UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Amendment No. 1
Under the Securities Exchange Act of 1934
The Vincam Group, Inc.
(Name of Issuer)
Common Stock, $.001 par value per share
(Title of Class of Securities)
92719 B 10 4
(CUSIP Number)
James Westra, Esquire
Hutchins, Wheeler & Dittmar
101 Federal Street, Boston, MA 02110 (617-951-6600)
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 1, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 92719B 10 4
1. NAME OF REPORTING PERSON - Theodore L. Gatsas
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
N/A
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7. SOLE VOTING POWER
900,000
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 900,000
PERSON WITH
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
900,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.6%
14. TYPE OF REPORTING PERSON
IN
<PAGE>
SCHEDULE 13D
ITEM 1. Security and Issuer:
This statement relates to shares of Common Stock, $.001 par
value ("Common Stock"), of The Vincam Group, Inc. (the
"Issuer"). The Issuer's principal executive offices are
located at 2850 Douglas Road, Coral Gables, Florida 33134.
ITEM 2. Identity and Background:
This statement is filed on behalf of Theodore Gatsas. Mr.
Gatsas' business address is c/o Staffing Network, Inc., 111
Charles Way, P.O. Box 6430, Manchester, New Hampshire
03108-6430. Mr. Gatsas serves as area Vice President for
the Issuer and conducts such business at the address set
forth in the previous sentence.
Mr. Gatsas has not been convicted of any criminal proceeding
during the past five years (excluding traffic violations and
similar misdemeanors), nor has Mr. Gatsas been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction during the past five years as a result
of which he was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Mr. Gatsas is a citizen of the United States.
ITEM 3. Source and Amount of Funds or Other Consideration:
On December 1, 1997, pursuant to a Merger Agreement dated
October 24, 1997 (the "Merger Agreement"), the Issuer acquired
all of the voting securities of Staffing Network, Inc.
("Staffing") (the "Merger"). Mr. Gatsas was a shareholder of
Staffing prior to the consummation of the Merger. In exchange
for cancellation of all his voting securities of Staffing in
the Merger, Mr. Gatsas received 600,000 shares of Common
Stock, representing approximately 6.6% of the Issuer's voting
securities outstanding as of November 14, 1997. On December
10, 1997, an additional 300,000 shares of Common Stock were
issued to Mr. Gatsas as a result of 3-for-2 stock dividend
effected by the Issuer. Mr. Gatsas also has the right to
acquire 15,000 shares of Common Stock, at a purchase price of
$36.75 per share, pursuant to a stock option agreement entered
into between Mr. Gatsas and the Issuer dated December 1, 1997,
subject to shareholder approval of the Issuer on or prior to
September 25, 1998. None of the options are currently
exercisable.
ITEM 4. Purpose of Transaction:
Mr. Gatsas acquired the Common Stock in consideration for the
cancellation of all his outstanding shares in Staffing in
connection with the Merger. Mr. Gatsas does
not presently have any plans or proposals which will result
in: (a) the acquisition
<PAGE>
by any person of additional securities of the Issuer, or the
disposition of securities of the Issuer; (b) an extraordinary
corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries; (d) any change in the
present board of directors or management of the Issuer,
including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of the Issuer; (f) any other material change
in the Issuer's business or corporate structure; (g) any
change in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person; (h)
causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association; (i) a class of
equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of
the Act; or (j) any action similar to any of those enumerated
above.
ITEM 5. Interest in Securities of the Issuer:
(a) Mr. Gatsas beneficially owns 900,000 shares of Common
Stock, constituting approximately 6.6% of shares of Common
Stock outstanding (based on the number of shares outstanding
in the most recently available filing with the Commission by
the Issuer and adjusted for the stock split described in Item
3 above). Mr. Gatsas also has the right to acquire 15,000
shares of Common Stock, at a purchase price of $36.75 per
share, pursuant to a stock option agreement entered into
between Mr. Gatsas and the Issuer dated December 1, 1997,
subject to shareholder approval of the Issuer on or prior to
September 25, 1998. None of the options are currently
exercisable.
(b) Mr. Gatsas has sole power to vote or direct the voting and
dispose or direct the disposition of all of the shares
described in Item 5(a).
(c) On December 1, 1997, in connection with the Merger, Mr.
Gatsas acquired 600,000 shares of Common Stock and was granted
options to purchase an additional 15,000 shares of Common
Stock, and on December 10, 1997, Mr. Gatsas received an
additional 300,000 shares of Common Stock pursuant to a stock
split of the Issuer, all as described in Item 3 above.
(d) No person other than those disclosed in this Item is known
to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of,
such shares of Common Stock.
(e) Not applicable.
<PAGE>
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer:
Mr. Gatsas is a party to a Registration Agreement dated
December 1, 1997 with the Issuer pursuant to which Mr. Gatsas
has certain rights to require the registration under the
Securities Act of 1933, as amended, of the shares of Common
Stock beneficially owned by him and set forth in Item 5(a).
Mr. Gatsas is also a party to an Escrow Agreement dated
December 1, 1997 with the Issuer pursuant to which 90,000
shares of Common Stock owned by Mr. Gatsas are held by an
independent escrow agent and may be transferred to the Issuer
in the event Mr. Gatsas is required to fulfill certain
indemnification obligations under the Merger Agreement
described in Item 3 above. Unless and until such shares of
Common Stock held in escrow are returned to the Issuer under
the terms of the Escrow Agreement, Mr. Gatsas is entitled to
vote such shares.
ITEM 7. Material to Be Filed as Exhibits:
Escrow Agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 26, 1998 /s/ Theodore L. Gatsas
Signature
Theodore L. Gatsas
Name: Michael J. Gatsas
<PAGE>
ESCROW AGREEMENT
Escrow Agreement entered into as of December 1, 1997 (the "Agreement")
by and among The Vincam Group, Inc., a Florida corporation ( Acquiror), Norwest
Bank Colorado, N.A., as escrow agent (the "Indemnification Escrow Agent"),
Michael J. Gatsas and Theodore L. Gatsas (Michael J. Gatsas and Theodore L.
Gatsas are referred to individually in this Agreement as a ("Shareholder and
collectively as the "Shareholders").
RECITALS:
1. Acquiror, Staffing Network, Inc., a New Hampshire corporation (the
"Company"), and the Shareholders have entered into an Agreement and Plan of
Merger dated as of October 24, 1997 (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. Acquiror hereby delivers to the Indemnification Escrow Agent the
Indemnification Escrow Shares, with stock powers related thereto duly endorsed
in blank, and the Indemnification Escrow Agent hereby acknowledges receipt
thereof. The Indemnification Escrow Shares shall be held by the Indemnification
Escrow Agent pursuant to the terms of this Agreement to secure the performance
of Shareholders' indemnification obligations hereunder but not as a limitation
thereof.
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. 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
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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, all of 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
date and time of the Merger as specified in the Articles of Merger filed
pursuant to Section 1.02 of the Merger Agreement (the "Effective Time") as
promptly as practicable after the filing of such Articles of Merger. The
Acquiror shall also provide the Indemnification Escrow Agent with written notice
specifying the Audit Date as promptly as practicable after the occurrence of
such date. Nothing in this Agreement or the Merger Agreement shall be deemed to
limit any right or remedy 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 and the other provisions of this Agreement, Acquiror shall be indemnified
and held harmless by the Shareholders 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 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 or resulting from any
failure by the Company or the Shareholders to perform any covenant contained
therein, which has not been waived in writing by Acquiror on or prior to the
Closing.
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(b) Subject to the survival period set forth in Section 2
above and the other provisions of this Agreement, Acquiror shall be indemnified
and held harmless by the Shareholders pro rata in proportion to their ownership
of the capital stock of the Company immediately prior to the Effective Time 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 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 or resulting from any failure by the Shareholders to
perform any covenant contained therein, 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 and the other provisions of this Agreement, the Shareholders shall be
indemnified and held harmless by Acquiror from and against all Adverse
Consequences suffered by the Shareholders resulting from any 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 or resulting from any
failure by the Acquiror to perform any covenant contained therein, which has not
been waived in writing by the Shareholders on or prior to the Closing.
(d) Acquiror shall be indemnified and held harmless by the
Shareholders from and against all Adverse Consequences suffered by Acquiror or
any Subsidiary of Acquiror (including the Surviving Corporation and any of its
Subsidiaries) arising out of (i) Jody Swable v. Wellco and Staffing Network,
Inc., pending in the State of New York Supreme Court for Genesee County, (ii)
Alexander McKenzie v.Bellemore Heating Oil, Inc, and Staffing Network, Inc.,
and (iii) the ongoing Internal Revenue Service audit of the Company and certain
of its clients regarding the proper reporting of non-cash fringe benefits for
certain of the Company's worksite employees. Notwithstanding anything in this
Agreement to the contrary, the indemnification obligations of the Shareholders
provided by this Section 3(d) shall survive until the 30th day following the
resolution or termination of any audit, action, complaint or investigation with
respect thereto, unless a notice of claim for indemnification with respect to
such matter shall have been given prior to the later of such dates.
(e) The aggregate liability of the Shareholders hereunder
shall in no event exceed an amount equal to 600,000 times the Market Value (as
defined below) on the Closing Date of Acquiror Common Stock. For purposes of
this Agreement, "Market Value" on a specified date means 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 such date. The liability of the Acquiror hereunder shall
in no event exceed an amount equal to 1,200,000 times the Market Value on the
Closing Date of Acquiror Common Stock.
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(f) Of the Indemnification Escrow Shares, not more than
101,571 Indemnification Escrow Shares shall be available to indemnify Acquiror
pursuant to Sections 3(a) and 3(b) above and not more than 7,500,7,500, and
3,429 Indemnification Escrow Shares shall be available to indemnify Acquiror
pursuant to Sections 3(d)(i), (ii) and (iii) hereof, respectively.
(g) No party shall have any liability for indemnification
pursuant to this Agreement until the cumulative and aggregate amount of all the
Adverse Consequences suffered by the party making a claim for indemnification
exceeds two hundred thousand dollars ($200,000) (the "Indemnification
Threshold"), and then only for the amount by which such Adverse Consequences
exceed the Indemnification Threshold.
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
and in reasonable detail all other relevant facts pertaining to the
Indemnification Claim ("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 Shareholders. No party shall be entitled to give a Notice of Claim after the
Indemnification Termination Date or the Audit Date, as the case may be, 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), and
then only within the time period specified in such Section 3(d). The Notice of
Claim shall set forth the amount of the Adverse Consequences suffered, or the
Indemnified Party's good faith, non-binding estimate of the Adverse Consequences
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 of a Notice of Claim shall reduce or otherwise
affect the Indemnified Party's right to indemnification hereunder except to the
extent that the Indemnifying Party has been prejudiced thereby. The date of a
Notice of Claim shall be deemed to be:
(x) the fourth 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;
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(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) (A) Upon receipt at any time prior to the
Indemnification Termination Date or the
Audit Date, as the case may be, of a Notice of
Claim, the Indemnification Escrow Agent shall,
subject to the provisions of Section 4(b)(i)(B)
hereof, deliver to Acquiror as promptly as
practicable after expiration of the twenty-day
notice period set forth in Section 4(b)(i)(B),
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).
(B) The Shareholders shall have twenty (20) business 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 so timely provided by the
Shareholders, 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, the Shareholders
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 given 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) business
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 and the Shareholders
shall indemnify Acquiror in accordance with the award resulting from
such arbitration, and Acquiror and the Shareholders shall instruct the
Indemnification Escrow Agent to distribute Indemnification Escrow
Shares in accordance with such award. The Market Value of the
Indemnification Escrow Shares payable to Acquiror as a result of such
award shall be determined as of the date of such award. In the case of
a Challenged Claim, the Shareholders 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 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) business days of the delivery of such notice.
Notwithstanding anything contained herein to the contrary, if a Notice
of Claim sets forth a claim or demand asserted by a third party (a
"Third Party Claim"), only the provisions of Section 4(d) shall apply
to such Third Party Claim.
(C) The Indemnification Escrow Agent shall retain in escrow after the
Indemnification Termination Date (x) the number of Indemnification
Escrow Shares allocated pursuant to Section 3(f) above to the matters
described in Section 3(d) ("Section 3(d) Matters") (less any such
shares previously distributed to Acquiror or Shareholders in respect of
Section
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3(d) Matters) and (y) the number of any other Indemnification Escrow
Shares (rounded up to the nearest whole share) having an aggregate
Market Value (as of the Indemnification Termination Date) equal to the
aggregate dollar amount of the estimated Adverse Consequences related
to 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 as 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"), 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.
(D) 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)(i)(C), with each Shareholder receiving an equal number of such
Indemnification Escrow Shares.
(E) In the event that the Market Value of the Indemnification Escrow
Shares determined in accordance herewith is ultimately insufficient to
indemnify Acquiror for all Adverse Consequences suffered thereby in
connection with any Indemnification Claim as to which Acquiror is
entitled to indemnification hereunder, the Shareholders shall pay any
such insufficiency, such payment to be made in immediately available
funds within 15 days after (x) the date written demand therefor is
received by the Shareholders in the case of an Accepted Claim or (y)
the date upon which such Indemnification Claim is resolved by
arbitration in accordance with this Agreement the agreement of Acquiror
and the Shareholders or otherwise.
(ii) (A) Upon receipt at any time prior to the Indemnification
Termination Date, or the Audit Date, as the case may be, of a
Notice of Claim made pursuant to Section 3(c) hereof, Acquiror
shall, subject to the provisions of Section 4(b)(ii)(B)
hereof, deliver to the Shareholders within five (5) business
days of the expiration of the twenty-day notice period set
forth in Section 4(b)(ii)(B) cash equal to the amount set
forth in the Notice of Claim.
(B) Acquiror shall have twenty (20) business days from the date of a
Notice of Claim within which to object, by written notice to the
Shareholders, to any Indemnification Claim (an "Acquiror Challenged
Claim"). If notice of objection to any such claim is not provided by
Acquiror to Shareholders, the validity and stated amount of the claim
will be deemed to have been accepted. The parties shall submit the
matter of an Acquiror
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Challenged Claim to arbitration in accordance with Section 8 hereof.
Notwithstanding anything contained herein to the contrary, if a Notice
of Claim sets forth a Third Party Claim, only the provisions of Section
4(d) shall apply to such Third Party Claim.
(C) Upon the termination of the Shareholders' indemnification
obligations as to the Section 3(d) Matters, the Indemnification Escrow
Shares allocated to the Section 3(d) Matters pursuant to Section 3(f)
above shall be distributed to the Shareholders, to the extent not
distributed to Acquiror in fulfillment of such obligations of the
Shareholders. Other 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)(i)(C) shall be
distributed (as appropriate) as promptly as practicable after
disposition of all Challenged Claims and Pending Claims.
(d) (i) In the event of a Third Party Claim, any Indemnifying Party
will have the right to control the defense of 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 which in the good faith judgment of the Indemnified
Party is not adverse to the continuing business interests of the
Indemnified Party, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of
the Indemnified Party, likely to establish a precedent adverse to the
continuing business interests of the Indemnified Party, 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 unless the Indemnified Party is granted a full and
unconditional release by such third party.
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(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. In
the event that the conditions in Section 4(d)(i)(C) or (D) are not
satisfied but money damages are involved, the Indemnifying Party may
participate in the defense of such Third Party Claim at its sole
expense and the Indemnified Party hereby agrees to consult with the
Indemnifying Party as to any settlement of such Third Party Claim;
provided, however, that the foregoing shall not limit the Indemnified
Party's right to consent to the entry of any judgment or enter into any
settlement with respect to such Third Party Claim in any manner as it
may deem appropriate.
(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, if the
Indemnified Party is Acquiror and there are sufficient Indemnification
Escrow Shares, shares of Acquiror Common 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 reasonably 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
name of the Shareholders, who shall be entitled to vote the 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 they had
received all of the shares of Acquiror Common Stock deliverable to him at the
Effective Time of the Merger and no shares had
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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 account 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 services rendered hereunder and
to the reimbursement of reasonable out-of-pocket expenses 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 100% of all such compensation 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 deliverable to the
Acquiror hereunder until all expenses, compensation, 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
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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
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 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 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 direction 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 Miami, Florida with capital and surplus of at least $500,000,000
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
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the provisions hereof. Any fee of any such substitute shall be borne equally
by Acquiror and Shareholders.
(h) In consideration of its acceptance of the appointment as
the Indemnification Escrow Agent, the Acquiror and the Shareholders 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 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 shall be selected by the other
two arbitrators within two business days of the appointment of the last
arbitrator selected. The third arbitrator so selected shall act as chairman. If
the two appointed arbitrators shall fail to select a third arbitrator within
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 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
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the Indemnification Escrow Shares to the arbitrators to resolve the
disagreement. If the Indemnification Escrow Agent transfers the Indemnification
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 in accordance with the provisions of Section 4 hereof) 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 Michael J. Gatsas: 477 Kearney Circle
Manchester, NH 03104
If to Theodore L. Gatsas: 105 Birchwood Road
Manchester, NH 03104
With a copy to: Hutchins, Wheeler & Dittmar
101 Federal Street Boston, MA 02110
Telecopier No.: (617) 951-1295
Attention: James Westra, Esq.
If to the Indemnification
Escrow Agent: Norwest Bank Colorado, N.A.
Corporate Trust and Escrow Services
2nd Floor, Bank Building
1740 Broadway
Denver, CO 80274-8693
Attention: Amy E. Buck, Vice President
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or to such other address as any party may have furnished to others 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 constitute the entire agreement among the parties with respect to the
subject matter hereof 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. The parties hereto acknowledge and agree
that the Indemnification Escrow Agent is not a party to, or bound by, the Merger
Agreement. The Indemnification Escrow Agent shall have no duty to know or
inquire as to the performance or nonperformance of any provision of such
agreement between the parties. This Agreement may not be assigned without the
prior written consent of the nonassigning party (other than the Indemnification
Escrow Agent). The assigning party shall promptly notify the Indemnification
Escrow Agent in writing of any such assignment.
Section 13. Parties in Interest. This Agreement 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. Signatures; 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.
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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 Interests. 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 interests" 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.
[The remainder of this page is intentionally left blank.]
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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
----------------------------------
Michael J. Gatas
----------------------------------
Theodore L. Gatsas
----------------------------------
As Indemnification Escrow Agent
By:_____________________________
Name:___________________________
Title:____________________________
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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
----------------------------------
Michael J. Gatas
----------------------------------
Theodore L. Gatsas
----------------------------------
As Indemnification Escrow Agent
By:_____________________________
Name:___________________________
Title:____________________________
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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
----------------------------------
Michael J. Gatsas
----------------------------------
Theodore L. Gatsas
----------------------------------
As Indemnification Escrow Agent
By:_____________________________
Name:___________________________
Title:____________________________
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Exhibit A
NORWEST BANK COLORADO
CORPORATE TRUST AND ESCROW SERVICES
THE VINCAM GROUP,/MICHAEL J. GATSAS
AND THEODORE L. GATSAS ESCROW FEE SCHEDULE
Inception Fee Extraordinary Services
o 500
Annual Administration Fee* Additional reasonable compensation
will be charged for extraordinary
o $2,500 services based on our then current
standard hourly charge. Extra-
Transaction Charges ordinary services include, but are
not limited to, attending escrow
Security Transactions closings, processing assignments
$25,000 of escrow interest, reviewing
Wire Transfers and accepting modifications
$15.00 amendments to the escrow agree-
Receipts ment, and letter of credit draws.
$5.00
Disbursements
$5.00 Reimbursables
Preparing Interest Allocations
$10.00/ All out-of-pocket expenses in-
calculation curred in connection with the
account, including travel,
Preparing and Filing postage, telephone charges,
Taxpayer Reports insurance, photocopies, supplied,
Each 1099 $10.00 and legal fees, with the exception
Minimum Charge $100.00 of legal fees incurred at the In-
ception of the account, will be
Account Closing Fee billed to the customer at cost.
Reasonable Compensation based
upon the services performed
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