UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported) August 21, 1996
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THE VINCAM GROUP, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-28148 59-2452823
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
2850 Douglas Road, Miami Florida 33134
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(Address of principal executive offices)
(Registrant's telephone number, including area code) (305) 460-2350
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Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On August 21, 1996, The Vincam Group, Inc. announced that it has entered into a
definitive asset purchase agreement to acquire substantially all of the business
of The Stone Mountain Group, Inc. (SMG), a professional employer organization
(PEO) headquartered in Snellville, Georgia, in exchange for approximately
$5 million in cash and notes. The transaction is expected to close during the
third quarter.
As a PEO, SMG provides businesses with an outsourcing solution to the
complexities and costs of human resource employment and management by
contractually assuming substantial employer responsibilities for the worksite
employees of its clients. SMG currently has approximately 140 clients and 2,100
worksite employees.
For the fiscal year ended December 31, 1995, SMG had operating income of
approximately $218,000 on revenues of almost $42 million. For the six months
ended June 30, 1996, SMG reported revenues of approximately $23.7 million.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit
No.
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2 Asset Purchase Agreement, dated as of August 21, 1996, by and among
The Vincam Group, Inc., The Stone Mountain Group, Inc. and
shareholders thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE VINCAM GROUP, INC.
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Registrant
Dated: August 22, 1996 BY /s/ MARTINIANO J. PEREZ
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Martiniano J. Perez
Vice President and
Controller
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THE VINCAM GROUP, INC.
INDEX TO ITEM 7(c)
EXHIBITS
Exhibit
No.
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2 Asset Purchase Agreement, dated as of August 21, 1996, by and among
The Vincam Group, Inc., The Stone Mountain Group, Inc. and
shareholders thereof.
<PAGE> Exhibit 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 21, 1996
(the "Agreement"), is by and among THE VINCAM GROUP, INC., a
Florida corporation ("Acquiror"), THE STONE MOUNTAIN GROUP, INC.,
a Georgia corporation (the "Company"), and Hal W. Pulfer, James
Beesley, Charles Frankenthal, Lester E. Frankenthal, Scott Bade
and Edward Spiegel (collectively, the six aforementioned
individuals will be referred to as the "Stone Mountain Group
Shareholders").
WITNESSETH:
WHEREAS, the Company owns and operates a professional
employer organization with a principal place of business in
Snellville, Georgia (the "Business");
WHEREAS, the Company desires to sell, transfer and assign to
the Acquiror certain of the assets of its Business including,
without limitation, the goodwill associated therewith, in
accordance with the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, Acquiror desires to purchase and assume the assets
on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company has (i)
determined that this Agreement and the transactions contemplated
herein are in the best interests of the Company and the holders of
Company Common Stock (as defined below) and (ii) approved and
adopted this Agreement and the transactions contemplated hereby
and recommended adoption of this Agreement by the shareholders of
the Company;
WHEREAS, the Board of Directors of Acquiror has determined
that this Agreement and the transactions contemplated herein are
in the best interests of Acquiror and its shareholders and has
approved and adopted this Agreement and the transactions
contemplated hereby; and
WHEREAS, Messrs. Bade, Frankenthal, Frankenthal and Spiegel
have not been involved with the activities and operations of the
Company, but will benefit from the transaction; therefore, certain
rights and obligations of these parties have been limited in this
Agreement to reflect their lack of involvement in and knowledge of
the activities and operations of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth in this Agreement, the parties agree as follows:
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ARTICLE I
SALE OF ASSETS;
SECTION 1.01 Subject Assets;. The Company hereby agrees to
sell, assign and deliver to the Acquiror at the Closing (as
defined below), free and clear of all liens, mortgages, pledges,
options, claims, security interests, conditional sales contracts,
title defects, encumbrances, charges and other restrictions of
every kind (collectively, the "Liens") except as specifically
permitted by this Agreement, on the terms and subject to the
conditions set forth in this Agreement, all right, title and
interest in and to all of the assets of the Business (with the
exception of the Excluded Assets, as hereinafter defined), whether
real, personal or mixed, tangible or intangible, together with any
replacements thereof and additions thereto made between the date
hereof and the Closing, including, without limitation, the assets
that are listed on Schedules 1.01(a) through (h) of the disclosure
schedule delivered by the Company to the Acquiror (the "Company
Disclosure Schedule") (collectively, the "Subject Assets"),
including the following:
(a) all personal property constituting a portion of the
Subject Assets, including, without limitation, furniture,
equipment and other fixed assets as set forth on Schedule 1.01(a)
of the Company Disclosure Schedule (collectively, the "Fixed
Assets");
(b) all of the interest in, and the rights and benefits
accruing to the Company as the result of, the leased real and
personal property used or useful in connection with the Business
of the Company, as listed on Schedule 1.01(b) of the Company
Disclosure Schedule including the lease the Company has on the
property it leases as its headquarters located at 2151 Fountain
Drive, Snellville, Georgia (the "Headquarters Lease")
(collectively, the Headquarters Lease and the other leased
property are referred to as the "Leased Property") and those other
contracts, leases and agreements used or useful in connection with
the Business of the Company, including but not limited to all
Contracts which are "professional employer agreements", all as
listed on Schedule 1.01(b) of the Company Disclosure Schedule
(collectively with the Leased Property, the "Contracts");
(c) all customer records, all employee records for the
employees of, and independent contractors retained by, the Company
who are hired post-closing by the Acquiror, including, without
limitation, Form I-9's, filings and records, operating data, books
and files, documents and records of the Company pertaining to the
Subject Assets, warranties, guaranties, service and maintenance
documents, bills of sale, assumption agreements and other similar
documents related to the Subject Assets, customer and employee
lists, regulatory filings and records, copies of financial and
accounting records, executed Contracts (as defined in paragraph
(b) above), credit records, correspondence reasonably required for
continued operation of the Business, current or projected budgets
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and other similar documents and records used or useful in
connection with the Business of the Company (collectively, the
"Records");
(d) all of the Company's rights in and to the licenses,
permits, approvals and other authorizations issued to it by any
governmental authority and used or useful in the conduct of the
business and operations of the Company as listed on Schedule
1.01(d) of the Company Disclosure Schedule (collectively, the
"Licenses") to the extent such Licenses are assignable by the
Company;
(e) all of the Company's rights in the Company's group
health plan and group dental plan under the Blue Cross and Blue
Shield Association which it currently has in place for the benefit
of its employees, as listed and described on Schedule 1.01(e) of
the Company Disclosure Schedule;
(f) all goodwill associated with the Subject Assets and
all trademarks, trade names, logos, slogans and other intangible
assets used or useful in connection with the Subject Assets as
listed on Schedule 1.01(f) of the Company Disclosure Schedule to
the extent of the Company's right, title and interest therein,
including, without limitation, the name Stone Mountain or Stone
Mountain Group, the initials SMG or TSMG and any logo, mark or
symbol used in connection therewith, whether or not an application
for trade mark or trade name protection has been filed with any
state or federal agency;
(g) all cash on hand, trade accounts receivable, deposits
in financial institutions, cash equivalents, short and long term
securities, certificates of deposit and other current assets
existing as of the date of Closing, (including the names and
addresses of all financial institutions in which the Company has
accounts, the numbers of these accounts and the names of all
persons authorized to draw on these accounts), as listed on
Schedule 1.01(g) of the Company Disclosure Schedule, not to
include the investment in Waterford (as defined below) and the
Waterford C fund collateral, and adjusted for changes in account
balances occurring in the ordinary course of business from the
date indicated on Schedule 1.01(g) until Closing;
(h) all cash deposits and prepaid expenses listed on
Schedule 1.01(h) hereto; and
(i) all goodwill associated with the foregoing and the
Business.
SECTION 1.02 Excluded Assets and Liabilities;. The Subject
Assets shall not include the assets described in this Section
1.02. The assets described in this Section 1.02 are the two
leases the Company has in effect for the lease of two vehicles
leased by the Company for the use of Hal W. Pulfer and James
Beesley (the "Car Leases"), and cash retained by the Company to
pay the "remaining lease payments" (not including a payment in
respect of the residual value of the leases) of these two leases,
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in the total amount of $19,743 (adjusted if the Closing occurs
after August 31, 1996), cash retained by the Company for the
distributions to be made to the Stone Mountain Group Shareholders
to pay for the income tax liability they will incur in respect of
the Company's income under Subchapter S of the Internal Revenue
Code for the monthly installment for August 1996, which is not
anticipated to be distributed to the Stone Mountain Group
Shareholders until a date after Closing (which amount withheld
must be in accordance with the Company's past practice and not
include provision for liability attributable to any income
recognized as a result of the transactions contemplated by this
Agreement, which liability will be borne by the Stone Mountain
Group Shareholders and satisfied out of the Purchase Price or
their own individual assets), the Company's ownership interest in
Waterford Insurance Ltd., a Cayman Islands Exempt Stock Insurance
Company, including the C fund collateral therein ("Waterford") or
any interest the Company has in the self-funded insurance plans
sponsored by the Company for its employees pursuant to agreements
with Klais & Company, Inc. (the "Former Health Plan")
(collectively, these assets not being transferred to the Acquiror
will be referred to as the "Excluded Assets"). The Subject Assets
shall also not be subject to, and the Acquiror shall not assume or
be subject to, any liabilities, obligations or commitments of the
Company not specifically listed in Section 1.03 or included in the
Contracts specifically referred to in Section 1.01(b) (those
liabilities not assumed or taken subject to are referred to as the
"Excluded Liabilities"). Without limiting the generality of the
foregoing, the Excluded Liabilities shall include, and neither the
Acquiror nor any Subsidiary of the Acquiror, shall be under any
obligation, nor shall be deemed, to assume any obligation or
liability of the Company for the following (except for those
liabilities reflected in the pro-forma column of the Company's
adjusted June 30, 1996 balance sheet attached as Schedule 1.02):
(a) any liability with respect to any pension,
retirement, savings, disability, medical, dental, health, life
(including all individual life insurance policies as to which the
Company is the owner, beneficiary or both), death benefit, group
insurance, profit sharing, deferred compensation, stock option,
bonus, incentive, vacation pay, severance pay, Code Section 125
"cafeteria" or "flexible benefit" plan, or other employee benefit
plan, trust, arrangement, contract, agreement, policy or
commitment (including without limitation, all employee pension
benefit plans as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
all employee welfare benefit plans as defined in Section 3(1) of
ERISA), under which current or former employees of the Company or
its ERISA Affiliates (as defined in Section 4.11(c) below) are
entitled to participate by reason of their employment with the
Company or its ERISA Affiliates, whether or not any of the
foregoing is funded, whether insured or self-funded, and whether
written or oral, (i) to which the Company or its ERISA Affiliates
is a party or a sponsor or a fiduciary thereof or by which the
Company or its ERISA Affiliates (or any of their rights,
properties or assets) is bound or (ii) with respect to which the
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Company or its ERISA Affiliates has made any payments,
contributions or commitments, or may otherwise have any liability
(whether or not the Company or its ERISA Affiliates still
maintains such plan, trust, arrangement, contract, agreement,
policy or commitment) (the "Employee Benefit Plans");
(b) any liability incurred by or assessed against the
Acquiror or any Subsidiary or affiliate of the Acquiror that
arises under Sections 4980B and 5000 of the Code and with respect
to any failure to comply by the Company with the continuation
health care coverage requirements of Section 4980B of the Code and
Sections 601 through 608 of ERISA, which failure occurs with
respect to any person who is or was a current or former employee
of the Company or any qualified beneficiary of such employee (as
defined in Section 4980B(g)(1) of the Code);
(c) the Company's or the Stone Mountain Group
Shareholders' legal, accounting, broker's or other fees or
expenses arising out of the transactions contemplated by this
Agreement, which shall be satisfied by the Company or the Stone
Mountain Group Shareholders out of the Purchase Price, except for
the amounts described in Section 1.03;
(d) with respect to federal income or excess profits
taxes or state or local income, sales, use, excise, ad valorem or
franchise taxes, together with any interest, assessments and
penalties thereon arising out of or attributable to the conduct of
the Company's operations and business prior to the Closing (as
hereinafter defined), including but not limited to the disputed
tax penalty in the amount of $61,697.25 that is being contested by
Brooks Holmes Williams & Cook LLC, or the Company's federal income
or capital gain, taxes or state or local income or franchise taxes
arising by virtue of the transactions contemplated by this
Agreement;
(e) with respect to litigation or other legal proceedings
or investigations to the extent related to the Company on and
prior to the Closing;
(f) with respect to any liability arising out of the
Company's ownership interest in Waterford, whether for unpaid
premiums, currently outstanding or future retroactive assessments,
tax liabilities, or any other liabilities or obligations related
to Waterford;
(g) with respect to wages, salaries, bonuses,
commissions, overtime or other employee and independent contractor
benefits relating to periods on and prior to the Closing;
(h) any liability with respect to the Car Leases;
(i) any liability with respect to the Former Health Plan;
(j) any tort, crime or workers' compensation claim
(including claims for insurance premiums in respect thereof) or
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any other claim against the Company based on any acts, omissions
or facts occurring or arising on or prior to the Closing;
(k) any liability with respect to the transfer of the
Subject Assets or the dissolution and liquidation of the Company;
(l) any amount owed by the Company to any one or more of
the Stone Mountain Group Shareholders, unless specifically
referred to elsewhere in this Agreement as a liability which the
Acquiror will assume as detailed in the pro-forma column of
Schedule 1.02;
(m) any liability with respect to sales commissions paid
(or to be paid) to employees or independent contractors of the
Company in connection with the Company's professional employer
agreements listed on Schedule 1.01(b); and
(n) with respect to any other accrued liabilities
relating to matters or periods on or prior to the Closing.
SECTION 1.03 Assumed Liabilities;. The Acquiror shall, at
the Closing, assume and undertake to perform, pay, satisfy or
discharge in accordance with their terms, only such liabilities,
obligations and commitments of the Company relating to the period
commencing after the Closing under the Leased Property and the
Contracts to be assigned to it as listed on Schedule 1.01(b) of
the Company Disclosure Schedule, liabilities for trade accounts
payable occurring in the ordinary course of the Business (other
than any set forth in Section 1.02 above), a non-interest bearing
non-secured promissory note from the Company to Hal Pulfer, in the
amount of $166,500, $20,000 of which shall be payable at Closing
and the balance of which shall be payable on January 3, 1997,
which the Company issued to Hal W. Pulfer in respect of a finder's
fee (the "Finder's Fee"), and 50% of the cost of the audit of the
1994 Financial Statements, and as may otherwise be expressly
assumed pursuant to this Agreement (the "Assumed Liabilities").
SECTION 1.04 ;The Closing;. The closing of the
transactions contemplated by this Agreement (the "Closing") will
take place at the offices of The Hartsfield Group, Inc., Six
Concourse Parkway, Suite 1930, Atlanta, Georgia, 30328, at 1:00
P.M., and will be effective on the date of Closing. At the
Closing, the Company shall deliver to Acquiror such bills of sale,
endorsements and assignments (in the forms attached as Exhibit
1.04), and other customary instruments and documents and
certificates reasonably satisfactory to Acquiror and its counsel
as shall be sufficient to vest in Acquiror good, valued and
marketable title to the Subject Assets, free and clear of all
liens, and to assign the Contracts to Acquiror or to such person
within Acquiror's Affiliated Group as designated by Acquiror, and
the Acquiror shall deliver to the Company the Purchase Price,
pursuant to the terms and conditions specified in Article II
below. In addition, at the Closing, each of the parties shall
satisfy or deliver evidence to the other of satisfactory
completion of each of the conditions to close applicable to it in
accordance with Article X below.
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SECTION 1.05 Prorations. All personal or real property taxes with
respect to the Subject Assets to be conveyed to the Acquiror
pursuant hereto (which shall be based on the immediately prior
year's tax bills and adjusted post-Closing after the current tax
year's tax bills are issued and received if such current tax
year's bills are not issued before the Closing) and any changes
for rents or similar costs of the Business shall be prorated
through the Closing Date. The parties will execute a closing
statement reflecting such prorations and adjustments. In the
event any amount is due from either to the other as a result of
any such proration, the resulting amount payable shall be paid
immediately upon demand.
ARTICLE II
PURCHASE PRICE;
SECTION 2.01 Purchase Price;. (a) The Subject Assets shall
be sold by the Company and shall be purchased by the Acquiror for
an aggregate purchase price (the "Purchase Price") of:
(i) $5,000,000, payable as specified in Section
2.01(b) below;
(ii) an Incremental Payment, payable in cash 45 days
after the first anniversary following the Closing (the
"Incremental Payment"), computed as follows:
Incremental Payment = 75% x New Client Controllable Revenues
where
(r) New Client Controllable Revenues equal (A) the total amount
billed in the 12 month period following the Closing to the
companies identified in attached Exhibit 2.01(a), provided these
companies execute the Acquiror's standard service contract prior
to October 25, 1996, at prices approved by Acquiror's area
president, less (B) amounts billed to these clients for (a)
payroll expenses (salary and other cash compensation), (b)
payments attributable to the Federal Insurance Contributions Act
("FICA"), Federal Unemployment Tax Act ("FUTA") and other
employment taxes, and (c) 50% of employer contributions for other
employee benefits; and
(iii) the Assumed Liabilities.
(b) The portion of the Purchase Price referred to in
Section 2.01(a)(i) above shall be paid by the Acquiror to the
Company at Closing as follows:
(i) through the issuance by the Acquiror of a
promissory note, substantially in the form of attached Exhibit
2.01(b)(i), which promissory note shall be payable to Company in
the principal amount of $548,437, bear interest at 7% (the
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"Beesley Note"), and which the Company and James Beesley agree
will be assigned, endorsed and delivered by it to James Beesley on
January 2, 1997;
(ii) through the issuance by the Acquiror of a
promissory note, substantially in the form of attached Exhibit
2.01(b)(ii), which promissory note shall be payable to Company in
the principal amount of $825,000, bear interest at 7% (the "Pulfer
Note"), and which the Company and Hal W. Pulfer agree will be
assigned, endorsed and delivered by it to Hal W. Pulfer on January
2, 1997;
(iii) $2,376,563 (less reductions under Section 9.10
below) by wire transfer of immediately available funds to an
account designated in writing by the Company to the Acquiror at
least five business days prior to Closing; and
.
(iv) $1,250,000 in cash to be deposited with the
Acquiror to hold as escrow agent pursuant to Article 8 of this
Agreement and the "Escrow Agreement" (as defined in Article 8).
SECTION 2.02 Allocation. The Purchase Price shall be allocated
among the Subject Assets on the basis set forth in Schedule 2.02,
which allocations shall be used by the parties for purposes of
reporting to the Internal Revenue Service ("IRS") on Form 8594.
The Acquiror and Company agree to cooperate with each other in
connection with the preparation and filing of any information
required to be furnished to the IRS under Section 1060 of the
Code, and any applicable regulations thereunder, and shall not
take any position in any income tax return, before any
Governmental Entity charged with the collection of income tax, or
in a judicial proceeding inconsistent with the terms of this
subsection.
ARTICLE III
DEFINITIONS;
The term "Adverse Consequences" as used in this Agreement means
all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, Taxes (as
defined below) liens, losses, expenses and fees, including court
costs and reasonable attorneys' fees and expenses.
The term "Affiliated Group" has the meaning described in Section
1504 of the Code, without regard to the exceptions contained in
subsection (b) thereof.
The term "Code" means the Internal Revenue Code of 1986, as
amended.
The term "Company Material Adverse Effect" as used in this
Agreement shall mean any change or effect that is materially
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adverse to the financial condition, results of operations,
businesses, properties, assets or liabilities of the Company. A
change or effect shall be considered materially adverse if it has
a negative financial impact of at least $25,000.
The term "person" as used in this Agreement means an individual,
corporation, partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
The term "knowledge" of a party as used in this Agreement, means
the actual knowledge of a person, or of its current officers and
directors in the case of a corporate person, after reasonable
investigation.
The term "Law" shall mean any federal, state or local law,
statute, rule, ordinance or regulation (including codes, plans,
judgments, injunctions, administrative interpretations, orders, or
charges thereunder).
The term "Subsidiary" (or its plural) as used in this Agreement
with respect to the Company or the Acquiror shall mean any
corporation, partnership, joint venture or other legal entity of
which the Company or the Acquiror, as the case may be (either
alone or through or together with any other Subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity
interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of
such corporation or other legal entity.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STONE MOUNTAIN
GROUP SHAREHOLDERS;
The Company and each of Hal W. Pulfer and James Beesley
represents and warrants to Acquiror that the statements contained
in this Article 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing (as
though made then and as though the Closing were substituted for
the date of this Agreement throughout this Article 4). Each of
the other Stone Mountain Group Shareholders represents and
warrants to Acquiror that, to his knowledge, the statements
contained in this Article 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the
Closing (as though made then and as though the Closing were
substituted for the date of this Agreement throughout this Article
4).
SECTION 4.01 Organization and Qualification; No
Subsidiaries;. The Company is a corporation, duly incorporated,
validly existing and in good standing under the laws of Georgia,
has all requisite corporate or other power and authority to own,
lease and operate its properties and to carry on its business as
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it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature
of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, including all
qualifications under any "professional employer organization" or
similar state statute in effect in any state in which the Company
provides employees under any "employee leasing" arrangement. The
Company does not now have and has never had any "Subsidiary", nor
owned 80 percent or more of any corporation or been a member of an
Affiliated Group.
SECTION 4.02 Articles of Incorporation; By-Laws;. The
Company has furnished to Acquiror complete and correct copies of
its Articles of Incorporation and By-Laws, as amended or restated.
The Company is not in violation of any of the provisions of its
Articles of Incorporation or By-Laws, as amended or restated.
SECTION 4.03 Capitalization;. (a) The authorized capital
stock of the Company consists of 100,000 shares of Company Common
Stock, of which 1,000 shares were issued and outstanding. The
Company has no other classes of stock.
(b) All outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid and non-assessable.
No outstanding shares of Company Common Stock have been issued in
violation of any pre-emptive or similar rights. There are no
options, warrants or other rights, agreements, arrangements or
commitments to which the Company is a party of any character
relating to the issued or unissued capital stock of the Company or
obligating the Company to grant, issue, sell or register for sale
any shares of the capital stock of the Company, by sale, lease,
license or otherwise. Except as disclosed in the June 30, 1996
balance sheet of the Company, as of the date of this Agreement,
there are no obligations, contingent or otherwise, of the Company
to provide funds to, or make any investment in (in the form of a
loan, capital contribution or otherwise), or provide any guarantee
with respect to the obligations of the Company or any other
person.
SECTION 4.04 Authority; Vote Required;. The Company has the
requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations under this Agreement
and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by
Acquiror, constitutes a legal, valid and binding obligation of the
Company subject to bankruptcy, insolvency, reorganization,
moratorium and other laws limiting creditors' rights generally and
to general equity principles. The transactions contemplated by
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this Asset Purchase Agreement will not give rise to any appraisal
rights or dissenter's rights of the Stone Mountain Group
Shareholders. As of the date of the Closing, all actions required
to be taken by the Board of Directors of the Company under Section
14-2-1202 of the Georgia Code regarding shareholder approval of a
sale of assets by the Company have been taken and the Stone
Mountain Group Shareholders have approved the transactions
contemplated by this Asset Purchase Agreement as required under
such section of the Georgia Code.
SECTION 4.05 No Conflict; Required Filings and Consents;.
The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate the Articles of Incorporation or
By-Laws or equivalent organizational documents of the Company;
(ii) subject to giving the notices and obtaining the consents,
approvals, authorizations or permits described in Schedule 4.05 of
the Company Disclosure Schedule, conflict with or violate any Laws
applicable to the Company or by which any of its respective
properties is bound or affected; or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company
is a party or by which the Company or any of its respective
properties is bound or affected, except for any such conflicts or
violations described in clause (ii) that would not have, in the
aggregate, a Company Material Adverse Effect, and any such
breaches or defaults described in clause (iii) that would not, in
the aggregate, have a Company Material Adverse Effect.
SECTION 4.06 Permits; Compliance;. The Company is in
possession of all material franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary for the Company to
own, lease and operate its properties or to carry on its business
substantially as it is now being conducted (the "Company Permits")
and no suspension, revocation or cancellation of any of the
Company Permits is pending or, to the knowledge of the Company,
threatened. In particular, the Company, and Hal W. Pulfer and
James Beesley, are licensed or registered as professional employer
organizations and as control persons thereof, respectively, in
each jurisdiction in which their activities require such licensing
or registration, except where failure to comply will not have a
Company Material Adverse Effect, and except as disclosed in
Schedule 4.06 of the Company Disclosure Schedule. The Stone
Mountain Group Shareholders represent and warrant that the Company
will not suffer a Company Material Adverse Effect as a result of
the exceptions disclosed on Schedule 4.06 of the Company
Disclosure Schedule, considered in the aggregate and not on a per
violation basis. The Company has not operated and is not
operating in violation of any Law applicable to the Company or by
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which any of its respective properties is bound or affected,
including without limitation, the Occupational Safety and Health
Act, Environmental Protection Act, Equal Employment Opportunities
Act, the Age Discrimination in Employment Act, Title VII of the
Civil Rights Act, the Vocational Rehabilitation Act, the Americans
with Disabilities Act, Vietnam Era Veterans Readjustment Act, Fair
Labor Standards Act, Federal Drug Free Workplace Act, and all Laws
relating to wages and hours, workers' compensation, labor practice
regulations, employment discrimination and state employee leasing
and registration requirements. The Company is not the object of
any employee claims alleging violation of federal or state laws
prohibiting discrimination or sexual harassment or any other
charges reportable to the Equal Employment Opportunity Commission
or comparable state human rights or equal employment opportunity
agency.
SECTION 4.07 Reports; Financial Statements;. (a) Since
December 31, 1991, the Company has filed all forms, reports,
statements and other documents required to be filed with all
applicable federal or state regulatory authorities (all such
forms, reports, statements and other documents, including any
amendment thereto, being collectively referred to as the "Company
Reports"). The Company Reports were prepared in all material
respects in accordance with the requirements of applicable Law.
(b) The audited balance sheet of the Company for the year
ended December 31, 1995 and the statements of income, changes in
stockholders' equity and cash flows for the fiscal year ended on
December 31, 1995, including any notes thereto, all of which have
been audited by Brooks, Holmes, Williams & Cook, LLC, certified
public accountants (such financial statements as of, at and for
the year ended December 31, 1995 being referred to herein as the
"1995 Financial Statements"), have been prepared in all material
respects in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved (except to the extent required by changes in GAAP
or as may be indicated in the notes thereto) and (ii) present
fairly, in all material respects, the financial position of the
Company as of the respective dates thereof and the results of
operations and cash flows for the periods indicated.
(c) The unaudited balance sheet of the Company for the
year ended December 31, 1994 and the statements of income, changes
in stockholders' equity and cash flows for the fiscal year ended
on December 31, 1994, including any notes thereto (such financial
statements as of, at and for the fiscal year ended December 31,
1994 being referred to herein as the "1994 Financial Statements"),
have been prepared in all material respects in accordance with
GAAP applied on a consistent basis throughout the periods involved
(except to the extent required by changes in GAAP or as may be
indicated in the notes thereto) and (ii) present fairly, in all
material respects, the financial position of the Company as of the
respective dates thereof and the results of operation and cash
flows for the periods indicated. The financial information and
disclosures in the unaudited 1994 Financial Statements will be
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substantially the same as in audited 1994 Financial Statements,
which are currently being prepared by the Company's certified
public accountants, Brooks, Holmes, Williams & Cook, LLC, and
which will be issued on an unqualified basis. The Company has
been informed by Brooks, Holmes, Williams & Cook, LLC, that
audited 1994 Financial Statements will be available by September
16, 1996. The Stone Mountain Group Shareholders represent and
warrant that in all cases these audited 1994 financial statements
will be available within 45 days of the Closing. In making this
representation, the Stone Mountain Group Shareholders understand
that as a result of the Acquiror's consummation of the
transactions contemplated hereby, the Acquiror must file a Form 8K
with the Securities and Exchange Commission within 60 days after
the date of this Agreement, which Form 8K must include the
Company's audited 1994 Financial Statements. The fee charged by
Brooks, Holmes, Williams & Cook LLC for the full cost of the audit
being conducted on the 1994 financial statements shall be paid as
provided in Section 9.09 below.
(d) The unaudited balance sheet and statements of income,
changes in stockholders' equity and cash flows of the Company for
the six months ended June 30, 1996 (such financial statements
being referred to as the "Interim Financial Statements"), (i) have
been prepared in accordance with GAAP applied on a consistent
basis with the 1995 Financial Statements, and (ii) present fairly,
in all material respects, the financial position of the Company as
of June 30, 1996 and the six month period ended June 30, 1996.
(e) Except as and to the extent reflected or reserved in
the balance sheet of the Company for the six months ended June 30,
1996, including all notes thereto (the "Company Balance Sheet"),
the Company does not have any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that
would be required to be reflected on, or reserved against in, a
balance sheet of the Company or in the notes thereto, prepared in
accordance with GAAP, except for liabilities or obligations
incurred in the ordinary course of business since June 30, 1996.
SECTION 4.08 Absence of Certain Changes or Events;. Except
as contemplated in this Agreement or the Company Disclosure
Schedule, since June 30, 1996:
(a) there has not been any change which has caused or
development of a prospective change which is reasonably likely to
cause a Company Material Adverse Effect;
(b) the Company has not increased compensation to
officers or key employees or increased or created any new bonus,
insurance, pension or other employee benefit plan, payment or
arrangement (including, but not limited to, the granting of
employee stock options), except for contemplated increases in
compensation or bonuses described in Schedule 4.08(b) of the
Company Disclosure Schedule, none of which have created or will
have created as of the Closing a binding obligation on the part of
the Company or Acquiror;
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(c) the Company has not made any loans or advances to any
officer, director, shareholder or affiliate of the Company (except
for ordinary travel and business expense payments), or guaranteed
or pledged collateral to support any loan or advance made to an
officer, director, shareholder or affiliate of the Company;
(d) the Company has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contract, leases, or licenses) involving more than $50,000;
(e) no party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract, lease,
or license (or series of related agreements, contracts, leases,
and licenses) involving more than $50,000 to which the Company is
a party or by which it is bound, or notified the Company that it
intends to do any of the foregoing;
(f) the Company has not imposed any security interest
upon any of its assets, tangible, or intangible;
(g) the Company has not made a capital expenditure (or
series of related capital expenditures) involving more than
$25,000;
(h) the Company has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of,
any other person (or series of related capital investments, loans,
and acquisitions) involving more than $50,000, except for payments
to Waterford for premiums in accordance with past business
practice;
(i) the Company has not delayed or postponed the payment
of accounts payable and other liabilities;
(j) the Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights or
claims) involving more than $25,000;
(k) the Company has not made any transfers of cash except
in the ordinary course of business;
(l) there has not been any change in the material
accounting methods or practices followed by the Company except as
required or permitted by GAAP; and
(m) the Company has not entered into any commitment
(contingent or otherwise) to do any of the foregoing.
SECTION 4.09 Absence of Litigation;. (a) Schedule 4.09(a) of
the Company Disclosure Schedule lists (i) all claims, actions,
suits, litigations, proceedings, arbitrations or investigations of
any kind against the Company, which are pending or, to the
Company's knowledge, threatened, and (ii) to the Company's
knowledge, all claims, actions, suits, litigations, proceedings,
arbitrations or investigations of any kind against any client of
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the Company which are pending or threatened, for any activity that
is or could be covered by or within the scope of the agreement the
Company has with the client. There is no action pending seeking
to enjoin or restrain the transactions contemplated by this
Agreement. The Company is not subject to any liability as a
result of a claim threatened or brought by any employee or former
employee of the Company even though the possibility of such claim
has been disclosed to Acquiror prior to Closing.
(b) The Company is not subject to any continuing order
of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of the Company, continuing
investigation by, any governmental entity (which includes all
federal, state, local, and foreign governments (and all agencies
thereof), or any judgment, order, writ, injunction, decree or
award of any governmental entity or arbitrator, including without
limitation, cease-and-desist or other orders.
SECTION 4.10 Contracts; No Default;. (a) Schedule 4.10(a) of
the Company Disclosure Schedule sets forth as of the date of this
Agreement a list of each Contract:
(i) which is a professional employer organization
agreement;
(ii) concerning a partnership or joint venture with
another person;
(iii) involving annual consideration in excess of
$15,000;
(iv) involving employment agreements, employment
contracts or understandings (other than understandings with
respect to "at will" employment) relating to employment to which
the Company is a party;
(v) concerning confidentiality or non-competition;
(vi) with any shareholder of the Company or
affiliate or person under the influence or control of or related
to any shareholder or affiliate of the Company;
(vii) involving indebtedness of the Company (other
than trade payables arising in the ordinary course of business) or
pursuant to which the Company has guaranteed the indebtedness of
another or a security interest in an asset of the Company has been
created; or
(viii) which the Company otherwise believes to be
material to the business of the Company or under which the
consequences of a default or termination could have a Company
Material Adverse Effect.
(b) Each Contract listed in Schedule 4.10(a) of the
Company Disclosure Schedule is in full force and effect, is a
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legal, valid and binding contract or agreement of the Company,
subject to bankruptcy, insolvency, reorganization, moratorium and
other laws limiting creditors' rights generally and to general
equity principles and to public policy concerns, and there is no
default (or any event known to the Company which, with the giving
of notice or lapse of time or both, would be a default) by the
Company or any other party to a Contract, in the timely
performance of any obligation to be performed or paid under any
such contract or agreement. The Company has full legal power and
authority to assign its rights under the Contracts to Acquiror in
accordance with this Agreement, and such assignment will not
affect the validity, enforceability or continuity of any of the
Contracts. All of the Contracts which are "professional employer
agreements" may also be assigned by the Company or Acquiror to any
person within the Affiliated Group of which Acquiror is a member
without the need to obtain the consent of any other Person. All
consents, waivers, approvals and authorizations which may be
required with respect to the transactions contemplated hereby are
listed on Schedule 4.10(a) of the Company Disclosure Schedule and
will have been duly obtained by the Company and delivered to
Acquiror and its counsel prior to Closing in a form reasonably
satisfactory to Acquiror and its counsel. Except as set forth on
Schedule 4.10(b), no party is seeking renegotiation of a Contract
or substitute performance thereunder or has repudiated any
provision thereunder or indicated that it intends to terminate or
not renew a Contract.
(c) Schedule 4.10(c) of the Company Disclosure Schedule
sets forth with respect to each Contract between the Company, and
its clients which are co-employers of the Company's employees,
each breach of contract or failure of performance claim in excess
of $25,000 made against the Company during the three years
immediately preceding the date of this Agreement and through the
Closing Date.
(d) Except as set forth on Schedule 4.10(d), there are no
outstanding powers of attorney executed on behalf of the Company;
(e) The Company is not subject to any liability to, or
claim by, Employee Resources Management, Inc. or International
Business Services, Inc., nor is the Company currently subject to
any agreement, whether written or oral (and including any joint
venture) with either of those persons or any owner of affiliate
thereof. The Company is not subject to any liability to, or claim
by, a third party as a result of any past agreement with Employee
Resources Management, Inc., or International Business Services,
Inc. or any owners or affiliates thereof.
SECTION 4.11 Employee Benefit Plans; Labor Matters;. (a)
Schedule 4.11 of the Company Disclosure Schedule lists all
pension, retirement, savings, disability, medical, dental, health,
life (including all individual life insurance policies as to which
the Company is the owner, beneficiary or both), death benefit,
group insurance, profit sharing, deferred compensation, stock
option, bonus, incentive, vacation pay, severance pay, Code
Page 16 of 47
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Section 125 "cafeteria" or "flexible benefit" plan, or other
employee benefit plan, trust, arrangement, contract, agreement,
policy or commitment (including without limitation, all employee
pension benefit plans as defined in Section 3(2) of ERISA, and all
employee welfare benefit plans as defined in Section 3(1) of
ERISA), under which current or former employees of the Company or
its ERISA Affiliates (as defined in Section 4.11(c) below) are
entitled to participate by reason of their employment with the
Company or its ERISA Affiliates, whether or not any of the
foregoing is funded, whether insured or self-funded, and whether
written or oral, (i) to which the Company or its ERISA Affiliates
is a party or a sponsor or a fiduciary thereof or by which the
Company or its ERISA Affiliates (or any of their rights,
properties or assets) is bound or (ii) with respect to which the
Company or its ERISA Affiliates has made any payments,
contributions or commitments, or may otherwise have any liability
(whether or not the Company or its ERISA Affiliates still
maintains such plan, trust, arrangement, contract, agreement,
policy or commitment). For each Employee Benefit Plan, the
Company has provided true and correct copies of all plan
documents, summary plan descriptions, determination letters and
most recent Form 5500.
(b) All required reports and descriptions have been filed
or distributed appropriately with respect to each Employee Benefit
Plan, including filings with the Pension Benefit Guaranty
Corporation, Internal Revenue Service or Department of Labor.
(c) For purposes of this Agreement, "ERISA Affiliates"
shall mean any trade or business (whether or not incorporated)
that is part of the same controlled group, or under common control
with, or part of an affiliated service group that includes, the
Company within the meaning of Section 414(b), (c), (m) or (o) of
the Code. Schedule 4.11 of the Company Disclosure Schedule lists
all ERISA Affiliates of the Company.
(d) As used in this Agreement, "Pension Plan" means any
Employee Benefit Plan which is an employee pension benefit plan as
defined in Section 3(2) of ERISA or is otherwise a pension,
savings or retirement plan or a plan of deferred compensation.
(e) With respect to the Employee Benefit Plans:
(i) None of the Employee Benefit Plans is a
"multiemployer plan," as such term is defined in Section 3(37) of
ERISA; each of the Employee Benefit Plans that are subject to
ERISA is in compliance (both in form and operation) with ERISA,
the Code and all other applicable Laws; each of the Employee
Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, has received a
favorable determination letter ruling that the plan complies with
the Tax Reform Act of 1986, as amended, and has been administered
and operated in accordance with all laws so as to maintain such
qualification; no Employee Benefit Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the
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Code; neither the Company nor any ERISA Affiliate has incurred,
directly or indirectly, any liability (including any contingent
liability) to or on account of an Employee Benefit Plan pursuant
to Title IV of ERISA; no proceedings have been instituted to
terminate any Employee Benefit Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in Section
4043(b) of ERISA, has occurred with respect to any Employee
Benefit Plan; and no condition exists that presents a material
risk to the Company or an ERISA Affiliate of incurring a liability
to or on account of a Employee Benefit Plan pursuant to Title IV
of ERISA.
(ii) The current value of the assets of each of the
Employee Benefit Plans that are subject to Title IV of ERISA
exceeds the present value of the accrued benefits under each such
Plan, taking into account projected salary increases and based
upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared for such Plans; and all
contributions, premium payments or other amounts payable by the
Company and ERISA Affiliates through the Closing with respect to
each Employee Benefit Plan in respect of current or prior plan
years have been or will be (prior to or at the Closing) either
paid or accrued on the Company's regularly prepared financial
statements.
(iii) There are no pending, threatened or
anticipated material claims (other than routine claims for
benefits) by, on behalf of or against any of the Employee Benefit
Plans, the fiduciaries of such plans or any trust related thereto.
(iv) No Employee Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees,
their spouses or dependents for periods extending beyond their
retirement or other termination of service (other than (i)
coverage mandated by applicable law, (ii) death benefits or
retirement benefits under any Pension Plan, or (iii) deferred
compensation accrued as liabilities on the books of the Company or
the ERISA Affiliates).
(f) The Company is not a party to any collective
bargaining or other labor union contracts. There are no union
organization attempts underway with respect to the employees of
the Company. There is no pending or, to the knowledge of the
Company, threatened labor dispute, strike or work stoppage against
the Company. To the knowledge of the Company, the Company has not
committed any unfair labor practices (as defined in the National
Labor Relations Act of 1947, as amended) in connection with the
operation of the business of the Company, and there is no pending
or, threatened charge or complaint against the Company by the
National Labor Relations Board or any comparable state or local
agency.
SECTION 4.12 Taxes;. (a) (i) All Returns (as defined below)
in respect of Taxes (as defined below) required to be filed with
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respect to the Company have been timely filed (including
extensions), including without limitation, all forms 5471 which
have been required in connection with the Company's ownership of
an interest in Waterford and no extension of time within which to
file any such Return has been requested, which Return has not
since been filed;
(ii) all Taxes shown on Returns to be due or payable
have been timely paid and all payments of estimated Taxes required
to be made with respect to the Company under Section 6655 of the
Code or any comparable provision of state, local or foreign law
have been made on the basis of the Company's good faith estimate
of the required installments;
(iii) all Returns (or, in cases where amended Returns
have been filed, such Returns as amended) are true, correct and
complete in all material respects, including without limitation,
all forms 5471 which have been required in connection with the
Company's ownership of an interest in Waterford;
(iv) no adjustment relating to any Return has been
proposed in writing by any Tax authority, except proposed
adjustments that have been resolved prior to the date hereof, and
the ongoing dispute described in Schedule 4.12(a)(iv) of the
Company Disclosure Schedule, which involves a disputed tax penalty
in the amount of $61,697.25 that is being contested by Brooks
Holmes Williams & Cook LLC;
(v) there are no outstanding subpoenas or requests for
information with respect to any federal, state, local or foreign
income tax Returns of the Company or the Taxes reflected on such
Returns;
(vi) The Company is not a party to any Tax allocation
or sharing agreement. The Company (A) has never been a member of
an Affiliated Group, and (B) has no liability for the Taxes of any
person under Section 1.1502-6 of the Treasury Regulations (or any
similar provision of state, local or foreign law), as a transferee
or successor, by contract, or otherwise;
(vi) the Company has not, in any taxable period for
which the statute of limitations on assessment remains open,
acquired any corporation that filed a consolidated federal income
tax return with any other corporation that was not also acquired
by the Company, and no corporation that was included in the filing
of a Return with the Company on a consolidated, combined, or
unitary basis has left the Company's consolidated, combined or
unitary group in a taxable year for which the statute of
limitations on assessment remains open;
(vii) no consent under Section 341(f) of the Code has
been filed with respect to the Company;
(viii) there are no Tax liens on any assets of the
Company other than liens for Taxes not yet due or payable;
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(ix) all Taxes required to be withheld, collected or
deposited by the Company during any taxable period for which the
statute of limitations or an assessment remains open have been
timely withheld, collected or deposited and, to the extent
required, have been paid to the relevant Tax authority, except
where the Taxes in question are subject to challenge by the
Company in an appropriate proceeding, and adequate reserves
therefor have been provided on the Company's financial statements,
and disclosure has been made by the Company in Schedule
4.12(a)(ix) of the Company Disclosure Schedule;
(x) the Company was not acquired in a qualified stock
purchase under Section 338(d)(3) of the Code and no elections
under Section 338(g) of the Code, protective carryover basis
elections, offset prohibition elections or other deemed or actual
elections under Section 338 are applicable to the Company;
(xi) there is no material difference on the books of
the Company between the amounts of the book basis and the tax
basis of assets (net of liabilities) that is not accounted for by
an accrual on the books for federal income tax purposes;
(xii) there are no outstanding waivers or agreements
extending the statute of limitations for any period with respect
to any Tax to which the Company may be subject;
(xiii) the Company is not, as of the date of this
Agreement, under audit with respect to any taxable period for any
federal, state, local or foreign Tax by the Internal Revenue
Service (the "IRS") or the applicable Tax authority in each such
state, local, or foreign jurisdiction;
(xiv) The Company is not and will not be subject to any
unsatisfied U.S. or foreign tax liability as a result of its
ownership interest in Waterford, including but not limited to any
liability which could arise as a result of Waterford's
classification as a "Controlled Foreign Corporation", "Foreign
Personal Holding Company", or "Passive Foreign Investment
Company", as such forms are defined in the Code;
(xv) The Company has been an "S corporation", as such term
is defined in section 1361(a)(1) of the Code, and has had a valid
election under section 1362(a) of the Code, for each year during
which it has been in existence. No facts exist or have existed
with respect to the Company, its capital structure or its
shareholders which at any time during the Company's existence
would cause a revocation of its Sub S election or loss of its Sub
S status.
(b) For purposes of this Agreement,
(i) "Tax" or "Taxes" shall mean any and all taxes,
charges, fees, levies, and other governmental assessments and
impositions of any kind, payable to any federal, state, local or
foreign governmental entity or taxing authority or agency,
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including, without limitation, income, franchise, net worth,
profits, gross receipts, minimum, alternative minimum, estimated,
ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding,
disability, employment, social security, medicare, workers
compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, and interest, penalties and additions to
tax imposed with respect thereto; and
(ii) "Returns" shall mean any and all returns,
reports, information returns and information statements with
respect to Taxes required to be filed with the IRS or any other
Governmental Entity or tax authority or agency, whether domestic
or foreign, including, without limitation, consolidated, combined
and unitary tax returns.
SECTION 4.13 Intellectual Property Rights;. The Company owns
or possesses the right to use all material patents, patents
pending, trademarks, servicemarks, trade names, service names,
slogans, registered copyrights, trade secrets, computer software
and other intellectual property rights it currently uses, without
any conflict or alleged conflict with the rights of others. Each
item of intellectual property owned or used by the Company prior
to the Closing, including without limitation the names Stone
Mountain and Stone Mountain Group, and any related marks, symbols
or logos, will be owned or available for use by the Acquiror on
the same terms and conditions immediately following Closing. The
Company has taken all necessary and desirable action to maintain
and protect each such item of intellectual property. Schedule
4.13 of the Company Disclosure Schedule lists all of the
intellectual property rights used by the Company as well as any
intellectual property rights owned by third parties and used by
the Company pursuant to licenses, sublicenses, agreement or
permission. All such licenses, sublicenses, agreements or
permissions are valid, binding and in full force and effect and no
default has occurred or notice of default been received with
respect thereto.
SECTION 4.14 Insurance;. (a) Schedule 4.14(a) of the
Company Disclosure Schedule lists all policies and binders of
insurance for professional liability, directors and officers,
property and casualty, fire, liability, worker's compensation and
other customary matters held by or on behalf of the Company
("Insurance Policies"), all of which have been made available to
Acquiror. The Insurance Policies are in full force and effect and
the Company is not in default with respect to any provision
contained in any Insurance Policy nor has the Company failed to
give any notice of any claim under any Insurance Policy in due and
timely fashion, nor has any coverage for current claims been
denied. The Company has been covered during the past three years
by insurance in scope and amount customary and reasonable for the
activities in which it engaged and the assets it has owned during
this three year period.
(b) The Company owns one share of common stock and one share
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of preferred stock in Waterford. The Company is able to sell the
Subject Assets and enter into this Agreement without causing any
breach of its agreement with Waterford or any additional
liabilities for which Acquiror or any Subsidiary of Acquiror could
be liable. The Company is current with respect to all premiums
owed to Waterford, and there are no outstanding retroactive
assessments or other unsatisfied liabilities or obligations
related to the Waterford for which the Company could be made
liable. Prior to becoming insured for workers' compensation
insurance and commercial general liability insurance through its
participation in Waterford, the Company was fully insured by
independent commercial insurance carriers and not self-insured.
SECTION 4.15 Brokers;. No broker, finder or investment
banker other than The Hartsfield Group, Inc. ("Hartsfield") and
Hal W. Pulfer with respect to the Finder's Fee is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or the Stone
Mountain Group Shareholders. The agreement between Hartsfield and
Company and the Stone Mountain Group Shareholders provides that
only the Stone Mountain Shareholders are liable for the full
amount of fees and costs owed to or which will be owed to
Hartsfield on consummation of the transactions contemplated by
this Agreement. The Stone Mountain Group Shareholders agree to
indemnify and hold harmless the Company and the Acquiror against
any claim, liability or obligation brought, imposed or sought to
be imposed against any or all of them in respect of any broker,
finder, investment banker or other fee or commission in connection
with the transactions contemplated by this Agreement.
SECTION 4.16 Title to Properties;. (a) The Company does not
own any real property;
(b) All of the real property leased by the Company (the
"Leased Real Property") is described in Schedule 4.16(b) of the
Company Disclosure Schedule. The leases for the Leased Real
Property are in full force and effect and the Company holds a
valid and existing leasehold interest under each of the leases.
The Company has delivered to Acquiror complete and accurate copies
of each of the leases for the Leased Real Property, and none of
such leases has been modified in any respect, except to the extent
that such modifications are disclosed by the copies delivered to
Acquiror. To the knowledge of the Company and the Stone Mountain
Group Shareholders, the Company is not in default under, and to
the knowledge of the Company no circumstances exist which, if
unremedied, would, either with or without notice or the passage of
time or both, result in the Company's default under any of such
leases, except for the requirement that the Company obtain the
consent of the landlord to assign the Headquarters Lease to
Acquiror pursuant to this Agreement. At the time of Closing, the
Headquarters Lease will contain a provision permitting Acquiror to
sublease all or part of the space leased pursuant to the
Headquarters Lease to a third party.
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(c) there are no pending or threatened condemnation
proceedings, lawsuits, or administrative actions relating to the
Leased Real Property or other matters affecting the current use,
occupancy, or value thereof;
(d) all of the Company's Leased Real Property facilities
have received all approvals of governmental authorities (including
licenses and permits) required in connection with the ownership or
operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(e) to the knowledge of the Company and the Stone
Mountain Group Shareholders, there are no other leases, subleases,
licenses, concessions, or other agreements, written or oral,
granting to any party or parties the right of use or occupancy of
any portion of the Leased Real Property;
(f) there are no parties (other than the Company) in
possession of any of the Company's Leased Real Property;
(g) all facilities located on the Company's Leased Real
Property are supplied with utilities and the services necessary
for the operation of such facilities, including gas, electricity,
water, telephone, sanitary sewer, and storm sewer, all of which
services are adequate in accordance with all applicable laws,
ordinances, rules and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements
benefitting the parcel of Leased Real Property;
(h) each parcel of Leased Real Property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of real property, and access to the
property is provided by paved public right-of-way with adequate
curb cuts available.
(i) The Company is not in violation of any applicable
zoning ordinance or other law, regulation or requirement relating
to the operation of any properties used in the operation of their
respective businesses;
(j) The Company is not in violation of any laws relating
to laws governing environmental protection with respect to the
Leased Real Property or any other real property for which it could
be liable as a result of the activities or actions of its
employees, nor is it subject to any liability for clean up or
remediation under any federal, state or local law. The Company
has not received any written notification from any Governmental
Entity with respect to existing violations of any Laws governing
environmental protection with respect to the Lease Real Property
or with respect to any real property for which it could be liable
as a result of the activities or actions of its employees; and
(k) The Company owns good title to the tangible and
intangible personal property reflected in Schedule 1.01 of the
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Company Disclosure Schedule or in the Company's Interim Financial
Statements free and clear of any liens, encumbrances, options or
other agreements, except as described in Schedule 4.16(k) of the
Company Disclosure Schedule.
SECTION 4.17 Notes and Accounts Receivable. All notes and
accounts receivable of the Company are reflected properly on its
books and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected
in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the
most recent Balance Sheet, as adjusted for the passage of time
through the Closing in accordance with past custom and practice.
SECTION 4.18 Tax Payment and Direct Deposit Service. (a) For all
persons which use or have used the Company's tax payment service,
all payments related to those persons and that service have been
collected and paid when due, and the amount of the tax payment
service funds on deposit as of the dates of this Agreement and
Closing equals the amount of payments due to the relevant Tax
authorities.
(b) The balance of direct deposits collected by the Company
as of the Closing is equal to the amount due to the Company's
clients and employees as of that date.
SECTION 4.19 Disclosure. No representation or warranty contained
in this Article 4 or in the Company Disclosure Schedule, or in any
document, written information, statement or certificate furnished
or to be furnished by either the Company or the Stone Mountain
Group Shareholders to the Acquiror pursuant to this Agreement
contains or will contain any untrue statement of a material fact,
or omits or will omit to state a material fact necessary to make
the statement contained herein or therein not misleading.
SECTION 4.20 Lack of Association. Neither the Company nor any of
the Stone Mountain Group Shareholders has, or has had at any time,
any business relationship with Employer Resources, Inc., a
Delaware corporation, or any owner or affiliate thereof, or
affiliate of the owner thereof.
SECTION 4.21 Investment Intent. Each of the Company and, when
distributed by the Company to them, Hal W. Pulfer and James
Beesley, (A) is acquiring the Pulfer Note and the Beesley Note
solely for its or his own account for investment purposes, and not
with a view to the distribution or resale thereof (other than the
distribution by the Company of the Beesley Note to James Beesley
and the Pulfer Note to Hal W. Pulfer, as contemplated in this
Agreement), (B) is an "accredited investor" as defined in Rule 215
of the regulations promulgated under the Securities Act of 1933,
as amended (the "Securities Act") with knowledge and experience in
business and financial matters, or is a sophisticated investor
with sufficient knowledge and experience to evaluate an investment
in the Acquiror, (C) has received certain information concerning
Acquiror, including but not limited to the information contained
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in the Prospectus of Acquiror dated May 9, 1996 and Acquiror's
quarterly report on Form 10-Q for the quarter ended June 30, 1996,
and has had the opportunity to obtain additional information as
desired to evaluate the merits and the risks inherent in holding
the Pulfer Note and the Beesley Note, (D) agrees to indemnify
Acquiror against any adverse consequences which shall arise as a
result of a sale or distribution of the Pulfer Note or the Beesley
Note by him or it in violation of the Securities Act and state
securities or Blue Sky laws, and (E) acknowledges that neither the
Beesley Note nor the Pulfer Note has been or will be registered
under the Securities Act and will bear a legend to that effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STONE MOUNTAIN GROUP SHAREHOLDERS
Each of the Stone Mountain Group Shareholders represents and
warrants to Acquiror that the statements contained in this Article
5 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing (as though made
then and as though the Closing were substituted for the date of
this Agreement throughout this Article 5.
SECTION 5.01 Authorization of Transaction. The Stone Mountain
Group Shareholder has full power and authority to execute and
deliver this Agreement and to perform his or its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Stone Mountain Group Shareholder,
enforceable in accordance with its terms and conditions. The
Stone Mountain Group Shareholder need not give any notice to, make
any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.
SECTION 5.02 Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Stone
Mountain Group Shareholder is subject, or (B) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Stone Mountain Group Shareholder is a
party or by which he is bound or to which any of his assets is
subject.
SECTION 5.03 Stone Mountain Group Shares. The Stone Mountain
Group Shareholder holds of record and owns beneficially the number
of shares of Company Common Stock set forth next to his name in
Schedule 5.03 of the Company Disclosure Schedule, free and clear
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of any mortgages, pledges, liens, encumbrances, charges,
restrictions on transfer (other than any restrictions under the
Securities Act and Blue Sky laws), Taxes, security interests,
options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands, and the Stone Mountain Group
Shareholders together own all of the issued and outstanding shares
of Company Common Stock, which number is equal to the sum of the
number of shares of Company Common Stock set forth next to the
Stone Mountain Group Shareholders' names in Schedule 5.03 of the
Company Disclosure Schedule. The Stone Mountain Group Shareholder
is not a party to any option, warrant, purchase right, or other
contract or commitment that could require the Stone Mountain Group
Shareholder to sell, transfer, or otherwise dispose of any capital
stock of Stone Mountain Group (other than this Agreement). The
Stone Mountain Group Shareholder is not a party to any voting
trust, proxy, or other agreement or understanding with respect to
the voting of any capital stock of Stone Mountain Group. The
Stone Mountain Group Shareholder acknowledges and agrees that
neither the shares of Company Common Stock owned by him nor, to
his knowledge, any other outstanding stock of the Company, has
been issued in violation of any pre-emptive or similar rights.
SECTION 5.04 Disclosure. No representation or warranty contained
in this Article 5 or in the Company Disclosure Schedule contains
or will contain any untrue statement of a material fact, or omits
or will omit to state a material fact necessary to make the
statement contained herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR;
The term "Acquiror Material Adverse Effect" as used in this
Agreement shall mean any change or effect that is materially
adverse to the financial condition, results of operations,
business, properties, assets or liabilities of Acquiror and its
Subsidiaries, taken as a whole; provided, however, that the
occurrence of any or all of the changes or events described in
Schedule 6.00 of the Acquiror Disclosure Schedule shall not,
individually or in the aggregate, constitute an Acquiror Material
Adverse Effect.
Except as set forth in the Disclosure Schedule delivered by
Acquiror to the Company prior to the execution of this Agreement
(the "Acquiror Disclosure Schedule"), Acquiror hereby represents
and warrants to the Company that:
SECTION 6.01 Organization and Qualification;. Acquiror is a
corporation, duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation,
and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is
now being conducted and is duly qualified and in good standing to
do business in each jurisdiction in which the nature of the
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business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, including all
qualifications needed by the Acquiror under any "professional
employer organization" or similar state statute in effect in any
state in which the Acquiror provides employees under any "employee
leasing" arrangement.
SECTION 6.02 Authority;. Acquiror has the requisite
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement by Acquiror
and the consummation by Acquiror of the transactions contemplated
by this Agreement, have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of
Acquiror are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Acquiror and,
assuming the due authorization, execution and delivery by the
other parties thereto constitutes a legal, valid and binding
obligation of Acquiror, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors'
rights generally and to general equitable principles.
SECTION 6.03 No Conflict, Required Filings and Consents;.
The execution and delivery of this Agreement by Acquiror does not,
and the performance of this Agreement by Acquiror will not, (i)
conflict with or violate the Articles of Incorporation or By-Laws
of Acquiror, (ii) subject to obtaining the consents, approvals,
authorizations or permits described in Schedule 6.03(a) of the
Acquiror Disclosure Schedule, conflict with or violate any Laws
applicable to Acquiror or any of Acquiror's Subsidiaries or by
which any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the properties or assets of Acquiror
or any of Acquiror's Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror or
any of Acquiror's Subsidiaries is a party or by which or any of
Acquiror's Subsidiaries or any of their respective properties is
bound or affected, except for any such conflicts or violations
described in clause (ii) or breaches or defaults described in
clause (iii) that would not have an Acquiror Material Adverse
Effect.
SECTION 6.04 Reports; Financial Statements;. (a) Since June
30, 1996, Acquiror and its Subsidiaries have filed (x) all forms,
reports, statements and other documents required to be filed with
the SEC (collectively, the "Acquiror SEC Reports"). The Acquiror
SEC Reports, including all Acquiror Reports filed after the date
of this Agreement and prior to the Closing, (i) were or will be
prepared in all material respects in accordance with the
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requirements of applicable Law, the Securities Act and the
Exchange Act, as the case may be, and (ii) did not at the time
they were filed, do not at the date hereof, or will not at the
time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were or will be
made, not misleading.
(b) Each of the consolidated financial statements
(including in each case, any related notes thereto) contained in
the Acquiror SEC Reports, including any Acquiror SEC Reports filed
after the date of this Agreement and prior to the Closing, (i)
have been or will be prepared in all material respects in
accordance with the published rules and regulations of the SEC and
GAAP applied on a consistent basis throughout the periods involved
(except (x) to the extent required by changes in GAAP or (y) as
may be indicated in the notes thereto) and (ii) fairly present or
will fairly present the consolidated financial position of
Acquiror and its Subsidiaries as of the respective dates thereof
and the consolidated results of operations and cash flows for the
periods indicated, except that (x) any unaudited interim financial
statements (A) were or will be subject to normal and recurring
year-end adjustments which were not or are not expected to be
material in amount and (B) are not or may not be necessarily
indicative of results for the full fiscal year and (y) any pro
forma financial information contained in such consolidated
financial statements is not or may not be necessarily indicative
of the consolidated financial position of Acquiror and its
Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods
indicated.
(c) Except as and to the extent set forth on the
consolidated balance sheet of Acquiror at March 31, 1996,
including all notes thereto, neither Acquiror nor any of its
Subsidiaries has any liabilities or obligations of any nature
(whether known or unknown, matured or unmatured, and whether
accrued, absolute, contingent or otherwise) that would be required
to be reflected on, or reserved against in, a balance sheet of
Acquiror or in the notes thereto, prepared in accordance with the
published rules and regulations of the SEC and GAAP, except for
liabilities or obligations incurred in the ordinary course of
business since the date of such balance sheet or as contemplated
by the Acquiror SEC Reports.
SECTION 6.05 Absence of Certain Changes or Events;. Since
June 30, 1996, there has not been an Acquiror Material Adverse
Effect or any change by Acquiror or its Subsidiaries in their
accounting methods, principles or practices, except any such
change after the date of this Agreement required by GAAP or as
described in the Acquiror SEC Reports filed prior to Closing.
SECTION 6.06 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
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connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Acquiror.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS;
SECTION 7.01 Affirmative Covenants of the Company;. The
Company hereby covenants and agrees that, prior to the Closing,
unless otherwise expressly contemplated by this Agreement or
otherwise consented to in writing by Acquiror, the Company will:
(a) operate its business in the usual and ordinary course
and consistent with past practice;
(b) use reasonable efforts to preserve intact its
business organization and assets, including its present
operations, physical facilities and working conditions; maintain
its rights and franchises, renew its licenses, permits,
agreements, uses, and governmental approvals, retain the services
of its respective officers and key employees and maintain the
relationships with its respective customers, lessors, licensors,
employees, and suppliers;
(c) use reasonable efforts to keep in full force and
effect liability insurance and bonds comparable in amount and
scope of coverage to that currently maintained; and
(d) confer with Acquiror at its reasonable request to
report operational matters of a material nature and to report the
general status of the ongoing operations of the business of the
Company, and notify Acquiror of any breach or event which if it
had occurred prior to the date of this Agreement would have been a
breach by the Company or the Stone Mountain Group Shareholders of
any of their representations, warrants, covenants and agreement
contained in this Agreement, the Disclosure Schedule or in any of
the agreements or documents delivered in connection herewith.
SECTION 7.02 Negative Covenants of the Company;. Except as
expressly contemplated by this Agreement, described in Schedule
7.02 of the Company Disclosure Schedule or otherwise consented to
in writing by Acquiror, from the date of this Agreement until the
Closing, the Company shall not do any of the following:
(a) (i) increase the compensation payable or to become
payable to any director, officer or employee, except for bonuses
or increases in salary or wages payable or to become payable which
are in accordance with preexisting plans or ordinary course of
business and consistent with past practice; (ii) grant any
severance or termination pay (other than pursuant to the severance
policy of the Company as in effect on the date hereof), or enter
into any severance agreement with, any director, officer or
employee, (iii) subject to clause (i) of this subsection (a),
enter into or amend any employment agreement with any director,
officer or employee that would extend beyond the Closing except on
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an at-will basis; or (iv) establish, adopt, enter into or amend
any Employee Benefit Plan, except as may be required to comply
with applicable Law;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock,
except for any distributions to be made to the Stone Mountain
Group Shareholders to pay for the income tax liability they will
incur in respect of the Company's income under Subchapter S of the
Internal Revenue Code in accordance with the Company's past
practice (other than liability attributable to any income
recognized as a result of the transactions contemplated by this
Agreement, which liability will be borne by the Stone Mountain
Group Shareholders and satisfied out of the Purchase Price or
their own individual assets without a pre-Closing distribution by
the Company in respect thereto);
(c) effect any reorganization or recapitalization;
(d) issue, deliver, award, grant or sell, or authorize
the issuance, delivery, award, grant or sale (including the grant
of any security interests, liens, claims, pledges, limitations in
voting rights, charges or other encumbrances) of, any shares of
any class of its capital stock (including shares held in
treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or
options to acquire, any such shares;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other person (other than the purchase of
assets from suppliers or vendors in the ordinary course of
business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of any of its assets, except
for dispositions in the ordinary course of business and consistent
with past practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance) any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction (as such term is defined
below), enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or
authorize any of the officers or directors of the Company to take
any such action, and the Company shall use its reasonable efforts
to cause the directors, officers, employees, agents and
representatives of the Company (including, without limitation, any
investment banker, financial advisor, attorney or accountant
retained by the Company) not to take any such action. The Company
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shall immediately notify Acquiror in writing of any offer,
proposal or communication received by it, or to the Company's
knowledge, any affiliate, employee or consultant of the Company,
of any Competing Transaction.
For purposes of this Agreement, "Competing Transaction" shall mean
any of the following involving the Company (other than the
transactions contemplated by this Agreement): (i) any merger,
consolidation, share exchange, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of five percent or more of
the assets of the Company in a single transaction or a series of
related transactions or assignment of any contract the Company has
with any of its Customers; or (iii) any tender offer or exchange
offer for twenty percent or more of the outstanding shares of
capital stock of the Company or the filing of a registration
statement under the Securities Act in connection therewith;
(h) adopt any amendments to its Articles of Incorporation
or By-Laws;
(i) (A) change any of its methods of accounting in effect
at the date hereof or (B) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim,
action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, or change any of its
methods of reporting income or deductions for federal income Tax
purposes from those employed in the preparation of the federal
income Tax returns for the taxable year ending December 31, 1995,
except in either case as may be required by Law, the IRS or GAAP;
(j) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument;
(k) fail to renew any agreement favorable to the Company
which is used by the Company in the conduct of its business or
compromise any obligation or amount owed to the Company.
(l) agree in writing or otherwise to do any of the
foregoing.
SECTION 7.03 Access and Information;. Subject to the
Confidentiality Agreement dated April 8, 1996, between the
Acquiror and the Company, the Company shall afford to Acquiror and
its officers, employees, accountants, consultants, legal counsel
and other representatives reasonable access upon reasonable notice
to all information concerning the business, properties, contracts,
records and personnel of the Company as Acquiror may reasonably
request.
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ARTICLE VIII
ANTICIPATED CLIENT RETENTION AND LIABILITIES
(a) The Company's existing clients (the "Existing
Clients") are set forth on Schedule 8(a) of the Company Disclosure
Schedule. If, on the date which is one year after the Closing,
(i) (A) the "Anniversary Controllable Revenues" (as defined below)
are less than 85% of the "Closing Controllable Revenues" (as
defined below), or (ii) there is any increase in the liabilities
of the Company to which Acquiror or any of its Subsidiaries
becomes subject and which result from acts or omissions occurring
or failing to occur prior to Closing, over the liabilities
reflected in the financial statements delivered to the Acquiror
prior to Closing, the Company and the Stone Mountain Group
Shareholders agree that they will relinquish a specified amount
(as defined in Section 8(b) below) of the Purchase Price, which
will be returned to the Acquiror pursuant to the terms of an
Escrow Agreement in the form of attached Exhibit 8(a) (the "Escrow
Agreement"). For purposes of this Article 8, Anniversary
Controllable Revenues means the total amount billed to Existing
Clients in the four weeks prior to the date which is one year
after the Closing, less amounts billed for (a) payroll expenses
(salary and other cash compensation), (b) payments attributable to
FICA, FUTA and other employment taxes, and (c) 50% of employer
contributions for other employee benefits, annualized by dividing
by four and multiplying by 52. For purposes of this Article 8,
Closing Controllable Revenues means the total amount billed to
Existing Clients in the four weeks prior to Closing, less amounts
billed for (a) payroll expenses (salary and other cash
compensation), (b) payments attributable to FICA, FUTA and other
employment taxes, and (c) 50% of employer contributions for other
employee benefits, annualized by dividing by four and multiplying
by 52.
(b) The amount of the Purchase Price which will be
relinquished pursuant to the terms of Section 8(a) above if any of
the specified conditions occur will be equal to the amount by
which Anniversary Controllable Revenues is less than 85% of
Closing Controllable Revenues, plus 100 percent of the increase in
liabilities pursuant to Section 8(a)(ii), provided, in the case of
the increase in liabilities, the amount of the increase, together
with any claims for indemnification under Section 9.06, exceed in
the aggregate $40,000, but in any case not more than the total of
the amount deposited into escrow pursuant to Section 8(c) below.
(c) To secure their obligations and commitment pursuant
to this Section 8, the Company and the Stone Mountain Group
Shareholders agree that at Closing, $1,250,000 will be transferred
by Acquiror to the escrow agent named in the Escrow Agreement, to
hold pursuant to the terms and conditions of the Escrow Agreement.
(d) If, on a date which is 12 months after Closing,
there are anticipated liabilities that are attributable to events
or acts occurring prior to Closing and which are contingent, and
the liability is considered by the Acquiror's independent auditors
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to be "reasonably possible", as such term is defined in Statement
of Auditing Standards 5, the Escrow Agreement shall be kept open
and continue with respect to that liability, in an amount equal to
the maximum amount of the range of possibility liability
determined by the Acquiror's independent auditors, until such time
as the liability is resolved, at which time the balance of cash
remaining in escrow shall be transferred to the Acquiror or to the
Company (or, at the Company's direction for amounts to be
transferred to it, to the Stone Mountain Group Shareholders), in
accordance with the Escrow Agreement.
(e) Acquiror agrees that with respect to Existing Clients
and for purposes of determining any decrease in Anniversary
Controllable Revenues from Closing Controllable Revenues for which
the Company or the Stone Mountain Group Shareholders could be
liable pursuant to this Article VIII, it will implement and
continue the past business practices and policies which Acquiror
has with respect to its clients. The Company and the Stone
Mountain Group Shareholders agree, however, that the Acquiror may,
at any time and completely at its discretion and without affecting
the liability of the Company and the Stone Mountain Group
Shareholders pursuant to this Article VIII, terminate any
contractual or other relationship with any one or more of the
Existing Clients.
ARTICLE IX
ADDITIONAL AGREEMENTS;
SECTION 9.01 [Intentionally Omitted].;
SECTION 9.02 Appropriate Action; Consents; Filings;. (a) The
Company and Acquiror shall use commercially reasonable best
efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Agreement as
promptly as practicable, (ii) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by
Acquiror or the Company or any of their respective Subsidiaries in
connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated in
this Agreement, and (iii) make all necessary notifications and
filings, and thereafter make any other required submissions, with
respect to this Agreement, required under (A) the Securities Act
and the Exchange Act, and any other applicable federal securities
Laws or state securities or blue sky laws ("Blue Sky Laws"); and
(B) any other applicable Law; provided that, Acquiror and the
Company shall cooperate with each other in connection with all
such filings, including providing copies of all such documents to
the non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The Company and
Acquiror shall furnish to each other all information required for
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any application or other filing to be made pursuant to the rules
and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(b) (i) The Company and Acquiror shall give (or shall
cause their respective Subsidiaries to give) any notices to third
parties, and use, and cause their respective Subsidiaries to use,
all commercially reasonable best efforts to obtain any third party
consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, including but not
limited to the assignment and transfer to Acquiror of the Subject
Assets (including the assignment of any bank accounts), Contracts
and Leases, (B) disclosed or required to be disclosed in the
Company Disclosure Schedule or the Acquiror Disclosure Schedule,
as the case may be, or (C) required to prevent a Company Material
Adverse Effect or an Acquiror Material Adverse Effect from
occurring prior to or after the Closing.
(ii) If either party fails to obtain any third party
consent described in subsection (b)(i) above, such party shall use
all commercially reasonable best efforts, and shall take any such
actions reasonably requested by the other party, to minimize any
adverse effect upon the Company and Acquiror, their respective
Subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Closing, from the
failure to obtain such consent.
(iii) After Closing, the Company will execute and
deliver such instruments and documents as the Acquiror reasonably
may request in order to (a) perfect the sale, conveyance, transfer
and assignment to the Acquiror of the Subject Assets, (b) assist
the Acquiror in the transition of the operations of the Business,
including, without limitation, providing copies of any relevant
financial, accounting, legal, tax and other information relating
to the Subject Assets and the Business and the Company's
activities associated therewith, or (c) carry out the purposes and
intent of this Agreement or under any bills of sale, assignments
or assumption agreements which are executed and delivered in
connection with this Agreement. After Closing, (i) Acquiror shall
promptly transfer and deliver to Company any cash, checks
(properly endorsed) or other property, including mail, which
Acquiror may receive and which may belong to Company and (ii)
Company shall promptly transfer and deliver to Acquiror any cash,
checks (properly endorsed) or other property, including mail,
which Company may receive and which may belong to Acquiror.
(c) From the date of this Agreement until the Closing,
the Company shall promptly notify Acquiror in writing of any
pending or, to the knowledge of the Company, threatened action,
proceeding or investigation by any Governmental Entity or any
other person (i) challenging or seeking material damages in
connection with this Agreement and the transactions and agreements
contemplated herein or (ii) seeking to restrain or prohibit the
consummation of this Agreement and the transactions and agreements
contemplated herein or otherwise limit the right of Acquiror or,
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to the knowledge of the Company, its Subsidiaries, to own or
operate all or any portion of the Business or Subject Assets.
(d) From the date of this Agreement until the Closing,
the Acquiror shall promptly notify the Company in writing of any
pending or, to the knowledge of Acquiror, threatened action,
proceeding or investigation by any Governmental Entity or any
other person (i) challenging or seeking material damages in
connection with this Agreement and the transactions and agreements
contemplated herein or (ii)_seeking to restrain or prohibit the
consummation of this Agreement and the transactions and agreements
contemplated herein or otherwise limit the right of the Acquiror
or its Subsidiaries to own or operate all or any portion of the
Business or Subject Assets.
SECTION 9.03 Update Disclosure; Breaches;. From and after
the date of this Agreement until the Closing, each party shall
promptly notify the other party hereto by written update to its
Disclosure Schedule of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to
cause any condition to the obligations of any party to effect the
transactions contemplated by this Agreement not to be satisfied,
or (ii) the failure of the Company or Acquiror, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement which would be
likely to result in any condition to the obligations of any party
to effect the transactions contemplated by this Agreement not to
be satisfied.
SECTION 9.04 Affiliates;. Schedule 9.04 of the Company
Disclosure Schedule lists all persons who, as of the date of this
Agreement, (i) are officers or directors of the Company and (ii)
all other persons who, as of the date of this Agreement
beneficially own shares of Company Common Stock.
SECTION 9.05 Public Announcements;. Acquiror, the Company
and the Stone Mountain Group Shareholders shall consult in good
faith with each other before issuing any press release or
otherwise making any public statements with respect to this
Agreement and the transactions and agreements contemplated herein
and neither the Company nor any Stone Mountain Group Shareholder
shall issue any such press release or make any such public
statement without the prior written approval of the Acquiror.
SECTION 9.06 Survival of Representations and
Indemnification;.
(a) Survival of Representations and Warranties. All of
the representations and warranties of the Parties contained in
this Agreement shall survive the Closing hereunder (even if the
damaged party knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing) and continue in full
force and effect thereafter (subject to any applicable statutes of
limitations).
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(b) Indemnification. In the event any of the Company or
the Stone Mountain Group Shareholders breaches (or in the event
any third party alleges facts that, if true, would mean any of the
Stone Mountain Group Shareholders or the Company has breached) any
of their representations, warranties, and covenants contained
herein during the applicable survival period, or if the Acquiror
or any of its Subsidiaries becomes subject to any Excluded
Liabilities (or any action or claim in respect thereto), then each
of the Stone Mountain Group Shareholders agrees to indemnify
Acquiror from and against the entirety of any Adverse Consequences
Acquiror or any of its Subsidiaries may suffer through and after
the date of the claim for indemnification resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or
the alleged breach); provided, however that Acquiror shall not
bring any claim for indemnification pursuant to this paragraph (b)
unless and until the alleged amount of damages to the Acquiror
and/or its Subsidiaries, together with any increase in liabilities
referred to in Section 8(a)(ii), in the aggregate, exceeds
$40,000.
(c) Matters Involving Third Parties.
(i) If any third party shall notify the Acquiror (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against
either the Company or any Stone Mountain Group Shareholder
(collectively, the "Indemnifying Party") under this Section 9.06,
then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying party
shall relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified party against the Third Party Claim with
counsel of its choice satisfactory to the Indemnified party so
long as (A) the Indemnifying Party notifies the Indemnified party
in writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in
the good faith judgment of the Indemnified Party, likely to
establish a precedencial custom or practice adverse to the
continuing business interests of the Indemnified Party, and (E)
the Indemnifying Party conducts the defense of the Third Party
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Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section
9.06(c)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent
of the Indemnified party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section
9.06(c)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of
any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly
and periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the fullest extent provided in this
Section 9.06.
(d) Notice. In the event any Party breaches (or in the
event any third party alleges facts that, if true, would mean any
of the Parties has breached) any of his or its covenants or any of
his or its representations and warranties in this Agreement or in
the event that any third party shall notify any Indemnified Party
with respect to a Third Party Claim which may give rise to a claim
for indemnification against the Indemnifying Party, then the
(alleged) breaching Party or Indemnifying Party, as the case may
be, shall provide written notice to the other Parties of the
occurrence and nature of the relevant event.
(e) Escrow Agreement. The Company and the Stone
Mountain Group Shareholders agree that while funds are being held
by the Escrow Agent pursuant to the Escrow Agreement referred to
in Article VIII, funds held by the Escrow Agent will also serve as
security (but not as a limit) for any liability they may have to
Acquiror pursuant to this Section 9.06.
(f) Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy any
Party may have for breach of representation, warranty, or covenant
in this Agreement, and in addition to the rights of
indemnification provided in Article VIII above. Each of the Stone
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Mountain Group Shareholders hereby agrees that he will not make
any claim for indemnification against any of the Company and/or
its Subsidiaries by reason of the fact that he was a director,
officer, employee, or agent of any such entity or was serving at
the request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such claim
is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw,
agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by Acquiror
against such Stone Mountain Group Shareholder (whether such
action, suit, proceeding, complaint, claim, or demand is pursuant
to this Agreement, applicable law, or otherwise).
SECTION 9.07 Name Change. The Company hereby agrees that, from
and after sixty (60) days from the Closing Date, it shall change
its corporate name to delete all references to "Stone Mountain" no
later than sixty (60) days from the Closing Date, shall cease
using "Stone Mountain" in any correspondence, on letterheads and
otherwise and shall promptly provide copies to the Acquiror of
amendments to its charter documents evidencing such changes,
certified by the Secretary of State.
SECTION 9.08 Company's Access to Books and Records. After the
Closing, the Acquiror shall permit the Company to have access to
and to copy, at the Company's sole cost and expense, the Records
during normal business hours for the purpose of preparing
financial statements, preparing income tax returns, the
prosecution and defense of litigation and for other legitimate
purposes relating to periods prior to the Closing. The Acquiror
shall reasonably cooperate in all respects in furnishing or
providing access to all records and information for legitimate
purposes relating to the business of the Company conducted prior
to the Closing, provided that such furnishing or access shall be
done during normal business hours and so as not to cause undue
disruption to the business of the Acquiror and shall be at the
sole expense of the Company.
SECTION 9.09 Payment for 1994 Audit of Company Financial
Statements. The cost of the audit on the 1994 financial
statements being performed by Brooks Holmes Williams & Cook LLC,
will be shared equally by the Acquiror, on the one hand, and the
Company and The Stone Mountain Group Shareholders on the other
hand. The Company and The Stone Mountain Group Shareholders agree
that their portion of the cost for the 1994 audit will be paid
solely out of the Purchase Price, and that they shall not use
other Company assets to do so, other than amounts already paid as
of the date of this Agreement in the ordinary course of business.
SECTION 9.10 Post June 30, 1996 Waterford Accruals. The parties
agree that any liabilities related to Waterford accrued after June
30, 1996 and prior to Closing may be paid by the Company prior to
Closing, but the amount of these payments that are attributable to
the Waterford C Fund collateral (as identified on the Waterford
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premium statements) shall be reduced from the Purchase Price and
the cash to be delivered by the Acquiror at Closing pursuant to
Section 2.01(b)(iii). For payments owed by the Company to
Waterford after Closing, the Acquiror shall reimburse the Company
an amount equal to the premium attributable to the Waterford A
Fund (as identified on the Waterford premium statements) in
respect of worker's compensation insurance coverage commencing on
the first day of the month of Closing and ending on the date of
Closing.
SECTION 9.11 Certain Ongoing Obligations. After the Closing, the
Company agrees that it will, and the Stone Mountain Group
Shareholders agree that they will cause the Company to, timely pay
all legitimate claims relating to the business of the Company
prior to the Closing. After the Closing, the Company shall cause
Klais & Company, Inc. to provide the Acquiror with monthly
accounting reports related to the Former Health Plan, including
reports of Klais & Company, Inc. which list all paid and
outstanding claims thereunder.
ARTICLE X
CLOSING CONDITIONS;
SECTION 10.01 Conditions to Obligations of Each Party Under
This Agreement;.
(a) Subject to waiver as set forth in Section 12.03, the
respective obligations of each party to effect the Closing and
consummate the other transactions contemplated by this Agreement
shall be subject to the satisfaction at or prior to the Closing of
the following conditions:
(i) This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company;
(ii) There shall not have been instituted and there
shall not be pending any action or proceeding by a Governmental
Entity, and no such action or proceeding shall have been
threatened by a Governmental Entity, with authority to institute
such an action or proceeding before any court of competent
jurisdiction or governmental agency or regulatory or
administrative body, and no order or decree shall have been
entered in any action or proceeding before such court, agency or
body, (a) imposing or seeking to impose limitations on the ability
of Acquiror to acquire or hold or to exercise full rights of
ownership of the Business, the Subject Assets, the Contracts or
the Leases; (b) imposing or seeking to impose limitations on the
ability of Acquiror to combine and operate the business and assets
of the Company with any of Acquiror's Subsidiaries or other
operations; (c) imposing or seeking to impose other sanctions,
damages or liabilities arising out of this Agreement on the
Acquiror or any of its Subsidiaries or the Company or any of their
officers or directors; (d) requiring or seeking to require
divestiture by the Acquiror of all or any material portion of the
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Business, Subject Assets, Leases or Contracts; or (e)_restraining,
enjoining or prohibiting or seeking to restrain, enjoin or
prohibit the consummation of the transactions and agreements
contemplated by this Agreement, in each case, with respect to
claims (a) through (d) above, which would or is reasonably likely
to result in a Company Material Adverse Effect at or prior to the
Closing or an Acquiror Material Adverse Effect at, prior to or
after the Closing or, with respect to clauses (a) through (e)
above, to subject any of their respective officers or directors to
substantial penalties or criminal liability, provided that (A)
prior to invoking this condition, the party seeking to invoke it
shall have used its reasonable efforts to have any such action or
proceeding dismissed or such order or decree vacated, and (B) this
condition may not be invoked with respect to threatened
proceedings with respect to which no action or proceeding is
commenced within ten days of receipt of the written notice of such
threatened proceeding;
(iii) All consents, waivers, approvals and
authorizations required to be obtained, and all filings or notices
required to be made, by Acquiror and or any Subsidiary and the
Company prior to consummation of the transactions contemplated in
this Agreement shall have been obtained from and made with all
required Governmental Entities, except for such consents, waivers,
approvals or authorizations which the failure to obtain, or such
filings or notices which the failure to make, would not have a
Company Material Adverse Effect prior to or after the Closing or
an Acquiror Material Adverse Effect after the Closing or be
reasonably likely to subject the Company, Acquiror, or any of
their respective Subsidiaries or any of their respective officers
or directors to substantial penalties or criminal liability;
(b) Subject to waiver as set forth in Section 12.04, the
respective obligations of the Company and the Stone Mountain Group
Shareholders to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the
Closing of the following conditions:
(i) An Employment Agreement, substantially in the
form of attached Exhibit 10.01(b)(i), between Vincam Human
Resources, Inc., a wholly owned Subsidiary of Acquiror ("VHR"),
Acquiror and James Beesley, shall have been executed by Acquiror
and VHR;
(ii) An Employment Agreement, substantially in the
form of attached Exhibit 10.01(b)(ii), between VHR, the Acquiror
and Hal Pulfer, shall have been executed by Acquiror and VHR;
(c) Subject to waiver as set forth in Section 12.03, the
respective obligation of the Acquiror to effect the transactions
contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of the following
conditions:
(i) The Acquiror shall have been provided with
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written evidence, satisfactory to it, that the proposed limited
liability company agreement between the Company and the Sullivan
Staffing, Inc., and all obligations, covenants and restrictions
imposed on the Company pursuant to this proposed agreement,
including but not limited to any conditions relating to non-
competition or exclusive dealing, have either been voided or never
came into effect;
(ii) A Confidentiality Agreement, substantially in
the form of attached Exhibit 10.01(c)(ii), shall have been entered
into and executed by each of the following persons:
(a) Lester E. Frankenthal
(b) Charles Frankenthal
(c) Scott Bade
(d) Edward Spiegel
(iii) A Non-Compete and Confidentiality Agreement,
substantially in the form of attached Exhibit 10.01(c)(iii), shall
have been entered into and executed by each of the following
persons:
(a) Betty Jane McCart
(b) Georgiana Britt
(c) Ken Sewell
(d) Russ Berkhan
(iv) An Employment Agreement, substantially in the
form of attached Exhibit 10.01(b)(i), between the Acquiror, VHR
and James Beesley ("Beesley"), shall have been executed by
Beesley;
(v) An Employment Agreement, substantially in the
form of attached Exhibit 10.01(b)(ii), between the Acquiror, VHR
and Hal Pulfer ("Pulfer"), shall have been executed by Pulfer;
(vi) The Escrow Agreement, substantially in the form
of attached Exhibit 8(a), shall have been executed by the Company
and the Stone Mountain Group Shareholders;
(vii) The termination agreement substantially in the
form of attached Exhibit 10.01(c)(vii) between the Company and
Sullivan Staffing, Inc. shall have been executed by both parties;
(viii) The landlord of the Headquarters Lease will
have consented to a transfer or assignment of the Headquarters
Lease to Acquiror on substantially the same terms and conditions
as existed between the Company and the landlord prior to the date
of this Agreement, with the added condition that the Acquiror will
be permitted under the terms of the lease to sub-let all or part
of the Headquarters Lease to any third party;
(ix) Executed bills of sale, endorsements and
assignments (in the forms attached as Exhibit 1.04) shall have
been provided to Acquiror transferring to Acquiror or any person
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designated by Acquiror within its Affiliated Group good and
marketable title, free and clear of all Liens, to the Subject
Assets, and that all Contracts, including but not limited to, all
Contracts with Company clients in which the Company provides
employees as a professional employer organization, will be
assigned to Acquiror or any person designated by Acquiror within
its Affiliated Group, at Closing;
(x) The Acquiror shall have been provided with
written evidence, satisfactory to it, of the assignment of the
Company's group health plan and group dental plan under the Blue
Cross and Blue Shield Association to the Acquiror, and that all
necessary consents to effect the assignments have been given;
(xi) The Company will have issued to Hal W. Pulfer a
non-interest bearing non-secured promissory note from the Company
to Hal Pulfer in the amount of $166,500, as described in Section
1.03 above.
SECTION 10.02 Additional Conditions to Obligations of
Acquiror;. Subject to waiver as set forth in Section 12.03, the
obligation of Acquiror to effect the transactions contemplated in
this Agreement are also subject to each of the following
conditions:
(a) Each of the representations and warranties of the
Company contained in this Agreement, shall be true and correct in
all material respects as of the Closing, as though made on and as
of the Closing, provided, however, that those representations and
warranties which address matters only as of a particular date
shall remain true and correct in all material respects as of such
date. Acquiror shall have received a certificate of the Company,
executed by the Chief Executive Officer or Chief Financial Officer
of the Company, to that effect.
(b) The Company shall have performed or complied in all
material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior
to the Closing. Acquiror shall have received a certificate of the
Company, executed by the Chief Executive Officer or Chief
Financial Officer of the Company, to that effect.
(c) The Company shall have obtained the consent or
approval of each person whose consent or approval shall be
required in connection with this Agreement and the agreements and
transactions contemplated herein under all loan or credit
agreements, notes, mortgages, indentures, leases or other
agreements or instruments to which it is a party, except those for
which failure to obtain such consents and approvals would not have
a Company Material Adverse Effect prior to or after the Closing or
an Acquiror Material Adverse Effect after the Closing.
(d) There shall not have occurred any Company Material
Adverse Effect since the date of this Agreement.
(e) All other certificates, opinions, instruments and
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documents required to effect the agreements and transactions
contemplated by this Agreement will have been received in form and
substance satisfactory to Acquiror.
SECTION 10.03 Additional Conditions to Obligations of the
Company and the Stone Mountain Group Shareholders;. Subject to
waiver as set forth in Section 12.03, the obligation of the
Company to effect the transactions contemplated in this Agreement
is also subject to the following conditions:
(a) Each of the representations and warranties of
Acquiror contained in this Agreement shall be true and correct in
all material respects as of the Closing, as though made on and as
of the Closing; provided, however, that those representations and
warranties which address matters only as of a particular date
shall remain true and correct in all material respects as of such
date. The Company shall have received a certificate of Acquiror,
executed by the Chief Executive Officer or Chief Financial Officer
of Acquiror, to that effect.
(b) Acquiror shall have performed or complied in all
material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior
to the Closing. The Company shall have received a certificate of
Acquiror, executed by the Chief Executive Officer or Chief
Financial Officer of Acquiror, to that effect.
(c) There shall not have occurred any Acquiror Material
Adverse Effect since the date of this Agreement.
ARTICLE XI
TERMINATION, AMENDMENT;
SECTION 11.01 Termination;. This Agreement may be terminated
at any time prior to the Closing, whether before or after approval
of this Agreement by the stockholders of the Company:
(a) by mutual consent of Acquiror and the Company;
(b) (i) by Acquiror, if there has been a breach by
the Company of any of its covenants or agreements contained in
this Agreement or if any of the representations and warranties of
the Company shall have become untrue, in any such case such that
Section 10.02(a) or Section 10.02(b) will not be satisfied, and,
if capable of being cured, such breach or condition has not been
cured within 30 days following receipt by the Company of written
notice of such breach; or
(ii) by the Company, if there has been a breach by
Acquiror of any of its covenants or agreements contained in this
Agreement or if any of the representations and warranties of
Acquiror shall have become untrue, in any such case such that
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Section 10.03(a) or Section 10.03(b) will not be satisfied, and,
if capable of being cured, such breach or condition has not been
cured within 30 days following receipt by Acquiror of written
notice of such breach;
(c) by either Acquiror or the Company if any decree,
permanent injunction, judgment, order or other action by any court
of competent jurisdiction or any Governmental Entity preventing or
prohibiting consummation of the agreements and transactions
contemplated by this Agreement shall have become final and
nonappealable;
(d) by either Acquiror or the Company if the Closing
shall not have been consummated before September 30, 1996;
provided, however, that this Agreement may be extended not more
than 60 days thereafter by either party by written notice to the
other party if the Closing shall not have been consummated as a
direct result of such other party's having failed (x) to receive
all regulatory approvals or consents required to be obtained by
that party with respect to the Closing or (y) to resolve all
actions or proceedings of a type described in Section 10.01(a)(ii)
or the last sentence of Section 4.09(a); and
(e) by either Acquiror or the Company if the Agreement
shall fail to receive the requisite vote for adoption by the
stockholders of the Company at the Stockholders' Meeting.
SECTION 11.02 Effect of Termination;. In the event of the
termination of this Agreement pursuant to Section 11.01, this
Agreement shall forthwith become void, and there shall be no
liability under this Agreement on the part of Acquiror, any of
Acquiror's Subsidiaries, or the Company or any of their respective
stockholders, officers or directors and all rights and obligations
of each party hereto shall cease.
SECTION 11.03 Fees and Expenses;. (a) Except as provided in
Section 11.02, all Expenses incurred by the parties shall be borne
solely and entirely by the party which has incurred the same.
(b) "Expenses" as used in this Agreement shall include
all reasonable out-of-pocket expenses (including without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party and its
affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the solicitation of
stockholder approvals and all other matters related to the closing
of the transactions contemplated by this Agreement.
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ARTICLE XII
GENERAL PROVISIONS;
SECTION 12.01 Notices;. All notices and other communications
given or made pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a
party as shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
If to Acquiror:
The Vincam Group, Inc.
2850 Douglas Road
Coral Gables, FL 33134
Telecopier No.: (305) 460-2396 or 2399
Attn: Mr. Carlos A. Saladrigas
With a copy to: Steel Hector & Davis
200 South Biscayne Boulevard, 40th Floor
Miami, Florida 33131-2398
Telecopier No.: (305) 577-7001
Attn: Ira N. Rosner, P.A.
If to the Company 2924 Overwood Lane
or any of the Stone Snellville, GA 30278
Mountain Group Telecopier No.: 770-979-9153
Shareholders (other Attn: Mr. James Beesley
than Hal W. Pulfer):
With a copy to: Stephen Klorfein, Esquire
Freed, Lester & Klorfein, P.C.
14 N. Parkway Square
4200 Northside Parkway, NW
Atlanta, GA 30327-3054
Telecopier No.: (404)-233-1943
If to Hal W. Pulfer: 224 Wiley Bottom Road
Savannah, GA 31411
Telecopier No.: 912-598-7471
Attn: Hal W. Pulfer
With a copy to: Stephen Klorfein, Esquire
Freed, Lester & Klorfein, P.C.
14 N. Parkway Square
4200 Northside Parkway, NW
Atlanta, GA 30327-3054
Telecopier No.: (404)-233-1943
SECTION 12.02 Amendment;. Subject to the Florida Act and the
Georgia Code, this Agreement may be amended by the parties by
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action taken by or on behalf of their respective Boards of
Directors at any time prior to the Closing. This Agreement may
not be amended except by an instrument in writing signed by the
parties.
SECTION 12.03 Waiver;. At any time prior to the Closing, any
party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties to be performed for
the benefit of the waiving party, (b) waive any inaccuracies in
the representations and warranties of the other parties contained
in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by the other parties with any
of the agreements or conditions compliance with which is for the
benefit of the waiving party contained in this Agreement (to the
extent permitted by law). Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
SECTION 12.04 Headings;. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 12.05 Severability;. If any term or other provision
of this Agreement is finally adjudicated by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced
by any rule of Law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 12.06 Entire Agreement;. This Agreement (together
with the Exhibits, the Company and Acquiror Disclosure Schedules,
the Confidentiality Agreement, and the other documents delivered
pursuant hereto), constitutes the entire agreement of the parties
and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the
subject matter hereof.
SECTION 12.07 Assignment;. This Agreement shall not be
assigned without the written consent of the other parties hereto.
SECTION 12.08 Parties in Interest;. This Agreement shall be
binding upon and inure solely to the benefit of each party, and
nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
SECTION 12.09 Governing Law;. This Agreement shall be
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governed by, and construed in accordance with, the Laws of the
State of Florida, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of law.
SECTION 12.10 Counterparts;. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 12.11 Shareholder Approval. This Agreement constitutes
the unanimous written consent pursuant to Section 14-2-1202 of the
Georgia Code of the Stone Mountain Group Shareholders to the sale
of assets and other transactions described herein which written
consent is given in accordance with Section 14-2-704 of the
Georgia Code. The Stone Mountain Group Shareholders acknowledge
that they have received all materials required to be provided to
the Stone Mountain Group Shareholders pursuant to Section 14-2-
704.
IN WITNESS WHEREOF, Acquiror, the Company and each of the
Stone Mountain Group Shareholders have caused this Agreement to be
executed as of the date first written above individually or by
their respective officers duly authorized.
THE VINCAM GROUP, INC.
By: /s/ Carlos A. Saladrigas
Its: President
THE STONE MOUNTAIN GROUP, INC.
By: /s/ James Beesley
Its: President
/s/ Hal W. Pulfer /s/ Scott Bade
Hal W. Pulfer Scott Bade
/s/ James Beesley /s/ Edward Spiegel
James Beesley Edward Spiegel
/s/ Lester E. Frankenthal /s/ Charles Frankenthal
Lester E. Frankenthal Charles Frankenthal
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