hereunder prior to the time at which the Threshold that
is applicable to such Claim has been surpassed for the purpose
of asserting such Claim within the relevant survival period of
the applicable indemnification obligation and any such Claim
made within such period shall, to the extent such Threshold
ultimately is met, survive until its final resolution.
(v) Neither (a) the termination of the representations or
warranties contained herein, nor (b) the expiration of the
indemnification obligations described above, will affect the rights of
an indemnified party in respect of any Claim made by such indemnified
party received by the Sellers prior to the expiration of the applicable
survival period provided herein.
10.3 Tax.
(a) Tax Indemnification. Except for Taxes that are reserved
for on the Closing Balance Sheet, the Sellers shall be responsible for
and pay and shall jointly and severally indemnify and hold harmless the
Purchaser and each of the Subject Companies (and each of their
respective affiliates, successors and assigns) from and against (i) all
Taxes imposed on any of the Subject Companies, or for which any of the
Subject Companies is liable, with respect to (A) all periods ending on
or prior to the Closing Date or (B) any period beginning before the
Closing Date and ending after the Closing Date, but only with respect
to the portion of such period up to and including the Closing Date
(such portion, a "Pre-Closing Partial Period"), (ii) any costs or
expenses (other than the time of employees of the Subject Companies and
advisory fees and facilitating fees associated with a federal income
tax audit of a Tax Return for a period ending on or prior to the
Closing Date or for a Pre-Closing Partial Period) with respect to the
Taxes indemnified hereunder and (iii) advisory fees and facilitating
fees with respect to a federal income tax audit for a period ending on
or prior to the Closing Date or for a Pre-Closing Partial Period. For
purposes of this Section 10.3(a), Taxes shall include the amount of
Taxes which would have been paid but for the application of any credit
or net operating or capital loss deduction attributable to any period
(or portion thereof) ending after the Closing Date, but shall not
include amounts which would have been paid but for the application of
any credit or net operating or capital loss deductions attributable to
any period (or portion thereof) ending on or before the Closing Date.
(b) Straddle Periods. Any Taxes with respect to any Subject
Company that relate to a Tax period beginning on or before the Closing
Date and ending after the Closing Date (a "Straddle Period") shall be
apportioned between the Pre-Closing Partial Period and the portion of
such Straddle Period beginning on the day after the Closing Date (the
"Post-Closing Partial Period"), as determined from the Books and
Records of such Subject Company during the portion of such period
ending on the Closing Date and the portion of such period beginning on
the day following the Closing Date consistent with the past
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practices of each Subject Company. The Purchaser shall cause each
Subject Company to file any Tax Returns for any Straddle Period, and
the Purchaser shall pay all Taxes shown as due on any such Tax Returns.
The Sellers shall pay the Purchaser all such Taxes apportioned to the
Pre-Closing Partial Period (to the extent not paid by any Subject
Company prior to the Closing Date or accrued or otherwise reflected as
a Liability on the Closing Balance Sheet) due pursuant to the filing of
any such Tax Returns under the provisions of this Section 10.3(b)
within fifteen (15) business days of receipt of notice of such filing
by the Purchaser, which notice shall set forth in reasonable detail the
calculations regarding the Sellers' share of such Taxes.
(c) Refunds. The Purchaser agrees to assign and promptly remit
(and to cause each Subject Company to assign and promptly remit) all
refunds (including interest thereon) net of any Tax effect to the
Purchaser or any Subject Company, received by the Purchaser or any
Subject Company of any Taxes for which the Sellers have indemnified the
Purchaser or any Subject Company hereunder; provided, however, that the
Purchaser shall be entitled to the portion of any refund resulting from
a carryback (including carrybacks to periods ending on or prior to the
Closing Date) of a net operating loss, net capital loss, Tax credit or
similar item sustained or arising in any period ending after the
Closing Date or in any Post-Closing Partial Period.
(d) Tax Returns for Pre-Closing Periods. The Sellers shall
prepare or cause to be prepared, and timely file or cause to be filed,
all Tax Returns (except for any 1998 partial year Tax Return for the
Subject Companies arising from an election of the Purchaser ) of any
Subject Company for all taxable periods of such Subject Company ending
on or prior to the Closing Date and shall pay or cause to be paid all
Taxes due with respect to such Tax Returns. With respect to any Tax
Return of the Subject Companies for a 1998 partial year period ending
on or prior to the Closing Date, Sellers shall pay or cause to be paid
all taxes due with respect to such period as determined from the Books
and Records of the Subject Companies for such period (to the extent not
paid by any Subject Company prior to the Closing Date or accrued or
otherwise reflected as a Liability on the Closing Balance Sheet). With
respect to any such Tax Returns for income Taxes required to be filed
by the Sellers and not required to be filed before the Closing Date,
the Sellers shall provide the Purchaser and its authorized
Representatives with copies of any such completed Tax Return at least
twenty (20) business days prior to the due date for filing of such Tax
Return and the Purchaser and its Representatives shall have the right
to review such Tax Return prior to the filing of such Tax Return.
Sellers and the Purchaser agree to consult and resolve in good faith
any issues arising as a result of such review.
(e) Other Matters. The Purchaser shall promptly notify the
Sellers in writing upon receipt by the Purchaser or any Affiliate of
the Purchaser of notice of (i) any pending or threatened federal,
state, local or foreign Tax audits or assessments of any Subject
Company and (ii) any pending or threatened federal, state, local or
foreign Tax audits or assessments of the Purchaser or any Affiliate of
the Purchaser which may affect the Tax
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Liabilities of any Subject Company with respect to any period ending on
or before the Closing Date, or any Pre-Closing Partial Period. The
Sellers shall promptly notify the Purchaser in writing upon receipt by
the Sellers or any affiliate of the Sellers of notice of any pending or
threatened federal, state, local or foreign Tax audits or assessments
relating to the income, properties or operations of any Subject
Company.
The Purchaser and the Sellers shall cooperate with each other
in the conduct of any audit or other proceedings involving any Subject Company
for periods beginning before the Closing Date and each may participate at its
own expense, provided that the Sellers shall have the right to control the
conduct of any such audit or proceeding for which the Sellers (i) agree that any
resulting Tax is covered by the indemnity provided in Section 10.3(a) of this
Agreement and (ii) demonstrate to the Purchaser their ability to make such
indemnity payment. Notwithstanding the foregoing, neither the Purchaser nor the
Sellers may settle or otherwise resolve any such claim, suit or proceeding
without the consent of the other party, such consent not to be unreasonably
withheld.
After the Closing Date, the Purchaser and the Sellers shall
make available to the other, as reasonably requested, all information, records
or documents relating to Tax liabilities or potential Tax liabilities of any
Subject Company and shall preserve all such information, records and documents
until the expiration of any applicable statute of limitations, including
extensions thereof, or such other period as required by law. The Purchaser and
the Sellers shall also make available to each other as reasonably requested by
the Purchaser or the Sellers, as the case may be, personnel responsible for
preparing or maintaining information, records and documents, in connection with
Tax matters. In case at any time after the Closing Date any further action is
necessary to carry out the purposes of this Agreement, the parties hereto shall
take all such necessary action.
All sales, value added, use, state or local transfer and gains
Taxes, registration, stamp and similar Taxes imposed in connection with the
Transactions shall be borne equally by the Purchaser, on the one hand, and the
Sellers, on the other hand.
Any payments made to the Sellers, any Subject Company or the
Purchaser pursuant to this Article X shall constitute an adjustment of the
Consideration for Tax purposes and shall be treated as such by the Purchaser and
the Sellers on their Tax Returns to the extent permitted by law.
All Tax sharing or similar agreements, if any, to which any
Subject Company is a party will be canceled at or prior to the Closing and
neither the Purchaser nor any Subject Company shall have any obligation under
any such agreement.
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ARTICLE XI
TERMINATION
11.1 Termination Events.
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by the Sellers, on the one hand, or by the Purchaser on
the other hand, if a Breach of any provision of this Agreement having a
Material Adverse Effect or representing a Material Adverse Change has
been committed by the other party or its Affiliates and such Breach has
not been expressly waived in writing;
(b) (i) by the Purchaser if any of the conditions in Article
VIII has not been satisfied as of the Closing or if satisfaction of
such a condition is or becomes impossible (other than through the
failure of the Purchaser to comply with their respective obligations
under this Agreement) and the Purchaser has not expressly waived such
condition in writing on or before the Closing; or (ii) by the Sellers,
if any of the conditions in Article IX has not been satisfied as of the
Closing or if satisfaction of such a condition is or becomes impossible
(other than through the failure of the Sellers or the Subject Companies
to comply with its obligations under this Agreement) and the Sellers
have not expressly waived such condition in writing on or before the
Closing;
(c) by mutual consent of Purchaser and the Sellers; or
(d) by either the Purchaser or the Sellers if the Closing has
not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before February 23, 1998 (the "Closing Date"), or
such later date as the Parties may agree upon.
11.2 Effect of Termination.
Each party's right of termination under Section 11.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 11.1, all further obligations
of the Parties under this Agreement will terminate, except that the obligations
in Sections 10.2, 10.3, 12.6, 12.9 and 12.10 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of this
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
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ARTICLE XII
MISCELLANEOUS
12.1 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party without the prior written
consent of the other party; except that the Purchaser may, without such consent,
assign all such rights to any lender as collateral security Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12.2 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to the Purchaser, addressed to such Purchaser at:
William W. Wilkinson
Corporate Staffing Resources, Inc.
100 E. Wayne Street, Suite 100
One Michiana Square
South Bend, IN 46601
Telephone: (219) 233-8209
Telecopy: (219) 280-2661
with a copy to:
Philip L. Carson, Esq.
Miller Carson Boxberger & Murphy LLP
1400 One Summit Square
Fort Wayne, IN 46802-3173
Telephone: (219) 423-9411
Telecopy: (219) 423-4329
If to either of the Sellers, addressed to such Seller at:
Richard D. Niermann
5625 Bahia Mar Circle
Stone Mountain, GA 30087
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With a copy to:
Robert G. Aitkens, Esq.
Aitkens & Aitkens, P.C.
1827 Powers Ferry Road
Building One, Suite 100
Atlanta, GA 30339
Telephone: (770) 952-4000
Telecopy: (770) 952-4015
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.3 Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware (without
giving effect to its choice of law principles), except with respect to matters
of law concerning the internal corporate affairs of any corporate entity which
is a party to or the subject of this Agreement, and as to those matters the law
of the jurisdiction under which the respective entity derives its powers shall
govern.
12.4 Entire Agreement: Amendments and Waivers. This Agreement,
together with all exhibits and schedules hereto (including the Disclosure
Schedule and the other agreements referred to herein), constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. This Agreement may not be amended
except in an instrument in writing signed on behalf of each of the parties
hereto. No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
12.5 Multiple Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.6 Expenses. Each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the Transactions (it being understood that in
the event of termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by the other party); provided, however, that the
Purchaser will pay for the expense of the combined audit of the Subject
Companies for the 12-month period ended October 31, 1997, in an amount not
exceeding $17,000, irrespective of whether the Transactions are closed or
terminated pursuant to the terms of Section 11.1.
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12.7 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
12.8 Titles. The titles, captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
12.9 Publicity. Except as required by law, none of the
Purchaser, the Subject Companies nor the Sellers shall issue any press release
or make any public statement regarding this Agreement and the Transactions,
without prior written approval of the other parties; provided, however, that in
the case of announcements, statements, acknowledgments or revelations which
either party is required by law to make, issue or release, the making, issuing
or releasing of any such announcement, statement, acknowledgment or revelation
by the party so required to do so by law shall not constitute a breach of this
Agreement if such party shall have given, to the extent reasonably possible, not
less than two (2) calendar days prior notice to the other party, and shall have
attempted, to the extent reasonably possible, to clear such announcement,
statement, acknowledgment or revelation with the other party. Each party hereto
agrees that it will not unreasonably withhold any such consent or clearance. The
Purchaser may, without the consent of the Sellers, issue or make an appropriate
press release or public announcement after the Closing.
12.10 Confidential Information.
(a) No Disclosure. The parties acknowledge that the
Transaction described herein is of a confidential nature and shall not
be disclosed except to consultants, advisors and Affiliates or as
required by law, until such time as the parties make a public
announcement regarding the Transaction as provided in Section 12.9.
(b) Preservation of Confidentiality. In connection with the
negotiation of this Agreement, the preparation for the consummation of
the Transactions, and the performance of obligations hereunder, the
Purchaser acknowledges that it will have access to confidential and
proprietary information relating to the Subject Companies and the
Sellers acknowledge that they will have access to confidential
information relating to the Purchaser and its Affiliates, in each case,
including technical or marketing information, ideas, methods,
developments, inventions, improvements, business plans, trade secrets,
scientific or statistical data, diagrams, drawings, specifications or
other proprietary information relating thereto, together with all
analyses, compilations, studies or other documents, records or data
prepared by the Sellers and the Subject Companies or the Purchaser, as
the case may be, or their respective Representatives or Affiliates,
which contain or otherwise reflect or are generated from such
information ("Confidential Information"). The term "Confidential
Information" does not include information received by one party in
connection with the
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Transactions which (i) is or becomes generally available to the public
other than as a result of a disclosure by such party or its
Representatives, (ii) was within such party's possession prior to its
being furnished to such party by or on behalf of the other party in
connection with the Transactions, provided that the source of such
information was not known by such party to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the other party or any other Person
with respect to such information or (iii) becomes available to such
party on a non-confidential basis from a source other than the other
party or any of their respective Representatives, provided that such
source is not bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the
other party or any other Person with respect to such information.
(c) Each party shall treat all Confidential Information of the
other party as confidential, preserve the confidentiality thereof and
not disclose any such Confidential Information, except to its
Representatives and Affiliates who need to know such Confidential
Information in connection with the Transactions. Each party shall use
all reasonable efforts to cause its Representatives to treat all such
Confidential Information of the other party as confidential, preserve
the confidentiality thereof and not disclose any such Confidential
Information. Each party shall be responsible for any breach of this
Agreement by any of its Representatives. If, however, Confidential
Information is disclosed, the party responsible for such disclosure
shall immediately notify the other party in writing and take all
reasonable steps required to prevent further disclosure.
(d) Until the Closing or the termination of this Agreement,
all Confidential Information shall remain the property of the party who
originally possessed such information. In the event of the termination
of this Agreement for any reason whatsoever, each party shall, and
shall cause its Representatives to, return to the other party all
Confidential Information (including all copies, summaries and extracts
thereof) furnished to such party by the other party in connection with
the Transactions.
(e) If one party or any of its Representatives or Affiliates
is requested or required (by oral questions, interrogatories, requests
for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) or is required by
operation of law to disclose any Confidential Information, such party
shall provide the other party with prompt written notice of such
request or requirement, which notice shall, if practicable, be at least
forty-eight (48) hours prior to making such disclosure, so that the
other party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. If, in
the absence of a protective order or other remedy or the receipt of
such a waiver, such party or any of its Representatives are
nonetheless, in the opinion of counsel, legally compelled to disclose
Confidential Information, then such party may disclose that portion of
the Confidential Information which such counsel advises is legally
required to be disclosed, provided that such party uses its reasonable
efforts to
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preserve the confidentiality of the Confidential Information,
whereupon such disclosure shall not constitute a breach of
this Agreement.
12.11 Burden and Benefit. This Agreement shall be binding upon
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. There are no third party beneficiaries of this
Agreement; provided, however, that any Person that is not a party to this
Agreement but, by the terms of Section 10.2, is entitled to indemnification,
shall be considered a third party beneficiary of this Agreement, with full
rights of enforcement as though such Person was a signatory to this Agreement.
12.12 Arbitration. In the event there shall be a dispute among
the parties arising out of or relating to this Agreement or the breach thereof,
other than Section 2.2(c), Section 2.3 or Article III, the parties agree that
such dispute shall be resolved by final and binding arbitration in Nashville,
Tennessee administered by the American Arbitration Association ("AAA"), in
accordance with AAA's Commercial Arbitration Rules then in effect. Depositions
may be taken and other discovery may be obtained during such arbitration
proceedings to the same extent as authorized under the Federal Rules of Civil
Procedure. The Purchaser and the Sellers shall each bear their own expenses
(including without limitation the fees and expenses of legal counsel and
accountants) in connection with such arbitration and the Purchaser and the
Sellers shall each bear one-half of the arbitrator's fees and expenses;
provided, however, that the arbitral award shall allocate such fees and expenses
of counsel, accountants, other advisers and the arbitrator according to the
relevant success of the Purchaser and the Sellers in the arbitration, as
determined by the arbitrator. The arbitrator shall award an amount equal to the
actual monetary damages suffered which may include interest costs. Any award
issued as a result of such arbitration shall be final and binding between the
parties and shall be enforceable by any court having jurisdiction over the party
against whom enforcement is sought.
12.13 Limitation of Liability. Notwithstanding anything to the
contrary in this Agreement, in no event shall any party hereto be liable for any
incidental or consequential damages occasioned by any failure to perform or the
breach of any obligation under this Agreement.
12.14 Additional Survival. In addition to the survival of
representations and warranties and other provisions referenced in Section 10.1
of this Agreement, which shall survive pursuant to the terms of such Section,
the obligations of the Sellers and the Purchaser contained in Sections 2.1, 2.2,
4.2, 4.3, 12.6, 12.9 and 12.10 and in Article III and Article X of this
Agreement shall survive the Closing Date indefinitely.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
PURCHASER:
Corporate Staffing Resources, Inc.
/s/ William W. Wilkinson
--------------------------------
By: William W. Wilkinson
Its: Chairman of the Board & Chief Executive
Officer
SELLERS:
/s/ Richard Niermann
--------------------------
Richard Niermann
/s/ Mary Ann Niermann
--------------------------
Mary Ann Niermann
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SCHEDULE 2.1
Target Stock
150 shares of Common Stock issued and outstanding William W. Wilkinson owns 75
shares of Common Stock William J. Wilkinson owns 75 shares of Common Stock
Sold Stock
Sold Stock equals 120 shares of Common Stock of Target William W. Wilkinson owns
60 shares of Sold Stock William J. Wilkinson owns 60 shares of Sold Stock
Contributed Stock
Contributed Stock equals 30 shares of Common Stock of Target William W.
Wilkinson owns 15 shares of Contributed Stock William J. Wilkinson owns 15
shares of Contributed Stock
LLC Interests
LLC Interests equals 2 Units in Corporate Staffing Resources LLC William W.
Wilkinson owns 1 Unit William J. Wilkinson owns 1 Unit
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SCHEDULE 2.2
Each of the Sellers will receive 50% of each of the
Consideration, the Present Shares, the 1997 Shares, the 1998 Shares and the Cash
Portion.
All of the Consideration except for $200,000 will be allocated
to the Shares. $200,000 of the Consideration will be allocated to the LLC
Interests.
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SCHEDULE 6.2
NONE.
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SCHEDULE 6.3
See attached.
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1. The capitalization of CSR, Inc., a Delaware Corporation ("Newco A") consists
of 1,000,000 shares of common stock, $.01 par value, and 1,000,000 shares of
preferred stock, $.01 par value, of which 110,000 shares of common stock and
110,000 shares of preferred stock are issued and outstanding (upon consummation
of the acquisition).
The owners of the outstanding shares and their respective ownership
are:
William W. Wilkinson and William J. Wilkinson (collectively
"The Wilkinsons"): 22,000 shares of common stock and 22,000
shares of preferred stock.
ING (U.S.) Capital Corporation: 4,800 shares of common stock
and 4,800 shares of preferred stock.
IPP97: 83,200 shares of common stock and 83,200 shares of
preferred stock.
No person owns any option, warrant or other right to acquire
any capital stock of Newco A except ING (U.S.) Capital
Corporation. The Company, following the Closing, will adopt a
stock incentive plan for the employees of the Company and its
Subsidiaries. Pursuant to Article 2 of the Acquisition
Agreement, the Company may issue further shares of common
stock to The Wilkinsons.
2. The capitalization of CSR Acquisition Corp. ("Newco B") consists of 1,000
shares of common stock, no par value, of which 100 shares are issued and
outstanding. Immediately following the Closing, Newco B will merge with
Corporate Staffing Resources, Inc., an Indiana Corporation ("Holdings").
The owners of the outstanding shares and their respective ownership
are:
Newco A: 100 shares.
No person owns any option, warrant or other right to acquire
any capital stock of Newco B.