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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): September 15, 1997
STAFFMARK, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20971 71-0788538
(State of other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
302 East Millsap Road
Fayetteville, Arkansas 72703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 973-6000
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Item 2. Acquisition or Disposition of Assets
On September 15, 1997, StaffMark, Inc. (the "Company") completed the
purchase of substantially all of the assets of H. Allen & Company, Inc., an
Illinois corporation ("H. Allen"), through the Company's wholly-owned
subsidiary, StaffMark Acquisition Corporation Twelve, a Delaware corporation.
H. Allen provides technical professionals in highly skilled areas including
computer troubleshooting, installation and configuration, LAN support, help
desk, programming development, and new platform rollouts. H. Allen is
headquartered in Downers Grove, Illinois, a suburb of Chicago.
The assets purchased primarily consist of accounts receivable, general
corporate assets, trademarks, trade names, customer contracts and certain
liabilities of H. Allen related to the assets. The total consideration paid
for the assets was approximately $9.8 million in cash and 71,982 shares of the
Company's common stock. The purchase price was determined as a result of direct
negotiations with H. Allen.
Item 7. Financial Statements and Exhibits
(a) Exhibits. The following exhibit is filed with this Form 8-K:
2.1 Asset Purchase Agreement, dated September 15, 1997,
by and among StaffMark, Inc., StaffMark Acquisition
Corporation Twelve, and H. Allen & Company, Inc. /1/
/1/ The Company will furnish supplementally a copy of any
omitted schedule to the Securities and Exchange
Commission upon request.
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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 hereunto duly authorized.
STAFFMARK, INC.
(Registrant)
Dated: September 26, 1997 By: /s/ Terry C. Bellora
-------------------------------
Terry C. Bellora
Chief Financial Officer
EXHIBIT INDEX
(a) Exhibits. The following exhibit is filed with this Form 8-K:
2.1 Asset Purchase Agreement, dated September 15, 1997, by and
among StaffMark, Inc., StaffMark Acquisition Corporation
Twelve, and H. Allen & Company, Inc. /1/
/1/ The Company will furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon
request.
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================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
STAFFMARK, INC.,
STAFFMARK ACQUISITION CORPORATION TWELVE,
AND
H. ALLEN & COMPANY, INC.,
DATED: SEPTEMBER 15, 1997
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TABLE OF CONTENTS
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INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
ARTICLE I. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1.1. Instruments of Conveyance and Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Consideration for the Transferred Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4. Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.5. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.6. Procedures for Assets Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Shares of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4. No Violation; Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.6. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.8. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9. Labor and Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.10. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.11 Powers of Attorney; Absence of Limitations on Competition; Guarantees . . . . . . . . . . . . . . 6
SECTION 2.12. Significant Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.13. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.14. Absence of Certain Changes; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.15. Certain Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.16. Compliance with Law; Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.17. Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.18. Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.19. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.20. Outstanding Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.21. Outstanding Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.22. Intellectual Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.23. Proprietary Information of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.24. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.25. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.26. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.27. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.28. Broker's or Finder's Fees; Break-Up or Termination Fees . . . . . . . . . . . . . . . . . . . . 13
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SECTION 2.29. Protection of Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.30. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.31. Securities Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2. Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.3. Validity, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.4. The Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.5. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV. PRE-CLOSING COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.1. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.2. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.3. Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.4. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.5. Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1. Post-Closing Covenants of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.1. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.2. Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.3. Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.4. Payment of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.6. Employee Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1.7. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.1.8. Bulk Transfer Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.1.9. Corporate Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.1.10. 1997 EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.1.11. Independent Accountant Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.2 Post-Closing Covenants of StaffMark and SAC . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.2.1. Employees and Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.2.2. Employee Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.2.3. 1997 EBIT Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.2.4. Independent Accountants' Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.2.5. Obligations Concerning Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI. CONDITIONS TO THE BUYERS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.1. Representations and Warranties True; Satisfaction of Covenants . . . . . . . . . . . . . . . . 19
SECTION 6.2. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.3. No Obstructive Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.4. Opinion of Counsel to the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.5. Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.6 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.7. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.8. Indemnification Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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SECTION 6.9. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.10. Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.11. Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.12. Purchase Price Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII. CONDITIONS TO THE CORPORATION'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.1. Representations and Warranties True; Satisfaction of Covenants . . . . . . . . . . . . . . . . 20
SECTION 7.2. Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.3. No Obstructive Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.4. Indemnification Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.5. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.6. Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.7. Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.8. Opinion of Counsel to Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII. THE CLOSING, AND CERTAIN CLOSING DELIVERIES AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.1. Time and Place of the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.2. Survival of Representations, Warranties and Covenants. . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.3. Other Termination Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 10.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.4. Modifications and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.5. Assignment/Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.6. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.9. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.10. Headings and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.11. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.12. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.13. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 10.15. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 10.16. Telecopy Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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INDEX TO EXHIBITS
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EXHIBIT A -- Form of the Bill of Sale and Assignment
EXHIBIT B -- Form of the Assumption Agreement
EXHIBIT C -- Form of the Indemnification Agreement
EXHIBIT D -- Form of the Escrow Agreement
EXHIBIT E -- Form of the Noncompetition Agreement
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INDEX TO SCHEDULES
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Schedule 1.1 -- The Transferred Assets
Schedule 1.1(d) -- List of Employees with Contracts
Schedule 1.1.2 -- The Excluded Assets
Schedule 1.5 -- Allocation of Consideration for the Transferred Assets
Schedule 2.4 -- No Violation; Consents
Schedule 2.7 -- Financial Statements
Schedule 2.7.1 -- Change in Financial Statements
Schedule 2.8 -- Absence of Undisclosed Liabilities
Schedule 2.9 -- Labor and Employee Relations
Schedule 2.11 -- Powers of Attorney; Absence of Limitations on Competition; Guarantees
Schedule 2.12 -- Significant Customers
Schedule 2.14 -- No Adverse Change
Schedule 2.16 -- Compliance with Law
Schedule 2.17 -- Employee Benefits
Schedule 2.17.1 -- Employee Compensation
Schedule 2.18 -- Claims on Fixed Assets
Schedule 2.19 -- Insurance
Schedule 2.10 -- Outstanding Contracts
Schedule 2.20.1 -- Notice of Contract Defaults
Schedule 2.20.2 -- Termination of Contracts
Schedule 2.20.3 -- Limitations on Contracts
Schedule 2.21 -- Leases
Schedule 2.22 -- Intellectual Properties
Schedule 2.23 -- Proprietary Information of Third Parties
Schedule 2.24 -- Transactions with Affiliates
Schedule 2.26 -- Litigation
Schedule 2.27 -- Environmental Matters
Schedule 2.30 -- Accounts Receivable
Schedule 10.1 -- Historical Income Statement and Forecasted Income Statement of Business for the eight (8)
month period ended August 31, 1997 and the forecasted four (4) month period ended
December 31, 1997
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into this
15th day of September 1997, by and among StaffMark, Inc., a Delaware
corporation ("StaffMark"), StaffMark Acquisition Corporation Twelve, a Delaware
corporation and wholly-owned subsidiary of StaffMark ("SAC" and collectively
with StaffMark sometimes collectively referred to herein as the "Buyers"), and
H. Allen & Company, Inc., an Illinois corporation (the "Corporation").
StaffMark, SAC and the Corporation are sometimes referred to herein
collectively as the "Parties" and sometimes each entity is referred to herein
separately as a "Party."
RECITALS
WHEREAS, the Corporation is engaged in the business of providing
technical staffing services for a wide range of information services functions
including, but not limited to, PC troubleshooting, installation and
configuration, LAN support, administration consulting, help desk support, and
development in various programming areas (the "Business"); and
WHEREAS, the Corporation desires to sell substantially all of the
assets of the Business to StaffMark, and StaffMark desires to purchase, through
SAC, the assets from the Corporation, all pursuant to this Agreement as
hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
SECTION 1.1. Transfer of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing the Corporation shall
transfer to SAC, free and clear of all claims, charges, pledges, liens,
contracts, rights, options, security interests, mortgages, encumbrances and
restrictions whatsoever (collectively, "Claims"), all of the assets, properties
and rights owned by the Corporation or in which the Corporation has any right
or interest of every type and description, real, personal and mixed, tangible
and intangible, confirmed or contingent (other than the Excluded Assets)
relating to the Business, including, without limitation the assets listed on
Schedule 1.1 and the following:
(a) Generally. Cash (other than the amount of cash reflected
on Schedule 1.1.2), accounts receivable, business agreements, property,
equipment, inventory, goodwill, supplier lists, customer lists, prepaid
insurance, licenses and permits, processes, service marks, trade
secrets, computers and computer equipment, files and other records
(other than corporate minute books), systems and processes, security
deposits, memberships, contracts, leasehold interests, leasehold and
other improvements, machines, machinery, furniture, fixtures, supplies,
all rights and claims under insurance policies and other contracts of
whatever nature and all causes of action, claims and demands by the
Corporation relating to the Transferred Assets (but not including any
causes of action, claims and demands relating to the Excluded Assets);
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(b) Name and Related Items. The name "H. Allen & Company,
Inc." and any variants thereof, all copyrights, copyright applications,
trade names, trademarks, service marks and logos (whether or not
registered) related thereto (but in no event shall include the name "H.
Allen Consulting & Co."); the phone number (630) 769-4040, and the
facsimile number (630) 769-4043 and other phone and facsimile numbers
for the Business existing as of the Closing;
(c) Agreements and Contracts. All orders, bids, quotations,
contracts, and other agreements with or related to past, present and
prospective clients of the Business and all amendments, updates,
customer files, lists, records, studies, surveys, reports,
correspondence and other similar materials related to the foregoing;
(d) Employee Agreements and Information. All employment,
nondisclosure, noncompetition and nonsolicitation agreements between
the Corporation and its employees and contracts and all rights
thereunder and copies of the information for each employee of the
Corporation (collectively, the "Employee Information"); provided,
however, that the transfer of all rights relating to such employees
shall be made only upon termination of the Employee Leasing Agreement,
if executed between the Parties. Schedule 1.1(d) includes a list of all
employees of the Corporation with any such written contracts.
(e) Records. All books, records, lists and reports, including
but not limited to, resumes and resume files, related to the Business
whether or not currently being utilized by such Business (collectively,
the "Records");
(f) Electronic Data. All rights of the Corporation in all
electronic information and data related to the Business wherever
located (collectively, the "Electronic Data"); and
(g) Additional Information. All sales, advertising and
promotional literature and materials, advertising and advertising copy
and other similar materials on which solely appears the name and such
other materials which are currently in the possession of the
stockholder of the Corporation and/or the employees of the Corporation
on which appear the name "H. Allen & Company, Inc." or any form thereof
(but in no event shall include the name "H. Allen Consulting & Co.").
All of the foregoing assets shall be referred to collectively as the
"Transferred Assets."
SECTION 1.1.1. Instruments of Conveyance and Transfer.
(a) The Corporation shall transfer the Transferred Assets to
SAC pursuant to a Bill of Sale and Assignment in substantially the form
of Exhibit A attached hereto (the "Assignment Agreement").
(b) At any time and from time to time after the Closing Date,
at the request of the Buyers, without further consideration, the
Corporation shall execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to
SAC and to confirm SAC's title to the Transferred Assets.
SECTION 1.1.2. Excluded Assets. Notwithstanding any provision of
this Agreement to the contrary, there shall be excluded from the Transferred
Assets and retained by the Corporation the assets listed on Schedule 1.1.2
hereto (the "Excluded Assets").
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SECTION 1.2. Consideration for the Transferred Assets. In consideration
for the transfer of the Transferred Assets, upon the terms and subject to the
conditions set forth in this Agreement, the Buyers shall pay to the Corporation
an aggregate purchase price (the "Purchase Price") as follows:
(a) At the Closing, StaffMark shall deliver to the
Corporation: (i) the shares of StaffMark common stock, $.01 par value
(the "StaffMark Common Stock") set forth in the certificate delivered
by the Corporation herewith (the "Purchase Price Certificate"), based
on the Agreed Value (collectively, the "Shares"); and (ii) the amount
of cash set forth in the Purchase Price Certificate, said cash to be
payable in immediately available funds by certified check or wire
transfer; and
(b) At the Closing, StaffMark shall deposit into escrow with
Mercantile Bank National Association, St. Louis, Missouri, an amount
of cash equal to 10% of the Purchase Price, as further set forth in the
Purchase Price Certificate.
SECTION 1.2.1 Agreed Value. For purposes of this Agreement, the
term "Agreed Value" shall mean the five day average for the last reported sale
price of the StaffMark Common Stock as reported on the Nasdaq Stock Market's
National Market ending on the last business day immediately preceding the date
of this Agreement as reported in The Wall Street Journal.
SECTION 1.3. Assumption of Liabilities. The only obligations and
liabilities to be assumed by SAC in connection with its acquisition of the
Transferred Assets are the obligations reflected in or on an exhibit to the
Assumption Agreement (the "Assumed Liabilities"), the form of which is attached
hereto as Exhibit B (the "Assumption Agreement"). Except for the Assumed
Liabilities, the Buyers shall not assume or be responsible for any other
liabilities or obligations which relate in any manner to the operation of the
Business prior to the Closing Date.
SECTION 1.4. Transfer Taxes. Buyers and the Corporation acknowledge and
agree that for any sales, use, transfer or other similar tax purposes, the
Purchase Price is deemed to have been paid by Buyers to the Corporation
pursuant to this Agreement and includes and is inclusive of any and all sales,
use, transfer or other similar tax imposed as a result of the consummation of
the transactions contemplated by this Agreement. The Corporation hereby agrees
to pay and discharge, and to indemnify Buyers against, and protect, save and
hold Buyers harmless from, any liability, obligation, claim, assessment or
deficiency (whether or not ultimately successful) for any and all sales, use,
transfer or other similar taxes (and any and all interest, penalties, additions
to tax and fines thereon or related thereto) resulting or arising from or
incurred in connection with the consummation of the transactions contemplated
by this Agreement.
SECTION 1.5. Allocation of Purchase Price. The consideration paid and
the liabilities assumed by Buyers pursuant to Sections 1.2 and 1.3 above shall
be allocated among the Transferred Assets purchased hereunder in accordance
with Section 1060 of the Code and as set forth in Schedule 1.5 attached hereto.
The Corporation and Buyers each hereby covenant and agree that none of them
will take a position on any income tax return, before any governmental agency,
or in any judicial proceeding that is in any way inconsistent with the
allocation set forth on Schedule 1.5. The parties agree to make all filings
required under Section 1060 of the Code consistent with the allocation of such
consideration as set forth on Schedule 1.5. Each party shall duly and timely
file Form 8594 with its appropriate tax returns.
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SECTION 1.6. Procedures for Assets Not Transferable. Following the
Closing, the Corporation and the Buyers shall mutually cooperate and use their
reasonable efforts to obtain any consents not previously obtained as soon as
possible after the Closing Date.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF
THE CORPORATION
As an inducement to the Buyers to enter into this Agreement and to
consummate the transactions contemplated hereby, the Corporation represents and
warrants to Buyers as follows:
SECTION 2.1. Organization and Qualification. The Corporation is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois. The Corporation is not qualified or otherwise
authorized to transact business as a foreign corporation in any other
jurisdiction. The Corporation has made available to the Buyers complete and
correct copies of its Articles of Incorporation and its By-laws as currently in
effect.
SECTION 2.2. Corporate Power and Authority. The Corporation has the
corporate power and authority to own and hold its properties and to carry on
its business as now conducted, including the right to use the name "H. Allen &
Company, Inc.," and any fictitious names currently being used in the geographic
area presently served by it. The Corporation: (a) has the full power and
authority to execute, deliver and perform this Agreement and each of the other
documents and instruments contemplated hereby (such other documents and
instruments contemplated hereby shall constitute the "Documents") and to
consummate the transactions contemplated hereby and thereby; and (b) this
Agreement has been duly and validly executed and delivered by the Corporation
and constitutes a valid and binding obligation of the Corporation, enforceable
against the Corporation in accordance with its terms and each of the Documents,
when executed and delivered by the Corporation, will have been duly and validly
executed and delivered by the Corporation and will constitute a valid and
binding obligation of the Corporation, enforceable against the Corporation in
accordance with its terms.
SECTION 2.3. Shares of the Corporation. The Corporation has authorized
capitalization consisting of 50,000 shares of common stock, no par value, of
which 1,000 shares are issued and outstanding and no shares are held as
treasury stock. All shares have been duly authorized and validly issued and are
fully paid and nonassessable. None of the shares have been issued in violation
of any preemptive right. The Corporation has no other equity securities or
other evidence of ownership outstanding other than the shares possessed by the
Corporation's current stockholder. There are no outstanding subscriptions,
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character providing for the
purchase, issuance, transfer or sale of any of the equity securities of the
Corporation or other evidence of ownership in the Corporation. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Corporation. There are no
voting trusts, proxies or other agreements or understandings with respect to
the voting capital stock of the Corporation.
SECTION 2.4. No Violation; Consents. Except as set forth on Schedule
2.4, neither the execution and delivery of this Agreement or the Documents, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement or the Documents in compliance with the terms and
conditions hereof and thereof by the Corporation will: (i) violate, conflict
with or result in any breach of the Articles of Incorporation or Bylaws of the
Corporation, or any trust agreement, judgment, decree, injunction, order, writ,
statute, rule or regulation applicable to the Corporation; (ii) violate,
conflict with or result in a breach, default or termination (or give rise to
any right of termination, cancellation or acceleration) of the maturity of any
payment date of any of the obligations of the Corporation under any law,
statute, rule, regulation or any
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judgment, decree, order, governmental permit, license or order applicable to
the Corporation or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, Contract or other instrument or obligation related to
the Corporation or to the Corporation's ability to consummate the transactions
contemplated hereby or thereby, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and provided to the Buyers; (iii) result
in the creation of any Claims upon the Transferred Assets of the Corporation;
or (iv) require the consent, waiver, authorization or approval of any federal,
state or local government or governmental department, agency, board,
commission, bureau, instrumentality, or public or self regulatory body or
authority, or of any other Person, entity or organization.
SECTION 2.5. Subsidiaries and Investments. The Corporation has no
subsidiaries and does not own, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any other corporation,
partnership, association, trust, joint venture or other entity.
SECTION 2.6. Books and Records. The minute books of the Corporation,
which have been and will be made available to the Buyers and their
representatives, contain accurate records of all meetings of and actions or
written consents by the directors and stockholders of the Corporation set forth
in such minute books. The Corporation does not have any of its records,
systems, controls, data or information recorded, stored, maintained, operated
or otherwise wholly or partly dependent upon or held by any means (including
electronic, mechanical or photographic process whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Corporation. The Employee
Information, the Records, and the Electronic Records are true and correct and
substantially reflect the operations of the Business and have been maintained
consistent with the past practices of the Corporation.
SECTION 2.7. Financial Statements. Schedule 2.7 contains the unaudited
balance sheet of the Corporation as of December 31, 1996 (the "Most Recent
Fiscal Year End") and the related statements of income and expenses for the
fiscal year then ended, and the unaudited balance sheet of the Corporation (the
"Balance Sheet") as of July 31, 1997 (the "Balance Sheet Date") and the related
statements of income and the expenses for the seven months then ended. All such
financial statements (the "Financial Statements") have been prepared with a
view to presenting statements of the assets and liabilities and the operations
of the Business on a consistent basis and were prepared from the books and
records of the Corporation. The Financial Statements fairly present the
financial position of the Corporation as of the dates thereof and the results
of its operations for the periods ended on the dates thereof. Since the Balance
Sheet Date, except as set forth on Schedule 2.7.1: (i) there has been no
material change in the assets, liabilities or financial condition of the
business of the Corporation from that reflected in the Balance Sheet outside
the ordinary course of business; and (ii) none of the business, financial
condition, operations, property or affairs of the Corporation has been
materially adversely affected by any occurrence or development, individually or
in the aggregate, whether or not insured against. The Corporation has disclosed
to the Buyers all material facts relating to the preparation of the Financial
Statements.
SECTION 2.8. Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically
reflected or reserved against in its Balance Sheet or except as set
forth on Schedule 2.8, the Corporation has no liabilities or
obligations of any nature whatsoever due or to become due, accrued,
absolute, contingent or otherwise, except for liabilities and
obligations incurred since the date thereof in the Ordinary Course of
Business.
(b) The Corporation maintains an adequate worker's
compensation reserve on the Balance Sheet or has adequate coverage
under a full-premium policy and represents and warrants there is no
unrecorded
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liability for which the Buyers will be liable. All referral fees and
commissions due to employees for all periods ending prior to the
Closing Date have been properly paid or accrued on the Balance Sheet.
(c) The Corporation is not bound by any agreement, or subject
to any charter or other corporate restriction or any legal requirement,
which has, or in the future can reasonably be expected to have, a
material adverse effect on the Transferred Assets.
SECTION 2.9. Labor and Employee Relations.
(a) Schedule 2.9 sets forth a list of each employment or
collective bargaining agreement to which the Corporation is a party and
any other employment or collective bargaining agreement which pertains
to employees of the Corporation.
(b) No labor organization or group of employees of the
Corporation has made a pending demand for recognition or certification,
and there are no representation proceedings presently pending or
threatened (in writing to the Corporation) with the National Labor
Relations Board or any other federal, state, or other governmental
agency or authority involving employees of the Corporation. There are
no other organizing activities involving the Corporation presently
being conducted or threatened (in writing to the Corporation) by any
labor organization or group of employees of the Corporation.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
labor disputes or material grievances pending or threatened (in writing
to the Corporation) against the Corporation, and there have been no
actual or threatened (in writing to the Corporation) material labor
disputes or work stoppages within the last three (3) years. There are
no unfair labor practice charges or complaints pending or threatened
(in writing to the Corporation) by or on behalf of any employee or
group of employees of the Corporation.
(d) There are no complaints, charges or claims pending or,
threatened (in writing to the Corporation) against the Corporation by
any federal, state or other governmental agency or authority based on,
arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Corporation of any
individual.
(e) The Corporation has been and is in substantial compliance
with all laws, regulations and orders relating to the employment of the
employees, including but not limited to all such laws, regulations and
orders relating to wages, hours, the National Labor Relations Act, as
amended, 29 U.S.C. Section 151 et. seq., and any comparable state or
local laws or regulations, equal employment opportunity discrimination
laws or regulations, civil rights laws or regulations, safety and
health laws or regulations, workers' compensation laws or regulations
and the collection and payment of withholding and/or social security
taxes.
SECTION 2.10. Real Property. The Corporation owns no real
property.
SECTION 2.11. Powers of Attorney; Absence of Limitations on
Competition; Guarantees. Except as set forth in Schedule 2.11: (i) no power of
attorney or similar authorization given by the Corporation presently is in
effect or outstanding as to any of the Transferred Assets; (ii) no contract or
agreement to which the Corporation is a party or is bound or to which the
Corporation's properties or assets is subject limits the freedom of the
Corporation to compete in any line of business or with any Person; and (iii)
the Corporation is not a party to or bound by any guarantee of any debt or
obligation of any other Person which relates to the Transferred Assets.
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SECTION 2.12. Significant Customers. Set forth on Schedule 2.12
is a true and correct list of the Corporation's ten largest customers for the
year ended December 31, 1996 and the eight-month period ending August 31, 1997,
together with the amount of services attributable to such customers expressed
in dollars and as a percentage of total sales and services. Except as set forth
on Schedule 2.12, since the Balance Sheet Date none of the customers identified
on Schedule 2.12 has terminated, reduced, or threatened (in writing to the
Corporation) to terminate or reduce, its request for services of the
Corporation during the period covered by such schedule or prior to the Closing
Date.
SECTION 2.13. Governmental Approvals. No registration or filing
with, or consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Corporation of this Agreement.
SECTION 2.14. Absence of Certain Changes; Conduct of Business.
Except as set forth on Schedule 2.14, during the period from the Most Recent
Fiscal Year End to and including the date of this Agreement:
(a) The Corporation has not canceled any indebtedness owing to
it or any claims that it might have possessed, waived any material
rights of substantial value or sold, leased, encumbered, transferred,
or otherwise disposed of, or agreed to sell, lease, encumber, or
otherwise dispose of its assets or permitted any of its assets to be
subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind;
(b) The Corporation has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, except in the
Ordinary Course of Business;
(c) The Corporation has not made any changes in the types,
nature, composition or quality of the services of the Business and
there has not been any material adverse change in the sales, revenue or
net income of the Business;
(d) The Corporation has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases and licenses) that remains in effect on the date
hereof involving more than $10,000 or outside the Ordinary Course of
Business;
(e) No party (including the Corporation) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) to which the Corporation is a party or by which it is bound
involving more than $10,000 or outside the Ordinary Course of Business;
(f) The Corporation has not permitted any Claims to be imposed
upon any of its assets, tangible or intangible, outside the Ordinary
Course of Business;
(g) The Corporation has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$10,000 or outside the Ordinary Course of Business;
(h) The Corporation has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person;
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(i) The Corporation has not issued, or agreed to issue, any
note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000 or outside the Ordinary
Course of Business;
(j) The Corporation has not delayed or postponed the payment
of accounts payable or other liabilities outside the Ordinary Course of
Business;
(k) The Corporation has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $10,000 or outside the Ordinary Course of
Business;
(l) The Corporation has not granted any license or sublicense
of any rights under or with respect to any patents, trademarks or
copyrights owned by the Corporation;
(m) The Corporation has not accelerated collection of accounts
receivables through special inducements or outside the Ordinary Course
of Business;
(n) The Corporation has not issued, sold or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock;
(o) The Corporation has not declared, set aside, or paid any
dividend or made any distribution with respect to its stockholders
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(p) The Corporation has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(q) The Corporation has not made any loan to, or entered into
any other transaction with, any of its stockholders, directors,
officers, or employees outside the Ordinary Course of Business;
(r) The Corporation has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(s) The Corporation has not granted any increase in the base
compensation of any of its directors, officers, or employees other than
increases in compensation in the Ordinary Course of Business;
(t) The Corporation has not adopted, amended, modified or
terminated any bonus, profit sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, or employees (or taken any such action with respect to any
other employee of the corporation Benefit Plan);
(u) The Corporation has not made any other change in
employment terms for any of its directors, officers, or employees; or
(v) The Corporation has not agreed, whether or not in writing,
to do any of the foregoing.
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SECTION 2.15. Certain Practices. Neither the Corporation, nor any
of its officers, directors, stockholders, or employees have, directly or
indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic political activity; made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; made any false or fictitious entry on the books or
records of the Corporation or any subsidiary; made any unlawful bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment; or made any
unlawful bribe, kickback, or other payment of a similar or comparable nature to
any person or entity, private or public, regardless of form, whether in money,
business or to obtain special concessions, or to pay for favorable treatment
for business secured or for special concessions already obtained.
SECTION 2.16. Compliance with Law; Licenses and Permits. Except
as set forth on Schedule 2.16, the Corporation has substantially complied with
all laws, ordinances, legal requirements, rules, regulations and orders
applicable to the Corporation or its operations, properties, assets, products
and services. Except as set forth on Schedule 2.16, there is no existing law,
rule, regulation or order, whether federal, state, or local, which would
prohibit or restrict the Buyers from conducting the Business in the manner
heretofore conducted by the Corporation in any jurisdiction in which the
Business is now conducted. The Corporation possesses all franchises, permits,
licenses, certificates and consents required from any governmental or
regulatory authority in order for the Corporation to carry on its business as
currently conducted and to own and operate its properties and assets as now
owned and operated. All of such licenses and permits are in full force and
effect, and true and correct copies of any such licenses and permits are
included in Schedule 2.16 hereto.
SECTION 2.17. Employee Benefits.
(a) Set forth on Schedule 2.17 is a list of all pension,
profit sharing, retirement, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance, life insurance, fringe benefit,
welfare and other employee benefit plans, programs or arrangements
pursuant to which the Corporation provides (directly or indirectly,
individually or jointly through others) benefits or compensation to or
on behalf of employees or former employees of the Corporation, whether
formal or informal, whether or not written ("Employee Plan"). On
request by the Buyers, the Corporation shall furnish a copy of each
Employee Plan and a copy of any related materials. The Corporation will
maintain the benefits listed on Schedule 2.17 in full force and effect
through the Closing Date. The Corporation has never adopted, maintained
or contributed to any plan which is intended to be qualified under
Section 401(a) of the Code, including, but not limited to,
Multiemployer Plans, nor has the Corporation ever had any ERISA
affiliates as determined under Section 414 of the Code. Except as set
forth on Schedule 2.17, the Buyers shall not have any obligation or
Liability of any kind or nature for any compensation or benefits of any
kind or nature to the employees or consultants of the Corporation for
services rendered prior to the Closing Date. Schedule 2.17.1 hereto
sets forth a true and complete list of the names and current base
salary and any bonus or commission for the prior fiscal year paid by
Corporation to each corporate or administrative employee and each
consultant utilized in connection with the operation of the Business.
(b) Each Employee Plan covering any present or former employee
of the Corporation which is subject to the continuation health coverage
requirements of Section 4980B of the Code or Section 601 of ERISA or
any applicable state law has complied in all material respects with all
such requirements for continuation coverage. The Corporation is not
obligated to provide post-retirement medical benefits or any other
unfunded post-retirement welfare benefits to or on behalf of any
persons whatsoever (except
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the benefits pursuant to the continuation health coverage requirements
under Section 4980B of the Code, ERISA Section 601, or applicable state
law).
(c) Except as set forth on Schedule 2.17, there are no
actions, suits or claims pending (other than routine claims for
benefits) or threatened against any Employee Plan or the assets of any
Employee Plan.
(d) Each Employee Plan (and the related trust or funding
vehicle, if any) has been administered and maintained in material
compliance with its terms and with applicable law. No Employee Plan has
unfunded liabilities that as of the Closing Date are not accurately and
fully reflected on the Corporation's Balance Sheet.
(e) The execution or performance of the transactions
contemplated by this Agreement will not create, accelerate or increase
any obligations under the Employee Plans, including any obligation to
make any payment which would not be deductible as an excess golden
parachute payment under Section 280G of the Code.
(f) For purposes of this Section 2.17, the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended.
SECTION 2.18. Fixed Assets. Except as shown on Schedule 2.18, the
Corporation has good and marketable title to all of the Transferred Assets free
and clear of all claims, liens, mortgages, charges and encumbrances. All of the
Transferred Assets whether owned or leased, are adequate and usable for the
purposes for which they are currently used, are in good operating condition and
repair and have been properly maintained.
SECTION 2.19. Insurance. Schedule 2.19 lists the insurance
coverage carried by the Corporation, which insurance will remain in full force
and effect with respect to all events occurring prior to the Closing Date.
There have been no claims with respect to any of such insurance policies for
the past three policy years. Except as set forth on Schedule 2.19, the
Corporation: (i) has not failed to give any notice or present any claim under
any such policy or binder in due and timely fashion; (ii) has not received
notice of cancellation or nonrenewal of any such policy or binder; (iii) is not
aware of any threatened or proposed cancellation or nonrenewal of any such
policy or binder; (iv) has not received notice of any insurance premiums which
will be materially increased in the future; and (v) is not aware of any
insurance premiums which will be materially increased in the future. There are
no outstanding claims under any such policy which have gone unpaid for more
than 45 days, or as to which the insurer has disclaimed liability.
SECTION 2.20. Outstanding Contracts. Schedule 2.20 sets forth a
description of all existing contracts, agreements, personal property leases,
commitments, licenses and franchises, whether written or oral, relating to the
Corporation that require either payments to/or receipts of $10,000 in a
twelve-month period (collectively "Contracts"). The Corporation has delivered
or made available to the Buyers true, correct and complete copies of all of the
Contracts specified on Schedule 2.20 which are in writing, and such schedule
sets forth a complete description of all Contracts which are not in writing.
All of the Contracts are in full force and effect and enforceable in accordance
with their respective terms, except to the extent that the enforceability
thereof may be subject to or affected by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other laws relating to or
affecting the rights of creditors generally. Except as set forth on Schedule
2.20.1, the Corporation and, to its knowledge, each other party thereto have
materially performed all the obligations required to be performed by it, have
received no notice of default and are not in default (with due notice of lapse
of time or both) under any of the Contracts. The Corporation is not aware of
any breach by the other party to
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any of the Contracts to which the Corporation is a party. Except as set forth
on Schedule 2.20.2, none of the Contracts has been terminated and no written
notice has been given by any party thereto of any alleged default by any party
thereunder. Except as set forth on Schedule 2.20.3, there exists no actual or
threatened (in writing to the Corporation) termination, cancellation or
limitation of the business relationship of the Corporation by any party to any
of the Contracts.
SECTION 2.21. Outstanding Leases. Schedule 2.21 sets forth a
description of each agreement by which the Corporation leases each parcel of
real property (the "Leased Parcels") used in connection with the Business
(collectively, the "Leases"). The Corporation has delivered or made available
to the Buyers true, correct and complete copies of all of the Leases specified
on Schedule 2.21. All rents due under the Leases have been paid. Each of the
Leases is in full force and effect and enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be subject to
or affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the rights
of creditors generally. Except as set forth on Schedule 2.21, the Corporation
and, to its knowledge, each other party to the Leases have materially performed
all the obligations required to be performed by them, have received no notice
of default and are not in default (with due notice or lapse of time or both)
under any of the Leases. The Corporation is not aware of any breach by the
other party to any of the Leases. Except as set forth on Schedule 2.21, none of
the Leases has been terminated; and no written notice has been given by any
party thereto of any alleged default by any party thereunder. There exists no
actual or threatened (in writing to the Corporation) termination, cancellation,
or limitation of the business relationship of the Corporation with any party to
any of the Leases.
SECTION 2.22. Intellectual Properties. Schedule 2.22 contains an
accurate and complete list of any domestic and foreign letters patent, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademarks, copyrights, service marks, trademark registrations and
applications, service mark registrations and applications and copyright
registrations and applications, trade secrets or other confidential proprietary
information owned and used by the Corporation in the operation of the Business
(collectively, the "Intellectual Property"). Except as set forth on Schedule
2.22 and except for commercial software licensed for use on personal computers,
the Corporation owns the entire right, title and interest in and to the
Intellectual Property and each item constituting part of the Intellectual
Property has been, to the extent indicated in Schedule 2.22, duly registered
by, or filed with, as the case may be, the United States Patent and Trademark
office or such other government entities, domestic or foreign as are indicated
in Schedule 2.22 and such registrations or filings remain in full force and
effect. There are no pending or threatened (in writing to the Corporation)
proceedings or litigation or other adverse claims materially affecting the
Intellectual Property. There are no pending or threatened (in writing to the
Corporation) claims asserted against the Corporation for infringement of any
domestic patent, patent licenses and know-how licenses, trade names, trademark
registrations, common law trademarks, service marks, service mark
registrations, copyrights, copyright registrations, trade secrets or other
confidential proprietary information. To the Corporation's knowledge, no Person
is infringing the Intellectual Property.
SECTION 2.23. Proprietary Information of Third Parties. Except as
disclosed on Schedule 2.23, no third party has claimed or to the Corporation's
knowledge, has reason to claim that any Person employed by or consulting with
the Corporation ("Related Person") has (i) violated or may be violating any of
the terms or conditions of such person's employment, noncompetition or
nondisclosure agreement with such third party, (ii) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party, or (iii) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees. Except as disclosed on Schedule 2.23, no
Related Person has employed any trade secret or any information or
documentation proprietary to any former employer
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and, no Related Person has violated any confidential relationship which such
person may have had with any third party, in connection with the development,
or sale of any service of the Corporation.
SECTION 2.24. Transactions with Affiliates. Except as disclosed
on Schedule 2.24, no stockholder, director, or officer of the Corporation, or
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or any member of the family of any
such person, has a beneficial interest greater than 5% or is an officer,
director, trustee, partner or holder of any equity interest greater than 5%, is
a party to any transaction with the Corporation, including any contract,
agreement or other arrangement providing for the employment of, furnishing of
services by, rental of real or personal property from or otherwise requiring
payments or involving other obligations to any such person or firm.
SECTION 2.25. Taxes. All federal, state, local and foreign Tax
returns and Tax reports required to be filed by the Corporation will be filed
on or before the Closing Date with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed and
all amounts of tax shown as owing thereon have been paid. All Taxes which have
become due or payable or are required to be collected by the Corporation or are
otherwise attributable to any periods the due date of which ends on or before
the Closing Date and all interest and penalties thereon, if any, whether
disputed or not (excluding, however, interest and penalties on any tax arising
on certain Illinois Small Business Corporation Replacement Tax Returns filed
with the Department of Revenue for the State of Illinois), have been paid or
will be paid in full or adequately reflected on the Balance Sheet or the
Corporation's books and records on or prior to the Closing Date. All deposits
required by law to be made by the Corporation with respect to employees'
withholding taxes have been duly made, and as of the Closing Date all such
deposits due will have been made. The Corporation has delivered to the Buyers
true and complete copies of all of the Corporation's state and federal income
tax returns as filed with the appropriate governmental agencies for the tax
years ending December 31, 1996 and December 31, 1995, and all reports and
results of income tax audits, if any, related thereto. No examination of any
tax return of the Corporation is currently in progress. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any such tax return.
"Tax" or "Taxes" means all taxes, including any interest, penalties or
other additions to tax, which the Corporation is required to pay, withhold or
collect (including without limitation all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security taxes, welfare
taxes, sales and use taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, real and personal property taxes, assessments,
environmental taxes, transfer taxes, Pension Benefit Guaranty Corporation
premiums and other governmental charges, and other similar obligations).
SECTION 2.26. Litigation. Except as set forth on Schedule 2.26,
there is no (i) action, suit, claim, proceeding or investigation pending or
threatened (in writing to the Corporation) against or affecting the
Corporation, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding pending
relating to the Corporation or (iii) governmental inquiry pending or threatened
(in writing to the Corporation) against or involving the Corporation, and there
is no basis for any of the foregoing. There are no outstanding orders, writs,
judgments, injunctions or decrees served upon the Corporation by any court,
governmental agency or arbitration tribunal against the Corporation. The
Corporation is not in default with respect to any order, writ, injunction or
decree known to or served upon it from any court or of any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign. Except as disclosed on Schedule 2.26,
there is no action or suit by the Corporation pending or threatened against
others.
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SECTION 2.27. Environmental Matters. The Corporation and all
Leased Parcels, are in substantial compliance with all applicable laws, rules,
regulations, orders, ordinances, judgments and decrees of all governmental
authorities with respect to all environmental statutes, rules and regulations.
Except as set forth on Schedule 2.27, there are no past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or
plans of the Corporation, or the Corporation's predecessors either
collectively, individually or severally, which may interfere with or prevent
continued compliance with, or which may give rise to any common law or legal
liability or otherwise form the basis of any claim, action, suit, proceeding,
hearing, or investigation, based on or related to the disposal, storage,
handling, manufacture, processing, distribution, use, treatment or transport,
or the emission, discharge, release or threatened release into the environment,
of any Substance. As used in this Section 2.27, the term "Substance" or
"Substances" shall mean any pollutant, hazardous substance, hazardous material,
hazardous waste or toxic waste, as defined in any presently enacted federal,
state or local statute or any regulation that has been promulgated pursuant
thereto. No part of any of the Leased Parcels has been listed or proposed for
listing on the National Priorities List established by the United States
Environmental Protection Agency, or any other such list by any federal, state
or local authorities.
SECTION 2.28. Broker's or Finder's Fees; Break-Up or Termination
Fees. No agent, broker, Person or firm acting on behalf of the Corporation is,
or will be, entitled to any commission or broker's or finder's fees from the
Corporation or from any Person controlling, controlled by or under common
control with the Corporation in connection with any of the transactions
contemplated herein, other than to ABN AMRO Chicago Corporation whose fees and
expenses shall be payable by the Corporation. No Person shall be entitled to
any break-up fee, termination fee or any other fees or expenses relating
directly or indirectly to the termination or expiration of the Letter Agreement
for whatever reason.
SECTION 2.29. Protection of Creditors. The transfer to SAC by the
Corporation of the Transferred Assets does not and will not constitute a
fraudulent transfer or fraudulent conveyance under any applicable state or
federal law or regulation or under any similar laws relating to creditors'
rights generally. The Purchase Price constitutes fair and adequate
consideration for the Transferred Assets. The Corporation has not entered into
this agreement or made any transfer or incurred any obligations hereunder or in
connection herewith, with actual intent to disturb, hinder, delay or defraud
either present or future creditors or other persons.
SECTION 2.30. Accounts Receivable. Except as set forth on
Schedule 2.30, all accounts receivable of the Corporation that are reflected on
the Balance Sheet on the Balance Sheet Date or on the accounting records of the
Corporation as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Except as
set forth on Schedule 2.30, unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet or on the accounting records
of the Corporation as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a material adverse change in the composition of such Accounts
Receivable in terms of aging.) Subject to such reserves and except as set forth
on Schedule 2.30, each of the Accounts Receivable either has been or will be
collected in full, without any set-off, within one hundred twenty (120) days
after the day on which it first becomes due and payable. After such 120-day
period, the Buyers shall re-assign any uncollectible account to the Corporation
for collection and Buyers shall have the right to make a claim in accordance
with the Indemnification Agreement and the Escrow Agreement; however, the
Corporation shall not have a right to dispute such claim. There is no contest,
claim, or right of set-off, other than returns in the Ordinary Course of
Business, under any contract with any obligor of any Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
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SECTION 2.31. Securities Exemptions. The Shares constituting a
portion of the Purchase Price are being issued to the Corporation for its
account, for investment purposes only and other than with respect to the
possible distribution to the Corporation's stockholder and certain of its key
employees, the Corporation has no present intention of distributing, selling or
otherwise disposing of such Shares, in connection with a distribution within
the meaning of the Securities Act of 1933, as amended, (the "Securities Act")
and the rules and regulations thereunder. The Shares have not been registered
under the Securities Act or any state securities laws pursuant to exemptions
afforded by Section 4 of the Securities Act and the exemptions under the
applicable state securities laws. The Corporation has been afforded full and
complete access to all relevant financial and other information regarding
StaffMark.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYERS
As an inducement to the Corporation to enter into this Agreement and to
consummate the transactions contemplated hereby, each of the Buyers jointly and
severally represents and warrants to the Corporation:
SECTION 3.1. Organization. Each of StaffMark and SAC are companies duly
organized, validly existing and in good standing under the laws of the State of
Delaware and are duly qualified to transact business as a foreign corporation
in each jurisdiction where the conduct of its business requires each of them to
be so qualified.
SECTION 3.2. Corporate Power and Authority. Each Buyer has the full
power and authority to execute, deliver and perform this Agreement and each of
the Documents to which it is a party. The execution, delivery and performance
of the Agreement and the transactions contemplated thereby have been duly
authorized and approved by all necessary corporate action of each Buyer. This
Agreement constitutes the legal, valid and binding obligation of each Buyer
enforceable against such Buyer in accordance with its terms and each of the
Documents, when executed by any Buyer that is a party thereto, will constitute
a valid and binding obligation of such Buyer, enforceable against such Buyer in
accordance with its terms.
SECTION 3.3. Validity, Etc. Neither the execution and delivery by
either Buyer of this Agreement and any Documents to which such Buyer is a
party, nor the consummation by either Buyer of the transactions contemplated
hereby or thereby, nor the performance by either Buyer of this Agreement or the
Documents in compliance with the terms and conditions hereof and thereof will:
(i) violate, conflict with or result in any breach of the certificate of
incorporation or bylaws of either Buyer, or any trust agreement, judgment,
decree, injunction, order, writ, statute, rule or regulation applicable to
either Buyer, (ii) violate, conflict with or result in a breach, default or
termination (or give rise to any right of termination, cancellation or
acceleration) of the maturity of any payment date or any of the obligations of
either Buyer under any law, statute, rule, regulation or any judgment, decree,
order, governmental permit, license or order applicable to either Buyer or any
of the terms, conditions or provisions of any mortgage, indenture, note,
license, agreement or other instrument or obligation related to either Buyer or
to either Buyer's ability to consummate the transactions contemplated hereby or
thereby to which either Buyer is a party, except for such defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and except for any such default that
would not result in an adverse effect on its business or (iii) require the
consent, waiver, authorization or approval of any federal, state or local
government or governmental department, agency, board, commission, bureau,
instrumentality, or public or self-regulatory body or authority, or of any
other Person, entity or organization.
SECTION 3.4. The Shares. The Shares when delivered hereunder
will be duly authorized, validly issued, and fully paid and nonassessable and
will be free and clear of any Claims, except for any transfer restrictions
imposed by the state and federal securities laws. The Shares will be issued
pursuant to Section 4(2)
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of the Securities Act promulgated thereunder. Certificates representing the
Shares issued to the Corporation will contain a restrictive legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, DISTRIBUTED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF: (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION
THEREFROM; OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO STAFFMARK, INC.
TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.
SECTION 3.5. Governmental Approvals. No registration or filing with, or
consent or approval of or other action by, any federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Buyers of this Agreement.
ARTICLE IV. PRE-CLOSING COVENANTS AND AGREEMENTS
SECTION 4.1. Cooperation. Each of the parties hereto shall use its best
efforts in good faith to perform and fulfill all conditions and obligations to
be fulfilled or performed by it hereunder to the end that the transactions
contemplated hereby will be fully and timely consummated.
SECTION 4.2. Best Efforts. The Corporation, and the Buyers, shall use
commercially reasonable efforts to procure upon reasonable terms and
conditions, all consents and approvals, completion of all filings, all
registrations and certificates, and satisfaction of all other requirements
prescribed by law which are necessary for the consummation of the transactions
contemplated by this Agreement and SAC's ownership and operation of the
Business after the Closing Date. Prior to the Closing Date, the Corporation
will use commercially reasonable efforts to preserve its relationships with its
employees, customers, and others having business relationships with the
Corporation.
SECTION 4.3. Investigations. The Corporation shall give Buyers and
their respective employees, accountants, attorneys and other authorized
representatives full access during all reasonable times to all the premises,
properties, books and records, and shall furnish Buyers with such financial and
operating data, analyses and other information of any kind respecting the
Corporation's business and properties as Buyers shall from time to time
request. Any investigation shall be conducted in a manner which does not
unreasonably interfere with business operations of the Corporation.
SECTION 4.4. Distributions. Prior to the Closing, the Corporation shall
pay no dividends, distributions, consulting fees or management fees to the
stockholder(s) of the Corporation, except with respect to the Excluded Assets.
Prior to the Closing, the Corporation shall not increase management
compensation policies or plans, and shall conduct no transactions with, or
transfer anything of value, directly or indirectly, to the Corporation's
stockholders, except with respect to the Excluded Assets.
SECTION 4.5. Corporate Matters. During the period from the date of this
Agreement to the Closing, the Corporation will not: (i) amend its articles of
incorporation or bylaws; (ii) issue any shares of its capital stock; (iii)
issue or create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments under which any additional shares of its
capital stock of any class might be directly or indirectly authorized, issued
or transferred from treasury; (iv) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in Section 2.14
above; or (v) agree to do any of the acts listed above.
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ARTICLE V. POST-CLOSING COVENANTS
SECTION 5.1. Post-Closing Covenants of the Corporation.
SECTION 5.1.1. Tax Returns. The Corporation shall cause to be
prepared and filed, at its sole expense, on or before the Closing Date, all of
its required tax returns for all tax periods ending prior to the Closing Date.
The Corporation shall be responsible for the payment of, and will indemnify,
defend and hold the Buyers harmless against all taxes due or assessed which
relate to the operations of the Business for all periods up to and including
the Closing Date and for which the Corporation is liable. As soon as reasonably
practicable following the Closing Date, the Corporation shall cause to be filed
Illinois Small Business Corporation Replacement Tax Returns with the Department
of Revenue for the State of Illinois for all periods prior to the Closing Date.
The Corporation shall be responsible for the payment of such taxes and will
indemnify, defend and hold the Buyers harmless against all taxes, interest and
penalties due or assessed with respect to such taxes.
SECTION 5.1.2. Dissolution. Subsequent to the Closing, the
Corporation will not dissolve or otherwise terminate its existence for at least
eighteen (18) months following the Closing.
SECTION 5.1.3. Nondisclosure of Confidential Information. The
Corporation recognizes and acknowledges that it has and will have access to
certain confidential information of the Buyers (including, but not limited to,
lists of customers, and costs and financial information) that StaffMark
considers to be valuable, special and unique property of StaffMark. Following
the Closing, the Corporation agrees that it will not disclose, and that it will
use reasonable efforts to prevent disclosure by any other Person of, any such
confidential information to any Person, except to authorized representatives of
StaffMark. The Corporation recognizes and agrees that violation of any of the
agreements contained in this Section 5.3 will cause irreparable damage or
injury to StaffMark, the exact amount of which may be impossible to ascertain,
and that, for such reason, among others, StaffMark shall be entitled to seek an
injunction, restraining any further violation of such agreements. Such rights
to any injunction shall be in addition to, and not in limitation of, any other
rights and remedies StaffMark may have against the Corporation or its
stockholder.
SECTION 5.1.4. Payment of Liabilities. Following the Closing Date,
except for the Assumed Liabilities, the Corporation shall pay and satisfy in
full all of its other obligations and liabilities, of any nature whatsoever,
which accrue prior or subsequent to the Closing Date.
SECTION 5.1.5. Insurance. Following the Closing Date, the
Corporation shall, if requested by Buyers, assign to Buyers or its designated
affiliates the Corporation's unemployment insurance and worker's compensation
experience ratings and take such steps as Buyers shall reasonably request to
effect such assignment, if such assignment is permitted and does not result in
any cost, expense or penalty to the Corporation and is otherwise not
prejudicial to the Corporation.
SECTION 5.1.6. Employee Records. Following the Closing Date,
unless prohibited by law, the Corporation shall make available to Buyers all
personnel records, including without limitation names, Social Security numbers,
dates of hire by the Corporation, dates of birth, number of hours worked each
calendar year, and salary histories, for all the Corporation's employees. The
Corporation and Buyers shall also cooperate, both before and after the Closing
Date, in exchanging information, including pertinent employment records,
benefit
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information, salary and compensation records, financial statements and other
data, and in taking other action respecting the interests of the Corporation's
employees who become employees of Buyers at or shortly following the Closing
Date, and their respective beneficiaries and dependents, in each of the
employee benefit plans of the Corporation and any plans established by Buyers,
so as to secure an orderly and effective transition of the benefit arrangements
for such employees of the Corporation and their respective beneficiaries and
dependents.
SECTION 5.1.7. Intentionally Omitted.
SECTION 5.1.8. Bulk Transfer Compliance. Following the Closing
Date, the Corporation shall indemnify, defend and hold Buyers harmless from and
against any loss, liability, cost, expense or damage resulting from the
assertion of a claim made against the Transferred Assets or Buyers by any
creditor of the Corporation pursuant to any bulk sales statutes, or any other
applicable law related to bulk sales.
SECTION 5.1.9. Corporate Name. On the Closing Date or as soon as
practicable thereafter, the Corporation shall change its corporate name such
that the new name of the Corporation is not similar to the existing name and
otherwise is not likely to be confused with its present names so as to make the
Corporation's name available to Buyers. From and after the Closing,
Corporation shall not use the words making up its existing name (or any
existing trade names) or similar names in connection with any business.
Notwithstanding the terms of this Section 5.1.9, StaffMark agrees that an
affiliate of the corporation, H. Allen Consulting & Co., may continue to use
the designation "H. Allen Consulting & Co." after the Closing Date.
SECTION 5.1.10. 1997 EBIT. Following the Closing Date and for the
four (4) month period ended December 31, 1997, the 1997 EBIT with respect to
the Business will equal or exceed $671,846.
SECTION 5.1.11. Independent Accountant Expenses. In the event the
Independent Accountants (hereinafter defined) are retained to review the 1997
EBIT, the Corporation shall pay one-half ( 1/2) of the costs and expenses of
the Independent Accountants.
SECTION 5.2 Post-Closing Covenants of StaffMark and SAC.
SECTION 5.2.1. Employees and Consultants. Following the Closing
Date or the expiration of the Employee Leasing Agreement, if executed by the
Parties, the employees of the Corporation shall cease to be employees of
Corporation and, except as otherwise determined by SAC in its sole discretion,
shall become employees of SAC or an affiliate of Buyers on an employment at
will basis. Notwithstanding the foregoing, Buyers will have no liability to the
Corporation if for any reason (i) Buyers decide not to offer employment to any
of the Corporation's employees (other than employees subject to employment
agreements as required by this Agreement), (ii) any of the employees do not
accept SAC's offer of employment or (iii) any of the employees (other than
employees subject to the employment agreements) accept employment with SAC, but
such employment is terminated for any reason after the Closing Date.
SECTION 5.2.2. Employee Stock Options. Within thirty (30) days of
Closing, StaffMark shall grant employees of the Corporation, other than the
stockholder of the Corporation, options to purchase an aggregate of 20,000
shares of StaffMark Common Stock. Such options shall be granted pursuant to and
subject to the terms of the StaffMark, Inc. 1996 Stock Option Plan; provided,
however, that of such options, two employees of the Corporation, as designated
by StaffMark, will each receive options for at least 5,000 shares of StaffMark
Common Stock.
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SECTION 5.2.3. 1997 EBIT Procedures.
(a) Following the Closing Date until December 31, 1997, StaffMark will:
(i) maintain the separate books, records and financial statements with respect
to the Business on an unconsolidated basis; (ii) not alter the scope or type of
the Business in a manner that is inconsistent with the Business as it was
conducted prior to the Closing Date; (iii) not reduce the 1997 EBIT for any
corporate overhead of StaffMark or SAC allocated to the Business, if any; (iv)
neither allocate any goodwill amortization under GAAP as a result of the
transactions contemplated by this Agreement nor any depreciation expense under
GAAP for any step-up in basis arising from the transactions contemplated hereby
with respect to the 1997 EBIT; (v) not liquidate or dissolve the Business or
transfer the assets that constitute the Business except in the Ordinary Course
of Business; and (vi) provide adequate working capital to the Business.
(b) Following the Closing Date, but not later than forty-five (45) days
following December 31, 1997, StaffMark will provide the following items to the
Corporation: (i) a certificate reflecting the calculation of the 1997 EBIT;
(ii) a copy of the Revised Income Statement; and (iii) a notice from StaffMark
that either: (1) the Corporation is in breach of its post-closing covenant in
Section 5.1.10 and thus owes StaffMark the dollar amount of Adverse
Consequences equal to the difference of (x) $671,846 minus (y) the 1997 EBIT;
or (2) the Corporation does not owe StaffMark any amount with respect to its
post-closing covenant in Section 5.1.10 hereof because the 1997 EBIT equals or
exceeds $671,846.
(c) Until the date that is thirty (30) days following the receipt of
the notice referred to in subsection 5.2.3(b) above by the Corporation, the
Corporation if it disagrees with the 1997 EBIT, may request StaffMark to engage
Coopers & Lybrand LLP to perform a limited review of the Reviewed Income
Statement (the "Independent Accountants"). The 1997 EBIT presented by the
Independent Accountants based on its limited review shall be conclusively
binding upon StaffMark, SAC and the Corporation for purposes of ascertaining
whether the Corporation is in breach of its post-closing covenant is Section
5.1.10.
SECTION 5.2.4. Independent Accountants' Expenses. In the event the
Independent Accountants are retained to review the 1997 EBIT, StaffMark or SAC
shall pay one-half ( 1/2) of the costs and expenses of the Independent
Accountants.
SECTION 5.2.5. Obligations Concerning Employees. While the
Corporation will be responsible for all liabilities associated with the
employees which relate to the period prior to midnight on the Closing Date (the
"Employee Transfer Time"), Buyers will be responsible for all liabilities
associated with the employees of the Corporation which relate to the period
subsequent to the Employee Transfer Time. After the Closing Date, Buyers will
notify the relevant parties that Buyers will be responsible for expenses
associated with benefit plans for the employees of the Corporation. On the
Closing Date, the Corporation agrees to provide Buyers with the register for
the most recent payroll period which register shall contain a true and complete
list of the FICA wages and FICA withholdings as of the date of such register
related to compensation paid by the Corporation to the employees of the
Corporation prior to the Closing Date.
ARTICLE VI. CONDITIONS TO THE BUYERS' OBLIGATIONS
The obligation of the Buyers to consummate the transactions
contemplated hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions each of which may be waived (in writing) by
the Buyers in their sole discretion:
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SECTION 6.1. Representations and Warranties True; Satisfaction of
Covenants. All of the representations and warranties made by the Corporation in
Article II of this Agreement shall be true and correct in all material respects
on and as of the Closing Date as though such representations and warranties
were made on and as of the Closing Date, except to the extent such
representations and warranties are expressly made as of an earlier specified
date. The Corporation shall have performed and complied in all material
respects with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date. The President
of the Corporation shall deliver a certificate to the Buyers to such effect.
SECTION 6.2. Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license,
permit, Contract or agreement relating to the Business from terminating prior
to its scheduled termination as a result of the consummation of the
transactions contemplated hereby (which are specified on Schedule 2.4), shall
have been obtained.
SECTION 6.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any governmental authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 6.4. Opinion of Counsel to the Corporation. The Buyers shall
have received an opinion from counsel to the Corporation, dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyers.
SECTION 6.5. Closing Documents. The Corporation shall have delivered
all of the Schedules, resolutions, certificates, documents and instruments
required by this Agreement to be delivered by the Corporation.
SECTION 6.6 Due Diligence. Buyers shall have completed their due
diligence review of the Corporation and the Business, and the results of such
review shall have been satisfactory to Buyers.
SECTION 6.7. No Material Adverse Change. From the date of this
Agreement through the Closing Date, (i) there shall have been no material
adverse change in the assets, liabilities, or financial condition of the
business of the Corporation from that reflected in the Balance Sheet outside
the Ordinary Course of Business, and (ii) none of the business, financial
condition, operations, property, or affairs of the Corporation shall have been
materially adversely affected by any occurrence or development, individually or
in the aggregate, whether or not insured against.
SECTION 6.8. Indemnification Agreement. The Buyers shall have received
a counterpart executed copy of the "Indemnification Agreement" from the
Corporation and the Corporation's stockholder in substantially the form of
Exhibit C attached hereto.
SECTION 6.9. Escrow Agreement. The Buyers shall have received a
counterpart executed copy of the "Escrow Agreement" from the Corporation and
the Corporation's stockholder in substantially the form of Exhibit D attached
hereto.
SECTION 6.10. Employment Agreement. The Buyers shall have
received a counterpart executed copy of an employment agreement with Susan
Mravca satisfactory to Buyers (the "Employment Agreement").
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SECTION 6.11. Noncompetition Agreement. The Buyers shall have
received a counterpart executed copy of the "Noncompetition Agreement" in the
form of Exhibit E attached hereto from the Corporation's stockholder.
SECTION 6.12. Purchase Price Certificate. The Buyers shall have
received an executed Purchase Price Certificate.
ARTICLE VII. CONDITIONS TO THE CORPORATION'S OBLIGATIONS
The obligation of the Corporation to consummate the transactions
contemplated hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions, each of which may be waived by the
Corporation in writing in its sole discretion:
SECTION 7.1. Representations and Warranties True; Satisfaction of
Covenants. All of the representations and warranties made by Buyers in Article
III of this Agreement shall be true and correct in all material respects on and
as of the Closing Date as though such representations and warranties were made
on and as of the Closing Date, except to the extent such representations and
warranties are expressly made as of an earlier specified date. The Buyers shall
have performed and complied with all covenants and conditions in all material
respects required by this Agreement to be performed or complied with by Buyers
prior to or at the Closing Date. An executive officer of each Buyer shall
deliver a certificate to the Corporation to such effect.
SECTION 7.2. Closing Documents. The Buyers shall have delivered all of
the Schedules, resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 7.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any governmental authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 7.4. Indemnification Agreement. The Corporation shall have
received a counterpart executed copy of the Indemnification Agreement from each
of the Buyers.
SECTION 7.5. Escrow Agreement. The Corporation shall have received a
counterpart executed copy of the Escrow Agreement from each of the Buyers.
SECTION 7.6. Employment Agreement. The Corporation shall have received
a counterpart executed copy of the Employment Agreement from SAC.
SECTION 7.7. Noncompetition Agreement. The Corporation shall have
received a counterpart executed copy of the Noncompetition Agreement from each
of the Buyers.
SECTION 7.8. Opinion of Counsel to Buyers. The Corporation shall have
received an opinion from StaffMark's General Counsel, dated as of the Closing
Date, in form and substance reasonably satisfactory to the Corporation.
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ARTICLE VIII. THE CLOSING, AND CERTAIN CLOSING DELIVERIES
AND OTHER MATTERS
SECTION 8.1. Time and Place of the Closing. Upon the terms and subject
to the satisfaction or waiver of the conditions contained in this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, on September 15, 1997, or at such other place, date
and time as may be mutually agreed upon by the parties (the "Closing Date").
The transactions contemplated by this Agreement shall be effective for
accounting purposes as of 12:01 A.M. (CDT) on August 1, 1997. At the Closing:
(i) the Corporation will deliver to Buyers the various certificates,
instruments and documents referred to in Article VI and any other certificates
and documents reasonably requested by Buyers, (ii) Buyers will deliver the
various certificates, instruments and documents referred to in Article VII; and
(iii) Buyers will deliver to the Corporation and the escrow agent the
respective portions of the Purchase Price required to be paid at the Closing
pursuant to and in accordance with this Agreement.
SECTION 8.2. Survival of Representations, Warranties and Covenants. All
of the representations and warranties of the parties contained in this
Agreement shall survive for eighteen (18) months following the Closing Date;
except, that, the survivability periods as to the representations and
warranties in Sections 2.17, 2.25 and 2.27, respectively, shall survive for the
full period of the statute of limitations applicable to the matters described
in such sections. Certain covenants of the parties in this Agreement are
post-closing covenants and shall survive the Closing Date for the time periods
so indicated in each such section.
ARTICLE IX. TERMINATION
SECTION 9.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) Buyers and the Corporation may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) Buyers may terminate this Agreement at any time prior to
the Closing; (i) in the event the Corporation has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect; (ii) in the event that Buyers are not satisfied
with their business, legal, accounting, environmental, labor, employee
matters, operational or financial due diligence; (iii) if there is
discovered or should there occur any event or condition which could
reasonably be expected to have a material adverse effect on the
Corporation; or (iv) if the Closing shall not have occurred on or
before September 30, 1997;
(c) The Corporation may terminate this Agreement any time
prior to the Closing; (i) in the event Buyers have breached any
representation, warranty or covenant contained in this Agreement in any
material respect; (ii) if there is discovered or should there occur any
event or condition which could reasonably be expected to have a
material adverse effect on Buyers but such event shall not include any
effects or changes on the price of the StaffMark Common Stock; or (iii)
if the Closing shall not have occurred on or before September 30, 1997;
(d) Buyers may terminate this Agreement if a governmental
authority adopts, enters, enacts or issues a final and nonappealable
order, or adopts, enacts, enforces, or holds applicable to the
Agreement
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a law, or a suit, action, or proceeding is threatened (in writing) or
pending before a governmental authority, that directly or indirectly:
(A) declares this Agreement to be illegal; (B) permanently enjoins,
restrains or otherwise prohibits the acquisition of the Transferred
Assets by Buyers pursuant to this Agreement or the transactions
contemplated hereby; (C) prohibits the ownership or operation by Buyers
(or any of its affiliates) of all or a material portion of the
Transferred Assets; or (D) compels Buyers (or any of their Affiliates)
to segregate or dispose of all or a material portion of the Transferred
Assets; or
(e) The Corporation may terminate this Agreement if a
governmental authority adopts, enters, enacts or issues a final and
nonappealable order, or adopts, enacts, enforces or holds applicable to
this Agreement a law or a suit, action or proceeding is threatened (in
writing) or pending before a governmental authority that directly or
indirectly: (A) declares the Agreement to be illegal; or (B)
permanently enjoins, restrains, or otherwise prohibits this Agreement
or the transactions contemplated hereby.
Termination of this Agreement by any Party pursuant to clauses (b) or (c) above
will be valid only if a notice of termination, signed by or on behalf of the
Party electing the termination, is given to the other Party to this Agreement.
Termination of this Agreement in accordance with clause (a) above will be
effective as of the date specified in the Parties' written agreement of
termination. Termination of this Agreement in accordance with clauses (d) or
(e) above will be effective on the effective date of the law or order that
makes the Agreement illegal or permanently enjoins, restrains, or prohibits
consummation of the Agreement or ownership of the Transferred Assets.
SECTION 9.2. Effect of Termination. If this Agreement is terminated in
accordance with the provisions of Section 9.1, a party will not have any
further right, liability or obligation with respect to the other party.
SECTION 9.3. Other Termination Matters. The confidentiality provisions
contained in Section 5.7 of this Agreement shall survive termination pursuant
to Section 9.1 above for a period of one (1) year following any such
termination date.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. Definitions.
(a) The following terms have meanings set forth below:
"1997 EBIT" means the dollar amount equal to the earnings before
interest and taxes as reflected on the Reviewed Income Statement plus
(+) and/or minus (-) the adjustments of the type, character and nature
made to derive the Adjusted EBIT.
"Adjusted EBIT" means the earnings before interest and taxes of the
Business for the twelve (12) month period ended July 31, 1997, plus (+)
and minus (-) the adjustments reflected on Schedule 1 to the Purchase
Price Certificate.
"Adverse Consequences" means 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, including those incurred on any appeal,
related to any and all actions, suits,
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proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, special notices, records of
decision(s), orders, decrees and/or rulings.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employee Leasing Agreement" means that certain leasing agreement that
SAC and the Corporation may enter into (but are not required to so
enter into) covering employees of the Corporation for the first payroll
period of the Corporation ending after the Closing Date.
"GAAP" means generally accepted accounting principles used in the
United States of America.
"Letter Agreement" means that certain confidential agreement in the
form of a letter dated June 13, 1997 addressed to Susan Mravca and the
Corporation and accepted by the Corporation on June 16, 1997 by Susan
Mravca as President of the Corporation and Susan Mravca, individually,
which by its terms terminated on July 16, 1997.
"Liability" means any liability (whether known or unknown, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
mature or unmatured).
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Ordinary Course of Business" means the ordinary course of business of
the Corporation consistent with its past customs and practices
(including with respect to quantity and frequency, if applicable).
"Person" means an individual, a general partnership, a limited
partnership, a corporation, a limited liability company, a limited
liability partnership, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or a governmental
entity.
"Reviewed Income Statement" means the income statement for the Business
for the four (4) month period ended December 31, 1997, which income
statement shall be prepared on a basis consistent with the historical
income statement and the forecasted income statement of the Business
attached hereto as Schedule 10.1 which income statement shall be
subject to a limited review by StaffMark's independent accountants
and/or the Independent Accountants, if necessary, in accordance with
generally accepted audited standards.
(b) The following terms have the meanings defined for such terms
in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Accounts Receivable 2.30
Agreed Value 1.2.1
Agreement Preamble
Assignment Agreement 1.1.1
Assumed Liabilities 1.3
Assumption Agreement 1.3
Balance Sheet 2.7
Balance Sheet Date 2.7
Business Preamble
</TABLE>
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<TABLE>
<S> <C>
Claims 1.1
Closing 8.1
Closing Date 8.1
Contracts 2.20
Corporation Preamble
Documents 2.2
Escrow Agreement 6.9
Electronic Data 1.1(f)
Employee Information 1.1(d)
Employee Plan 2.17(a)
Employee Transfer Time 5.2.5
ERISA 2.17(f)
Excluded Assets 1.1.2
Financial Statements 2.7
Indemnification Agreement 6.8
Independent Accountants 5.2.3
Intellectual Property 2.22
Leased Parcels 2.21
Leases 2.21
Most Recent Fiscal Year End 2.7
Noncompetition Agreement 6.11
Parties Preamble
Party Preamble
Purchase Price 1.2
Purchase Price Certificate 1.2
Related Person 2.23
SAC Preamble
Securities Act 2.31
Shares 1.2(a)
StaffMark Preamble
StaffMark Common Stock 1.2(a)
Tax or Taxes 2.25
Transferred Assets 1.1
</TABLE>
SECTION 10.2. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by recognized overnight courier, (iii) made by telecopy or facsimile
transmission, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
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If to Buyers:
StaffMark, Inc.
302 East Millsap Road
Fayetteville, Arkansas 72703
Attn: Terry C. Bellora, Chief Financial Officer
Phone: (501) 973-6000
Fax No.: (501) 973-6019
With a copy to:
StaffMark, Inc.
302 East Millsap Road
Fayetteville, Arkansas 72703
Attn: Gordon Y. Allison, Executive
Vice President - General Counsel
Phone: (501) 973-6057
Fax No.: (501) 973-6019
If to the Corporation:
Susan Mravca
President
H. Allen & Company, Inc.
144 Branding, Suite 110
Downers Grove, Illinois 60515
Phone: (630) 769-4045
Fax: (630) 323-7404
With a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: Jean Marie Pechette
Phone: (312) 853-7000
Fax: (312) 853-7036
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof
to the receiving Party at the address of such Party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, (iii) if made by telecopy or
facsimile transmission, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, or (iv) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
sent. The address of any party herein may be changed at any time by written
notice to the other Party given in accordance with this Section 10.2.
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SECTION 10.3. Entire Agreement. This Agreement and the Documents
embody the entire agreement and understanding between the Parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter hereof.
SECTION 10.4. Modifications and Amendments. The terms and
provisions of this Agreement may be modified or amended only by written
agreement executed by all Parties hereto.
SECTION 10.5. Assignment/Binding Effect. Neither this Agreement,
nor any right or obligation hereunder, may be assigned by any of the Parties
hereto without the prior written consent of the other Parties; provided,
however, Buyers may assign their rights (but not their respective obligations)
hereunder to a wholly-owned subsidiary formed for the purpose of owning and
operating the Business. This Agreement shall be binding upon, and inure to the
benefit of, the representatives, successors and permitted assigns.
SECTION 10.6. Parties in Interest. 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. Nothing
in this Agreement shall be construed to create any rights or obligations except
among the Parties hereto, and no Person shall be regarded as a third-party
beneficiary of this Agreement.
SECTION 10.7. Governing Law. This Agreement and the rights and
obligations of the Parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of Illinois.
SECTION 10.8. Severability. In the event that any tribunal of
competent jurisdiction shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or unenforceable in
any respect, then such provision shall be deemed limited to the extent that
such tribunal determines it enforceable, and as so limited shall remain in full
force and effect. In the event that such tribunal shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions
of this Agreement shall nevertheless remain in full force and effect.
SECTION 10.9. Interpretation. The Parties hereto acknowledge and
agree that: (i) the rule of construction to the effect that any ambiguities are
resolved against the drafting party shall not be employed in the interpretation
of this Agreement, and (ii) the terms and provisions of this Agreement shall be
construed fairly as to all Parties hereto and not in favor of or against any
party, regardless of which Party was generally responsible for the preparation
of this Agreement.
SECTION 10.10. Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of reference
only and shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.11. Expenses. Each Party shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such Party) incurred in connection with this Agreement and
the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
SECTION 10.12. Gender. All pronouns and any variation thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or entity or the context may require.
SECTION 10.13. Publicity. Except by the mutual agreement between
the Corporation and StaffMark, no Party shall issue any press release or
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement except as may be required by law,
rule or regulation.
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SECTION 10.14. Counterparts. This Agreement may be executed in one
or more counterparts, and by different Parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 10.15. Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
SECTION 10.16. Telecopy Execution and Delivery. A facsimile
telecopy or other reproduction of this Agreement may be executed by one or more
parties hereto, and an executed copy of this Agreement may be delivered by one
or more Parties hereto by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto, all
parties hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction thereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Buyers and the Corporation have each caused
this Agreement to be executed by their respective duly authorized officers all
as of the day and year first above written.
BUYERS
STAFFMARK, INC.
By: /s/ ROBERT H. JANES III
---------------------------------------
Robert H. Janes III
Executive Vice President
STAFFMARK ACQUISITION CORPORATION TWELVE
By: /s/ ROBERT H. JANES III
---------------------------------------
Robert H. Janes III, Vice President
THE CORPORATION
H. ALLEN & COMPANY, INC.
By: /s/ SUSAN MRAVCA
---------------------------------------
Susan Mravca, President
28
