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) December 10, 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) File Number) Identification No.)
2850 Douglas Road, Miami Florida 33134
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(Address of principal executive offices) (Zip Code)
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 December 24, 1996, The Vincam Group, Inc. entered into a definitive
merger agreement with Staff Administrators, Inc. ("SAI"), a privately-held
professional employer organization ("PEO") headquartered in Denver, Colorado
with approximately 220 clients and 3,600 worksite employees
Vincam will issue 520,000 shares of its common stock in exchange for all of
the equity in SAI and its subsidiaries. The transaction will be accounted for
as a pooling of interests and is expected to close in January 1997.
As a PEO, SAI 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.
For the eleven months ended November 30, 1996, SAI had revenues of
approximately $70 million and expects to have an operating loss for the year
ending December 31, 1996.
On December 10, 1996, The Vincam Group, Inc. announced that it has entered into
an agreement with Reliance National Insurance Company to provide workers'
compensation insurance coverage. The agreement will provide the Company with
a three-year guaranteed cost program and commutation provision which allows
the Company the opportunity to buy back its losses, for each year, at any
time in the future. Additionaly, the agreement will include a full risk
transfer of the company's losses and exposure through Commercial Risk
Re-Insurance Company and Reliance under its existing large deductible
workers' compensation insurance policies for the years 1994, 1995 and 1996.
On December 31, 1996, The Vincam Group, Inc. signed an Agreement and Amendment
No. 1 to Amended and Restated Credit Agreement with Fleet National Bank (the
"Amendment"). Among other things the Amendment terminates the Company's cash
collateral pledge of approximately $4.0 million, extends the maturity date of
the revolving line of credit from June 5, 1997 to December 31, 1997, and
increases the borrowing capacity for working capital under the $13.0 million
revolving line of credit from $1.0 million to $2.0 million.
Certain statements in this Form 8-K constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "intends" and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such known and unknown risks, uncertainties
and other factors include, among others, the following: (i) potential for
unfavorable interpretation of government regulations relating to labor, taxes,
insurance, employment matters and the provision of managed care services;
(ii) the Company's ability to obtain or maintain all required licenses or
certifications required to further expand the range of specialized managed
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care services offered by the Company; (iii) potential increases in the
Company's costs, such as health care costs, that the Company may not be able
to reflect immediately in its service fees; (iv) the Company's ability to
offer its services to prospective clients in additional states where
it has less or no market penetration; (v) higher than expected workers'
compensation claims under the Company's large deductible workers' compensation
insurance policies; (vi) the level of acquisition opportunities available
to the Company; (vii) the financial condition of the Company's clients;
(viii) additional regulatory requirements affecting the Company; (ix) the
impact of competition from existing and new PEO companies; and (x) other factors
which are described in further detail in the Company's filings with the
Securities and Exchange Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit
No.
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2 Agreement and Plan of Merger by and Among The Vincam Group, Inc.,
Staff Administrators, Inc. and Michael C. Koltak and Robert J.
Quinette, dated as of December 24, 1996, including the form of
Registration Agreement, Escrow Agreement, and Agreement and Plan
of Merger with respect to Staff Administrators of Western
Colorado, Inc. which are exhibits thereto.*
10 Agreement and Amendement No.1 to Amended and Restated Credit
Agreement,dated as of December 31, 1996, by and among The Vincam
Group, Inc., its subsidiaries and Fleet National Bank.
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* Not all exhibits to Exhibit 2 have not been filed with the Securities and
Exchange Commission (the "Commission"). The registrant agrees to provide
those exhibits supplementally upon the request of the Commission.
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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: January 3, 1997 By /s/ STEPHEN L. WAECHTER
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Stephen L. Waechter
Chief Financial Officer
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THE VINCAM GROUP, INC.
INDEX TO ITEM 7(c)
EXHIBITS
Exhibit
No.
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2 Agreement and Plan of Merger by and Among The Vincam Group, Inc.,
Staff Administrators, Inc. and Michael C. Koltak and Robert J.
Quinette, dated as of December 24, 1996, including the form of
Registration Agreement, Escrow Agreement, and Agreement and Plan
of Merger with respect to Staff Administrators, Inc. of Western
Colorado, Inc. which are exhibits thereto.
10 Agreement and Amendement No.1 to Amended and Restated Credit
Agreement,dated as of December 31, 1996, by and among The Vincam
Group, Inc., its subsidiaries and Fleet National Bank.
<PAGE> Exhibit 2
Agreement and Plan of Merger
by and Among
The Vincam Group, Inc.,
Staff Administrators, Inc.
and
Michael C. Koltak and Robert J. Quinette
December 24, 1996
<PAGE>
THE PAGINATION REFERENCE IN THE FOLLOWING TABLE OF CONTENTS MAKE
REFERENCE TO THE ORIGINAL DOCUMENT.
TABLE OF CONTENTS
ARTICLE I
THE MERGER 1
SECTION 1.01 The Merger 1
SECTION 1.02 Effective Time 2
SECTION 1.03 Effect of the Merger 2
SECTION 1.04 Articles of Incorporation; By-Laws 2
SECTION 1.05 Directors and Officers 2
SECTION 1.06 Taking Necessary Action; Further
Action 2
SECTION 1.07 The Closing 2
ARTICLE II
EFFECT ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES 3
SECTION 2.01 Effect on Capital Stock 3
SECTION 2.02 Delivery of Per Share Merger
Consideration 4
SECTION 2.03 Registration Rights 6
SECTION 2.04 Accounting Treatment 6
SECTION 2.05 Tax Treatment 6
ARTICLE III
DEFINITIONS 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS 8
SECTION 4.01 Organization and Qualification;
No Subsidiaries 8
SECTION 4.02 Articles of Incorporation; By-Laws 9
SECTION 4.03 Capitalization 9
SECTION 4.04 Authority; Enforceability 10
SECTION 4.05 Noncontravention; Required
Filings and Consents 10
SECTION 4.06 Permits; Compliance 11
SECTION 4.07 Reports; Financial Statements 12
SECTION 4.08 Absence of Certain Changes or
Events 14
SECTION 4.09 Absence of Litigation 15
SECTION 4.10 Contracts; No Default 16
SECTION 4.11 Employee Benefit Plans; Labor
Matters 18
SECTION 4.12 Taxes 20
SECTION 4.13 Intellectual Property Rights 22
SECTION 4.14 Insurance 23
SECTION 4.15 Brokers 23
SECTION 4.16 Title to Properties 23
SECTION 4.17 Notes and Accounts Receivable 25
SECTION 4.18 Tax Payment and Direct Deposit
Service 25
SECTION 4.19 Related Parties 25
SECTION 4.20 Disclosure 26
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS 26
SECTION 5.01 Authority; Enforceability 26
SECTION 5.02 Noncontravention 26
SECTION 5.03 Investment 27
SECTION 5.04 Company Shares 27
SECTION 5.05 Share Ownership 27
SECTION 5.06 Disclosure 28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR 28
SECTION 6.01 Organization and Qualification 28
SECTION 6.02 Capitalization 28
SECTION 6.03 Authority 29
SECTION 6.04 No Conflict, Required Filings
and Consents 29
SECTION 6.05 Reports; Financial Statements 30
SECTION 6.06 Absence of Certain Changes or
Events 31
SECTION 6.07 Brokers 31
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS 31
SECTION 7.01 Affirmative Covenants of the
Company 31
SECTION 7.02 Negative Covenants of the
Company 32
SECTION 7.03 Access and Information 34
ARTICLE VIII
ADDITIONAL AGREEMENTS 35
SECTION 8.01 Appropriate Action; Consents;
Filings 35
SECTION 8.02 Update Disclosure; Breaches 36
SECTION 8.03 Affiliate Agreements; Tax
Treatment 37
SECTION 8.04 Public Announcements 37
SECTION 8.05 NMS Listing 37
SECTION 8.06 Survival of Representations and
Warranties; Indemnification 37
SECTION 8.07 Obligations of Acquiror Sub 39
SECTION 8.08 Accounting Treatment 39
SECTION 8.09 Good Faith 39
SECTION 8.10 Publication of Post-Merger Results 39
SECTION 8.11 Legend 39
SECTION 8.12 Employee Benefit Plan 40
SECTION 8.13 Confidentiality and Non-Competition
Agreement 40
ARTICLE IX
CLOSING CONDITIONS 40
SECTION 9.01 Conditions to Obligations of Each
Party Under This Agreement 40
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ARTICLE X
TERMINATION; AMENDMENT 45
SECTION 10.01 Termination 45
SECTION 10.02 Effect of Termination 45
SECTION 10.03 Fees and Expenses 46
ARTICLE XI
GENERAL PROVISIONS 46
SECTION 11.01 Notices 46
SECTION 11.02 Amendment 47
SECTION 11.03 Waiver 48
SECTION 11.04 Headings 48
SECTION 11.05 Severability 48
SECTION 11.06 Entire Agreement 48
SECTION 11.07 Assignment 48
SECTION 11.08 Parties in Interest 48
SECTION 11.09 Governing Law 49
SECTION 11.10 Counterparts; Facsimile
Signatures 49
SECTION 11.11 Attorneys Fees 49
EXHIBITS
Exhibit 2.02 Escrow Agreement*
Exhibit 2.03 Registration Agreement*
Exhibit 4.01 Company Disclosure Schedule
Exhibit 7.01 Staff Administrators of Western
Colorado, Inc. Merger Agreement*
Exhibit 8.03 Affiliate Agreement
Exhibit 9.01(c)(v) Non-Competition and
Confidentiality Agreement
Exhibit 9.01(c)(xvii) Promissory Note
* Exhibit included as part of this filing.
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of
December 24, 1996 (this Agreement ), is by and among
The Vincam Group, Inc., a Florida corporation ( Acquiror
), Staff Administrators, Inc., a Colorado corporation
(the Company ), Michael C. Koltak and Robert J.
Quinette. In this Agreement, Messrs. Koltak and
Quinette are referred to collectively as the
Shareholders and individually as a Shareholder.
RECITALS:
A. Subject to the provisions of this Agreement and
the satisfaction of the conditions to this Agreement,
the Company shall be merged (the Merger ) with a wholly
owned subsidiary of Acquiror ( Acquiror Sub ) at the
time provided for in Section 1.02. Following the
Merger, the Company shall be a wholly owned subsidiary
of the Acquiror. Shares of common stock, no par value,
of the Company ( Company Common Stock ) issued and
outstanding prior to the Merger will be converted into
shares of common stock, $.001 par value, of the Acquiror
( Acquiror Common Stock ) pursuant to the exchange ratio
set forth in Article II of this Agreement.
B. The parties hereto desire to enter into this
Agreement for the purpose of setting forth certain
representations, warranties and covenants made by each
to the other as an inducement to the execution and
delivery of this Agreement and the conditions precedent
to the consummation of the Merger.
NOW, THEREFORE, in consideration of the premises
and of the mutual provisions, agreements and covenants
herein contained, Acquiror, Company and the Shareholders
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to
the conditions set forth in this Agreement, and in
accordance with the Colorado Business Corporation Act
(the Colorado Code ), at the Effective Time (as defined
below), the Acquiror Sub shall be merged with and into
the Company. As a result of the Merger, the separate
corporate existence of the Acquiror Sub shall cease and
the Company shall continue as the surviving corporation
of the Merger (the Surviving Corporation ). Acquiror
Sub and the Company are collectively referred to in this
Agreement as the Constituent Corporations.
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SECTION 1.02 Effective Time. At the Closing (as
defined below), the parties shall cause the Merger to be
consummated by filing articles of merger (the Articles
of Merger ) with the Secretary of State of Colorado in
such form as required by, and executed in accordance
with, the relevant provisions of the Colorado Code (the
effective date and time specified in such filing, which
shall be no earlier than January 1, 1997, being the
Effective Time ).
SECTION 1.03 Effect of the Merger. At the Effective
Time, the effect of the Merger shall be as provided in
the applicable provisions of the Colorado Code. Without
limiting the generality of such act, and subject to its
provisions, at the Effective Time, all the property,
interests, assets, rights, privileges, immunities,
powers and franchises of Acquiror Sub and the Company
shall vest in the Surviving Corporation, and all debts,
liabilities, duties and obligations of Acquiror Sub and
the Company shall become the debts, liabilities, duties
and obligations of the Surviving Corporation.
SECTION 1.04 Articles of Incorporation; By-Laws. At
the Effective Time, the Articles of Incorporation and
the By-Laws of the Acquiror Sub shall be the Articles of
Incorporation and the By-Laws of the Surviving
Corporation.
SECTION 1.05 Directors and Officers;. The directors of
Acquiror Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the
Articles of Incorporation and By-Laws of the Surviving
Corporation, and the officers of Acquiror Sub
immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected
or appointed and qualified.
SECTION 1.06 Taking Necessary Action; Further Action;.
Acquiror, Acquiror Sub and the Company, respectively,
shall each use its best reasonable efforts to take all
such action as may be necessary or appropriate to
effectuate the Merger under the Colorado Code at the
Effective Time. If, at any time after the Effective
Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and
possession to all properties, interests, assets, rights,
privileges, immunities, powers and franchises of either
of the Constituent Corporations, the officers of the
Surviving Corporation are fully authorized in the name
of each Constituent Corporation or otherwise to take,
and shall take, all such lawful and necessary action.
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SECTION 1.07 The Closing;. The closing of the
transactions contemplated by this Agreement (the
Closing ) shall be held as promptly as practicable, but
not more than two business days following the
satisfaction of, or waiver by the party entitled to
satisfaction of, all conditions precedent to the Merger
specified in this Agreement, unless duly waived by the
party entitled to satisfaction thereof. The Closing
will take place at the offices of Steel Hector & Davis
LLP, 200 S. Biscayne Blvd., Suite 4000, Miami, Florida
33131-2398, at 10:00 a.m. local Miami time on such date,
or at such other time and place as the parties may
agree.
ARTICLE II
EFFECT ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
SECTION 2.01 Effect on Capital Stock;. At the Effective
Time, by virtue of the Merger and without any further
action on the part of Acquiror Sub, the Company or the
holders of Company Common Stock:
(a) All issued and outstanding shares of
capital stock of Acquiror Sub shall continue to be
issued and shall be converted into 1,000 shares of
common stock of the Surviving Corporation. Each stock
certificate of Acquiror Sub evidencing ownership of any
such shares shall evidence ownership of such shares of
capital stock of the Surviving Corporation.
(b) Each share of Company Common Stock, or
fraction thereof, issued and outstanding immediately
prior to the Effective Time (other than any shares of
Company Common Stock to be cancelled pursuant to Section
2.01(e)) and other than shares as to which a demand for
dissenter s rights shall have been duly perfected in
accordance with the Colorado Code ( Dissenting Shares ),
shall be converted, without any action on the part of
the holders thereof into 2,500 shares of Acquiror Common
Stock (the Per Share Merger Consideration ). The
shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any
shares of Company Common Stock to be cancelled pursuant
to Section 2.01(e) and any Dissenting Shares) are
sometimes referred to herein as the Outstanding Company
Shares.
(c) All such shares of Company Common Stock so
converted shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease
to exist, and each certificate previously representing
any such shares shall thereafter represent the right to
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receive the aggregate per share consideration into which
such Company Common Stock was converted in the Merger.
No fractional share of Acquiror Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be
made pursuant to Section 2.02(d) hereof.
(d) No fractional shares of Acquiror Common
Stock shall be issued, but in lieu thereof each holder
of shares of Company Common Stock who would otherwise be
entitled to receive a fraction of a share of Acquiror
Common Stock (after aggregating all fractional shares of
Acquiror Common Stock to be received by such holder)
shall receive from Acquiror an amount of cash equal to
the product of (i) the fraction of a share of Acquiror
Common Stock to which such holder would otherwise be
entitled, and (ii) the average closing price, as
reported on the Nasdaq National Market, of a share of
Acquiror Common Stock for the ten (10) days on which
Acquiror Common Stock has traded immediately preceding
the Closing (the Market Value ).
(e) Each share of Company Common Stock held in
the treasury of the Company shall be cancelled and
extinguished without any conversion of such shares and
no payment shall be made with respect to such shares.
SECTION 2.02 Delivery of Per Share Merger
Consideration;. (a) At the Closing, Acquiror shall
deliver to Norwest Bank Colorado, N.A., in Denver,
Colorado, acting in the capacity of escrow agent (the
Escrow Agent ), and to the holders of the Outstanding
Company Shares, certificates representing the shares of
Acquiror Common Stock and the cash, in immediately
available funds, to which the holders of Outstanding
Company Shares shall be entitled pursuant to Section
2.01, as further provided below. Fifty percent (50%) of
the fees of the Escrow Agent shall be borne by the
Acquiror, and twenty five percent (25%) of the fees of
the Escrow Agent shall be borne by each of the
Shareholders.
(b) At the Closing, each holder of record
(other than Acquiror or Acquiror Sub or any other
Subsidiary of Acquiror) of a certificate or certificates
which immediately prior to the Effective Time
represented Outstanding Company Shares (individually a
Certificate and collectively the Certificates ) shall
deliver to the Acquiror such shareholder s Certificates.
The holder of such Certificate(s) shall be entitled to
receive in exchange therefor a certificate representing
all of the shares of Acquiror Common Stock (other than
those shares being placed in escrow as described below)
and the cash, if any, that such holder is entitled to
receive pursuant to Section 2.01(d). Of the shares
otherwise issuable to the holders of Outstanding Company
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Shares, an aggregate number of shares equal to 10% of
the number of shares of Acquiror Common Stock issuable
to such holders hereunder (the Indemnification Escrow
Shares ) shall be deposited by the Acquiror with the
Escrow Agent in accordance with the terms and provisions
of an escrow agreement substantially in the form
attached as Exhibit 2.02 (the Escrow Agreement ). The
number of Indemnification Escrow Shares to be delivered
to the Escrow Agent on behalf of each holder of
Outstanding Company Shares shall equal the product of
(i) the total number of Escrow Shares to be delivered to
the Escrow Agent and (ii) a fraction, the numerator of
which is the number of shares of Acquiror Common Stock
into which such holder s Outstanding Company Shares are
converted as a result of the Merger and the denominator
of which is the total number of shares of Acquiror
Common Stock into which all of the Outstanding Company
Shares are converted as a result of the Merger, rounded
up to the next whole share. The delivery of the
Indemnification Escrow Shares shall be made on behalf of
the holders of the Outstanding Company Shares in
accordance with the provisions hereof, with the same
force and effect as if such shares had been delivered by
Acquiror directly to such holders and subsequently
delivered by such holders to the Escrow Agent. The
shares so deposited shall be evidenced by separate
certificates in the names of each of the holders of the
Outstanding Company Shares. The adoption of this
Agreement by the Shareholders shall also constitute
their approval of the terms and provisions of the Escrow
Agreement, including the indemnification provided for
therein and their confirmation of the appointment of
Norwest Bank Colorado, N.A. to act as Escrow Agent.
(c) If any certificate for shares of Acquiror
Common Stock is to be issued in a name other than that
in which the certificate surrendered in exchange
therefor is registered, it will be a condition of the
issuance thereof that such transfer be in compliance
with any applicable state and federal securities laws
and that the certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and
that the person requesting such exchange will have paid
to Acquiror or any agent designated by it any transfer
or other taxes required by reason of the issuance of a
certificate for shares of Acquiror Common Stock in any
name other than that of the registered holder of the
certificate surrendered, or established to the
satisfaction of Acquiror or any agent designated by it
that such tax has been paid or is not payable.
(d) Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the
right to receive upon surrender (i) the Per Share Merger
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Consideration into which the shares of Company Common
Stock previously represented by such Certificate were
converted at the Effective Time, (ii) cash in lieu of
any fractional shares of Acquiror Common Stock to which
such holder is entitled pursuant to Section 2.01(d) and
(iii) any dividends or other distributions to which such
holder is entitled pursuant to Section 2.02(f).
(e) At and after the Effective Time, the
holders of Certificates shall cease to have any rights
as shareholders of the Company, except for the right to
surrender Certificates to be converted pursuant to
Section 2.01. All shares of Acquiror Common Stock
issued (and cash paid in lieu of fractional shares) upon
conversion of the shares of Company Common Stock in
accordance with the terms of this Agreement shall be
deemed to have been issued and paid in full satisfaction
of all rights pertaining to such shares of Company
Common Stock.
(f) Holders of unsurrendered Certificates with
respect to the shares of Acquiror Common Stock
represented thereby shall be entitled to receive
dividends and other distributions declared or made with
respect to Acquiror Common Stock with a record date as
of the close of business on or after the date on which
the Effective Time occurs. No such dividends or other
distributions, however, and no cash payment in lieu of
fractional shares payable pursuant to Section 2.01(d),
shall be paid to the holder of any such unsurrendered
Certificate until such holder shall surrender such
Certificate. Subject to the effect of escheat, tax or
other applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the
certificates representing whole shares of Acquiror
Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of any cash payable
with respect to a fractional share of Acquiror Common
Stock to which such holder is entitled pursuant to
Section 2.01(d) and the amount of dividends or other
distributions with a record date as of the close of
business on or after the Effective Time theretofore paid
with respect to such whole shares of Acquiror Common
Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a
record date as of the close of business on or after the
Effective Time but prior to surrender, payable with
respect to such whole shares of Acquiror Common Stock.
(g) If, between the date hereof and the
Effective Time, the outstanding shares of Acquiror
Common Stock shall be changed into a different number of
shares or a different class by reason of any
reclassification, recapitalization, split-up, exchange
of shares or readjustment, or if a stock dividend
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thereon shall be declared with a record date within such
period, the number of shares of Acquiror Common Stock to
be issued and delivered in the Merger for each
outstanding shares of Company Common Stock as provided
in this Agreement shall be correspondingly adjusted. It
is agreed and understood that the grant by the Acquiror
of stock options pursuant to any stock option or stock
incentive plan, or the exercise by any holder of such a
stock option, shall not constitute an action of the type
requiring adjustment pursuant to this Section 2.02.
SECTION 2.03 Registration Rights;. The shares of
Acquiror Common Stock received in the Merger shall be
entitled to certain registration rights, as defined in
and pursuant to the Registration Agreement attached as
Exhibit 2.03.
SECTION 2.04 Accounting Treatment;. The parties intend
that the Merger shall be treated as a pooling of
interests for accounting purposes.
SECTION 2.05 Tax Treatment;. The Company and the
Shareholders intend that the Merger will be a non-
taxable transaction to the holders of Company Common
Stock under section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended.
ARTICLE III
DEFINITIONS
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.
The term Affiliate means, with respect to a given
person, a person who controls, is controlled by or is
under common control with, such person.
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 means any
change or effect that is materially adverse to the
financial condition, results of operations, businesses,
properties, assets or liabilities of the Company and its
Subsidiaries, taken as a whole. A change or effect
shall be considered materially adverse if it has a
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negative financial impact of at least $40,000.
The term employee includes, but is not limited to,
any leased employee, co-employee, worksite employee,
internal employee or corporate employee.
The term Governmental Entity means any federal,
state, local, or foreign government or any agency
thereof.
The term knowledge means the actual knowledge of a
person, or of its current officers and directors in the
case of a corporate person, after reasonable
investigation. For purposes of this definition,
reasonable investigation means that inquiry has been
made of those Company persons employed or retained by
the Company or its Subsidiaries (excluding leased
employees of the Company) who are likely to know the
facts of the subject matter being investigated and all
files or documents in the possession of all such persons
which relate to the subject matter being investigated
have been reviewed.
The term Law means any federal, state or local law,
statute, rule, ordinance or regulation (including codes,
plans, judgments, injunctions, administrative
interpretations, orders, or charges thereunder).
The term person 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 Subsidiary (or its plural) as used in this
Agreement with respect to the Company, Acquiror, the
Surviving Corporation or any other person shall mean any
corporation, partnership, joint venture or other legal
entity of which the Company, Acquiror, the Surviving
Corporation or such other person, 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 THE SHAREHOLDERS
The Company and each of the Shareholders jointly
and severally represent and warrant to Acquiror that the
statements contained in this Article IV are correct and
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complete as of the date of this Agreement and will be
correct and complete immediately prior to the Effective
Time (as though made then and as though the Effective
Time were substituted for the date of this Agreement
throughout this Article IV). In the event that, after
the date hereof and prior to the Effective Time, any of
the statements contained in this Article IV becomes
incorrect or incomplete, the Company and the
Shareholders shall provide notice to the Acquiror
pursuant to Section 8.02.
SECTION 4.01 Organization and Qualification; No
Subsidiaries;. The Company and each of its Subsidiaries
is a corporation, duly incorporated, validly existing
and in good standing under the laws of its state of
incorporation, and has all requisite corporate or other
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 business conducted by it or the
ownership or leasing of its properties makes such
qualification necessary, except where the failure to be
so qualified will not have, individually or in the
aggregate with any other failure to be qualified, a
Company Material Adverse Effect. All of the Company s
Subsidiaries, and their respective states of
incorporation, are set forth in Section 4.01 of the
disclosure schedule attached as Exhibit 4.01 (the
Company Disclosure Schedule ). Other than the entities
listed in Section 4.01 of the Company Disclosure
Schedule, the Company has never had, nor does it
currently have, any Subsidiaries, nor has it owned, nor
does it currently own, directly or indirectly, any
capital stock or other equity securities of any
corporation or have direct or indirect equity or
ownership interest in any association, partnership,
joint venture or other entity. Section 4.01 of the
Company Disclosure Schedule also lists by state, as of
the most recent practicable date, the number of
employees of the Company and each of its Subsidiaries in
each state, according to the state(s) in which the
employee is working as of such date. Such list includes
all employees of the Company or any of its Subsidiaries
and includes separate lists for each of the Company and
its Subsidiaries.
SECTION 4.02 Articles of Incorporation; By-Laws;. The
Company has furnished to Acquiror complete and correct
copies of the Articles of Incorporation and By-Laws of
the Company, Staff Administrators of California, Inc. (
SAI California ), Staff Administrators of Western
Colorado, Inc. ( Western Colorado ), and Staff
Administrators of CO., Inc. ( SAI Colorado ), as amended
or restated, and as currently in effect. Neither the
Page 9 of 54
<PAGE>
Company nor any of its Subsidiaries is 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 10,000 shares
of Company Common Stock, of which 200 shares are issued
and outstanding. The Company has no other classes of
stock. The authorized capital stock of SAI California
consists of 10,000 shares of common stock, no par value
( SAI California Common Stock ), of which 10,000 shares
are issued and outstanding. All such issued and
outstanding shares of SAI California Common Stock are
owned, as of the date hereof, by the Company. SAI
California has no other classes of stock. The
authorized capital stock of SAI Colorado consists of
1,000 shares of common stock, par value $10.00 per share
( SAI Colorado Common Stock ), of which 1,000 shares are
issued and outstanding. All such issued and outstanding
shares of SAI Colorado Common Stock are owned, as of the
date hereof, by the Company. SAI Colorado has no other
classes of stock. The authorized capital stock of
Western Colorado consists of 50,000 shares of common
stock, no par value ( Western Colorado Common Stock ),
of which 50,000 shares are issued and outstanding.
25,500 of such issued and outstanding shares of Western
Colorado Common Stock are owned, as of the date hereof,
by the Company, and 24,500 shares are owned by Kris
Smith. Western Colorado has no other classes of stock.
At no time since January 1,1994 has the Company been
controlled by another corporation.
(b) All outstanding shares of Company Common
Stock, Western Colorado Common Stock, SAI Colorado
Common Stock and SAI California Common Stock are duly
authorized, validly issued, fully paid and
non-assessable. No outstanding shares of Company Common
Stock, Western Colorado Common Stock, SAI Colorado
Common Stock or SAI California Common Stock have been
issued in violation of, or are currently subject to, any
preemptive or similar rights, except that the parties
acknowledge that the stock of SAI Colorado is subject to
pre-emptive rights pursuant to its Articles of
Incorporation. Except as set forth in Section 4.03 of
the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or
commitments to which the Company or any of its
Subsidiaries is a party of any character relating to the
issued or unissued capital stock of any of the Company
or its Subsidiaries or obligating any of them to grant,
issue, sell or register for sale any shares of capital
stock, by sale, lease, license or otherwise. As of the
date of this Agreement, there are no obligations,
contingent or otherwise, of any of the Company or its
Subsidiaries to provide funds to, or make any investment
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<PAGE>
in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the
obligations of, any other person (including the Company
or any other Subsidiary).
(c) Since January 1, 1994, there have been no
changes in the proportionate equity ownership of the
Company.
SECTION 4.04 Authority; Enforceability;. The Board of
Directors of the Company has adopted this Agreement and
recommended the Merger for the approval of the
Shareholders pursuant to Sections 7-111-101 and 7-111-
103 of the Colorado Code. The Shareholders have
unanimously adopted and approved the Agreement and the
Merger contemplated hereby. 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 and shareholder action and no
other corporate or shareholder proceedings on the part
of the Company, other than the filing of the Articles of
Merger, 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 equitable
principles.
SECTION 4.05 Noncontravention; 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 or
any of its Subsidiaries; (ii) subject to giving the
notices and obtaining the consents, approvals,
authorizations or permits described in Section 4.05 of
the Company Disclosure Schedule and the filing of the
Articles of Merger, conflict with or violate any Laws
applicable to the Company or its Subsidiaries or by
which any of the Company or its Subsidiaries or their
respective properties are 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,
Page 11 of 54
<PAGE>
or result in the creation of a lien or encumbrance on
any of the properties or assets of the Company or its
Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of
their respective properties are bound or affected,
except for any such conflicts or violations described in
clause (ii) that would not have, individually or in the
aggregate, a Company Material Adverse Effect, and any
such breaches or defaults described in clause (iii) that
would not, individually or in the aggregate, have a
Company Material Adverse Effect.
SECTION 4.06 Permits; Compliance;. The Company and its
Subsidiaries are in possession of all material
franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents,
certificates, approvals and orders necessary for the
Company and its Subsidiaries to own, lease and operate
their properties or to carry on their businesses
substantially as they are now being conducted (the
Company Permits ) except where failure to have such
Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect, and
no suspension, revocation or cancellation of any of the
Company Permits is pending or, to the knowledge of the
Company and the Shareholders, threatened. All of the
Company Permits are set forth in Section 4.06 of the
Company Disclosure Schedule. The Company, its
Subsidiaries and each of the Shareholders are licensed
or registered as professional employer organizations
and/or as control persons thereof, as appropriate, in
each jurisdiction in which their activities require such
licensing or registration, except where failure to be so
licensed or registered will not have, individually or in
the aggregate, a Company Material Adverse Effect. All
such professional employer organization licenses and
registrations are set forth in Section 4.06 of the
Company Disclosure Schedule. Neither the Company nor
any of its Subsidiaries nor, to the knowledge of the
Company and the Shareholders, any client of the Company
or any of its Subsidiaries, has operated (nor is any of
the Company or any of its Subsidiaries or their
respective clients currently operating) in violation of
any Law applicable to the Company or its Subsidiaries or
their respective clients or by which any of their
respective properties is bound or affected, including
without limitation, laws with respect to the regulation
or licensure of professional employer organizations, the
Occupational Safety and Health Act, the Environmental
Protection Act, the Equal Employment Opportunities Act,
the Age Discrimination in Employment Act, Title VII of
the Civil Rights Act, the Vocational Rehabilitation Act,
Page 12 of 54
<PAGE>
the Americans with Disabilities Act (except that, as to
the clients of the Company and its Subsidiaries, no
representation is made as to compliance with the
physical premises provisions thereof), the Vietnam Era
Veterans Readjustment Act, the Fair Labor Standards Act,
the Federal Drug Free Workplace Act, Laws with respect
to immigration and naturalization and all Laws relating
to wages and hours, workers compensation, labor
practice regulations, employment discrimination and
state employee leasing and registration requirements,
other than violations that, individually or in the
aggregate, would not have a Company Material Adverse
Effect. Other than as disclosed in Section 4.09(a) of
the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries nor, to the knowledge of the
Company and the Shareholders, any or their respective
clients, is 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
the respective incorporation of each, the Company and
each of its Subsidiaries have 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 ),
other than those forms, reports, statements or other
documents, the failure of which to file has not had, and
will not have, individually or in the aggregate, a
Company Material Adverse Effect. The Company Reports
were prepared in all material respects in accordance
with the requirements of applicable Law.
(b) The audited balance sheets of the Company
for the years ended December 31, 1995 and December 31,
1994 and the statements of income, changes in
stockholders equity and cash flows for each of the
fiscal years in the three-year period ended on December
31, 1995, including any notes thereto (the Company
Financial Statements ), all of which have been audited
by Ehrhardt Keefe Steiner & Hottman P.C., certified
public accountants, are attached as Section 4.07(b) of
the Company Disclosure Schedule. The Company Financial
Statements (i) have been prepared 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
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<PAGE>
dates thereof and the results of operation and cash
flows for the periods indicated.
(c) The unaudited balance sheet and statements
of income, changes in stockholders equity and cash
flows of the Company for the ten months ended October
31, 1996 attached as Section 4.07(c) of the Company
Disclosure Schedule (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 past practice (except for
footnotes to the Interim Financial Statements and
appropriate year-end adjustments and other presentation
items), and (ii) present fairly, in all material
respects, the financial position of the Company as of
October 31, 1996 and its results of operations and cash
flows for the ten month period ended October 31, 1996.
(d) Except as and to the extent reflected or
reserved in the balance sheet of the Company for the ten
month period ended October 31, 1996 attached as Section
4.07(c) of the Company Disclosure Schedule (the Interim
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, prepared in accordance
with GAAP consistent with past practice, except for
liabilities or obligations incurred in the ordinary
course of business since October 31, 1996.
(e) Attached as Section 4.07(e) of the Company
Disclosure Schedule is a true and complete copy of the
latest projections of the consolidated income of the
Company and its Subsidiaries for the two (2) months
ended December 31, 1996. Such projections are based on
underlying assumptions of the Company which to the
Company s and the Shareholders knowledge provide a
reasonable basis for the projections contained therein
and have been prepared on the basis of the assumptions
set forth therein, which the Company and the
Shareholders believe are fair and reasonable in light of
the historical financial performance of the Company and
its Subsidiaries and of current and reasonably
foreseeable business conditions.
(f) The reserves for workers compensation and
health care costs reflected on the Interim Balance Sheet
are adequate and appropriate and have been accrued in
accordance with generally accepted accounting
principles. The Company has not received any report
(including, without limitation, a report from any
actuary, insurance company or accountant) which suggests
that any of the reserves reflected on the Interim
Balance Sheet may be inadequate in any material respect.
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<PAGE>
(g) Ehrhardt Keefe Steiner & Hottman P.C., the
accountants who have audited the Company Financial
Statements, are independent accountants within the
meaning of the Securities Act and the rules and
regulations promulgated thereunder.
SECTION 4.08 Absence of Certain Changes or
Events;. Except as disclosed is Section 4.08 of the
Company Disclosure Schedule, since December 31, 1995:
(a) there has not been any change which has
caused, or which is reasonably likely to cause, a
Company Material Adverse Effect;
(b) neither the Company nor any of its
Subsidiaries has increased compensation to officers, key
employees, consultants or to Excel Business Services,
Incorporated 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);
(c) neither the Company nor any of its
Subsidiaries has made any distribution upon its capital
stock, by way of dividend, repurchase or otherwise or
made any loan or advance to any officer, director,
shareholder or Affiliate (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;
(d) neither the Company nor any of its
Subsidiaries has entered into any agreement, contract,
lease, or license (or series of agreements, contract,
leases, or licenses related to the same transaction or
involving the same party or an affiliate thereof)
involving more than $50,000;
(e) no party has accelerated, terminated,
modified, or cancelled any agreement, contract, lease,
or license (or series of agreements, contract, leases,
or licenses related to the same transaction or involving
the same party or an affiliate thereof) involving more
than $50,000 to which the Company or any of its
Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound, or notified the Company or
any of its Subsidiaries that it intends to do any of the
foregoing;
(f) neither the Company nor any of its Subsidiaries
has granted any security interest in any of their
assets, tangible, or intangible;
(g) neither the Company nor any of its Subsidiaries
has made a capital expenditure (or series of related
capital expenditures) involving more than $50,000;
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(h) neither the Company nor any of its Subsidiaries
has 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 related to the same transactions or
involving the same party or an affiliate thereof)
involving more than $50,000;
(i) neither the Company nor any of its Subsidiaries
has delayed or postponed the payment of accounts payable
and other liabilities;
(j) neither the Company nor any of its Subsidiaries
has cancelled, compromised, waived, or released any
right or claim (or series of related rights or claims)
involving more than $25,000;
(k) there has not been any change in the
material accounting methods or practices followed by the
Company or any of its Subsidiaries except as required or
permitted by GAAP;
(l) neither the Company nor any of its
Subsidiaries has entered into an employee leasing
agreement which the Company or the Shareholders have
reason to believe would require Company or any
Subsidiary to provide services at a loss;
(m) neither the Company nor any of its
Subsidiaries has entered into any commitment (contingent
or otherwise) to do any of the foregoing.
SECTION 4.09 Absence of Litigation;. (a) Section
4.09(a) of the Company Disclosure Schedule lists all
claims, actions, suits, litigations, proceedings,
arbitrations or investigations of any kind against the
Company or any of its Subsidiaries which are pending or,
to the Company s and the Shareholders knowledge,
threatened. To the knowledge of the Company and the
Shareholders, there are no facts or circumstances with
regard to which it is reasonably foreseeable that a
claim, action, suit, litigation, proceeding, arbitration
or investigation will be filed or initiated against the
Company or any of its Subsidiaries, except as set forth
in Section 4.09(a) of the Company Disclosure Schedule.
Section 4.09(a) of the Company Disclosure Schedule lists
all claims, actions, suits, litigations, proceedings,
arbitrations or investigations of any kind against a
client of the Company which, to the Company s and the
Shareholder s knowledge are pending or threatened and
with regard to which it is reasonably foreseeable that
the Company or any of its Subsidiaries may be named as a
defendant or as an indemnitor. There is no action
pending seeking to enjoin or restrain the Merger or the
transactions contemplated by this Agreement.
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(b) Except as set forth in Section 4.09(b) of
the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries is subject to any continuing
order of, consent decree, settlement agreement or other
similar written agreement with, or, to the knowledge of
the Company and the Shareholders, continuing
investigation by, any Governmental Entity, or any
judgment, order, writ, injunction, decree or award of
any Governmental Entity or arbitrator, including without
limitation, cease-and-desist orders. To the knowledge
of the Company and the Shareholders, no client of the
Company or of any of its Subsidiaries is subject to any
continuing order of, consent decree, settlement
agreement or other similar written agreement with, or
continuing investigation by, any Governmental Entity, or
any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including
without limitation, cease-and-desist orders other than
such orders, decrees, agreements, investigations,
judgments, writs, injunctions or awards that (i)
individually or in the aggregate, would not have a
Company Material Adverse Effect or (ii) are not related
to the client s agreement with the Company or any of its
Subsidiaries.
SECTION 4.10 Contracts; No Default;. (a) Section
4.10(a) of the Company Disclosure Schedule sets forth as
of the date of this Agreement a list of each contract or
agreement to which the Company or any of its
Subsidiaries is a party (each, a Company Contract ):
(i) which is a professional employer
organization agreement with any of the twenty (20)
largest clients of the Company or any of its
Subsidiaries, taken as a whole, as measured on the basis
of either (x) the current number of employees or (y)
current revenues;
(ii) concerning a partnership or joint
venture with another person;
(iii) involving annual consideration in
excess of $25,000;
(iv) involving employment agreements,
employment contracts or understandings (other than
understandings with respect to at will employment)
relating to employment to which the Company or any of
its Subsidiaries is a party;
(v) concerning confidentiality or non-
competition;
(vi) with any shareholder or Affiliate or
person under the influence or control of or related to
any shareholder or Affiliate;
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(vii) involving indebtedness (other than
trade payables arising in the ordinary course of
business) or pursuant to which the Company or any of its
Subsidiaries has guaranteed the indebtedness of another
or pursuant to which a security interest in an asset of
the Company or any of its Subsidiaries has been created;
(viii) concerning consulting services,
changes of control, or severance or termination
payments;
(ix) with respect to payment of taxes or
tax sharing;
(x) with respect to the promotion of the
Company s or any of its Subsidiaries business through
the Internet or the World Wide Web or otherwise through
a computer network; or
(xi) which is otherwise material to the
business of the Company or any of its Subsidiaries,
taken as a whole, or under which the consequences of a
default or termination could have a Company Material
Adverse Effect.
(b) The Company has delivered to the Acquiror a
correct and complete copy of each Company Contract
listed in Section 4.10(a) of the Company Disclosure
Schedule. Each Company Contract is in full force and
effect, is a 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
equitable principles, and there is no default (or any
event known to the Company or the Shareholders which,
with the giving of notice or lapse of time or both,
would be a default) by the Company or any of its
Subsidiaries or any other party to a Company Contract,
in the timely performance of any obligation to be
performed or paid under any such contract or agreement.
The consummation of the transactions contemplated hereby
will not affect the status of any Company Contract as a
legal, valid, binding and enforceable agreement. No
party is seeking renegotiation of a Company Contract
(except in connection with the negotiation of a renewal
of a professional employer organization agreement in the
ordinary course of business) or substitute performance
thereunder nor has any party repudiated any provision
thereunder or indicated that it intends to terminate or
not renew a Company Contract.
(c) With respect to any professional employer
organization agreement to which the Company or any of
its Subsidiaries is a party, whether or not such
agreement is currently in effect, Section 4.10(c) of the
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Company Disclosure Schedule sets forth each claim for
breach of contract or failure of performance in excess
of $25,000 made against the Company or any of its
Subsidiaries during the three years immediately
preceding the date of this Agreement and through the
Closing.
(d) Except as set forth in Section 4.10(d) of
the Company Disclosure Schedule, there are no
outstanding powers of attorney executed on behalf of the
Company.
SECTION 4.11 Employee Benefit Plans; Labor Matters;.
(a) Section 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 Section 401(k) plan, 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 any of its
Subsidiaries or their respective ERISA Affiliates (as
defined in Section 4.11(c) below) are entitled to
participate by reason of their employment with the
Company or any of its Subsidiaries or their respective
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 any of its
Subsidiaries or their respective ERISA Affiliates are a
party or a sponsor or a fiduciary thereof or by which
the Company or any of its Subsidiaries or their
respective ERISA Affiliates (or any of their rights,
properties or assets) are bound or (ii) with respect to
which the Company or any of its Subsidiaries or their
respective ERISA Affiliates have made any payments,
contributions or commitments, or may otherwise have any
liability (whether or not the Company or any of its
Subsidiaries or their respective ERISA Affiliates still
maintains such plan, trust, arrangement, contract,
agreement, policy or commitment) (the Employee Benefit
Plans ). 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
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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 or
any of its Subsidiaries within the meaning of Section
414(b), (c), (m) or (o) of the Code. Section 4.11 of
the Company Disclosure Schedule lists all ERISA
Affiliates of the Company or any of its Subsidiaries.
(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 and with respect to each of the
Employee Benefit Plans that is subject to ERISA, other
than a plan described in Section 3(2) of ERISA, the
Company has at all times and continues to operate such
plans in compliance (both in form and operation) with
ERISA, the Code and all other applicable laws; no
Employee Benefit Plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of
the 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 any of its
Subsidiaries or any of their ERISA Affiliates of
incurring a liability to or on account of an 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 plan; and
all contributions, premium payments or other amounts
payable by the Company or any of its Subsidiaries or
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their ERISA Affiliates through the Effective Time 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 Effective Time) 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) Except for the employment,
consulting, change of control and severance agreements
set forth in Section 4.10(a) of the Company Disclosure
Schedule, 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 any of its Subsidiaries or their ERISA
Affiliates.
(f) The Company, its Subsidiaries and their
respective clients are not a party to any collective
bargaining or other labor union contracts. There are no
union organization attempts underway with respect to
such employees. There is no pending or, to the
knowledge of the Company and the Shareholders,
threatened labor dispute, strike or work stoppage
involving such employees. To the knowledge of the
Company and the Shareholders, neither the Company nor
any of its Subsidiaries nor any of their respective
clients has committed any unfair labor practices (as
defined in the National Labor Relations Act of 1947, as
amended) in connection with the operation of its
business, and there is no pending or, to the knowledge
of the Company and the Shareholders, threatened charge
or complaint against the Company or any of its
Subsidiaries or any of their respective clients by the
National Labor Relations Board or any comparable state
or local agency.
SECTION 4.12 Taxes;. (a) Except as set forth in Section
4.12 of the Company Disclosure Schedule:
(i) all Returns (as defined below) in
respect of Taxes (as defined below) required to be filed
with respect to the Company or any of its Subsidiaries
have been timely filed (including extensions) and no
extension of time within which to file any such Return
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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 or any of its Subsidiaries under Section 6655 of
the Code or any comparable provision of state, local or
foreign law have been made on the basis of a 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;
(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;
(v) there are no outstanding subpoenas or
requests for information with respect to any Returns or
the Taxes reflected on such Returns;
(vi) neither the Company nor any of its
Subsidiaries is a party to any Tax allocation or sharing
agreement. Neither the Company nor any of its
Subsidiaries (A) has ever been a member of an Affiliated
Group, nor (B) has any 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;
(vii) neither the Company nor any of its
Subsidiaries has, 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 or its
Subsidiary, and no corporation that was included in the
filing of a Return with the Company or any of its
Subsidiaries 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;
(viii) no consent under Section 341(f) of
the Code has been filed with respect to the Company or
any of its Subsidiaries;
(ix) there are no Tax liens on any assets
of the Company or any of its Subsidiaries other than
liens for Taxes not yet due or payable;
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(x) all Taxes required to be withheld,
collected or deposited by the Company or any of its
Subsidiaries 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 or any of its
Subsidiaries in an appropriate proceeding, and adequate
reserves therefor have been provided on the Company s
financial statements;
(xi) neither the Company nor any of its
Subsidiaries was 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 or any of its Subsidiaries;
(xii) there is no material difference on
the books of the Company or any of its Subsidiaries
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;
(xiii) there are no outstanding waivers or
agreements extending the statute of limitations for any
period with respect to any Tax to which the Company or
any of its Subsidiaries may be subject;
(xiv) neither the Company nor any of its
Subsidiaries is, 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; and
(xv) Staff Administrators of Western Colorado,
Inc. made a valid election under Section 1362 of the
Code and any corresponding state or local tax provisions
to be an S corporation for the taxable periods set forth
in Section 4.12 of the Company Disclosure Schedule.
(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
Governmental Entity or taxing authority or agency,
including, without limitation, income, franchise, net
worth, profits, gross receipts, minimum, alternative
minimum, estimated, ad valorem, value added, sales, use,
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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 taxes 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 by
the Company or any of its Subsidiaries 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
and each of its Subsidiaries owns, licenses 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 or in violation of any license
or other agreement with respect thereto. Each item of
intellectual property owned or used by the Company prior
to the Closing will be owned or available for use by the
Surviving Corporation on the same terms and conditions
immediately following the Closing. The Company and each
of its Subsidiaries has taken all such actions as are
reasonably necessary to maintain and protect its
intellectual property. Section 4.13 of the Company
Disclosure Schedule lists all of the intellectual
property rights used by the Company or any of its
Subsidiaries as well as any intellectual property rights
owned by third parties and used by the Company or any of
its Subsidiaries pursuant to licenses, sublicenses,
agreements 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;. Section 4.14(a) of the
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 or any of its Subsidiaries (the
Insurance Policies ), all of which have been made
available to Acquiror. The Insurance Policies are in
full force and effect and neither the Company nor any of
its Subsidiaries is in default with respect to any
Page 24 of 54
<PAGE>
provision contained in any Insurance Policy. Neither
the Company nor any of its Subsidiaries has 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. Except as disclosed in
Section 4.14(a) of the Company Disclosure Schedule, the
Company and each of its Subsidiaries has been covered
during the past three years by insurance for the
activities in which it has engaged and the assets it has
owned during this three year period. A copy of each
such Insurance Policy has been previously provided to
Acquiror.
SECTION 4.15 Brokers;. No broker, finder or investment
banker 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 Shareholders.
SECTION 4.16 Title to Properties;. (a) Neither the
Company nor any of its Subsidiaries owns any real
property.
(b) All of the real property leased by the
Company or any of its Subsidiaries (the Leased Real
Property ) is described in Section 4.16(b) of the
Company Disclosure Schedule. The leases for the Leased
Real Property are in full force and effect and the
Company or its Subsidiary 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
Shareholders, neither the Company nor any of its
Subsidiaries is in default under, and to the knowledge
of the Company and the Shareholders no circumstances
exist which, if unremedied, would, either with or
without notice or the passage of time or both, result in
the Company s or the Subsidiary s default under any of
such leases.
(c) There are no pending or, to the knowledge
of the Company and the Shareholders, 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 operation thereof under the Company's
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<PAGE>
leases and have been operated and maintained in
accordance with applicable laws, rules, and regulations
as required under the Company's leases.
(e) To the knowledge of the Company and the
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 and there are no parties (other than a
Subsidiary of the Company) in possession of any Leased
Real Property of a Subsidiary of the Company.
(g) All facilities located on the 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, to
the knowledge of the Company and the Shareholders,
adequate in accordance with all applicable laws,
ordinances, rules and regulations.
(h) Each parcel of Leased Real Property abuts
on and has direct vehicular access to a public road.
(i) To the knowledge of the Company and the
Shareholders, neither the Company nor any of its
Subsidiaries is in violation of any applicable zoning
ordinance or other similar law, regulation or
requirement.
(j) Neither the Company nor any of its
Subsidiaries is in violation of laws relating to
environmental protection with respect to the Leased Real
Property or with respect to any other real property
leased or occupied by such person at any time or with
respect to any real property for which such person could
be liable as a result of the activities or actions of
its employees, nor is any such person subject to any
liability for clean up or remediation under any federal,
state or local law. Neither the Company nor any of its
Subsidiaries has received any written notification from
any Governmental Entity with respect to existing
violations of any Laws governing environmental
protection with respect to the Leased Real Property or
with respect to any other real property leased or
occupied by such person at any time or with respect to
any real property for which such person could be liable
as a result of the activities or actions of its
employees.
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<PAGE>
(k) The Company and each of its Subsidiaries
owns good title to each item of tangible personal
property reflected in the Interim Financial Statements
free and clear of any liens, encumbrances, options or
other agreements, except as described in Section 4.16(k)
of the Company Disclosure Schedule.
SECTION 4.17 Notes and Accounts Receivable;. All notes
and accounts receivable of the Company and its
Subsidiaries are (i) reflected properly on the Company s
books and records; (ii) are valid receivables subject to
no contractual setoffs or, to the knowledge of the
Company and the Shareholders, common law rights of
setoff or counterclaim; and (iii) are current and
collectible, subject only to the reserve for bad debts
set forth on the face of the Interim Balance Sheet (as
defined in Section 4.07), 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 who 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 date of this Agreement equals
the amount of payments due to the relevant Tax
authorities.
(b) The balance of direct deposits collected by the
Company as of the date of this Agreement is equal to the
amount due to the Company s clients and employees as of
such date.
SECTION 4.19 Related Parties;. Except as set forth in
Section 4.19 of the Company Disclosure Schedule, no
officer or director of the Company or any of its
Subsidiaries, or any Affiliate of such person, has,
either directly or indirectly, (a) an interest in any
corporation, partnership, firm or other person or entity
which furnishes or sells services or products which are
similar to those furnished or sold by the Company or its
Subsidiaries, or (b) a beneficial interest in any
contract or agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any
of its Subsidiaries may be bound. For purposes of this
Section 4.19, there shall be disregarded any interest
which arises solely from ownership of less than a five
percent (5%) equity interest in a corporation whose
stock is regularly traded or quoted on a national
securities exchange or over-the-counter market.
SECTION 4.20 Disclosure;. No representation or
warranty contained in this Article IV, as qualified by
the Company Disclosure Schedule, or in any Schedule or
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<PAGE>
Exhibit hereto or any closing certificate furnished or
to be furnished by either the Company or the
Shareholders to the Acquiror pursuant to this Agreement
or in connection with the Merger contains or, at the
Effective Time, will contain any untrue statement of a
material fact, or omits or, at the Effective Time, will
omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders severally but not jointly
represents and warrants to Acquiror that the statements
contained in this Article V are correct and complete as
of the date of this Agreement and will be correct and
complete as of the Effective Time (as though made then
and as though the Effective Time were substituted for
the date of this Agreement throughout this Article V).
SECTION 5.01 Authority; Enforceability;. The
Shareholder has full power and authority to execute and
deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of the Shareholder,
enforceable in accordance with its terms and conditions,
subject to bankruptcy, insolvency, reorganization,
moratorium and other laws limiting creditors rights
generally and to general equitable principles. The
Shareholder need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval
of any Governmental Entity in order to consummate the
transactions contemplated by this Agreement. The
Shareholder has taken all action required under Section
7-111-103 of the Colorado Code to adopt and approve this
Agreement and the Merger.
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 Governmental Entity, or court
to which the Shareholder or the Company or any of its
Subsidiaries 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
Shareholder is a party or by which he is bound or to
which any of his assets is subject.
Page 28 of 54
<PAGE>
SECTION 5.03 Investment;. Except as may be contemplated
by the terms of the Registration Agreement, the
Shareholder (A) is acquiring Acquiror Common Stock
solely for his own account for investment purposes, and
not with a view to the distribution or resale thereof,
(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
Prospectus of Acquiror dated May 9, 1996 and Acquiror s
quarterly report on Form 10-Q for the quarter ended
September 30, 1996, and has had the opportunity to
obtain additional information as desired in order to
evaluate the merits and the risks of an investment in
Acquiror Common Stock, and (D) agrees to indemnify
Acquiror and Acquiror Sub against any adverse
consequences which shall arise as a result of a sale or
distribution of such shares by Shareholder in violation
of the Securities Act and state securities or state Blue
Sky laws. Shareholder acknowledges that the shares of
Acquiror Common Stock being issued pursuant to the
Merger have not been registered under the Securities Act
or state securities or state Blue Sky laws and may only
be transferred in compliance with such laws.
SECTION 5.04 Company Shares.; The Shareholder owns of
record and beneficially 100 shares of Company Common
Stock, free and clear 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, demands, rights of first refusal or first offer,
voting agreements or other limitations except as set
forth in Section 5.04 of the Company Disclosure
Schedule. The Shareholder is not a party to any option,
warrant, purchase right, or other contract or commitment
that could require the Shareholder to sell, transfer, or
otherwise dispose of any capital stock of the Company
(other than this Agreement). The 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 the Company. The 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 preemptive or similar rights.
SECTION 5.05 Share Ownership;. The Shareholder owns no
shares of Acquiror Common Stock other than those it will
receive pursuant to the Merger. The Shareholder
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<PAGE>
understands that it is the intent of all parties that
the Merger constitute a reorganization pursuant to Code
section 368(a), and therefore represents that he has no
present intent to dispose of Acquiror Common Stock
received in the Merger.
SECTION 5.06 Disclosure;. No representation or warranty
contained in this Article V or in the Company Disclosure
Schedule contains or, at the Effective Time, will
contain any untrue statement of a material fact, or
omits or, at the Effective Time, will omit to state a
material fact necessary to make the statements contained
herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
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 Florida, 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 business
conducted by it or the ownership or leasing of its
properties makes such qualification necessary, except
where the failure to be so qualified will not have,
individually or in the aggregate with any other failure
to be qualified, an Acquiror Material Adverse Effect.
On or prior to Closing, Acquiror Sub will be a
corporation duly incorporated, validly existing and in
good standing under the laws of its state of
incorporation.
SECTION 6.02 Capitalization;. (a) As of the date
hereof, the authorized capital stock of Acquiror
consisted of the following:
(i) 60,000,000 shares of Acquiror Common
Stock of which:
(y) 8,013,332 shares were issued and
outstanding; and
(z) 1,466,665 shares were reserved
for future issuance pursuant to Acquiror
s stock option and incentive plans
relating to stock options and awards for
Page 30 of 54
<PAGE>
certain officers, employees, consultants
and directors (the Acquiror Options );
and
(ii) 20,000,000 shares of series preferred
stock, par value $.01 per share of which none
was issued or outstanding.
(b) As of the date of this Agreement, all
shares of Acquiror Common Stock issued and outstanding
are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights,
whether created by the Florida Business Corporation Act
(the Florida Act ) or otherwise and any shares of
Acquiror Common Stock issuable in the Merger, when
issued pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and non-
assessable and not subject to preemptive rights created
by the Florida Act or otherwise.
(c) As of the Closing, the authorized capital
stock of Acquiror Sub will consist of 1,000 shares of
Common Stock, $.01 par value ( Acquiror Sub Common Stock
) and will be held by Acquiror of record and
beneficially. Acquiror Sub will be a newly formed
Subsidiary of Acquiror with no obligations except as
contemplated by this Agreement.
SECTION 6.03 Authority;. Acquiror has the requisite
corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Acquiror and
the consummation by Acquiror of the transactions
contemplated hereby 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 hereby, subject to the
corporate and shareholder approvals of Acquiror Sub
(which Acquiror shall cause to be obtained prior to
Closing). This Agreement has been duly executed and
delivered by Acquiror and, assuming the due
authorization, execution and delivery by the other
parties hereto, constitutes the 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 6.04 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 and Acquiror Sub will not, (i)
conflict with or violate the Articles of Incorporation
Page 31 of 54
<PAGE>
or By-Laws of Acquiror or Acquiror Sub, (ii) subject to
the filing of the Articles of Merger, conflict with or
violate any Laws applicable to Acquiror, Acquiror Sub or
any of Acquiror s Subsidiaries or by which any of their
respective properties is bound or affected, or (iii)
subject to the receipt of consents from Fleet National
Bank pursuant to the Amended and Restated Credit
Agreement of the Acquiror dated June 5, 1996, as amended
through the date hereof and under the Registration
Rights Agreement between the Acquiror, Greylock Equity
Limited Partnership, Carlos A. Saladrigas and Jose M.
Sanchez dated February 10, 1995, as amended through the
date hereof, 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 Acquiror
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 6.05 Reports; Financial Statements;. (a) Since
May 9, 1996, Acquiror and its Subsidiaries have filed
all forms, reports, statements and other documents
required to be filed with the Securities and Exchange
Commission (collectively, the Acquiror SEC Reports ).
The Acquiror SEC Reports, including all such reports
filed after the date of this Agreement and prior to the
Effective Time, (i) were or will be prepared in all
material respects in accordance with the 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, 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 Effective Time, (i)
have been or will be prepared in all material respects
in accordance with the published rules and regulations
of the Securities and Exchange Commission (the SEC )
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<PAGE>
and generally accepted accounting principles ( 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 September
30, 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 6.06 Absence of Certain Changes or Events;.
Since May 9, 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 6.07 Brokers;. No broker, finder or investment
banker 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 Acquiror.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
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SECTION 7.01 Affirmative Covenants of the Company;.
The Company hereby covenants and agrees that, prior to
the Effective Time, unless otherwise expressly
contemplated by this Agreement or otherwise consented to
in writing by Acquiror, which consent shall not be
unreasonably withheld, the Company will, and will cause
its Subsidiaries to:
(a) operate their businesses in the usual and
ordinary course and consistent with past practice;
(b) use best reasonable efforts to preserve
intact their business organization and assets, including
their present operations, physical facilities and
working conditions; maintain their rights and
franchises, maintain and/or renew their licenses,
permits, agreements, uses, and governmental approvals,
retain the services of their respective officers and key
employees and maintain the relationships with their
respective customers, lessors, licensors, employees, and
suppliers;
(c) use best reasonable efforts to keep in full
force and effect liability insurance, workers
compensation insurance, letters of credit and bonds
comparable in amount and scope of coverage to that
currently maintained;
(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 its
Subsidiaries, 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
Shareholders of any of their representations, warrants,
covenants and agreements contained in this Agreement or
in any of the agreements or documents delivered in
connection herewith. The Shareholders agree and
covenant to cause the Company to comply with its
covenants and agreements set forth in this Section 7.01;
and
(e) use best reasonable efforts to cause a
merger agreement, in the form attached as Exhibit 7.01,
to be authorized and executed and will use best
reasonable efforts to cause the transactions
contemplated thereby to be consummated.
SECTION 7.02 Negative Covenants of the Company;.
Except as expressly contemplated by this Agreement,
described in Section 7.02 of the Company Disclosure
Schedule or otherwise consented to in writing by
Acquiror, which consent shall not be unreasonably
withheld, from the date of this Agreement until the
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Effective Time, the Company shall not, and the
Shareholders shall not (whether in their capacity as
shareholders or directors of the Company and its
Subsidiaries) and shall cause the Company and its
Subsidiaries not to, do any of the following:
(a) (i) increase the compensation payable or to
become payable to any director or officer of the Company
or any Subsidiary or to any employee other than a leased
employee; (ii) grant any severance or termination pay
(other than pursuant to any severance agreement of the
Company or a Subsidiary described in Section 4.11 of the
Company Disclosure Schedule), or enter into any
severance agreement with, any director, officer or
employee, (iii) enter into or amend any employment
agreement with any director, officer or employee that
would extend beyond the Effective Time except on 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;
(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;
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(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 or any of its
Subsidiaries to take any such action, and the
Shareholders and the Company shall use their best
reasonable efforts to cause the officers, employees,
agents and representatives of the Company and its
Subsidiaries (including, without limitation, any
investment banker, financial advisor, attorney or
accountant retained by the Company) not to take any such
action. The Company 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 or
any of its Subsidiaries (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 or any of its Subsidiaries in a single
transaction or a series of related transactions or
assignment of any contract the Company or any of its
Subsidiaries has with any of its clients; or (iii) any
tender offer or exchange offer for twenty percent or
more of the outstanding shares of capital stock of the
Company or any of its Subsidiaries 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;
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provided, however, that it shall not constitute a breach
of this covenant if the Company settles its current
Internal Revenue Service audit of the Company s federal
taxes for 1994 for an amount not in excess of the amount
reserved in the Interim Financial Statements with
respect thereto;
(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 or any of its Subsidiaries which is used in
the conduct of its business or compromise any obligation
or amount owed to the Company or any of its
Subsidiaries;
(l) incur any Expenses (as defined in Section
10.03) other than reasonable Expenses which are
reasonably related to the Company s participation in the
transaction. Such Expenses shall not exceed $225,000.
(m) agree in writing or otherwise to do any of
the foregoing.
SECTION 7.03 Access and Information;. Subject to the
Confidentiality Agreement dated July1,1996, 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.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 Appropriate Action; Consents; Filings;.
(a) The Company, the Shareholders and Acquiror shall use
best reasonable 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)
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<PAGE>
make all necessary notifications and filings, and
thereafter make any other required submissions, with
respect to this Agreement and the Merger 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 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, the Shareholders 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,
best reasonable efforts to obtain any third party
consents, (A) necessary, proper or advisable to
consummate the transactions contemplated in this
Agreement, (B) disclosed or required to be disclosed in
the Company Disclosure Schedule, or (C) required to
prevent a Company Material Adverse Effect or an Acquiror
Material Adverse Effect from occurring prior to or after
the Effective Time.
(ii) If either party fails to obtain any
third party consent described in subsection (b)(i)
above, such party shall use best reasonable 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 Effective
Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the
Effective Time, 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 the Merger or (ii) seeking to restrain
or prohibit the consummation of the Merger or otherwise
limit the right of Acquiror or, to the knowledge of the
Company, its Subsidiaries, to own or operate all or any
portion of the businesses or assets of the Company or
its Subsidiaries.
(d) From the date of this Agreement until the
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<PAGE>
Effective Time, 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 the Merger or (ii) seeking to restrain
or prohibit the consummation of the Merger or otherwise
limit the right of the Acquiror or its Subsidiaries to
own or operate all or any portion of the business or
assets of the Company.
(e) The parties hereto shall do and perform or
cause to be done and performed all such further actions
and things and shall execute and deliver all such other
agreements, certificates, instruments or documents as
any other party hereby may reasonably request in order
to carry out the intent and purposes of this Agreement
and the consummation of the transactions contemplated
hereby.
SECTION 8.02 Update Disclosure; Breaches;. From and
after the date of this Agreement until the Effective
Time, each party shall promptly notify the other party
hereto by written update 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
Merger and the other transactions contemplated by this
Agreement not to be satisfied, or (ii) the failure of
the Company, Acquiror or Acquiror Sub, as the case may
be, 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 Merger and the other transactions
contemplated by this Agreement not to be satisfied. In
addition, the Company and the Shareholders shall notify
Acquiror in writing of (i) such additional information
with respect to any matters or events discovered
subsequent to the date hereof and prior to the Effective
Time, which if existing and known on the date hereof
would have rendered any representation or warranty made
by the other party, or any information contained in any
Exhibit hereto, then inaccurate or incomplete and (ii)
any development after the date hereof and prior to the
Effective Time causing a breach of any representation or
warranty in Article IV or V above. Unless the Acquiror
elects to terminate this Agreement pursuant to Section
10.01 below within the period of 10 business days
following such notice, the written notice pursuant to
this Section will be deemed to have qualified the
relevant provision of Article IV or V and/or the Company
Disclosure Schedule, and to have cured any
misrepresentation or breach of warranty that otherwise
might have existed hereunder. Receipt of such
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<PAGE>
information by the other parties hereto shall not
operate as a waiver of the non-disclosing party s right
to terminate this Agreement as provided herein.
SECTION 8.03 Affiliate Agreements; Tax Treatment;.
Section 8.03 of the Company Disclosure Schedule lists
all persons who are, in the Company s reasonable
judgment, affiliates of the Company within the meaning
of Rule 145 of the rules and regulations promulgated by
the SEC under the Securities Act ( Rule 145"). As of
the date hereof, the Company has delivered agreements
from Michael C. Koltak and Robert J. Quinette
(collectively, the Affiliate Agreements ) in a form
attached to this Agreement as Exhibit 8.03. Acquiror
shall be entitled to issue appropriate stop transfer
instructions to the transfer agent for Acquiror Common
Stock consistent with the terms of the Affiliate
Agreements. Each party shall use its best reasonable
efforts to cause the Merger to qualify, and shall not
take any actions which could prevent the Merger from
qualifying, as a reorganization under the provisions of
Section 368(a) of the Code.
SECTION 8.04 Public Announcements;. Acquiror, the
Company and the Shareholders shall consult in good faith
with each other before issuing any press release or
otherwise making any public statements with respect to
the Merger and neither the Company nor any Shareholder
shall issue any such press release or make any such
public statement without the prior written approval of
the Acquiror.
SECTION 8.05 NMS Listing;. Acquiror shall cause those
shares of Acquiror Common Stock to be issued in the
Merger to be listed on the Nasdaq National Market
System, subject only to official notice of issuance
thereof.
SECTION 8.06 Survival of Representations and Warranties;
Indemnification;.
(a) Notwithstanding any right of any party to
the Agreement to fully investigate the affairs of any
other party to the Agreement and notwithstanding any
knowledge of facts determined or determinable by any
party pursuant to such investigation or right of
investigation, each party to the Agreement has the right
to rely fully upon the representations and warranties of
any other party to the Agreement contained in this
Agreement or in any Schedule or Exhibit or any closing
certificate furnished or to be furnished by any such
other party pursuant to this Agreement or in connection
with the Merger. Except as expressly set forth in
Articles IV and V of this Agreement, and in the
Schedules and Exhibits hereto and in any closing
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<PAGE>
certificate delivered in connection herewith, the
Company and the Shareholders make no representation or
warranty with respect to the Company, its Subsidiaries
or the Shareholders, or any of their respective assets,
liabilities or operations, and any such other
representations or warranties are hereby expressly
disclaimed. Except as expressly set forth in Article VI
of this Agreement, and in the Schedules and Exhibits
hereto and in any closing certificate delivered in
connection herewith, the Acquiror makes no
representation or warranty with respect to the Acquiror
or its Subsidiaries, or any of their respective assets,
liabilities or operations, and any such other
representations or warranties are hereby expressly
disclaimed.
(b) All representations and warranties of the
Company, the Shareholders and the Acquiror contained
herein and in the Schedules and the Exhibits hereto and
in any closing certificates delivered pursuant hereto
shall survive the execution and delivery of this
Agreement and the Closing; provided, however, that,
notwithstanding the foregoing, the representations and
warranties set forth in Articles IV, V and VI of this
Agreement, and in the Schedules and Exhibits hereto and
in any closing certificate delivered in connection
herewith, relating to matters that would be expected to
be resolved by an audit conducted in accordance with
generally accepted auditing standards shall survive the
execution and delivery of this Agreement and the Escrow
Agreement and the Closing until the date of issuance of
the report of Acquiror s independent public accountants
with respect to the first audit of financial statements
containing combined operations of Acquiror and the
Company (the Audit Date ), unless a notice of claim of
a breach of such representation or warranty shall have
been given prior to such date; and provided further that
all other representations and warranties set forth in
Articles IV, V and VI of this Agreement and in the
Schedules and Exhibits hereto and in any closing
certificate delivered in connection herewith shall
survive the execution and delivery of this Agreement and
the Escrow Agreement and the Closing until the first
anniversary of the Effective Time, unless a notice of
claim of a breach of such representation or warranty
shall have been given prior to such date. Nothing in
this Agreement or the Escrow Agreement shall be deemed
to limit any right or remedy of any party at law or in
equity or for criminal activity or fraud.
(c) With respect to claims arising in
connection with actions or omissions of the Company or
any of the officers, directors, agents, employees or
shareholders of the Company which occurred prior to the
Effective Time or claims arising in connection with the
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<PAGE>
negotiation and consummation of the transactions
contemplated by this Agreement, each of the 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 or Acquiror Sub against such
Shareholder (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
(d) The parties to this Agreement agree to
indemnify one another on the terms set forth in the
Escrow Agreement set forth as Exhibit 2.02 to this
Agreement.
SECTION 8.07 Obligations of Acquiror Sub;. Acquiror
shall take all action necessary to cause Acquiror Sub to
consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 8.08 Accounting Treatment;. Acquiror, the
Company and the Shareholders shall use best reasonable
efforts and shall cooperate fully to allow the Merger
and other transactions contemplated by this Agreement to
be accounted for as a pooling of interests in
accordance with GAAP acceptable to the SEC.
SECTION 8.09 Good Faith;. Each party shall act in good
faith in an attempt to cause all the conditions
precedent to its obligations under this Agreement to be
satisfied. Each party will act in good faith and take
all reasonable action within its capability necessary to
render accurate as of the Effective Time its
representations and warranties required to be true as of
such time contained in this Agreement.
SECTION 8.10 Publication of Post-Merger Results;. As
soon as practicable following the Effective Time, and in
any event not more than 40 days after the calendar month
commencing on or next following the Closing, Acquiror
shall make publication sufficient to satisfy SEC rules
governing pooling of interests accounting in such form
of publication which complies with SEC rules covering at
least one calendar month of post-Merger combined
operations of Acquiror and Company.
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<PAGE>
SECTION 8.11 Legend;. Each certificate representing
shares of Acquiror Common Stock issued pursuant to the
Merger shall bear a legend substantially in the
following form:
The shares represented by this certificate have
not been registered under the Securities Act of
1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated
unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to
the Company is obtained to the effect that such
registration is not required.
SECTION 8.12 Employee Benefit Plan;. The Company shall
not make, nor shall it allow any participant to make,
contributions to the Company s 401(k) benefit plan after
December 31, 1996.
SECTION 8.13 Confidentiality and Non-Competition
Agreement;. The Company and the Shareholder shall use
their best reasonable efforts to cause the following
employee(s) of the Company to enter into a
confidentiality and non-competition agreement in the
form attached as Exhibit 9.01(c)(v): Bill Hatfield.
ARTICLE IX
CLOSING CONDITIONS
SECTION 9.01 Conditions to Obligations of Each Party
Under This Agreement;.
(a) Subject to waiver as set forth in Section
11.03, the respective obligations of each party to
effect the Merger and the other transactions
contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Effective Time of the
following conditions:
(i) 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 any securities of
the Company or any of its Subsidiaries; (b) imposing or
seeking to impose limitations on the ability of Acquiror
to combine and operate the business and assets of the
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<PAGE>
Company with any of Acquiror s Subsidiaries or other
operations; (c) imposing or seeking to impose other
sanctions, damages or liabilities arising out of the
Merger on the Acquiror, Acquiror Sub 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 business, assets or property
of the Company or any of its Subsidiaries; or (e)
restraining, enjoining or prohibiting or seeking to
restrain, enjoin or prohibit the consummation of the
Merger, which, in the case of claims (a) through (d)
above, would or is reasonably likely to result in a
Company Material Adverse Effect at or prior to the
Effective Time or an Acquiror Material Adverse Effect
at, prior to or after the Effective Time or which, with
respect to clauses (a) through (e) above, would or is
reasonably likely to subject any of their respective
officers or directors to substantial penalties or
criminal liability; provided, however that prior to
invoking this condition the party seeking to invoke it
shall have used its best reasonable efforts to have any
such action or proceeding dismissed or such order or
decree vacated.
(ii) All consents, waivers, approvals and
authorizations required to be obtained, and all filings
or notices required to be made, by Acquiror and Acquiror
Sub and the Company or any Subsidiary prior to
consummation of the transactions contemplated in this
Agreement (other than the filing of Articles of Merger
in accordance with the Colorado Code) 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 Effective Time or an Acquiror Material Adverse
Effect after the Effective Time or be reasonably likely
to subject the Company, Acquiror, Acquiror Sub 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
11.03, the respective obligations of the Company and the
Shareholders to effect the Merger and the other
transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(i) The Escrow Agreement, substantially in
the form of attached Exhibit 2.02, shall have
been executed by the Acquiror.
(ii) The Registration Agreement,
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<PAGE>
substantially in the form of attached
Exhibit 2.03, shall have been executed by the
Acquiror.
(iii) [intentionally omitted]
(iv) [intentionally omitted]
(v) Each of the representations and
warranties of Acquiror contained in this
Agreement shall be true and correct in all
material respects as of the Effective Time, as
though made on and as of the Effective Time;
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 of Acquiror, to that effect.
(vi) 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 Effective Time. The
Company shall have received a certificate of
Acquiror, executed by the Chief Executive
Officer of Acquiror, to that effect.
(vii) There shall not have occurred any
Acquiror Material Adverse Effect since the
date of this Agreement.
(viii) The Company shall have received an
opinion dated the Closing of Steel Hector &
Davis LLP in a form mutually acceptable to
Steel Hector & Davis LLP and Minor & Brown,
P.C.
(ix) The Company shall have received an
opinion dated the Closing of Gorsuch Kirgis
L.L.C. in a form mutually acceptable to
Gorsuch Kirgis L.L.C., Minor & Brown, P.C. and
Steel Hector & Davis LLP.
(c) Subject to waiver as set forth in Section
11.03, the obligations of the Acquiror to effect the
Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(i) The Escrow Agreement, substantially in
the form of attached Exhibit 2.02, shall have
been executed by the Shareholders.
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<PAGE>
(ii) The Registration Agreement,
substantially in the form of attached
Exhibit 2.03, shall have been executed by the
Shareholders.
(iii) [intentionally omitted]
(iv) [intentionally omitted]
(v) A Non-Competition and Confidentiality
Agreement, substantially in the form of
attached Exhibit 9.01(c)(v), shall have been
entered into and executed by each of the
following persons:
(a) Thomas Preslan
(b) Joan Weder
(c) Rick Taibl
(d) Kris Smith
(vi) All amounts owed by the Company to
any one or more of the Shareholders or to any
person controlled or owned by Robert J.
Quinette and/or Michael C. Koltak shall have
been satisfied and the obligation be no longer
outstanding.
(vii) The management agreement between
Excel Business Services Incorporated and the
Company shall have been terminated and shall
be of no further force or effect and no
amounts shall be outstanding thereunder.
(viii) The Acquiror shall have received an
opinion of Price Waterhouse LLP, independent
certified accountants, satisfactory to
Acquiror concerning accounting for the
transaction, including an opinion that the
Merger satisfies all of the requirements for
treatment as a pooling transaction under GAAP.
The Affiliate Agreements shall be in full
force and effect.
(ix) The Acquiror shall have received an
opinion dated the Closing of Minor & Brown,
P.C., in a form mutually acceptable to Minor &
Brown, P.C. and Steel Hector & Davis LLP.
(x) Each of the representations and
warranties of the Company and the Shareholders
contained in this Agreement shall be true and
correct in all material respects as of the
Effective Time, as though made on and as of
the Effective Time; provided, however, that
those representations and warranties which
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<PAGE>
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 certificates of the Shareholders to
that effect and a certificate of the Company,
executed by the Chief Executive Officer of the
Company, to that effect.
(xi) The Company and the Shareholders
shall have performed or complied in all
material respects with all agreements and
covenants required by this Agreement to be
performed or complied with on or prior to the
Effective Time. Acquiror shall have received
certificates of the Shareholders to that
effect and a certificate of the Company,
executed by the Chief Executive Officer of the
Company, to that effect.
(xii) The Company shall have obtained the
consents and approvals set forth in Section
9.01(c)(xii) of the Company Disclosure
Schedule and any other consents and approvals
of third parties necessary to the consummation
of the Merger, except those for which failure
to obtain such consents and approvals would
not have a Company Material Adverse Effect
prior to or after the Effective Time or an
Acquiror Material Adverse Effect after the
Effective Time.
(xiii) There shall not have occurred any
Company Material Adverse Effect since the date
of this Agreement.
(xiv) All other certificates, opinions,
instruments and documents required by law to
effect the Merger will have been received in
form and substance satisfactory to Acquiror.
(xv) A merger agreement between Staff
Administrators of Western Colorado, Inc., its
shareholders and the Acquiror, substantially
in the form of Exhibit 7.01, (the Western
Colorado Merger Agreement ), shall have been
executed by Staff Administrators of Western
Colorado, Inc. and the shareholders thereof
and all of the conditions to the consummation
of the merger (the Western Colorado Merger )
contemplated thereby (other than the
consummation of the Merger) shall have been
satisfied or waived by the party entitled to
satisfaction thereof.
(xvi) All amounts owed to the Company or
Page 48 of 54
<PAGE>
any of its Subsidiaries by either of the
Shareholders or by any person controlled or
owned by Michael C. Koltak and/or Robert J.
Quinette (including, without limitation, Excel
Business Services, Inc.) shall have been paid
in full, other than indebtedness in the amount
of $126,362 owed to the Company by Excel
Business Services, Inc., which indebtedness
shall, on or prior to the Closing Date, have
been assumed jointly and severally by the
Shareholders and shall at the Closing Date be
evidenced by an executed promissory note in
the form attached as Exhibit 9.01(c)(xvi).
(xvii) The Acquiror shall have received an
opinion, dated the Closing, of Stewart W.
Olive, Esq. in a form mutually acceptable to
Stewart W. Olive, Esq. and Steel Hector &
Davis LLP.
(xviii) The Company shall provide evidence
satisfactory to Acquiror that it has made
refunds in the approximate amount of $19,000
on or prior to December 31, 1996 to those
highly compensated employees necessary to
correct the Company s 1995 nondiscrimination
test with respect to the Company s 401(k)
plan.
ARTICLE X
TERMINATION
SECTION 10.01 Termination;. This Agreement may be
terminated at any time prior to the Effective Time:
(a) by mutual consent of Acquiror and the
Company;
(b) (i) by Acquiror, if there has been a
breach by the Company or the Shareholders of any of
their respective covenants or agreements contained in
this Agreement or if any of the representations and
warranties of the Company or the Shareholders shall have
become untrue; 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;
(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
Page 49 of 54
<PAGE>
Governmental Entity preventing or prohibiting
consummation of the Merger shall have become final and
nonappealable; or
(d) by either Acquiror or the Company if the
Merger shall not have been consummated before January
31, 1997.
SECTION 10.02 Effect of Termination;. In the event of
the termination of this Agreement pursuant to Section
10.01, this Agreement shall forthwith become void, and
there shall be no liability under this Agreement on the
part of Acquiror or the Company or any of their
respective stockholders, officers or directors and all
rights and obligations of each party hereto shall cease,
except as provided in Section 10.03-Fees and Expenses.
Notwithstanding anything herein to the contrary, the
parties agree that if this Agreement is terminated, the
obligations of the parties pursuant to the
Confidentiality Agreement between Acquiror and Company,
dated July 1, 1996, shall survive the termination of
this Agreement.
SECTION 10.03 Fees and Expenses;. (a) All Expenses
(as defined below) incurred by the parties shall be
borne solely and entirely by the party which has
incurred the same, except as follows:
(i) In the event of a termination of this
Agreement by the Company as a result of a failure by
Acquiror to consummate the Merger despite the
satisfaction of the conditions to this Agreement (or the
waiver by the Company and the Shareholders of those
conditions set forth in Section 9.01(b)), the Acquiror
shall indemnify the Company for the costs of the
preparation of the Company s 1993 and 1994 audited
financial statements by the Company s independent
accountants.
(ii) In the event of a termination of this
Agreement by the Acquiror pursuant to a breach of
Section 7.02(g), the Company shall reimburse the
Acquiror for all Expenses (as defined below) incurred by
the Acquiror.
(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
Page 50 of 54
<PAGE>
Agreement.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 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 22134
Telecopier no.: (305) 460-2396
Attention: General Counsel
With a copy to: Steel Hector & Davis LLP
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: Staff Administrators, Inc.
12075 E. 45th Avenue,
Vista Suite
Denver, CO 80237-2843
Telecopier No.: (303) 371-8970
Attn: Robert J. Quinette
With a copy to: Minor & Brown, P.C.
650 South Cherry Street
Cherry Creek Plaza, Suite 1100
Denver, CO 80222
Telecopier No.: (303) 320-6330
Attn: Ned Minor, Esq.
If to Robert J. Quinette:
Robert J. Quinette
12075 E. 45th Avenue,
Vista Suite
Denver, CO 80237-2843
Telecopier No.: (303) 371-8970
Page 51 of 54
<PAGE>
If to Michael C. Koltak:
Michael C. Koltak
5115 Hogan Court
Fort Collins, CO 80525
Telecopier No.: (907) 225-3954
SECTION 11.02 Amendment;. Subject to applicable
provisions of the Colorado Code or the Florida Act, this
Agreement may be amended by the parties by action taken
by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time. This Agreement
may not be amended except by an instrument in writing
signed by the parties.
SECTION 11.03 Waiver;. At any time prior to the
Effective Time, 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 for the benefit of the
waiving party 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 only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 11.04 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 11.05 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.
Page 52 of 54
<PAGE>
SECTION 11.06 Entire Agreement;. This Agreement
(together with the Exhibits, the Schedules and any
closing certificates), is intended as a full integration
of the parties understandings, 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 11.07 Assignment;. This Agreement shall not be
assigned without the written consent of the other
parties hereto.
SECTION 11.08 Parties in Interest;. This Agreement
shall be binding upon and inure solely to the benefit of
each party and to that party s permitted successors,
assigns, heirs and personal representatives, 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 11.09 Governing Law;. This Agreement shall be
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 11.10 Counterparts; Facsimile Signatures;.
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.
The parties hereby acknowledge and agree that facsimile
signatures of this Agreement and any Exhibit hereto
shall have the same force and effect as original
signatures.
SECTION 11.11 Attorneys Fees;. If any party shall
commence any action or proceeding against another party
in order to enforce the provisions hereof, or to recover
damages as the result of the alleged breach of any of
the provisions hereof, the prevailing party therein
shall be entitled to recover all reasonable costs
incurred in connection therewith, including, but not
limited to, reasonable attorneys fees and expenses.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Acquiror, Company and the
Shareholders have caused this Agreement to be executed
as of the date first written above by their respective
officers duly authorized.
Page 53 of 54
<PAGE>
THE VINCAM GROUP, INC.
By:
Name:
-------------------------------
Title:
-------------------------------
STAFF ADMINISTRATORS, INC.
By:
Name:
-------------------------------
Title:
-------------------------------
SHAREHOLDERS
- -------------------------------------
Michael C. Koltak
- -------------------------------------
Robert J. Quinette
Page 54 of 54
<PAGE> Exhibit 2.02
ESCROW AGREEMENT
Escrow Agreement entered into as of ---------------,
199- (the Agreement ), by and among The Vincam
Group, Inc., a Florida corporation ( Acquiror ), Michael
C. Koltak, Robert J. Quinette and Norwest Bank Colorado,
N.A. (the Indemnification Escrow Agent ). In this
Agreement, Messrs. Koltak and Quinette are referred to
collectively as the Shareholders and individually as a
Shareholder.
RECITALS:
1. Acquiror, Staff Administrators, Inc., a
Colorado corporation (the Company ), and the
Shareholders have entered into an Agreement and Plan of
Merger dated as of-------------, 1996 (the Merger Agreement).
2. It is a condition of the Merger Agreement
that the parties hereto enter into
this Agreement.
3. Unless otherwise specified herein, all
capitalized terms shall have the meanings provided in
the Merger Agreement, which meanings are hereby
incorporated herein by reference .
NOW, THEREFORE, in consideration of the
premises and of the mutual provisions, agreements and
covenants herein contained, Acquiror, the Shareholders
and the Indemnification Escrow Agent agree as follows:
Section 1. Delivery of Indemnification Escrow
Shares to Indemnification Escrow Agent. At the Closing,
Acquiror will deliver to the Indemnification Escrow
Agent the Indemnification Escrow Shares, with stock
powers related thereto duly endorsed in blank. The
Indemnification Escrow Shares shall be held by the
Indemnification Escrow Agent pursuant to the terms of
this Agreement.
Section 2. Survival of Representations and
Warranties. Notwithstanding any right of any party to
the Merger Agreement to fully investigate the affairs of
any other party to the Merger Agreement and
notwithstanding any knowledge of facts determined or
determinable by any party pursuant to such investigation
or right of investigation, each party to the Merger
Agreement has the right to rely fully upon the
representations and warranties of any other party to the
Merger Agreement contained in the Merger Agreement or in
any Schedule or Exhibit or any closing certificate
furnished or to be furnished by any such other party
pursuant to the Merger Agreement or in connection with
the Merger. Except as expressly set forth in Articles
Page 1 of 17
<PAGE>
IV and V of the Merger Agreement, and in the Schedules
and Exhibits thereto and in any closing certificate
delivered in connection therewith, the Company and the
Shareholders make no representation or warranty with
respect to the Company, its Subsidiaries or the
Shareholders, or any of their respective assets,
liabilities or operations, and any such other
representations or warranties are hereby expressly
disclaimed. Except as expressly set forth in Article VI
of the Merger Agreement, and in the Schedules and
Exhibits thereto and in any closing certificate
delivered in connection therewith, the Acquiror makes no
representation or warranty with respect to the Acquiror
or its Subsidiaries, or any of their respective assets,
liabilities or operations, and any such other
representations or warranties are hereby expressly
disclaimed. All representations and warranties of the
Company, the Shareholders and the Acquiror contained in
the Merger Agreement and in the Schedules and Exhibits
thereto and in any closing certificates delivered in
connection therewith shall survive the execution and
delivery of the Merger Agreement and this Agreement and
the Closing; provided, however, that notwithstanding the
foregoing, the representations and warranties set forth
in Articles IV, V and VI of the Merger Agreement, and in
the Schedules and Exhibits thereto and in any closing
certificate delivered in connection therewith, relating
to matters that would be expected to be resolved by an
audit conducted in accordance with generally accepted
auditing standards shall survive the execution and
delivery of this Agreement and the Merger Agreement and
the Closing until the date of issuance of the report of
Acquiror s independent public accountants with respect
to the first audit of financial statements containing
combined operations of Acquiror and the Company (the
Audit Date ), unless a notice of claim of a breach of
such representation or warranty shall have been given
prior to such date; and provided further that all other
representations and warranties set forth in Articles IV,
V and VI of the Merger Agreement, and in the Schedules
and Exhibits thereto and in any closing certificate
delivered in connection therewith, shall survive the
execution and delivery of this Agreement and the Merger
Agreement and the Closing until the first anniversary of
the effective date and time (the Effective Time )
specified in the Articles of Merger filed pursuant to
Section 1.02 of the Merger Agreement (the
Indemnification Termination Date ), unless a notice of
claim of a breach of such representation or warranty
shall have been given prior to such date. The Acquiror
shall provide the Indemnification Escrow Agent with
written notice specifying the Effective Time as promptly
as practicable after the filing of such Articles of
Merger. Nothing in this Agreement or the Merger
Agreement shall be deemed to limit any right or remedy
Page 2 of 17
<PAGE>
of any party at law or in equity or for criminal
activity or fraud.
Section 3. Indemnification.
(a) Subject to the survival period set forth in
Section 2 above, Acquiror shall be indemnified and held
harmless by the Shareholders, jointly and severally,
from and against 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,
liens, losses, expenses and fees, including court costs
and reasonable attorneys fees and expenses
(collectively, Adverse Consequences ) suffered by
Acquiror or any Subsidiary of Acquiror (including the
Surviving Corporation and any of its Subsidiaries)
resulting from any inaccuracy in or breach of any of the
representations and warranties of the Company and the
Shareholders set forth in Article IV of the Merger
Agreement, and in the Schedules and Exhibits thereto and
in any closing certificate delivered in connection
therewith, which has not been waived in writing by
Acquiror on or prior to the Closing.
(b) Subject to the survival period set forth in
Section 2 above, Acquiror shall be indemnified and held
harmless by the Shareholders, severally, from and
against all Adverse Consequences suffered by Acquiror or
any Subsidiary of Acquiror (including the Surviving
Corporation and any of its Subsidiaries) resulting from
any inaccuracy in or breach of any of the
representations and warranties of the Shareholders set
forth in Article V of the Merger Agreement, and in the
Schedules and Exhibits thereto and in any closing
certificate delivered in connection therewith, which has
not been waived in writing by Acquiror on or prior to
the Closing.
(c) Subject to the survival period set forth in
Section 2 above, each Shareholder shall be indemnified
and held harmless by Acquiror from and against all
Adverse Consequences suffered by the Shareholder
resulting from any inaccuracy in or breach of any of the
representations and warranties of the Acquiror set forth
in Article VI of the Merger Agreement, and in the
Schedules and Exhibits thereto and in any closing
certificate delivered in connection therewith, which has
not been waived in writing by the Shareholder on or
prior to the Closing.
(d) Acquiror shall be indemnified and held
harmless by the Shareholders, jointly and severally,
from and against all Adverse Consequences suffered by
Page 3 of 17
<PAGE>
Acquiror or any Subsidiary of Acquiror (including the
Surviving Corporation and any of its Subsidiaries)
arising out of: (i) the disallowance of the Company s
deductions relating to workers compensation reserves or
management fees with respect to its federal taxes in
respect of periods ending prior to the Effective Time in
excess of amounts reserved therefor in the Company s
Interim Financial Statements, (ii) Environmental Claims
(as defined below) based on actions or omissions by
Staff Administrators of CO, Inc. (formerly known as
Assurance L.P.M., Inc.), or any of its officers,
directors, employees, independent contractors, agents or
shareholders occurring prior to the Effective Time,
(iii) the failure of the Company s 401(k) Plan to be
qualified under the Internal Revenue Code of 1986, as
amended, or to be operated and administered in
accordance with applicable laws and regulations, and
(iv) the failure by the Company to invest any
performance deposits (i.e., deposits by the Company s
clients of a prepayment to guarantee performance by the
client under the Company s subscriber services
agreement) made by the Company s clients in an interest-
bearing account for the benefit of such clients or to
accrue interest payable to and/or to pay interest to
such clients with respect to such deposits.
Notwithstanding anything in this Agreement to the
contrary, (x) the indemnification obligations of the
Shareholders provided by paragraph (d)(i) and (d)(iii)
shall survive until the earlier of the date the statute
of limitations with respect to such tax or plan year
expires and the date that the Surviving Corporation
enters into a closing agreement with the IRS with
respect to such tax or plan year and (y) the
indemnification obligations of the shareholders provided
by paragraphs (d)(ii) and (d)(iv) shall survive until
the expiration of the applicable statute of limitation.
Environmental Claim shall mean any Adverse Consequence
arising from or related to any violations or alleged
violations of any federal, state or local law, ordinance
or regulation designed to prohibit or regulate the
release of pollutants or hazardous substances or
materials into the environment, to reduce the
quantities, prevent the release or minimize the
hazardous characteristics of wastes, to assure that
products are designed, packaged and used so that they do
not present unreasonable risks to human health or the
environment when used or disposed of, to protect natural
resources or species, and to reduce the risks inherent
in transportation of hazardous substances, pollutants,
oil or other potentially harmful substances.
(e) The liability of each Shareholder hereunder
shall in no event exceed an amount equal to 250,000
times the average closing price, as reported on the
Nasdaq National Market, of a share of Acquiror Common
Page 4 of 17
<PAGE>
Stock for the ten (10) days on which Acquiror Common
Stock has traded, immediately preceding the Closing Date
(such average closing price per share of Acquiror Common
Stock being referred to herein as the Market Value ).
The liability of the Acquiror hereunder shall in no
event exceed an amount equal to 500,000 times the Market
Value per share of Acquiror Common Stock.
(f) No party shall have any liability for
indemnification pursuant to Sections 3(a), (b) or (c)
hereof until the cumulative and aggregate amount of the
Adverse Consequences suffered by the party making a
claim for indemnification exceeds forty thousand dollars
($40,000) (the Indemnification Threshold ), and then
only for the amount by which such Adverse Consequences
exceed the Indemnification Threshold. The
Indemnification Threshold shall not apply to the
indemnification obligations of the Shareholders set
forth in Section 3(d) hereof.
Section 4. Distributions and Claims.
(a) Upon obtaining knowledge of any state of
facts, claim or demand which has given rise to, a claim
for indemnification hereunder (referred to herein as an
Indemnification Claim ), the party seeking
indemnification (the Indemnified Party ) shall give
written notice of such state of facts, claim or demand,
specifying, if applicable, the section of the Merger
Agreement containing the representation and warranty
giving rise to the claim or demand ( Notice of Claim )
to the party from whom indemnification is sought (the
Indemnifying Party ) and to the Indemnification Escrow
Agent. In the event that a Notice of Claim is given by
Acquiror after the date all Indemnification Escrow
Shares have been delivered to Acquiror in satisfaction
of other Indemnification Claims, such Notice of Claim
shall be delivered only to the each of the Shareholders.
No party shall be entitled to give a Notice of Claim
after the Indemnification Termination Date except with
respect to (i) any matter which was the subject of a
Notice of Claim given prior to such date or (ii) a claim
by Acquiror pursuant to Section 3(d). The Notice of
Claim shall set forth the amount of the Adverse
Consequences suffered, or which may be suffered, by the
Indemnified Party and in the case of a Notice of Claim
delivered by the Acquiror after the date all
Indemnification Escrow Shares have been delivered to the
Acquiror in satisfaction of other Indemnification
Claims, the amount to be paid by the Shareholders.
Subject to the applicable survival periods set forth in
section 2 hereof, no failure or delay by the Indemnified
Party in the giving a Notice of Claim shall reduce or
otherwise affect the Indemnified Party s right to
indemnification hereunder except to the extent that the
Page 5 of 17
<PAGE>
Indemnifying Party has been prejudiced thereby. The
date of a Notice of Claim shall be deemed to be:
(x) the second business day after the
date of the postmark on the registered or
certified mail (postage prepaid, return
receipt requested) containing the Notice of
Claim;
(y) if the Notice of Claim is
personally delivered, the date of such
personal delivery;
(z) if the Notice of Claim is sent by
overnight courier, the first business day
following the deposit of such Notice of Claim
with such courier.
(b)(i) Upon receipt at any time prior to the
Indemnification Termination Date of a Notice of Claim,
the Indemnification Escrow Agent shall, subject to the
provisions of Section 4(b)(ii) hereof, deliver to
Acquiror as promptly as practicable after expiration of
the twenty-day notice period, Indemnification Escrow
Shares having an aggregate Market Value (as of the date
of the Notice of Claim) equal to the amount set forth in
the Notice of Claim rounded up to the next number of
whole shares.
(ii) Each Shareholder shall have twenty (20)
days from the date of a Notice of Claim within which to
object, by written notice of objection given to Acquiror
and the Indemnification Escrow Agent, to any
Indemnification Claim (a Challenged Claim ). If notice
of objection to any such claim is not provided by either
Shareholder, the validity and stated amount of the claim
will be deemed to have been accepted (such claims being
referred to herein as Accepted Claims ). In the case
of Accepted Claims, each Shareholder shall have twenty
(20) days from the date of a Notice of Claim to elect in
writing to satisfy such claim in cash rather than
Indemnification Escrow Shares. Such written notice
shall be delivered to the Indemnification Escrow Agent
and the Acquiror prior to the expiration of such twenty
day period and payment of the Indemnification Claim
shall be made in immediately available funds within five
(5) days of the delivery of such notice in the case of
an Accepted Claim. The parties shall submit the matter
of a Challenged Claim to arbitration in accordance with
Section 8 hereof. In the case of a Challenged Claim,
each Shareholder shall have twenty (20) days from the
date of the arbitration award to elect in writing to
satisfy such claim in cash rather than Indemnification
Escrow Shares. Such written notice shall be delivered
to the Indemnification Escrow Agent and the Acquiror
Page 6 of 17
<PAGE>
prior to the expiration of such twenty day period and
payment of the Indemnification Claim shall be made in
immediately available funds within five (5) days of the
delivery of such notice. If a Notice of Claim sets
forth a claim or demand asserted by a third party (a
Third Party Claim ), the provisions of Section 4(d)
shall apply.
(iii) The Indemnification Escrow Agent shall
retain in escrow after the Indemnification Termination
Date the number of Indemnification Escrow Shares
(rounded up to the nearest whole share) having an
aggregate Market Value (as of the Indemnification
Termination Date) equal to the dollar amount of all
Challenged Claims and pending or threatened
Indemnification Claims which have not been finally
determined ( Pending Claims ). The dollar amount of
any Pending Claim shall be calculated by Acquiror, using
its reasonable discretion, assuming the maximum possible
Adverse Consequences; provided, however, that with
respect to a Pending Claim in respect of a third party
action for which legal action has not been taken against
Acquiror or the Surviving Corporation within two years
following the Notice of Claim (the Period ), then the
dollar amount of such Pending Claim shall be as agreed
upon by Acquiror and the Shareholders, and if they
cannot agree within 90 days of the end of the Period,
then such dollar amount shall be determined by
arbitration in accordance with Section 8 herein.
(iv) Notwithstanding the Shareholders
continued indemnification obligation pursuant to Section
3(d) hereof, on the Indemnification Termination Date,
the Indemnification Escrow Agent shall deliver to the
Shareholders the balance of the Indemnification Escrow
Shares not delivered to Acquiror or retained in escrow
pursuant to Section 4(b)(iii). Each Shareholder shall
receive his proportional share interest in such
distribution, to be determined as follows: the number of
Indemnification Escrow Shares to be delivered to each
Shareholder shall be equal to the total number of
Indemnification Escrow Shares to be delivered to both
Shareholders multiplied by a fraction, the numerator of
which is the number of Indemnification Escrow Shares
deposited by the Acquiror with the Indemnification
Escrow Agent for such Shareholder s account at the
Effective Time of the Merger, and the denominator of
which is the aggregate number of Indemnification Escrow
Shares deposited by the Acquiror with the
Indemnification Escrow Agent at the Effective Time of
the Merger.
(v) [Intentionally omitted].
Page 7 of 17
<PAGE>
(vi) Upon receipt at any time prior to the
Indemnification Termination Date of a Notice of Claim
made pursuant to Section 3(c) hereof, Acquiror shall,
subject to the provisions of Section 4(b)(vii) hereof,
deliver to the Shareholder within five (5) days of the
expiration of the twenty-day notice period cash equal to
the amount set forth in the Notice of Claim.
(vii) Acquiror shall have twenty (20) days from
the date of a Notice of Claim within which to object, by
written notice to the Shareholder, to any
Indemnification Claim (an Acquiror Challenged Claim ).
If notice of objection to any such claim is not provided
by Acquiror to Shareholder, the validity and stated
amount of the claim will be deemed to have been
accepted. The parties shall submit the matter of a
Acquiror Challenged Claim to arbitration in accordance
with Section 8 hereof. If a Notice of Claim sets forth
a Third Party Claim, the provisions of Section 4(d)
shall apply.
(c) Indemnification Escrow Shares that are not
distributed to the Shareholders on the Indemnification
Termination Date because they have been retained
pursuant to Section 4(b)(iii) shall be distributed (as
appropriate) as promptly as practicable after
disposition of each such Pending Claim. Upon the date
after which the last of all Challenged Claims and all
other Pending Claims have been finally determined and
the final distribution has been made to Acquiror (the
Termination Date ), the balance of all Indemnification
Escrow Shares shall be delivered to the Shareholders in
accordance with Section 4(b)(iv).
(d)(i) In the event of a Third Party Claim, 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 10 days after the
date of the Notice of Claim concerning the commencement
or assertion 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
reasonably 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,
Page 8 of 17
<PAGE>
the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a
precedent adverse to the continuing business interests
of the Indemnified Party (provided, however, that in no
event shall the Indemnifying Party be liable for Adverse
Consequences in excess of the amount for which the
Indemnifying Party can establish, to the reasonable
satisfaction of the Indemnified Party, that such Third
Party Claim could be settled without regard to such
potential adverse precedent) and (E) the Indemnifying
Party conducts the defense of the Third Party Claim
actively and diligently as reasonably determined in good
faith by the Indemnified Party.
(ii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in
accordance with Section 4(d)(i) 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).
(iii) In the event any of the conditions in
Section 4(d)(i) above is not satisfied or ceases to be
satisfied, 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 4.
(iv) Within 10 days of the date a court of
competent jurisdiction or arbitrator shall determine
that the Indemnified Party is liable for all or a
portion of the monetary liability arising out of any
Third Party Claim or a settlement is reached, the
Indemnifying Party shall be obligated to deliver to the
Indemnified Party cash or shares of Acquiror Common
Page 9 of 17
<PAGE>
Stock having a Market Value, calculated as of the date
of such determination, equal to such liability or
settlement. The parties shall submit disputes regarding
any payments due under this Section 4(d)(iv) to
arbitration in accordance with Section 8.
(v) The Indemnifying Party and the Indemnified
Party shall cooperate in the defense or prosecution of
any Third Party Claim and shall furnish or cause to be
furnished such records, information and testimony, and
attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be requested in
connection therewith.
Section 5. Voting Rights and Distributions.
(a) The Indemnification Escrow Shares, unless
and until delivered to Acquiror pursuant to this
Agreement, shall be registered in the respective names
of the Shareholders, who shall be entitled to vote their
respective Indemnification Escrow Shares. All cash
dividends or distributions of assets declared by
Acquiror with respect to its Common Stock prior to the
Indemnification Termination Date, shall be paid directly
to the Shareholders as if each had received all of the
shares of Acquiror Common Stock deliverable to him at
the Effective Time of the Merger and no shares had been
placed into escrow under this Agreement (subject to
reduction to reflect the delivery of Indemnification
Escrow Shares to Acquiror under this Agreement).
(b) All shares of Acquiror Common Stock
relating to Indemnification Escrow Shares still held by
the Indemnification Escrow Agent under this Agreement
and resulting from conversion, stock dividend, stock
split, reclassification, recapitalization or corporate
reorganization of Acquiror, shall be delivered to the
Indemnification Escrow Agent when deliverable to holders
of other outstanding shares of Acquiror Common Stock,
shall be credited to the accounts of the Shareholders
and shall constitute additional Indemnification Escrow
Shares.
Section 6. Interest in Indemnification Escrow
Shares. The interest of the Shareholders in the
Indemnification Escrow Shares (until released to them
hereunder) is nonassignable and shall be transferable
only by operation of law.
Section 7. Provisions Concerning the
Indemnification Escrow Agent.
(a) The Indemnification Escrow Agent shall be
entitled to the compensation described on Exhibit A
hereto for all services rendered hereunder and to
reimbursement of reasonable out-of-pocket expenses
Page 10 of 17
<PAGE>
incurred by it in the performance of its obligations
hereunder. The Indemnification Escrow Agent shall be
entitled to employ such legal counsel and other experts
as it may deem necessary to properly advise it in
connection with its obligations hereunder, and may rely
on the advice of such counsel, and may pay them
reasonable compensation therefor. The Acquiror shall
bear 50% of all such fees and expenses and the
Shareholders shall each bear 25% of such compensation,
fees and expenses. The Indemnification Escrow Agent has
the right, regardless of any Notice of Claim or
objection thereto it may receive, or any other
instrument it may receive, to hold the Indemnification
Escrow Shares until all expenses, fees and charges as
described in this Agreement are fully paid.
(b) The Indemnification Escrow Agent shall not
be liable for any diminution of value of the
Indemnification Escrow Shares. The Indemnification
Escrow Agent shall have no authority to sell or
otherwise dispose of or encumber the Indemnification
Escrow Shares except as provided herein.
(c) Notwithstanding any other provisions herein
contained, the Indemnification Escrow Agent may at all
times act upon and in accordance with the joint written
instructions of Acquiror and the Shareholders. The
Indemnification Escrow Agent shall not be liable for any
act done or omitted by it in accordance with such
instructions or pursuant to the advice of counsel of its
selection.
(d) The duties and responsibilities of the
Indemnification Escrow Agent shall be limited to those
expressly set forth in this Agreement and instructions
given to the Indemnification Escrow Agent pursuant to
this Agreement, and the Indemnification Escrow Agent
shall not be subject to, nor obligated to recognize, any
other agreement between any or all of the parties hereto
even though reference thereto may be made herein;
provided, however, this Agreement may be amended
pursuant to Section 16 hereof. The Indemnification
Escrow Agent shall advise Acquiror and each of the
Shareholders from time to time, upon request, as to (i)
the number of Indemnification Escrow Shares represented
by certificates held by the Indemnification Escrow
Agent, and (ii) the number of Indemnification Escrow
Shares distributed by the Indemnification Escrow Agent
to the Acquiror.
(e) The Indemnification Escrow Agent shall not
be responsible for the sufficiency or accuracy of the
form, execution, validity or genuineness of documents or
securities now or hereafter deposited hereunder, or of
any endorsement thereof, or for any lack of endorsement
Page 11 of 17
<PAGE>
thereon, or for any description therein, nor shall it be
responsible or liable in any respect on account of the
identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any
such document, security or endorsement of this
Agreement, and the Indemnification Escrow Agent shall be
fully protected in relying upon any written notice,
demand, certificate or document which it in good faith
believes to be genuine.
(f) The Indemnification Escrow Agent is
authorized, in its sole discretion, to disregard any and
all notices or instructions given by any of the parties
hereto or by any other person, firm or corporation,
except only such notices or instructions as are herein
provided for in this Agreement and orders or process of
any court entered or issued with or without
jurisdiction. If any property subject hereto is at any
time attached, garnished or levied upon under any court
order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any
order, judgment or decree shall be made or entered by
any court affecting such property or any part thereof,
then and in any of such events, the Indemnification
Escrow Agent is authorized, in its sole discretion, to
rely upon and comply with any such order, writ, judgment
or decree which the Indemnification Escrow Agent is
advised by legal counsel of its own choosing is binding
upon it; and if the Indemnification Escrow Agent
complies with any such order, writ, judgment or decree,
it shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of
such compliance even though such order writ, judgment or
decree may be subsequently reversed, modified, annulled,
set aside or vacated.
(g) The Indemnification Escrow Agent may resign
by giving thirty (30) days advance written notice to
Acquiror and each of the Shareholders and thereafter
shall deliver the Indemnification Escrow Shares to such
substitute escrow agent as Acquiror and the Shareholders
shall jointly direct in writing. If such discretion to
deliver to a substitute escrow agent is not received by
the Indemnification Escrow Agent within thirty (30) days
after mailing such notice of resignation, it is
unconditionally and irrevocably authorized, directed and
empowered to deliver all items held by it to any other
bank or trust company in the City of Denver with capital
and surplus of at least $20,000,000 which is selected by
the Indemnification Escrow Agent; such bank or trust
company then shall hold the same as the Indemnification
Escrow Agent, subject to the provisions hereof.
(h) In consideration of its acceptance of the
Page 12 of 17
<PAGE>
appointment as the Indemnification Escrow Agent, the
Acquiror and the Shareholders jointly and severally
agree to indemnify and hold the Indemnification Escrow
Agent harmless as to any liability incurred by it to any
person, firm or corporation by reason of its having
accepted the same or in carrying out any of the terms
hereof (except as such liability may arise out of or be
barred upon the gross negligence or willful misconduct
of the Indemnification Escrow Agent), and to reimburse
the Indemnification Escrow Agent for all its reasonable
expenses, including, among other things, counsel fees
and court costs, incurred by reason of its position
hereunder or actions taken pursuant hereto.
Section 8. Arbitration. Any dispute arising
hereunder, including any dispute as to the
enforceability or applicability of this arbitration
provision, shall be submitted to final and binding
arbitration under the Federal Arbitration Act and the
auspices of the American Arbitration Association within
ten (10) business days of the date that a notice of
objection is delivered to the Indemnification Escrow
Agent. Such arbitration shall be conducted in Miami,
Florida applying the governing law set forth in Section
17 hereof and in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association using the Florida Rules of Civil Procedure
and the Florida Rules of Evidence. The arbitrators
shall consist of a panel of three (3) arbitrators (the
Arbitrators ), one of whom shall be selected by the
Shareholders within three business days of the date that
a notice of objection is delivered to the
Indemnification Escrow Agent, one of whom shall be
selected by Acquiror within such three business day
period, and one of whom, who shall act as chairman, to
be selected by the other two arbitrators within two
business days of the appointment of the last arbitrator
selected. If the two appointed arbitrators shall fail
to select a third arbitrator within the such two
business day period, the parties shall mutually select
the third arbitrator. If the parties are unable to
agree within two business days thereafter as to the
third arbitrator, then either party may request the
American Arbitration Association to select the third
arbitrator. The arbitrators shall meet the
qualifications and abide by the Code of Ethics for
arbitrators in commercial disputes of the American
Arbitration Association. All costs and expenses of the
arbitration, including actual attorneys fees and
disbursements, shall be allocated among the parties
according to the Arbitrators discretion. The
Arbitrators award resulting therefrom may be confirmed
and entered as a final judgment in any court of
competent jurisdiction and enforced accordingly. Each
party hereto agrees to use its respective best efforts
Page 13 of 17
<PAGE>
to conduct and conclude the arbitration of any dispute
under this Agreement as quickly as possible.
Section 9. Interpleader. If the parties to this
Escrow Agreement disagree about the interpretation of
this Escrow Agreement or about the rights and
obligations of the Indemnification Escrow Agent or the
propriety of any action contemplated by the
Indemnification Escrow Agent, the Indemnification Escrow
Agent may, but shall not be required to, (i) submit an
action of interpleader to final and binding arbitration
pursuant to Section 8 by delivering a written demand for
arbitration to the other parties hereto in the manner
described in Section 10 and (ii) transfer the
Indemnification Escrow Shares to the arbitrators to
resolve the disagreement. If the Indemnification Escrow
Agent transfers the Escrow Shares to the arbitrators and
submits to the arbitrators an action of interpleader,
the Indemnification Escrow Agent shall be released and
relieved from all further obligation and liability
hereunder.
Section 10. Notices. All notices, requests,
claims, demands and other communications hereunder shall
be in writing and shall be given if delivered in person,
by cable, telegram or telex (and shall be deemed to have
been duly given on the date of delivery if so given), or
by registered or certified mail (postage prepaid, return
receipt requested) (and shall be deemed to have been
duly given the second business day after the date of the
postmark if so given) to the respective parties as
follows:
If to Acquiror: The Vincam Group, Inc.
2850 Douglas Road
Coral Gables, FL 22134
Telecopier no.: (305) 460-2396
Attention: General Counsel
With a copy to: Steel Hector & Davis LLP
200 South Biscayne Boulevard,
40th Floor
Miami, Florida 33131-2398
Telecopier No.: (305) 577-7001
Attention: Ira N. Rosner, P.A.
If to Robert J. Quinette:
Robert J. Quinette
12075 E. 45th Avenue,
Vista Suite
Denver, CO 80237-2843
Telecopier No.: (303) 371-8970
Page 14 of 17
<PAGE>
With a copy to: Minor & Brown, P.C.
650 South Cherry Street
Cherry Creek Plaza, Suite 1100
Denver, CO 80222
Telecopier No.: (303) 320-6330
Attention: Ned Minor, Esq.
If to Michael C. Koltak:
Michael C. Koltak
5115 Hogan Court
Fort Collins, CO 80525
(970) 225-3954
With a copy to: Minor & Brown, P.C.
650 South Cherry Street
Cherry Creek Plaza, Suite 1100
Denver, CO 80222
Telecopier No.: (303) 320-6330
Attention: Ned Minor, Esq.
If the Indemnification
Escrow Agent:
Norwest Bank Colorado, N.A.
--------------------
--------------------
--------------------
With a copy to:
--------------------
--------------------
--------------------
or to such other address as any party may have furnished
to the others in writing in accordance herewith, except
that notices of changes of address shall only be
effective upon receipt.
Section 11. Headings. The descriptive headings in
this Agreement have been inserted for convenience only
and shall not be deemed to limit or otherwise affect the
construction of any provision hereof.
Section 12. Entire Agreement; Assignment. This
Agreement and the Merger Agreement constitutes the
entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all
other prior agreements and understandings, both written
and oral, among the parties or any of them with respect
to the subject matter hereof and thereof. The parties
hereto acknowledge and agree that the Indemnification
Escrow Agent is not a party to the Merger Agreement.
This Agreement shall not be assigned by operation of law
or otherwise.
Section 13. Parties in Interest. This Agreement
Page 15 of 17
<PAGE>
shall be binding upon and inure solely to the benefit of
the parties hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 14. Validity. The invalidity or
unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any
other provisions of this Agreement, each of which shall
remain in full force and effect, provided that
enforcement of such other provisions in the absence of
the invalid or unenforceable provisions does not deprive
either the Company or Acquiror of the benefit of the
bargain.
Section 15. Counterparts; Facsimile Signatures.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and same
Agreement. The parties hereto hereby acknowledge and
agree that facsimile signatures of this Agreement shall
have the same force and effect as original signatures.
Section 16. Modification. The Indemnification
Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Agreement unless in
writing and signed by the Acquiror and the Shareholders.
In no event, however, shall any modification of this
Agreement, which shall affect the rights or duties of
the Indemnification Escrow Agent, be binding on the
Escrow Agent unless it shall have given its prior
written consent.
Section 17. Governing Law. This Agreement shall
be 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 laws thereof.
Section 18. Pooling of Interest. If any provision
of this Agreement or the application of any such
provision to any person or circumstance shall preclude
the use of pooling of interest accounting treatment in
connection with the Merger, then, at the Acquiror s sole
option, such provision shall be of no force and effect
to the extent, and solely to the extent, necessary to
preserve such accounting treatment for the Merger, and
in that event, the remainder of this Agreement shall not
be affected, and in lieu of such provision there shall
be added as part of this Agreement a provision as
similar in terms as may be possible for the Merger to be
treated as a pooling of interests for accounting
purposes.
Page 16 of 17
<PAGE>
[The remainder of this page is intentionally left
blank.]
IN WITNESS WHEREOF, Acquiror, the Shareholders and
the Indemnification Escrow Agent have caused this
Agreement to be signed by their respective officers
thereunto duly authorized, and their respective seals to
be affixed hereto, as of the date first written above.
THE VINCAM GROUP, INC.
By:
Name:
Title:
I.R.S. Employer
Identification No.: 59-2452823
Robert J. Quinette
Social Security No. ###-##-####
Michael C. Koltak
Social Security No. ###-##-####
NORWEST BANK COLORADO, N.A.
As Indemnification Escrow Agent
By:
Name:
Title:
Page 17 of 17
<PAGE> Exhibit 2.03
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT (this Agreement ) is
entered into as of January ---, 1997 by The Vincam
Group, Inc., a Florida corporation ( Vincam ), and each
of the undersigned shareholders of Vincam (individually
a Shareholder and collectively the Shareholders ).
Recitals
Vincam has entered into an Agreement and Plan of
Merger, dated as of December ---, 1996 (the SAI Merger
Agreement ), with Staff Administrators, Inc. ( SAI ),
Michael C. Koltak and Robert J. Quinette, pursuant to
which Vincam shall cause a subsidiary to merge with SAI
(the SAI Merger ) in exchange for shares of Vincam
Common Stock, par value $.001 per share. In addition,
Vincam has entered into an Agreement and Plan of Merger,
dated as of December ---, 1996 (the Western Colorado
Merger Agreement ), with Staff Administrators of Western
Colorado, Inc., a Colorado corporation ( Western
Colorado ), SAI and Kris A. Smith, pursuant to which
Vincam shall cause a subsidiary to merge with Western
Colorado (the Western Colorado Merger ) in exchange for
shares of Vincam Common Stock. The shares of Vincam
Common Stock to be issued to the Shareholders pursuant
to the SAI Merger Agreement and the Western Colorado
Merger Agreement shall hereinafter be referred to as the
Registrable Shares. Capitalized terms used but not
defined herein shall have the respective meanings
ascribed to them in the SAI Merger Agreement unless
otherwise indicated in this Agreement.
The Registrable Shares to be received by the
Shareholders pursuant to the SAI Merger Agreement and
the Western Colorado Merger Agreement have not been
registered under the Securities Act of 1933, as amended
(the Securities Act ), or the securities laws of any
state.
In consideration of the purchase of the Registrable
Shares and to induce SAI, Western Colorado and the
Shareholders to enter into the respective merger
agreements, Vincam has agreed to undertake to register
the Registrable Shares under the Securities Act and
applicable state securities laws.
Agreement
1. Registration of Registrable Shares by
Vincam.
(a) Within 10 days of the public release by
Vincam, pursuant to the requirements of Section 8.10 of
Page 1 of 12
<PAGE>
the SAI Merger Agreement, of a report including the
combined financial results of Vincam and SAI for a
period of at least 30 days of combined operations of
Vincam and SAI (the 30 Day Report ) within the meaning
of Accounting Series Release No. 135 as amended, of the
Securities and Exchange Commission (the Commission ),
Vincam will prepare and file a registration statement on
Form S-1 (or on any other form for the general
registration of securities to be resold for cash) with
the Securities and Exchange Commission (the Commission
) to cover 30% of the Registrable Shares (the Initially
Registered Shares ) issued to each of the Shareholders.
Thereafter, Vincam will prepare and file a registration
statement on Form S-1 (or on any other form for the
general registration of securities to be resold for
cash) with the Commission covering an additional 23.33%
of the Registrable Shares on the first business day
following each of the first, second and third
anniversaries of the Closing Date. Each of these
registration statements is referred to herein
individually as a Registration Statement and
collectively as the Registration Statements. The
Indemnification Escrow Shares (as such term is defined
in the SAI Merger Agreement) shall constitute a portion
of the Registrable Shares to be registered on the first
business day following the third anniversary of the
Closing Date. All such Indemnification Escrow Shares,
other than any such shares distributed to Vincam in
satisfaction of claims made pursuant to the Escrow
Agreement, shall be registered as part of the
Registration Statement to be filed on the first business
day following the third anniversary of the Closing Date.
(b) Vincam will use its best reasonable efforts
to cause the Registration Statements to become effective
and to effect the registration of the Registrable Shares
under the Securities Act such that the Registrable
Shares may be offered and sold by the Shareholders on a
delayed or continuous basis in accordance with Rule 415
under the Securities Act. Notwithstanding the
foregoing, Vincam may, at its option and in its sole
discretion, register Registrable Shares prior to the
dates set forth above. In connection with the
preparation and filing of the Registration Statements
and any amendments or supplements thereto, Vincam will
furnish to the Shareholders copies of all documents
proposed to be filed, which documents will be subject to
their review and reasonable approval with respect to any
information contained therein concerning the
Shareholders.
(c) Vincam will pay all expenses of the
registration, including without limitation legal and
accounting fees and disbursements, blue sky fees and
expenses, printing costs and related expenses arising
Page 2 of 12
<PAGE>
out of the preparation, filing, amending and
supplementing of the Registration Statements and any
prospectus a part thereof, other than fees and
disbursements of counsel, accountants and other advisors
for the Shareholders, underwriting commissions and
discounts, brokerage commissions, agents fees and
transfer taxes relating to the offer and sale of the
Registrable Shares.
2. Registration of Registrable Shares in
Underwritten Offering. Vincam agrees that, at the
option of the Shareholders and upon receipt of written
notice from the Shareholders as hereinafter required, it
will include the Initially Registered Shares in the
first underwritten public offering of Vincam equity
securities consummated after the public release by
Vincam of the 30 Day Report. Vincam will provide each
Shareholder with at least 10 business days written
notice prior to the filing of a registration statement
relating to any such underwritten offering. Each
Shareholder shall have five business days from the
receipt of such notice from Vincam within which to
notify Vincam in writing of an election to participate
in the underwritten offering. If a Shareholder does not
notify Vincam of such election within such period,
Vincam shall have no further obligation to such
Shareholder under this Section 2. Such inclusion shall
be prior to the inclusion of any shares of Vincam Common
Stock held by any person other than the Shareholders;
provided however, that such number of Initially
Registered Shares included in such offering shall be
subject to reduction to the extent that Vincam intends
to sell shares of Common Stock in such underwritten
offering and the underwriters thereof advise Vincam that
it is appropriate, because of marketing factors, to
limit the number of Initially Registered Shares to be
included in such offering in order to permit Vincam to
sell the shares to be offered for its own account.
3. Registration of Additional Securities.
Vincam shall, at its option, be entitled to include in
either or all of the Registration Statements Vincam
securities, to be sold for its own account or the
account of others; provided, however, that in the event
that any of such Registration Statements shall be filed
in connection with an underwritten public offering of
Vincam securities, the inclusion of the Registrable
Shares shall be prior to the inclusion of any shares of
Vincam Common Stock held by any person other than the
Shareholders.
4. Registration Procedures. In connection with
the registration of the Registrable Shares, Vincam will,
as expeditiously as possible:
Page 3 of 12
<PAGE>
(a) prepare and file with the Commission such
amendments and supplements to each Registration
Statement and the prospectus (including documents
incorporated by reference therein) a part thereof
(a Prospectus, which term shall for all purposes
of this Agreement include any amendments or
supplements to such Prospectus) as are necessary to
maintain the effectiveness of such Registration
Statement and to comply with the provisions of the
Securities Act and the Securities Exchange Act of
1934, as amended (the Exchange Act ), with respect
to the disposition of the Registrable Shares until
all of the Registrable Shares have been disposed of
in accordance with the intended methods of
disposition of the Shareholders, as set forth in
the Registration Statement, or until counsel for
Vincam has in writing advised Vincam and each
Shareholder who continues to own Registrable Shares
that such counsel is of the opinion that such
Shareholder has no further obligation to comply
with the registration requirements of the
Securities Act or to deliver a Prospectus meeting
the requirements of Section 10(a) of the Securities
Act in connection with further sales of Registrable
Shares by such Shareholder, but in no event shall
Vincam be required to maintain the effectiveness of
any Registration Statement for a period of more
than one year after the effective date thereof;
(b) furnish to each Shareholder two conformed
copies of each Registration Statement and of each
related amendment and supplement and in each case
including all exhibits, a number of copies of the
related Prospectus (including any related
preliminary prospectus and summary prospectus), in
conformity with the requirements of the Securities
Act, and such other documents, as such Shareholder
reasonably requests to facilitate the disposition
of his or her Registrable Shares;
(c) use its best reasonable efforts to
register or qualify the Registrable Shares under
the securities or blue sky laws of those
jurisdictions within the United States which each
Shareholder reasonably requests, except that Vincam
shall not be required to file a general consent to
service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein
it is not so qualified, or to subject itself to
taxation in any jurisdiction, and provided that
Vincam reserves the right, in its sole discretion,
not to register or qualify the Registrable Shares
in any jurisdiction where the Registrable Shares do
not meet such jurisdiction s requirements for
registration or qualification;
Page 4 of 12
<PAGE>
(d) notify promptly each Shareholder, at any
time when a Prospectus is required to be delivered
under the Securities Act, of (i) the happening of
any event as a result of which such Prospectus, as
then in effect, includes an untrue statement of a
material fact or omits to state a material fact
required to be stated therein or necessary to make
the statements made, in the light of the
circumstances then existing, not misleading; and at
the request of any Shareholder prepare, file with
the Commission and furnish to such Shareholder a
reasonable number of copies of a supplement to or
an amendment of such Prospectus, so that, as
thereafter delivered to the purchasers of such
Registrable Shares, such Prospectus does not
include an untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements made,
in the light of the circumstances then existing,
not misleading; (ii) the issuance by the Commission
of a stop order suspending the effectiveness of a
Registration Statement or the initiation of
proceedings for such purpose; and (iii) the receipt
by Vincam of any notification with respect to the
suspension of the qualification or exemption from
qualification of any of the Registrable Shares for
sale in any jurisdiction or the initiation of
proceedings for such purpose;
(e) otherwise use its best reasonable efforts
to comply with the Securities Act, the Exchange Act
and all applicable rules and regulations of the
Commission, and make generally available to holders
of its securities, as soon as practicable, an
earnings statement covering the period of at least
12 months, beginning with the first day of the
first fiscal quarter next succeeding the effective
date of each Registration Statement (as defined in
Rule 158 under the Securities Act), which earnings
statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(f) use its best reasonable efforts to list
the Registrable Shares on the automated quotation
system and/or securities exchanges upon which
Vincam s Common Stock is listed generally.
Notwithstanding anything contained in this
Agreement to the contrary, Vincam shall not be obligated
to effect, or to take any action to effect, any
registration pursuant to this Agreement or file any
supplement or amendment thereto or to any Prospectus,
if, in the good faith judgment of the Board of Directors
of Vincam, such registration, supplement or amendment
would contain disclosure which, in the good faith
Page 5 of 12
<PAGE>
judgment of the Board of Directors, would be detrimental
to Vincam at such time and which Vincam would not
otherwise be obligated to disclose, or if, at the time
it is required to file a registration statement pursuant
to Section 1(a) hereof, Vincam is engaged or has fixed
plans to engage in a registered public offering within
90 days as to which the Shareholders may include the
Registrable Shares otherwise required to be the subject
of a Registration Statement pursuant to Section 1(a) at
that time. In such event, Vincam may at its option
defer the filing of such document for a period not in
excess of 180 days from the date it is required to file
such document and in such event, or upon the occurrence
of any event described paragraph (d)(ii) or (d)(iii)
above, each Shareholder shall at Vincam s written
request refrain from making any sale or disposition of
Registrable Shares which sale or disposition requires
the delivery of a Prospectus until Vincam shall have
given written notice that such sales or dispositions may
resume, it being understood that Vincam shall use its
best reasonable efforts to obtain the withdrawal of any
stop order or the lifting of any suspension of
qualification or exemption from qualification.
5. Conditions to Registration. Each Shareholder
s right to have Registrable Shares included in a
Registration Statement shall be subject to the following
conditions or limitations:
(a) The Shareholder shall furnish Vincam in a
timely manner with all information required by the
applicable rules and regulations of the Commission,
including without limitation the proposed method of
sale or other disposition of the Registrable
Shares, the identity of and compensation to be paid
to any person to be employed in connection
therewith, and all other information as Vincam may
reasonably require; and
(b) All Shareholders who desire to sell and
distribute Registrable Shares over a period of
time, or from time to time, at then prevailing
market prices, shall execute and deliver to Vincam
those written undertakings which Vincam and its
counsel may reasonably require in order to assure
full compliance with relevant provisions of the
Securities Act and the Exchange Act;
(c) Each Shareholder hereby agrees that upon
the written request of Vincam and the managing
underwriter of an underwritten offering of equity
securities or debt securities convertible into
equity securities of Vincam, it shall not sell
publicly or otherwise transfer or dispose of any
Registrable Shares or other equity securities of
Page 6 of 12
<PAGE>
Vincam held by such Shareholder during the period
starting up to 45 days prior to Vincam s good faith
estimate of the date of filing with the Commission
of, and ending on a date up to 90 days (or up to
180 days if so requested by the underwriter) after
the effective date of, a registration statement
relating thereto, provided that Vincam is actively
employing in good faith all reasonable efforts to
cause such registration statement to become
effective; and
(d) To the extent that any Registrable Shares
are included in an underwritten offering, the
Shareholders so selling shall execute an
underwriting agreement containing customary terms
including, without limitation, with respect to
indemnification provisions, and such other
agreements as may be reasonably requested by Vincam
and the underwriters.
6. Indemnification.
6.1 Indemnification by Vincam. Vincam will,
to the extent permitted by law, indemnify and hold
harmless each Shareholder who is the seller of
Registrable Shares, each other person, if any, who
participates as an underwriter, broker or dealer in the
offering or sale of the Registrable Shares and each
other person, if any, who controls any participating
person within the meaning of the Securities Act, against
any losses, claims, demands, damages or liabilities,
joint or several, to which such indemnified person may
become subject under the Securities Act or otherwise,
insofar as the losses, claims, demands, damages or
liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of any material
fact contained or incorporated by reference in a
Registration Statement, a Prospectus or a preliminary or
summary prospectus contained therein, any amendment or
supplement thereto, or any document (or part thereof)
incorporated by reference therein, or (b) the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; and Vincam will
reimburse each indemnified person for all legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, demand,
damage, liability, action or proceeding, except that
Vincam will not be liable in any such case to the extent
that the loss, claim, demand, damage or liability arises
out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made or
incorporated by reference in such Registration
Statement, Prospectus or preliminary or summary
Page 7 of 12
<PAGE>
prospectus, amendment or supplement in reliance upon and
in conformity with information furnished to Vincam by
the indemnified person. This indemnity shall remain in
full force and effect regardless of any investigation
made by or on behalf of an indemnified person and shall
survive the transfer of Registrable Shares by a
Shareholder.
6.2 Indemnification by Shareholders. Each
Shareholder will, to the extent permitted by law,
indemnify and hold harmless Vincam, each director of
Vincam, each officer of Vincam who signs a Registration
Statement, and each other person, if any, who controls
Vincam, against any losses, claims, demands, damages or
liabilities, joint or several, to which Vincam or such
director, officer or controlling person may become
subject under the Securities Act or otherwise, insofar
as the losses, claims, demands, damages or liabilities
(or actions or proceedings in respect thereof) arise out
of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained or
incorporated by reference in a Registration Statement,
Prospectus or preliminary or summary prospectus
contained therein, any amendment or supplement thereto,
or any document (or part thereof) incorporated by
reference therein, or (b) the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, which untrue statement or
alleged untrue statement or omission or alleged omission
has been made or incorporated therein in reliance upon
and in conformity with information furnished to Vincam
by such Shareholder, and will reimburse Vincam and each
director, officer and controlling person for all legal
or other expenses reasonably incurred by them in
connection with investigating or defending any such
loss, claim, demand, damage, liability, action or
proceeding. This indemnity shall remain in full force
and effect regardless of any investigation made by or on
behalf of Vincam or such director, officer or
controlling person and shall survive the transfer of
Registrable Shares by such Shareholder.
6.3 Notices of Claims. Promptly after
receipt by an indemnified party of a demand or notice of
the commencement of any action or proceeding involving
losses, claims, demands, damages or liabilities referred
to in Section 6.1 or 6.2 (each, an Indemnified Claim ),
the indemnified party will, if a claim for
indemnification is to be made against an indemnifying
party, give written notice to the latter of the
Indemnified Claim, provided that the failure of any
indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its
obligations under Section 6.1 or 6.2, except to the
Page 8 of 12
<PAGE>
extent that the indemnifying party is actually
prejudiced by the failure to give notice. Unless in the
reasonable judgment of counsel for an indemnifying party
a conflict of interest exists between such indemnifying
party and the indemnified party or parties with respect
to the Indemnified Claim, each indemnified party agrees
to permit the indemnifying party to assume the defense
of the Indemnified Claim with counsel reasonably
satisfactory to the indemnified party or parties. If
the indemnifying party is not entitled to, or elects not
to, assume the defense of an Indemnified Claim, it will
not be obligated to pay the fees and expenses of more
than one counsel for such indemnified party or parties
with respect to the Indemnified Claim. No indemnifying
party will consent to entry of any judgment or enter
into any settlement which does not include as an
unconditional term the giving by the claimant or
plaintiff to the indemnified party of a release from all
liability in respect of the Indemnified Claim.
6.4 Contribution. If the indemnification
provided for in Section 6.1 or 6.2 from the indemnifying
party is unavailable to an indemnified party in respect
of any losses, claims, demands, damages or liabilities
referred to therein, then each indemnifying party, in
lieu of indemnifying the indemnified party, shall
contribute to the amount paid or payable by each
indemnified party as a result of such losses, claims,
demands, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of such
indemnifying party on the one hand and of the
indemnified party or parties on the other in connection
with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as
any other relevant equitable considerations. The
relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified
party and the parties relative intent, knowledge,
access to information, and opportunity to correct or
prevent such statement or omission.
The parties agree that it would not be just and
equitable if contribution pursuant to this Section 6
were determined by pro rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. No person liable for fraudulent
misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution
from any person who was not liable for such fraudulent
misrepresentation.
Page 9 of 12
<PAGE>
7. Expenses. Except as otherwise specifically
provided in this Agreement, each party shall pay its own
expenses incident to the performance or enforcement of
this Agreement, including all fees and expenses of its
counsel for all activities of counsel undertaken
pursuant to this Agreement.
8. Notices. All notices and other
communications under this Agreement shall be in writing
and shall be (i) mailed by first class or express mail,
postage prepaid, (ii) sent by telex, telegram, telecopy
or other similar form of rapid transmission, confirmed
by mailing (by first class or express mail, postage
prepaid) written confirmation at substantially the same
time as the rapid transmissions or (iii) personally,
delivered to the receiving party. All such
communications shall be mailed, sent or delivered:
(a) If to Vincam, as specified in the Merger
Agreement, or to such other person(s) or address(es) as
Vincam shall have furnished to the other parties in
writing; and
(b) If to any Shareholder, at its address as
the same may appear on the records of Vincam or to such
other address as it may have furnished in writing to
Vincam.
Any notice shall be deemed to be given when so
mailed. Any notice so sent by rapid transmission shall
be deemed to be given when transmitted, and any
communication so delivered in person shall be deemed to
be given when receipted for by, or actually received by,
the party (or its agent) to whom it is given.
9. Entire Agreement. This Agreement
constitutes the entire agreement among the parties with
respect to its subject matter and supersedes all prior
agreements and understandings between them as to its
subject matter.
10. Waivers and Further Agreements. A waiver
of any of the terms or conditions of this Agreement
shall be in writing and shall not operate as a waiver of
any other breach of such terms or conditions or any
other term or condition, nor shall any failure to
enforce any provision hereof operate as a waiver of such
provision or of any other provision. No such written
waiver shall be construed to effect a continuing waiver
of the provision being waived, unless it specifically
provides to the contrary, and no such waiver in any
instance shall constitute a waiver in any other instance
or for any other purpose or impair the right of the
party against whom such waiver is claimed in all other
instances or for all other purposes to require full
Page 10 of 12
<PAGE>
compliance with such provision. Each of the parties
agrees to execute all further instruments and documents
and to take all further action as the other parties may
reasonably require in order to effectuate the purposes
and intent of this Agreement.
11. Amendments. This Agreement may not be
amended nor shall any waiver, change, modification,
consent or discharge be effected except by an instrument
in writing executed by or on behalf of the party or
parties against whom enforcement of any amendment,
waiver, change, modification, consent or discharge is
sought.
12. Assignment; Successors and Assigns. This
Agreement and the rights provided hereunder shall not be
assignable but shall be binding upon and shall inure to
the benefit of the parties and their respective
successors, heirs, executors and legal representatives.
13. Restrictions on Transfer of Registrable
Shares. The Shareholders acknowledge that the
Registrable Shares have not been registered under the
Securities Act or the securities laws of any
jurisdiction and may not be sold or transferred unless
they are registered or Vincam receives an opinion of
counsel reasonably satisfactory to Vincam that an
exemption from applicable registration requirements is
available. The certificates representing the
Registrable Shares will bear a restrictive legend to the
foregoing effect until such time as such Registrable
Shares are the subject of an effective Registration
Statement. Each of the Shareholders agrees not to sell
or otherwise transfer any Registrable Shares except in
compliance with the Securities Act and other applicable
laws and the provisions hereof. Each of the
Shareholders may pledge his Registrable Shares, provided
the pledgee agrees in writing not to sell or otherwise
transfer pledged Registrable Shares except in compliance
with the Securities Act and other applicable laws.
14. Representations and Warranties of
Shareholders. Each of the Shareholders represents and
warrants to Vincam that he is acquiring the Registrable
Shares for his own account for investment purposes and
not with a view toward the resale or distribution
thereof, except pursuant to an available exemption from
the registration requirement of the Securities Act or to
the Registration Statement.
15. Severability. Except as provided in
Section 6.4, if any provision of this Agreement is held
or deemed to be, or in fact is, invalid, inoperative or
unenforceable for any reason, this Agreement shall be
construed as though such invalid, inoperative or
Page 11 of 12
<PAGE>
unenforceable provision had never been contained in this
Agreement.
16. Governing Law. This Agreement shall be
governed by and construed and enforced in accordance
with the laws of the State of Florida, regardless of the
laws which might otherwise be applicable under
principles of conflicts of law.
17. Counterparts; Facsimile Signatures. This
Agreement may be executed in two or more counterparts,
each of which need not be executed by each of the
parties and each of which shall be deemed an original,
but all of which together shall constitute one and the
same instrument. The parties hereby acknowledge and
agree that facsimile signatures of this Agreement shall
have the same force and effect as original signatures.
18. Section Headings. The headings contained
in this Agreement are for reference purposes only and
shall not in any way affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
The Vincam Group, Inc. Shareholders
By:
Name:
Robert J. Quinette
Title:
Michael C. Koltak
Kris A. Smith
Page 12 of 12
<PAGE> Exhibit 7.01
Agreement and Plan of Merger
by and among
The Vincam Group, Inc.,
Staff Administrators of Western Colorado, Inc.,
Staff Administrators, Inc. and Kris A. Smith
December 24, 1996
<PAGE>
THE PAGINATION REFERENCE IN THE FOLLOWING TABLE OF CONTENTS MAKE
REFERENCE TO THE ORIGINAL DOCUMENT.
TABLE OF CONTENTS
ARTICLE I
THE MERGER 1
SECTION 1.01 The Merger 1
SECTION 1.02 Effective Time 1
SECTION 1.03 Effect of the Merger 1
SECTION 1.04 Articles of Incorporation;
By-Laws 2
SECTION 1.05 Directors and Officers 2
SECTION 1.06 Taking Necessary Action;
Further Action 2
SECTION 1.07 The Closing 2
ARTICLE II
EFFECT ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES 2
SECTION 2.01 Effect on Capital Stock 2
SECTION 2.02 Exchange of Certificates 3
SECTION 2.03 Tax Treatment 4
SECTION 2.04 Registration Rights 4
ARTICLE III
DEFINITIONS 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE CORPORATE SHAREHOLDER 5
SECTION 4.01 Authority; Enforceability 6
SECTION 4.02 Disclosure 6
ARTICLE V 6
REPRESENTATIONS AND WARRANTIESOF THE
SHAREHOLDERS 6
SECTION 5.01 Authority; Enforceability 6
SECTION 5.02 Investment 7
SECTION 5.03 Company Shares. 7
SECTION 5.04 Share Ownership 8
SECTION 5.05 Brokers 8
SECTION 5.06 Disclosure 8
ARTICLE VI
REPRESENTATIONS AND WARRANTIESOF ACQUIROR 8
SECTION 6.01 Organization and Qualification 8
SECTION 6.02 Capitalization 8
SECTION 6.03 Authority 9
SECTION 6.04 No Conflict, Required Filings and
Consents 9
SECTION 6.05 Reports; Financial Statements 10
SECTION 6.06 Absence of Certain Changes or
Events 11
SECTION 6.07 Brokers 11
i
<PAGE>
ARTICLE VII 11
ADDITIONAL AGREEMENTS 11
SECTION 7.01 Public Announcements 11
SECTION 7.02 NMS Listing 11
SECTION 7.03 Survival of Representations,
Warranties, Covenants and Agreements 11
SECTION 7.04 Legend 12
SECTION 7.05 Reasonable Efforts; Further
Assurances 12
SECTION 7.06 Termination of Purchase Agreement 12
SECTION 7.07 Affiliate Agreements; Tax
Treatment 12
SECTION 7.08 Update Disclosure; Breaches 13
ARTICLE VIII
CLOSING CONDITIONS 13
SECTION 8.01 Conditions to Obligations of
Each Party Under This Agreement 13
ARTICLE IX
TERMINATION, AMENDMENT 14
SECTION 9.01 Termination 14
SECTION 9.02 Effect of Termination 15
SECTION 9.03 Fees and Expenses 15
ARTICLE X
GENERAL PROVISIONS 15
SECTION 10.01 Notices 15
SECTION 10.02 Amendment 17
SECTION 10.03 Waiver 17
SECTION 10.04 Headings 17
SECTION 10.05 Severability 17
SECTION 10.06 Entire Agreement 17
SECTION 10.07 Assignment 18
SECTION 10.08 Parties in Interest 18
SECTION 10.09 Governing Law 18
SECTION 10.10 Counterparts; Facsimile
Signatures 18
SECTION 10.11 Attorneys Fees 18
EXHIBITS
Exhibit 2.04 Registration Agreement
Exhibit 7.07 Affiliate Agreement
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of
December 24, 1996 (this Agreement ), is by and among
The Vincam Group, Inc., a Florida corporation ( Acquiror
), Staff Administrators of Western Colorado, Inc., a
Colorado corporation (the Company ), Staff
Administrators, Inc. (the Corporate Shareholder ) and
Kris A. Smith (the Individual Shareholder ). In this
Agreement, the Corporate Shareholder and the Individual
Shareholder are referred to collectively as the
Shareholders.
RECITALS:
A. Subject to the provisions of this Agreement and
the satisfaction of the conditions to this Agreement,
the Company shall be merged (the Merger ) with a
subsidiary of Acquiror ( Acquiror Sub ) at the time
provided for in Section 1.02. Immediately following the
Merger, the Company shall be a subsidiary of the
Acquiror.
B. The parties hereto desire to enter into this
Agreement for the purpose of setting forth certain
representations, warranties and covenants made by each
to the other as an inducement to the execution and
delivery of this Agreement and the conditions precedent
to the consummation of the Merger.
NOW, THEREFORE, in consideration of the premises
and of the mutual provisions, agreements and covenants
herein contained, Acquiror, Company and the Shareholders
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger;. Upon the terms and subject to the
conditions set forth
in this Agreement, and in accordance with the Colorado
Business Corporation Act (the Colorado Code ), at the
Effective Time (as defined below), the Acquiror Sub
shall be merged with and into the Company. As a result
of the Merger, the separate corporate existence of the
Acquiror Sub shall cease and the Company shall continue
as the surviving corporation of the Merger (the
Surviving Corporation ). Acquiror Sub and the Company
are collectively referred to in this Agreement as the
Constituent Corporations.
SECTION 1.02 Effective Time;. At the Closing (as defined below),
the parties shall cause the Merger to be consummated by filing
Page 1 of 22
<PAGE>
articles of merger (the Articles of Merger ) with the
Secretary of State of Colorado in such form as required
by, and executed in accordance with, the relevant
provisions of the Colorado Code (the effective date and
time specified in such filing, which shall be no earlier
than January 1, 1997, being the Effective Time ).
SECTION 1.03 Effect of the Merger;. At the Effective Time, the
effect of the Merger shall be as provided in the
applicable provisions of the Colorado Code. Without
limiting the generality of such act, and subject to its
provisions, at the Effective Time, all the property,
interests, assets, rights, privileges, immunities,
powers and franchises of Acquiror Sub and the Company
shall vest in the Surviving Corporation, and all debts,
liabilities, duties and obligations of Acquiror Sub and
the Company shall become the debts, liabilities, duties
and obligations of the Surviving Corporation.
SECTION 1.04 Articles of Incorporation;
By-Laws;. At the Effective Time, the Articles of
Incorporation and the By-Laws of the Acquiror Sub shall
be the Articles of Incorporation and the By-Laws of the
Surviving Corporation.
SECTION 1.05
Directors and Officers;. The directors of Acquiror Sub
immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to
hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation,
and the officers of Acquiror Sub immediately prior to
the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their
respective successors are duly elected or appointed and
qualified.
SECTION 1.06 Taking Necessary Action; Further
Action;. Acquiror, Acquiror Sub and the Company,
respectively, shall each use its best reasonable efforts
to take all such action as may be necessary or
appropriate to effectuate the Merger under the Colorado
Code at the Effective Time. If, at any time after the
Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement
and to vest the Surviving Corporation with full right,
title and possession to all properties, interests,
assets, rights, privileges, immunities, powers and
franchises of either of the Constituent Corporations,
the officers of the Surviving Corporation are fully
authorized in the name of each Constituent Corporation
or otherwise to take, and shall take, all such lawful
and necessary action.
Page 2 of 22
<PAGE>
SECTION 1.07 The Closing;.
The closing of the transactions contemplated by this
Agreement (the Closing ) shall be held as promptly as
practicable, but not more than two business days
following the satisfaction of, or waiver by the party
entitled to satisfaction of, all conditions precedent to
the Merger specified in this Agreement, unless duly
waived by the party entitled to satisfaction thereof.
The Closing will take place at the offices of Steel
Hector & Davis LLP, 200 S. Biscayne Blvd., Suite 4000,
Miami, Florida 33131-2398, at 10:00 a.m. local Miami
time on such date, or at such other time and place as
the parties may agree.
ARTICLE II
EFFECT ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES
SECTION 2.01
Effect on Capital Stock;. At the Effective Time, by
virtue of the Merger and without any further action on
the part of Acquiror Sub, the Company or the
Shareholders:
(a) All issued and outstanding shares of capital
stock of Acquiror Sub shall continue to be issued and
shall be converted into 1,000 shares of common stock of
the Surviving Corporation. Each stock certificate of
Acquiror Sub evidencing ownership of any such shares
shall evidence ownership of such shares of capital stock
of the Surviving Corporation.
(b) The 24,500 shares of common stock of the
Company, no par value ( Company Common Stock ), held
beneficially and of record by the Individual Shareholder
shall be converted, without any action on the part of
the Individual Shareholder into 20,000 shares of common
stock, par value $.001, of the Acquiror (the Smith
Merger Consideration ). All such shares of Company
Common Stock so converted shall no longer be outstanding
and shall automatically be cancelled and retired and
shall cease to exist, and the certificate previously
representing such shares shall thereafter represent the
right to receive the Smith Merger Consideration.
(c) The 25,500 shares of Company Common Stock held
beneficially and of record by the Corporate Shareholder
shall be converted, without any action on the part of
the Corporate Shareholder into 20,816 shares of common
stock, par value $.001, of the Acquiror (the SAI Merger
Consideration ). All such shares of Company Common
Stock so converted shall no longer be outstanding and
shall automatically be cancelled and retired and shall
cease to exist, and the certificate previously
Page 3 of 22
<PAGE>
representing such shares shall thereafter represent the
right to receive the SAI Merger Consideration.
(d) Each share of Company Common Stock held in the
treasury of the Company shall be cancelled and
extinguished without any conversion of such shares and
no payment shall be made with respect to such shares.
SECTION 2.02
Exchange of Certificates;. (a) At the Closing, the
Shareholders shall deliver to Acquiror the certificate
or certificates representing their shares of Company
Common Stock issued and outstanding immediately prior to
the Effective Time (each a Certificate and
collectively the Certificates ), and Acquiror shall
deliver to the Individual Shareholder a certificate
representing the Smith Merger Consideration and to the
Corporate Shareholder a certificate representing the SAI
Merger Consideration.
(b) Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the
right to receive upon surrender the merger consideration
into which the shares of Company Common Stock previously
represented by such Certificate were converted at the
Effective Time and any dividends or other distributions
to which such holder is entitled pursuant to Section
2.02(d).
(c) At and after the Effective Time, the holders
of Certificates shall cease to have any rights as
shareholders of the Company, except for the right to
surrender Certificates to be converted pursuant to
Section 2.01. All shares of common stock of the
Acquiror, par value $.001 ( Acquiror Common Stock ),
issued upon conversion of the shares of Company Common
Stock in accordance with the terms of this Agreement
shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of
Company Common Stock.
(d) Holders of unsurrendered Certificates with
respect to the shares of Acquiror Common Stock
represented thereby shall be entitled to receive
dividends and other distributions declared or made with
respect to Acquiror Common Stock with a record date as
of the close of business on or after the date on which
the Effective Time occurs. No such dividends or other
distributions, however, shall be paid to the holder of
any such unsurrendered Certificate until such holder
shall surrender such Certificate. Subject to the effect
of escheat, tax or other applicable laws, following
surrender of any such Certificate, there shall be paid
to the holder of the certificates representing the
Page 4 of 22
<PAGE>
shares of Acquiror Common Stock issued in exchange
therefor, without interest, (i) promptly, the amount of
dividends or other distributions with a record date as
of the close of business on or after the Effective Time
theretofore paid with respect to such shares of Acquiror
Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a
record date as of the close of business on or after the
Effective Time but prior to surrender, payable with
respect to such shares of Acquiror Common Stock.
(e) If, between the date hereof and the Effective
Time, the outstanding shares of Acquiror Common Stock
shall be changed into a different number of shares or a
different class by reason of any reclassification,
recapitalization, split-up, exchange of shares or
readjustment, or if a stock dividend thereon shall be
declared with a record date within such period, the
number of shares of Acquiror Common Stock to be issued
and delivered in the Merger for each outstanding shares
of Company Common Stock as provided in this Agreement
shall be correspondingly adjusted. It is agreed and
understood that the grant by the Acquiror of stock
options pursuant to any stock option or stock incentive
plan, or the exercise by any holder of such a stock
option, shall not constitute an action of the type
requiring adjustment pursuant to this Section 2.02.
SECTION 2.03 Tax
Treatment;. The Company and the Shareholders intend
that the Merger will be a non-taxable transaction to the
Shareholders under section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended.
SECTION 2.04
Registration Rights;. The shares of Acquiror Common
Stock received in the Merger by the Individual
Shareholder shall be entitled to certain registration
rights, as defined in and pursuant to the Registration
Agreement attached as Exhibit 2.04.
ARTICLE III
DEFINITIONS
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.
The term Code means the Internal Revenue Code of 1986,
as amended.
Page 5 of 22
<PAGE>
The term employee includes, but is not limited to,
any leased employee, co-employee, worksite employee,
internal employee or corporate employee.
The term knowledge means the actual knowledge of a
person, or of its current officers and directors in the
case of a corporate person, after reasonable
investigation. For purposes of this definition,
reasonable investigation means that inquiry has been
made of those Company persons employed or retained by
the Company or its Subsidiaries (excluding leased
employees of the Company) who are likely to know the
facts of the subject matter being investigated and all
files or documents in the possession of all such persons
which relate to the subject matter being investigated
have been reviewed.
The term person 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 Subsidiary (or its plural) as used in this
Agreement with respect to the Company, Acquiror, the
Surviving Corporation or any other person shall mean any
corporation, partnership, joint venture or other legal
entity of which the Company, Acquiror, the Surviving
Corporation or such other person, 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.
The term Tax or Taxes shall mean any and all taxes,
charges, fees, levies, and other governmental
assessments and impositions of any kind, payable to any
governmental entity or taxing authority or agency,
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 taxes imposed with
respect thereto.
Page 6 of 22
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE CORPORATE SHAREHOLDER
The Corporate Shareholder and the Company jointly
and severally represent and warrant to Acquiror that the
statements contained in this Article IV are correct and
complete as of the date of this Agreement and will be
correct and complete immediately prior to the Effective
Time (as though made then and as though the Effective
Time were substituted for the date of this Agreement
throughout this Article IV). In the event that, after
the date hereof and prior to the Effective Time, any of
the statements contained in this Article IV becomes
incorrect or incomplete, the Company and the Corporate
Shareholder shall provide notice to the Acquiror
pursuant to Section 7.08.
SECTION 4.01
Authority; Enforceability;. The Board of Directors of
the Company has adopted this Agreement and recommended
the Merger for the approval of the Shareholders pursuant
to Sections 7-111-101 and 7-111-103 of the Colorado
Code. 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 and
shareholder action and no other corporate or shareholder
proceedings on the part of the Company, other than the
filing of the Articles of Merger, 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 equitable principles.
SECTION 4.02 Disclosure;.
No representation or warranty contained in this Article
IV, or in any Schedule or Exhibit hereto or any closing
certificate furnished or to be furnished by either the
Company or the Corporate Shareholder to the Acquiror
pursuant to this Agreement or in connection with the
Merger contains or, at the Effective Time, will contain
any untrue statement of a material fact, or omits or, at
the Effective Time, will omit to state a material fact
necessary to make the statements contained herein or
therein not misleading.
Page 7 of 22
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS.
Each of the Shareholders severally but not jointly
represents and warrants to Acquiror that the statements
contained in this Article V are correct and complete as
of the date of this Agreement and will be correct and
complete as of the Effective Time (as though made then
and as though the Effective Time were substituted for
the date of this Agreement throughout this Article V),
other than those statements that, by their terms, are
made only by the Individual Shareholder or the Corporate
Shareholder, in which case only the Shareholder to whom
the statement refers represents and warrants the
correctness and completeness thereof.
SECTION 5.01
Authority; Enforceability;. The Shareholder has full
power and authority to execute and deliver this
Agreement and to perform the obligations of the
Shareholder hereunder. This Agreement constitutes the
valid and legally binding obligation of the Shareholder,
enforceable in accordance with its terms and conditions,
subject to bankruptcy, insolvency, reorganization,
moratorium and other laws limiting creditors rights
generally and to general equitable principles. The
Shareholder need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval
of any governmental entity in order to consummate the
transactions contemplated by this Agreement. The
Shareholder has taken all action required under Section
7-111-103 of the Colorado Code to adopt and approve this
Agreement and the Merger.
SECTION 5.02 Investment;.
The Shareholder (A) is acquiring Acquiror Common Stock
solely for its own account for investment purposes, and
not with a view to the distribution or resale thereof,
(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
Prospectus of Acquiror dated May 9, 1996 and Acquiror s
quarterly report on Form 10-Q for the quarter ended
September 30, 1996, and has had the opportunity to
obtain additional information as desired in order to
evaluate the merits and the risks of an investment in
Acquiror Common Stock, and (D) agrees to indemnify
Acquiror and Acquiror Sub against any adverse
Page 8 of 22
<PAGE>
consequences which shall arise as a result of a sale or
distribution of such shares by Shareholder in violation
of the Securities Act and state securities or state Blue
Sky laws. Shareholder acknowledges that the shares of
Acquiror Common Stock being issued pursuant to the
Merger have not been registered under the Securities Act
or state securities or state Blue Sky laws and may only
be transferred in compliance with such laws.
SECTION 5.03 Company
Shares.; The Individual Shareholder owns of record and
owns beneficially 24,500 shares of Company Common Stock,
free and clear of any mortgages, pledges, liens,
encumbrances, charges, restrictions on transfer, Taxes,
security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, demands,
rights of first refusal or first offer, voting
agreements or other limitations (other than any
restrictions under the Securities Act and Blue Sky laws
and restrictions under a Purchase Agreement dated
July 1, 1994 between the Individual Shareholder and the
Corporate Shareholder (the Purchase Agreement )). The
Corporate Shareholder holds of record and owns
beneficially 25,500 shares of Company Common Stock, free
and clear of any mortgages, pledges, liens,
encumbrances, charges, restrictions on transfer (other
than any restrictions under the Securities Act and Blue
Sky laws and restrictions under the Purchase Agreement),
Taxes, security interests, options, warrants, purchase
rights, contracts, commitments, equities, claims,
demands, rights of first refusal or first offer, voting
agreements or other limitations. The Individual
Shareholder is not a party to any option, warrant,
purchase right, or other contract or commitment that
could require the Individual Shareholder to sell,
transfer, or otherwise dispose of any capital stock of
the Company (other than this Agreement and the Purchase
Agreement). The Corporate Shareholder is not a party to
any option, warrant, purchase right, or other contract
or commitment that could require the Corporate
Shareholder to sell, transfer, or otherwise dispose of
any capital stock of the Company (other than this
Agreement and the Purchase Agreement). Neither of the
Shareholders is a party to any voting trust, proxy, or
other agreement or understanding with respect to the
voting of any capital stock of the Company (other than
the Purchase Agreement). The Shareholder acknowledges
and agrees that neither the shares of Company Common
Stock that the Shareholder owns nor, to the knowledge of
the Shareholder, any other outstanding stock of the
Company, has been issued in violation of any preemptive
or similar rights.
SECTION 5.04 Share Ownership;. The Shareholder owns no shares of
Acquiror Common Stock other than those it will receive pursuant
Page 9 of 22
<PAGE>
to the Merger. The Shareholder understands that it is
the intent of all parties that the Merger constitute a
reorganization pursuant to Code section 368(a), and has
no present intent to dispose of Acquiror Common Stock
received in the Merger.
SECTION 5.05 Brokers;. No
broker, finder or investment banker 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 Shareholders.
SECTION 5.06 Disclosure;. No
representation or warranty contained in this Article V
contains or, at the Effective Time, will contain any
untrue statement of a material fact, or omits or, at the
Effective Time, will omit to state a material fact
necessary to make the statements contained herein or
therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR
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 Florida, 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 business conducted by it or the
ownership or leasing of its properties makes such
qualification necessary, except where the failure to be
so qualified will not have, individually or in the
aggregate with any other failure to be qualified, an
Acquiror Material Adverse Effect. On or prior to
Closing, Acquiror Sub will be a corporation duly
incorporated, validly existing and in good standing
under the laws of its state of incorporation.
SECTION 6.02 Capitalization;. (a) As of the date hereof, the
authorized capital stock of Acquiror consisted of the
following:
(i) 60,000,000 shares of Acquiror Common
Stock of which:
(y) 8,013,332 shares were issued and
outstanding; and
Page 10 of 22
<PAGE>
(z) 1,466,665 shares were reserved for
future issuance pursuant to Acquiror s
stock option and incentive plans relating
to stock options and awards for certain
officers, employees, consultants and
directors (the Acquiror Options ); and
(ii) 20,000,000 shares of series preferred
stock, par value $.01 per share of which none
was issued or outstanding.
(b) As of the date of this Agreement, all shares
of Acquiror Common Stock issued and outstanding are duly
authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights,
whether created by the Florida Business Corporation Act
(the Florida Act ) or otherwise and any shares of
Acquiror Common Stock issuable in the Merger, when
issued pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and non-
assessable and not subject to preemptive rights created
by the Florida Act or otherwise.
(c) As of the Closing, the authorized capital
stock of Acquiror Sub will consist of 1,000 shares of
Common Stock, $.01 par value ( Acquiror Sub Common Stock
) and will be held by Acquiror (or a wholly owned
Subsidiary) of record and beneficially. Acquiror Sub
will be a newly formed wholly owned Subsidiary of
Acquiror which may be held directly or indirectly by
Acquiror and which will have no obligations except as
contemplated by this Agreement.
SECTION 6.03 Authority;. Acquiror has the requisite corporate power
and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Acquiror and the consummation by Acquiror
of the transactions contemplated hereby 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 hereby, subject to the
corporate and shareholder approvals of Acquiror Sub
(which Acquiror shall cause to be obtained prior to
Closing). This Agreement has been duly executed and
delivered by Acquiror and, assuming the due
authorization, execution and delivery by the other
parties hereto, constitutes the 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 6.04 No Conflict, Required Filings
Page 11 of 22
<PAGE>
and Consents;. The execution and delivery of this
Agreement by Acquiror does not, and the performance of
this Agreement by Acquiror and Acquiror Sub will not,
(i) conflict with or violate the Articles of
Incorporation or By-Laws of Acquiror or Acquiror Sub,
(ii) subject to the filing of the Articles of Merger,
conflict with or violate any Laws applicable to
Acquiror, Acquiror Sub or any of Acquiror s Subsidiaries
or by which any of their respective properties is bound
or affected, or (iii) subject to the receipt of consents
from Fleet National Bank pursuant to the Amended and
Restated Credit Agreement of the Acquiror dated June 5,
1996, as amended through the date hereof and under the
Registration Rights Agreement between the Acquiror,
Greylock Equity Limited Partnership, Carlos A.
Saladrigas and Jose M. Sanchez dated February 10, 1995,
as amended through the date hereof, 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 Acquiror 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 6.05 Reports; Financial Statements;. (a) Since May 9,
1996, Acquiror and its Subsidiaries have filed all
forms, reports, statements and other documents required
to be filed with the Securities and Exchange Commission
(collectively, the Acquiror SEC Reports ). The
Acquiror SEC Reports, including all such reports filed
after the date of this Agreement and prior to the
Effective Time, (i) were or will be prepared in all
material respects in accordance with the 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, 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
Page 12 of 22
<PAGE>
Acquiror SEC Reports filed after the date of this
Agreement and prior to the Effective Time, (i) have
been or will be prepared in all material respects in
accordance with the published rules and regulations of
the Securities and Exchange Commission (the SEC ) and
generally accepted accounting principles ( 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 September 30,
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 6.06 Absence of Certain Changes or
Events;. Since May 9, 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 6.07 Brokers;. No
broker, finder or investment banker 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 Acquiror.
Page 13 of 22
<PAGE>
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Public Announcements;. Acquiror, the Company
and the Shareholders shall consult in good faith with each other
before issuing any press release or otherwise making any
public statements with respect to the Merger and neither
the Company nor any Shareholder shall issue any such
press release or make any such public statement without
the prior written approval of the Acquiror.
SECTION 7.02 NMS Listing;.
Acquiror shall cause those shares of Acquiror Common
Stock to be issued to the Individual Shareholder in the
Merger to be listed on the Nasdaq National Market
System, subject only to official notice of issuance
thereof.
SECTION 7.03 Survival of
Representations, Warranties, Covenants and Agreements;.
(a) The representations, warranties, covenants and
agreements of the parties hereto shall survive the
execution and delivery of this Agreement and the
Closing; provided, however, that, notwithstanding the
foregoing, all representations and warranties set forth
in Article IV, V and VI shall expire on the second
anniversary of the Effective Time, unless a notice of
claim of a breach of such representation or warranty
shall have been given prior to such date; provided,
further that nothing in this Agreement shall be deemed
to limit any right or remedy of any party at law or in
equity for criminal activity or fraud.
(b) The Individual Shareholder hereby agrees not
to make any claim for indemnification against the
Company by reason of the fact that she was a director,
officer, employee, or agent of the Company or was
serving at the request of the Company 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 or Acquiror Sub against the
Shareholder (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
SECTION 7.04 Legend;. Each
certificate representing shares of Acquiror Common Stock
issued pursuant to the Merger shall bear a legend
substantially in the following form:
Page 14 of 22
<PAGE>
The shares represented by this certificate have
not been registered under the Securities Act of
1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated
unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to
the Company is obtained to the effect that such
registration is not required.
SECTION 7.05 Reasonable Efforts; Further
Assurances;. Subject to the terms and conditions of
this Agreement, each party shall use its best reasonable
efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper
or advisable consistent with applicable laws and
regulations to consummate the transactions contemplated
by this Agreement as promptly as possible. The parties
hereto shall do and perform or cause to be done and
performed all such further actions and things and shall
execute and deliver all such other agreements,
certificates, instruments or documents as any other
party hereby may reasonably request in order to carry
out the intent and purposes of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 7.06 Termination of Purchase
Agreement;. The Shareholders agree that upon the
consummation of the transactions contemplated by this
Agreement, the Purchase Agreement (as defined in Section
5.03) shall automatically be terminated and shall be of
no further force or effect as of and after the Closing.
Subject to the consummation of the Merger, each of the
Shareholders hereby waives any rights it has or may have
pursuant to the Purchase Agreement that survived the
closing of the transactions represented by the Purchase
Agreement (including but not limited to the right of
first refusal in Article Four, Section 5 of the Purchase
Agreement), waives any default under the Purchase
Agreement that may arise out of the execution of this
Agreement and hereby waives any further obligations
under the Purchase Agreement.
SECTION 7.07 Affiliate Agreements; Tax
Treatment;. Simultaneously herewith, the Individual
Shareholder and the Company have executed and delivered
an agreement in the form attached as Exhibit 7.07 hereto
(the Affiliate Agreement ). The Acquiror shall be
entitled to issue appropriate stop transfer instructions
to the transfer agent for Acquiror Common Stock
consistent with the terms of the Affiliate Agreement.
Each party shall use its best reasonable efforts to
cause the Merger to qualify, and shall not take any
actions which could prevent the Merger from qualifying,
as a reorganization under the provisions of Section
368(a) of the Code.
Page 15 of 22
<PAGE>
SECTION 7.08 Update Disclosure; Breaches;. From and after the
date of this Agreement until the Effective Time, each
party shall promptly notify the other party hereto by
written update 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 Merger and the
other transactions contemplated by this Agreement not to
be satisfied, or (ii) the failure of the Company,
Acquiror or Acquiror Sub, as the case may be, 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
Merger and the other transactions contemplated by this
Agreement not to be satisfied. In addition, the Company
and the Shareholders shall notify Acquiror in writing of
(i) such additional information with respect to any
matters or events discovered subsequent to the date
hereof and prior to the Effective Time, which if
existing and known on the date hereof would have
rendered any representation or warranty made by the
other party, or any information contained in any Exhibit
hereto, then inaccurate or incomplete and (ii) any
development after the date hereof and prior to the
Effective Time causing a breach of any representation or
warranty in Article IV or V above. Unless the Acquiror
elects to terminate this Agreement pursuant to Section
9.01 below within the period of 10 business days
following such notice, the written notice pursuant to
this Section will be deemed to have qualified the
relevant provision of Article IV or V, and to have cured
any misrepresentation or breach of warranty that
otherwise might have existed hereunder. Receipt of such
information by the other parties hereto shall not
operate as a waiver of the non-disclosing party s right
to terminate this Agreement as provided herein.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 Conditions to
Obligations of Each Party Under This Agreement;.
(a) Subject to waiver as set forth in Section
10.03, the respective obligations of each party to
effect the Merger and the other transactions
contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Effective Time of the
following conditions:
(i) The consummation of the merger
contemplated by the Merger Agreement by and
among Staff Administrators, Inc., its
Page 16 of 22
<PAGE>
shareholders and the Acquiror, entered into as
of December 24, 1996 (the SAI Merger
Agreement ) shall have occurred.
(b) Subject to waiver as set forth in Section
10.03, the respective obligations of the Company and the
Shareholders to effect the Merger and the other
transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(i) Each of the representations and
warranties of Acquiror contained in this
Agreement shall be true and correct in all
material respects as of the Effective Time, as
though made on and as of the Effective Time;
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.
(ii) A registration agreement in the form
attached as Exhibit 2.04 hereto shall have
been executed by the Acquiror.
(c) Subject to waiver as set forth in Section
10.03, the obligations of the Acquiror to effect the
Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(i) All amounts owed by the Company to any
one or more of the Shareholders shall have
been satisfied and the obligation be no longer
outstanding.
(ii) Each of the representations and
warranties of the Company and the Shareholders
contained in this Agreement shall be true and
correct in all material respects as of the
Effective Time, as though made on and as of
the Effective Time; 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.
(iii) Any accounts receivable of the
Company owed by either of the Shareholders
shall have been paid in full.
(iv) A registration agreement in the form
attached as Exhibit 2.04 hereto shall have
been executed by the Individual Shareholder.
Page 17 of 22
<PAGE>
ARTICLE IX
TERMINATION, AMENDMENT
SECTION 9.01 Termination;.
This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual consent of the parties hereto;
(b) (i) by Acquiror, if there has been a breach
by the Company or the Shareholders of any of their
respective covenants or agreements contained in this
Agreement or if any of the representations and
warranties of the Company or the Shareholders shall have
become untrue; 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;
(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 Merger shall have become final and
nonappealable; or
(d) by either Acquiror or the Company if the
Merger shall not have been consummated before January
31, 1996.
SSECTION 9.02
Effect of Termination;. In the event of the termination
of this Agreement pursuant to Section 9.01, this
Agreement shall forthwith become void, and there shall
be no liability under this Agreement on the part of
Acquiror or the Company or any of their respective
stockholders, officers or directors and all rights and
obligations of each party hereto shall cease, except as
provided in Section 9.03-Fees and Expenses.
SECTION 9.03 Fees
and Expenses;. (a) All Expenses (as defined below)
incurred by the parties shall be borne solely and
entirely by the party which has incurred the same. This
Section 9.03 shall not be construed to modify or
contravene Section 10.03 of the SAI Merger Agreement.
(b) Expenses as used in this Agreement shall
include all reasonable out-of-pocket expenses (including
without limitation, all fees and expenses of counsel,
Page 18 of 22
<PAGE>
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.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 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 22134
Telecopier no.: (305) 460-2396
Attention: General Counsel
With a copy to: Steel Hector & Davis LLP
200 South Biscayne Boulevard,
40th Floor
Miami, Florida 33131-2398
Telecopier No.: (305) 577-7001
Attention: Ira N. Rosner, P.A.
If to the Company: Staff Administrators of Western
Colorado, Inc.
2912 North Avenue, Suite 4
Grand Junction, Colorado 81504
Telecopier No.: (970) 242-4679
Attention: President
With a copy to: Minor & Brown, P.C.
650 South Cherry Street
Cherry Creek Plaza, Suite 1100
Denver, CO 80222
Telecopier No.: (303) 320-6330
Attention: Ned Minor, Esq.
Page 19 of 22
<PAGE>
If to the Corporate
Shareholder: Staff Administrators, Inc.
12075 E. 45th Avenue,
Vista Suite
Denver, CO 80237-2843
Telecopier No.: (303) 371-8970
Attention: Robert J. Quinette
With a copy to: Minor & Brown, P.C.
650 South Cherry Street
Cherry Creek Plaza, Suite 1100
Denver, CO 80222
Telecopier No.: (303) 320-6330
Attention: Ned Minor, Esq.
If to the Individual
Shareholder: Kris A. Smith
1120 23 Road
Grand Junction, Colorado 81505
With a copy to: Thomas Volkman, Esq.
655 North 12th Street
Grand Junction, Colorado 81501
SECTION 10.02 Amendment;.
Subject to applicable provisions of the Colorado Code or
the Florida Act, this Agreement may be amended by the
parties by action taken by or on behalf of their
respective Boards of Directors at any time prior to the
Effective Time. This Agreement may not be amended
except by an instrument in writing signed by the
parties.
SECTION 10.03 Waiver;. At any
time prior to the Effective Time, 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 for the benefit of the waiving party 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 only if set forth in
an instrument in writing signed by the party or parties
to be bound thereby.
SECTION 10.04 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.
Page 20 of 22
<PAGE>
SECTION 10.05
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 10.06 Entire
Agreement;. This Agreement (together with any exhibits
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 10.07 Assignment;.
This Agreement shall not be assigned without the written
consent of the other parties hereto.
SECTION 10.08
Parties in Interest;. This Agreement shall be binding
upon and inure solely to the benefit of each party and
to that party s permitted successors, assigns, heirs and
personal representatives, 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 10.09 Governing
Law;. This Agreement shall be 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 10.10 Counterparts; Facsimile
Signatures;. 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.
The parties hereby acknowledge and agree that facsimile
signatures of this Agreement and any Exhibit hereto
shall have the same force and effect as original
signatures.
Page 21 of 22
<PAGE>
SECTION 10.11 Attorneys
Fees;. If any party shall commence any action or
proceeding against another party in order to enforce the
provisions hereof, or to recover damages as the result
of the alleged breach of any of the provisions hereof,
the prevailing party therein shall be entitled to
recover all reasonable costs incurred in connection
therewith, including, but not limited to, reasonable
attorneys fees and expenses.
[Remainder of this page left intentionally blank]
IN WITNESS WHEREOF, Acquiror, Company and the
Shareholders have caused this Agreement to be executed
as of the date first written above by their respective
officers duly authorized.
THE VINCAM GROUP, INC.
By: /s/ CARLOS A. SALADRIGAS
Name:CARLOS A. SALADRIGAS
Title:PRESIDENT
STAFF ADMINISTRATORS OF WESTERN COLORADO, INC.
By: /s/ KRIS A. SMITH
Name:KRIS A. SMITH
Title:PRESIDENT
SHAREHOLDERS
/s/ KRIS A. SMITH
Kris A. Smith
STAFF ADMINISTRATORS, INC.
By:/s/ ROBERT J. QUINETTE
Name:ROBERT J. QUINETTE
Title:PRESIDENT/CEO
Page 22 of 22
<PAGE> Exhibit 10
AGREEMENT AND AMENDMENT NO.1 TO
AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT AND AMENDMENT NO.1 TO AMENDED AND RESTATED CREDIT AGREEMENT
("this Amendment"), dated as of December 31, 1996, by and among THE VINCAM
GROUP, INC., a Florida Corporation (the "Company"), the Subsidiaries of the
Company whose names appear on the signature page hereof, all of which are
Florida corporations (together with the Company, collectively, the "Borrowers")
and FLEET NATIONAL BANK, a national banking association (the "BANK").
WHEREAS, the parties hereto desire to amend, on the terms set forth herein,
the Amended and Restated Revolving Credit Agreement, dated as of June 5,1 996
(the "Credit Agreement"), among the Borrowers and the Bank (capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement).
WHEREAS, in consideration of the amendments to the credit Agreement set
forth herein, the Bank is willing to terminate the Cash Collateral Pledge
Agreement and discharge and release its security interest in the collateral
pledged to the Bank pursuant thereto.
NOW, THEREFORE, in consideration of these premises, and the mutual
covenants and agreements contained herein, the parties hereto agree as
follows:
1. Amendments to Credit Agreement.
1.1 Amendments to Section 1.1.
(a) The definition of "Cash Collateral Pledge Agreement" set
forth in Section 1.1 of the Credit Agreement is hereby deleted in its entirety.
(b) The following definition is hereby inserted in Section 1.1 of
the Credit Agreement, immediately following the definition of "Letter of
Credit":
"Letter of Credit Sublimit" shall have the meaning specified in
Section 2.1.
(c) The following definition is hereby inserted in Section 1.1 of
the Credit Agreement, immediately following the definition of "Regulatory
Change":
"Required LOC" shall have the meaning specified in Section 5.1.
(d) The definition of "Revolver Maturity Date" set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:
"Revolver Maturity Date" shall mean December 31, 1997.
(e) The definition of "Security Instruments" set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"Security Instruments" shall mean, collectively, the Security
Page 1 of 4
<PAGE>
Agreement, the Stock Pledge Agreements and each other instrument or
agreement that purports to secure the obligations of the Borrowers to
the Bank.
1.2 Amendment of Section 2.1. Section 2.1 of the Credit Agreement is
hereby amended and restated in its entirety as follows:
2.1 "Amount". Upon the terms and subject to conditions set forth
herein, and in reliance upon the representations, warranties and covenants
of the Borrowers herein, the Bank agrees to make loans (each a "Revolving
Credit Loan" and collectively the "Revolving Credit Loans") to the
Borrowers and to issue Letters of Credit for the account of the Borrowers
at the Borrowers' request from time to time from and after the Closing Date
and prior to the Revolver Maturity Date in aggregate principal amount not
to exceed at any one time outstanding the sum of $8,000,000 (the "Revolving
Credit Commitment"), as the same may be reduced or terminated pursuant to
the provisions hereof, provided that the sum of all outstanding Revolving
Credit Loans and Letter of Credit Usage shall not at any time exceed the
Revolving Credit Commitment, provided, further that the aggregate
principal amount of outstanding Revolving Credit Loans shall not at any
time exceed the lesser of (i) $2,000,000 (the "Revolving Loan Sublimit")
or (ii) the Borrowing Base, and provided, further that the Letter of
Credit Usage shall not at any time exceed $6,000,000 foregoing limits and
subject to the terms and conditions hereof, the Borrowers may request
Letters of Credit and may borrow, repay and reborrow Revolving Credit
Loans at any time or from time to time until the Revolver Maturity Date
or the earlier termination of the Revolving Credit Commitment.
1.3 Amendment to Section 2.4. Section 2.4 of the Credit Agreement
is amended by deleting the word "and" immediately prior to clause (f) thereof
and inserting the following immediately after the last word thereof:
; and (g) both before the issuance of the requested Letter of Credit and
after giving effect to the issuance thereof Letter of Credit Usage
shall not exceed the Letter of Credit Sublimit.
1.4 Amendment of Section 5.1. Section 5.1 of the Credit Agreement
is hereby amended by amending and restating subsection (b) thereof to read as
follows:
(b) In order to secure the payment and performance of the Borrowers'
Obligation, the Borrowers agree to cause a financial institution
satisfactory to the Bank to issue a standby letter of credit in the
face amount of not less than $4,100,959, in form and substance
satisfactory to the Bank ( the "Required LOC") and to maintain the
Required LOC so long as any Obligations are outstanding and until the
Bank's Commitment shall have terminated.
1.5 Amendment of Section 6.1. Section 6.1 of the Credit Agreement
is hereby amended by inserting the following immediately after the last
sentence of subsection (a) thereof:
The Bank shall have received the Required LOC.
Page 2 of 4
<PAGE>
1.6 Amendment to Section 10.5. Section 10.5 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
10.5 Capital Expenditures. The Borrowers and their subsidiaries
shall not make aggregate Capital Expenditures in excess of
(i) $1,500,000 during fiscal year ending December 31, 1996,
(ii) $2,000,000 during fiscal year ending December 31, 1997,
and (iii) $2,500,000 during any fiscal year thereafter.
2. Termination of Cash Collateral Pledge Agreement. The Cash Collateral
Pledge Agreement is hereby terminated and the Bank releases its security
interest in the Collateral under and as defined in the Cash Collateral Pledge
Agreement.
3. Representations and warranties. The Borrowers hereby represent and
warrant to the Bank as follows:
3.1 Representations in loan Documents. Each of the representations
and warranties made by or on behalf of the Borrowers in any of the Loan
Documents was true and correct when made and is true and correct on and as of
the date of this Amendment, except to the extent that any such representation or
warranty relates by its express terms solely to a prior date.
3.2 No Defaults. After giving effect to the amendments to the Credit
Agreement effectuated by this Amendment, no Default or Event of Default exists.
3.3 Corporate Authority and Enforceability. This Amendment has been
duly executed and delivered by the Borrowers and is in full force and effect
as of the date hereof, and constitutes the valid and biding obligation of the
Borrowers enforceable against the Borrowers in accordance with its terms.
4. No Other Amendments. Except as specifically provided herein, the terms
and provisions of the Credit Agreement shall be and remain unaltered and in full
force and effect.
5. Miscellaneous. This Amendment shall be governed by and constructed in
accordance with the laws of The Commonwealth of Massachusetts (without regard to
conflicts of laws principles). This Amendment may be executed in several
counterparts and by each party on a separate counterpart, each of which when
so executed and delivered shall be an original, but all of which together shall
constitute one instrument.
Page 3 of 4
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed under seals as of the date first set forth above.
THE VINCAM GROUP, INC.
BY:/s/ CARLOS A. SALADRIGAS
------------------------------
Name: Carlos A. Saladrigas
Title: Chairman, President and
Chief Financial Officer
VINCAM HUMAN RESOURCES, INC.
VINCAM HUMAN RESOURCES, INC. I
VINCAM HUMAN RESOURCES, INC. II
VINCAM HUMAN RESOURCES, INC. III
VINCAM HUMAN RESOURCES, INC. IV
VINCAM HUMAN RESOURCES, INC. V
VINCAM HUMAN RESOURCES, INC. VI
VINCAM HUMAN RESOURCES, INC. XII
VINCAM HUMAN RESOURCES OF
MICHIGAN, INC.
VINCAM OCCUPATIONAL HEALTH
SYSTEMS, INC.
PERSONNEL RESOURCES, INC.
VINCAM INSURANCE SERVICES, INC.
VINCAM PRACTICE MANAGEMENT, INC.
AMERICAN PEDIATRIC SYSTEMS, INC.
PSYCH/CARE, INC.
BY:/s/ CARLOS A. SALADRIGAS
------------------------------
Name: Carlos A. Saladrigas
Title: President
FLEET NATIONAL BANK
BY:/s/ GINGER C. STOLZENTHALER
------------------------------
Name: Ginger C. Stolzenthaler
Title: Vice President
Page 4 of 4
<PAGE>
