<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): . . . . . . . . March 18, 1997
STAFFMARK, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20971 71-0788538
(State or 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
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On March 18, 1997, StaffMark, Inc. (the "Company") completed the
purchase of substantially all of the assets of Flexible Personnel, Inc.
("Flexible"), H.R. America, Inc. ("HR America"), and Great Lakes Search
Associates, Inc. ("Great Lakes"), each an Indiana corporation (collectively,
the "Acquired Businesses"). Flexible and Great Lakes were acquired through the
Company's wholly-owned subsidiary, StaffMark Acquisition Corporation Two, a
Delaware corporation. HR America was acquired through the Company's wholly-
owned subsidiary, StaffMark Acquisition Corporation Three, a Delaware
corporation. Flexible provides temporary and direct placements in the light
industrial, clerical, professional, and technical industries. Great Lakes
provides contingency and retainer search services. HR America is a Professional
Employer Organization. The Acquired Businesses are headquartered in Fort
Wayne, Indiana.
The assets purchased primarily consist of cash, accounts receivable,
general corporate assets, trade marks, trade names, customer contracts and
related information, and employee agreements. In addition, the Company assumed
certain liabilities of the Acquired Businesses related to the assets. The
total consideration paid for the assets was $10 million, including $7.5 million
in cash and 183,824 shares of common stock of the Company, plus an additional
amount based upon 1997 earnings of the Acquired Businesses. The purchase price
for the Acquired Businesses was determined as a result of direct negotiations
with the Acquired Businesses, and the funds used in the acquisition were
proceeds from the Company's initial public offering of common stock.
Item 7. Financial Statements and Exhibits
(a) It is impracticable to provide the required financial statements
for the businesses acquired by the registrant. The registrant will file
the required financial statements for such acquired business within 60
days of the date this Form 8-K is due.
(b) It is impracticable to provide the required pro forma financial
information for the businesses acquired by the registrant. The
registrant will file the required pro forma financial information for
such acquired business within 60 days of the date this Form 8-K is due.
(c) Exhibits. The following exhibits are filed with this Form 8-K:
2.1 Asset Purchase Agreement, dated March 17, 1997, among
StaffMark, Inc., StaffMark Acquisition Corporation Two,
StaffMark Acquisition Corporation Three, and Flexible
Personnel, Inc, Great Lakes Search Associates, Inc., H.R.
America, Inc., Douglas H. Curtis, Jean A. Curtis and
Robert P. Curtis/1/
99.1 Press Release dated March 18, 1997.
/1/ The Company will furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
<PAGE> 3
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)
Date: April 1, 1997 By: /s/ Terry C. Bellora
- ------------------ ----------------------------------
Terry C. Bellora
Chief Financial Officer
2
<PAGE> 4
EXHIBIT INDEX
2.1 Asset Purchase Agreement, dated March 17, 1997, among StaffMark,
Inc., StaffMark Acquisition Corporation Two, StaffMark
Acquisition Corporation Three, and Flexible Personnel, Inc, Great
Lakes Search Associates, Inc., H.R. America, Inc., Douglas H.
Curtis, Jean A. Curtis and Robert P. Curtis/1/
99.1 Press Release dated March 18, 1997.
/1/ The Company will furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
3
<PAGE> 1
EXHIBIT 2.1
================================================================================
ASSET PURCHASE AGREEMENT
among
STAFFMARK, INC.,
STAFFMARK ACQUISITION CORPORATION TWO,
STAFFMARK ACQUISITION CORPORATION THREE
and
FLEXIBLE PERSONNEL, INC.,
GREAT LAKES SEARCH ASSOCIATES, INC.,
H.R. AMERICA, INC.,
DOUGLAS H. CURTIS, JEAN A. CURTIS and ROBERT P. CURTIS
* * * * * * * * * * * * * *
Closing Date: March 17, 1997
Effective Date: March 5, 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 . . . . . . . . . . . . . . . . . . . 3
SECTION 1.2. Consideration for the Transferred Assets . . . . . . 3
SECTION 1.3. Assumption of Liabilities . . . . . . . . . . . . . . 3
SECTION 1.4. Allocation of Purchase Price . . . . . . . . . . . . 4
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . 4
SECTION 2.1. Organization and Qualification . . . . . . . . . . . 4
SECTION 2.2. Corporate Power and Authority . . . . . . . . . . . . 4
SECTION 2.3. No Violation; Consents . . . . . . . . . . . . . . . 4
SECTION 2.4. Subsidiaries and Investments . . . . . . . . . . . . 5
SECTION 2.5. Books and Records . . . . . . . . . . . . . . . . . . 5
SECTION 2.6. Financial Statements . . . . . . . . . . . . . . . . 5
SECTION 2.7. Absence of Undisclosed Liabilities . . . . . . . . . 6
SECTION 2.8. Labor and Employee Relations . . . . . . . . . . . . 6
SECTION 2.9. Real Property . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.10 Powers of Attorney; Absence of Limitations on
Competition; Guarantees . . . . . . . . . . . . . . . 6
SECTION 2.11. Significant Customers . . . . . . . . . . . . . . . . 6
SECTION 2.12. Governmental Approvals . . . . . . . . . . . . . . . 7
SECTION 2.13. Absence of Certain Changes; Conduct of Business . . . 7
SECTION 2.14. Certain Practices . . . . . . . . . . . . . . . . . . 8
SECTION 2.15. Compliance with Law; Licenses and Permits . . . . . . 9
SECTION 2.16. Employee Benefits . . . . . . . . . . . . . . . . . . 9
SECTION 2.17. Fixed Assets . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.18. Insurance . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.19. Outstanding Contracts . . . . . . . . . . . . . . . . 11
SECTION 2.20 Outstanding Leases . . . . . . . . . . . . . . . . . 12
SECTION 2.21. Intellectual Properties . . . . . . . . . . . . . . . 12
SECTION 2.22. Proprietary Information of Third Parties . . . . . . 13
SECTION 2.23. Transactions with Affiliates . . . . . . . . . . . . 13
SECTION 2.24. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.25. Litigation . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.26. Environmental Matters . . . . . . . . . . . . . . . . 14
SECTION 2.27. Broker's or Finder's Fees . . . . . . . . . . . . . . 14
SECTION 2.28. Disclosure . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.29. Accounts Receivable . . . . . . . . . . . . . . . . . 15
SECTION 2.30. Continued Operations . . . . . . . . . . . . . . . . 15
SECTION 2.31 Protection of Creditors . . . . . . . . . . . . . . . 15
SECTION 2.32 Securities Exemptions . . . . . . . . . . . . . . . . 15
SECTION 2.33 Stock Option Agreements . . . . . . . . . . . . . . . 16
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 16
SECTION 3.1. Organization . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2. Corporate Power and Authority . . . . . . . . . . . . 16
SECTION 3.3. Validity, Etc. . . . . . . . . . . . . . . . . . . . 16
SECTION 3.4. Disclosure . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.5. Governmental Approvals . . . . . . . . . . . . . . . 17
SECTION 3.6. StaffMark Stock . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . 17
SECTION 4.1. Cooperation . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.2. Best Efforts . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.3. Tax Returns . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.4. Investigations . . . . . . . . . . . . . . . . . . . 17
SECTION 4.5. Payment of Liabilities . . . . . . . . . . . . . . . 18
SECTION 4.6. Employees and Consultants . . . . . . . . . . . . . . 18
SECTION 4.7. Obligations Concerning Employees . . . . . . . . . . 18
SECTION 4.8. Employee Benefits . . . . . . . . . . . . . . . . . . 18
SECTION 4.9. Bulk Transfer Compliance . . . . . . . . . . . . . . 19
SECTION 4.10. Non-Competition Covenant. . . . . . . . . . . . . . . 19
SECTION 4.11. Employee Stock Options . . . . . . . . . . . . . . . 19
SECTION 4.12. Corporate Names . . . . . . . . . . . . . . . . . . . 20
SECTION 4.13. Non-Competition Agreements . . . . . . . . . . . . . 20
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATIONS . . . . . . . . . . . . . 20
SECTION 5.1. Representations and Warranties True . . . . . . . . . 20
SECTION 5.2. Consents . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.3. No Obstructive Proceeding . . . . . . . . . . . . . . 20
SECTION 5.4. Opinion of Counsel to the Sellers . . . . . . . . . . 20
SECTION 5.5. Closing Documents . . . . . . . . . . . . . . . . . . 20
SECTION 5.6. Approval of the Buyer and Its Counsel . . . . . . . . 20
SECTION 5.7. Employment Agreements . . . . . . . . . . . . . . . . 21
SECTION 5.8. Additional Agreements . . . . . . . . . . . . . . . . 21
SECTION 5.9. Adverse Change . . . . . . . . . . . . . . . . . . . 21
SECTION 5.10. Lock-Up and Registration Rights Agreement . . . . . . 21
SECTION 5.11. Escrow Agreement . . . . . . . . . . . . . . . . . . 21
ARTICLE VI. CONDITIONS TO THE SELLERS' OBLIGATIONS . . . . . . . . . . . . 21
SECTION 6.1. Representations and Warranties True . . . . . . . . . 21
SECTION 6.2. Closing Documents . . . . . . . . . . . . . . . . . . 21
SECTION 6.3. No Obstructive Proceeding . . . . . . . . . . . . . . 21
SECTION 6.4. Approval of the Sellers and Its Counsel . . . . . . . 22
SECTION 6.5. Additional Agreements . . . . . . . . . . . . . . . . 22
SECTION 6.6. Escrow Agreement . . . . . . . . . . . . . . . . . . 22
SECTION 6.7. Employment Agreements . . . . . . . . . . . . . . . . 22
SECTION 6.8. Opinion of Counsel to Buyer . . . . . . . . . . . . . 22
ARTICLE VII. THE CLOSING AND CERTAIN CLOSING DELIVERIES . . . . . . . . . 22
SECTION 7.1. Time and Place of Closing . . . . . . . . . . . . . . 22
SECTION 7.2. Deliveries by the Sellers . . . . . . . . . . . . . . 22
SECTION 7.3. Deliveries by the Buyer . . . . . . . . . . . . . . . 23
</TABLE>
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ARTICLE VIII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.1. Survival . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.2. Indemnification by Sellers . . . . . . . . . . . . . . 24
SECTION 8.3. Notice to Sellers, Etc. . . . . . . . . . . . . . . . 24
SECTION 8.4. Indemnification by Buyer . . . . . . . . . . . . . . . 24
SECTION 8.5. Notice to the Buyer, Etc. . . . . . . . . . . . . . . 25
SECTION 8.6. Right to Set Off . . . . . . . . . . . . . . . . . . . 25
SECTION 8.7. Survival of Indemnification . . . . . . . . . . . . . 25
ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.1. Knowledge of Sellers . . . . . . . . . . . . . . . . 26
SECTION 9.2. Knowledge of Buyer . . . . . . . . . . . . . . . . . 26
SECTION 9.3. "Person" Defined . . . . . . . . . . . . . . . . . . 26
SECTION 9.4. Notices . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.5. Entire Agreement . . . . . . . . . . . . . . . . . . 27
SECTION 9.6. Modifications and Amendments . . . . . . . . . . . . 27
SECTION 9.7. Assignment/Binding Effect . . . . . . . . . . . . . . 27
SECTION 9.8. Parties in Interest . . . . . . . . . . . . . . . . . 27
SECTION 9.9. Governing Law . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.10. Severability . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.11. Interpretation . . . . . . . . . . . . . . . . . . . 28
SECTION 9.12. Headings and Captions . . . . . . . . . . . . . . . . 28
SECTION 9.13. Reliance . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.14. Expenses . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.15. Gender . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.16. Publicity . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.17. Counterparts . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
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INDEX TO EXHIBITS
<TABLE>
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APPENDIX A -- Calculation of Earn-Out
EXHIBIT A -- Form of Bill of Sale
EXHIBIT B -- Form of Assignment and Assumption Agreement
EXHIBIT C -- Form of Lease Assignment
EXHIBIT D -- Form of Escrow Agreement
EXHIBIT E -- Form of Lock-Up and Registration Rights Agreement
INDEX TO SCHEDULES
Schedule 1.1(a) -- Schedule of Assets
Schedule 1.1(d) -- Employee Agreements
Schedule 1.2 -- Allocation of Shares
Schedule 1.3 -- Assumed Liabilities
Schedule 1.4 -- Allocation of Purchase Price
Schedule 2.3 -- No Violations; Consents
Schedule 2.6 -- Financial Statements
Schedule 2.7 -- Absence of Undisclosed Liabilities
Schedule 2.8 -- Labor and Employee Relations
Schedule 2.10 -- Powers of Attorney; Absence of Limitations on
Competition; Guarantees
Schedule 2.11 -- Significant Customers
Schedule 2.13 -- No Adverse Change
Schedule 2.15 -- Compliance with Law
Schedule 2.16 -- Employee Benefits
Schedule 2.17 -- Claims on Fixed Assets
Schedule 2.18 -- Insurance
Schedule 2.19 -- Contracts
Schedule 2.19.1 -- Notice of Contract Defaults
Schedule 2.19.2 -- Termination of Contracts
Schedule 2.19.3 -- Limitations on Contracts
Schedule 2.20 -- Leases
Schedule 2.21 -- Intellectual Properties
Schedule 2.22 -- Proprietary Information of Third Parties
Schedule 2.23 -- Transactions with Affiliates
Schedule 2.24 -- Taxes
Schedule 2.25 -- Litigation
Schedule 2.26 -- Environmental Matters
Schedule 2.27 -- Brokers
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 17 day of March, 1997, by and among STAFFMARK, INC., a Delaware
corporation ("StaffMark"), STAFFMARK ACQUISITION CORPORATION TWO ("SAC2") and
STAFFMARK ACQUISITION CORPORATION THREE ("SAC3"), each a Delaware corporation
and a wholly-owned subsidiary of StaffMark (SAC2 and SAC3, together with
StaffMark, the "Buyer"), and FLEXIBLE PERSONNEL, INC. ("Flexible"), GREAT LAKES
SEARCH ASSOCIATES, INC. ("Great Lakes"), and H.R. AMERICA, INC. ("HRA"), each
an Indiana corporation (each a "Seller" and collectively, the "Sellers"), and
DOUGLAS H. CURTIS, JEAN A. CURTIS, and ROBERT P. CURTIS (each individually a
"Stockholder" and collectively, the "Stockholders").
PRELIMINARY STATEMENTS:
The Sellers are engaged in the business of providing temporary and
direct placement of light industrial and clerical staff through Flexible,
professional employment through HRA and executive search and placement through
Great Lakes;
Each Seller desires to sell or otherwise transfer certain of their
assets and the aforementioned businesses conducted by it (each a "Business" and
collectively, the "Businesses"); and
StaffMark desires to purchase the operating assets of Flexible and Great
Lakes through SAC2 and to purchase HRA through SAC3, each of which will own and
operate the respective Business.
NOW, THEREFORE, in consideration of the preliminary statements 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 Effective Time (as hereinafter
defined) Flexible and Great Lakes shall transfer to SAC2 and HRA shall transfer
to SAC3, free and clear of all claims, charges, liens, contracts, rights,
options, security interests, mortgages, encumbrances and restrictions
whatsoever (collectively, "Claims"), all of the assets, properties and rights
owned by the respective Seller or in which the respective Seller 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 as
hereinafter defined) relating to its Business and as reflected on the
respective Sellers' balance sheet as of March 5, 1997 and any such assets
acquired prior to and existing as of the Closing, including, without limitation
(collectively, the "Transferred Assets"):
(a) Generally. Cash, 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, systems and
processes, security deposits, memberships, contracts, leasehold and other
improvements, machines, machinery, equipment, furniture, fixtures, supplies,
all rights and claims under insurance policies and other contracts of whatever
nature, all causes of action, claims and demands of every nature relating to
the
<PAGE> 7
Assumed Liabilities, Contracts and Leases (as hereinafter defined, including,
but not limited to, the assets listed on Schedule 1.1(a));
(b) Name and Related Items. The names "Flexible Personnel",
"Flexible Information Technology" and "Great Lakes Search" to SAC2 and "H.R.
America" to SAC3 and any variants thereof and all copyrights, copyright
applications, trade names, trademarks, service marks and logos (whether or not
registered) related thereto; the phone number (219) 436-3838, and the facsimile
number (219) 436-4545 and other phone and facsimile numbers for the Businesses
existing as of Closing.
(c) Agreements and Contracts. All orders, bids, quotations,
contracts, and other agreements with or related to past, present and
prospective clients of each 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 agreements
and contracts for those individuals listed on Schedule 1.1(d) (the "Employees")
by each respective Seller and all rights thereunder and copies of the
information for each Employee as indicated on such Schedule 1.1(d) and all
other employees of each Seller not included on such schedule (collectively,
the "Employee Information"); however, such transfer shall occur only upon
termination of the Employee Leasing between the parties of even date herewith
(the "Employee Leasing Agreement");
(e) Records. All books, records, lists and reports, including but
not limited to, resumes and resume files, related to each Business whether or
not currently being utilized by such Business (collectively, the "Records");
(f) Electronic Data. All electronic information and data related to
each Business wherever located (collectively, the "Electronic Data");
(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 Flexible, or Great Lakes (to SAC2),
or HRA (to SAC3) and such other materials which are currently in the possession
of Stockholders and the Employees on which appear the name Flexible, or Great
Lakes (to SAC2), or HRA (to SAC3); and
(h) Other Assets. All other assets, properties and rights of every
kind and nature owned by the Sellers and used in each Business, and whether or
not specifically referred to in this Agreement;
All with the intention that each Business shall be transferred to the Buyer as
a going concern.
SECTION 1.1.1. Instruments of Conveyance and Transfer.
(a) The Seller shall transfer the Transferred Assets to the Buyer
pursuant to a Bill of Sale in substantially the form of Exhibit A, an
Assignment and Assumption Agreement in substantially the form of Exhibit B (the
"Assignment and Assumption Agreement"), a Lease Assignment in substantially the
form of Exhibit C (the "Lease Assignment"), and such other documents and
instruments as the Buyer or its counsel may reasonably request.
2
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(b) At any time and from time to time after the Closing Date, at the
request of the Buyer, without further consideration, the Seller 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 the Buyer and to confirm the Buyer'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 Stockholders the following assets (the "Excluded
Assets"): Notes receivable from related parties, notes receivable from
franchisees, automobiles currently operated by the Sellers, certain tax
benefits relating to the Stoneburner Termination Agreement (hereinafter
defined), and any life insurance contracts on the life of Douglas H. Curtis
(including the related cash surrender value).
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 Buyer shall assume
the Assumed Liabilities pursuant to Section 1.3 hereof and shall pay to the
Seller aggregate up-front consideration of $10,000,000 (the "Up-Front Purchase
Price") plus the Earn-Out calculated in accordance with Appendix A
(collectively, the "Purchase Price") as follows:
(a) At Closing, Buyer shall deliver to the Sellers cash in the amount
of 75% of the Up-Front Purchase Price of which $1.0 million will
be placed in a four month escrow with Mercantile Bank National
Association, St. Louis, Missouri, as set forth in the Escrow
Agreement in substantially the form of Exhibit D (the "Escrow");
and
(b) At Closing, Buyer shall issue the Stockholders that number of
shares of common stock of StaffMark which is equal to dividing
25% of the Up-Front Purchase Price by the average closing price
of StaffMark common stock as published in The Wall Street Journal
on the ten trading days immediately preceding the date hereof
(the "Shares"). The Shares shall be issued to each Stockholder as
set forth on Schedule 1.2 attached hereto. The Shares shall be
subject to a Lock-Up and Registration Rights Agreement in
substantially the form of Exhibit E (the "Lock-Up and
Registration Rights Agreement").
SECTION 1.3. Assumption of Liabilities. The only obligations and
liabilities to be assumed by the Buyer in connection with its acquisition of
the Transferred Assets are the obligations and liabilities relating to Sellers'
accounts payable, workers' compensation payable, bank line of credit
indebtedness, and accrued salaries and payroll taxes (the "Assumed
Liabilities") as specifically set forth on Schedule 1.3 attached hereto. The
Assumed Liabilities specifically exclude notes payable to related parties, the
note payable and any other liabilities related to that certain Termination
Agreement dated as of May 23, 1996, between Ryan R. Stoneburner, Flexible, and
HRA (the "Stoneburner Termination Agreement") and any liabilities of National
On-Site Personnel Service ("NOPS").
Buyer shall assume such obligations and liabilities pursuant to the
Assignment and Assumption Agreement and the Lease Assignment. Except for the
Assumed Liabilities, the Sellers shall remain liable for the payment of all
other liabilities and obligations which accrue prior or subsequent to the
Effective Date. Except for the Assumed Liabilities in the amount and to the
extent provided in this Section 1.3, the Buyer shall not assume or be
responsible for any other liabilities or obligations which relate in any manner
3
<PAGE> 9
to the operation of any of the Businesses prior to the Effective Date, and the
Seller shall indemnify, defend, and hold the Buyer harmless from all of such
obligations and liabilities as set forth in Section 8.2 below.
SECTION 1.4. Allocation of Purchase Price. The considerations paid and
the liabilities assumed by Buyer pursuant to Sections 1.2 and 1.3 above shall
be allocated among the Transferred Assets purchased hereunder as set forth on
Schedule 1.4 attached hereto. Sellers and Buyer 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 1.4. Each party shall
duly and timely file Form 8594 with its appropriate tax returns.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each Seller and Stockholders
(with respect to each Seller such Stockholder has an interest therein), jointly
and severally, represent and warrant to the Buyer as follows:
SECTION 2.1. Organization and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Indiana. The Seller is duly qualified or otherwise
authorized to transact business and is in good standing in each other
jurisdiction in which such authorization or qualification is required by law.
Each Seller has made available to the Buyer complete and correct copies of its
respective Articles of Incorporation and Bylaws as currently in effect.
SECTION 2.2. Corporate Power and Authority. The Seller 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 names "Flexible
Personnel," "Great Lakes Search" and "H.R. America", respectively by Flexible,
Great Lakes and HRA, and the fictitious name "Flexible Information
Technologies" (by Flexible) in the geographic area presently served by it. The
Seller (a) has the full power and authority to execute, deliver and perform
this Agreement, the Exhibits and the Schedules hereto and the other documents
and instruments contemplated hereby (collectively this Agreement, the Exhibits
and Schedules hereto, and the other documents and instruments contemplated
hereby shall constitute the "Documents") and to consummate the transactions
contemplated hereby and thereby, and (b) this Agreement and the other Documents
have been duly and validly executed and delivered by Seller and constitute
valid and binding obligations of the Seller, enforceable against the Seller in
accordance with their terms.
SECTION 2.3. No Violation; Consents. Except as set forth on Schedule
2.3, neither the execution and delivery of this Agreement or the other
Documents, the consummation of the transactions contemplated hereby or thereby,
nor the performance of this Agreement or the other Documents and such other
agreements in compliance with the terms and conditions hereof and thereof by
the Seller will (i) violate, conflict with or result in any breach of any trust
agreement, Articles of Incorporation, Bylaws, judgment, decree, order, statute
or regulation applicable to the Seller, (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 Seller or increase or otherwise affect the obligations of
the Seller under any law, rule, regulation or any judgment, decree, order,
governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to the Seller or to the Seller's ability to
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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
Buyer, (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Seller, (iv) result in the creation of any Claims
upon the Transferred Assets, or (v) require the consent, waiver, authorization
or approval of any federal, state or local government or governmental
department, agency, board, commission, bureau or instrumentality, or public or
self-regulatory body or authority or of any other person, entity or
organization.
SECTION 2.4. Subsidiaries and Investments. Seller 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 2.5. Books and Records. The minute books of Seller, which have
been and will be made available to the Buyer and its representatives, contain
accurate records of all meetings of and actions or written consents by the
respective officers and directors of the Seller set forth in such minute books.
The Employee Information, the Records and the Electronic Records are materially
true and correct and accurately reflect the operations of the Business and have
been maintained consistent with past practices.
SECTION 2.6. Financial Statements. The Sellers have previously
furnished to the Buyer, and attached hereto as Schedule 2.6 are, the
consolidated audited balance sheet of Flexible and HRA as at December 31, 1995
and 1996, and the related statements of income and expenses for the fiscal year
then ended, the internally prepared balance sheet of Great Lakes as at December
31, 1996, and the related statements of income and expenses for the fiscal year
then ended and the balance sheet of the Sellers (the "Balance Sheet") as at
March 5, 1997, (the "Balance Sheet Date") and the related statements of income
and the expenses for the fiscal period then ended. All such financial
statements (the "Financial Statements") have been prepared in accordance with
Generally Accepted Accounting Principals on a consistent basis and were
prepared from the books and records of the Sellers. Such books and records are
complete and correct in all material respects, accurately reflect all
transactions of the Business, and have been made available to Buyer for
examination. The Financial Statements fairly present the financial position of
the Sellers as of the dates thereof and the results of its operations for the
periods ended on the dates thereof. Since the Balance Sheet Date (i) there has
been no Material Change in the assets, liabilities or financial condition of
the assets of the Sellers from that reflected in its Balance Sheet and (ii)
none of the business, prospects, financial condition, operations, property or
affairs of the Sellers have been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against. The Sellers have disclosed to the Buyer all material facts
relating to the preparation of the Financial Statements. For purposes of this
section, "Material Change" shall mean a change in excess of $50,000 in any line
item on the Seller's Balance Sheet incurred or changed outside the ordinary
course of business or a change in excess of $100,000 in the aggregate of any
line items on the Sellers' Balance Sheet. The Sellers maintain an adequate
worker's compensation reserve on the Balance Sheet in accordance with Generally
Accepted Accounting Principles or has adequate coverage under a full-premium
policy and represents and warrants there will be no unrecorded liability for
which the Buyer 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 as at December 31, 1996, the related
statements of income and expenses for the fiscal year then ended, and the
Balance Sheet of the Sellers as at March 5, 1997.
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SECTION 2.7. Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically reflected
or reserved against in the Balance Sheet or except as set forth on Schedule
2.7, the Seller 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. The Seller does not know of any basis for the assertion
against the Seller of any liability or obligation not fully reflected or
reserved against on the Balance Sheet, except as set forth on Schedule 2.7.
(b) The Seller 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 business or prospects of the Seller.
SECTION 2.8. Labor and Employee Relations. The Seller is not a party
to or bound by any collective bargaining agreement with any labor organization,
group or association covering any of its employees, and Seller has no knowledge
of any attempt to organize the Seller's employees by any Person, unit or group
seeking to act as its bargaining agent. Except as set forth in Schedule 2.8,
there are no pending or, to the best knowledge of Seller, threatened charges
(by employees, their representatives or governmental authorities) of unfair
labor practices or of employment discrimination or of any other wrongful action
with respect to any aspect of employment of any person employed or formerly
employed by the Seller. No union representation election relating to employees
of the Seller has been scheduled by any governmental agency or authority, no
organization effort is being made with respect to any of such employees, and
there is no investigation of the Seller's employment policies or practices by
any governmental agency or authority pending or threatened. The Seller is not
currently, nor has it been, involved in labor negotiations with any unit or
group seeking to become the bargaining unit for any employees of the Seller.
The Seller has not experienced any material work stoppages, and to the best
knowledge of Seller, no work stoppage is planned.
SECTION 2.9. Real Property. The Seller owns no real property.
SECTION 2.10 Powers of Attorney; Absence of Limitations on Competition;
Guarantees. Except as set forth in Schedule 2.10, (i) no power of attorney or
similar authorization given by the Seller presently is in effect or
outstanding; (ii) no contract or agreement to which the Seller is a party or is
bound or to which the Seller's properties or assets is subject limits the
freedom of the Seller to compete in any line of business or with any Person;
and (iii) the Seller is not a party to or bound by any guarantee of any debt or
obligation of any other Person.
SECTION 2.11. Significant Customers. Set forth on Schedule 2.11 is a
true and correct list of the Seller's ten largest customers for the most recent
twelve month period ending December 31, 1996, together with the amount of
services attributable to such customers expressed in dollars and as a
percentage of total sales and services. None of the customers identified on
Schedule 2.11 has terminated, materially reduced or threatened to terminate or
materially reduce its request for services of the Seller during the period
covered by such schedule or prior to the Closing Date.
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SECTION 2.12. 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 Seller of this Agreement.
SECTION 2.13. Absence of Certain Changes; Conduct of Business. During
the period from the Balance Sheet Date to and including the date of this
Agreement except as set forth on Schedule 2.13 or relating to the Excluded
Assets:
(a) Seller has not cancelled 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) Seller has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, of the Business except in the
ordinary course of business;
(c) Seller has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases and
licenses) with respect to the Business involving more than $5,000
or outside the ordinary course of business;
(d) No party (including Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and
licenses) to which Seller is a party or by which it is bound
involving more than $5,000 or outside the ordinary course of
business;
(e) Seller has not allowed any Claims to be imposed upon any of its
assets, tangible or intangible outside the ordinary course of
business;
(f) Seller has not made any capital expenditure (or series of related
capital expenditures) either involving more than $5,000 or
outside the ordinary course of business;
(g) Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person
(or series of related capital investments, loans, and
acquisitions) either involving more than $5,000 or outside the
ordinary course of business;
(h) Seller 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 $1,000 or outside the
ordinary course of business;
(i) Seller has not delayed or postponed the payment of accounts
payable and other liabilities outside the ordinary course of
business;
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(j) Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) either
involving more than $5,000 or outside the ordinary course of
business;
(k) Seller has not granted any license or sublicense of any rights
under or with respect to patents, trademarks or copyrights;
(l) Seller has not accelerated collection of accounts receivables
through special inducements or outside the ordinary course of
business;
(m) Seller 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;
(n) Seller 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;
(o) Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(p) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees
outside the ordinary course of business;
(q) Seller 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;
(r) Seller has not granted any increase in the base compensation of
any of its directors, officers, and employees outside the
ordinary course of business;
(s) Seller 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, and employees (or taken any such action with respect to
any other Employee Benefit Plan);
(t) Seller has not made any other change in employment terms for any
of its directors, officers, and employees outside the ordinary
course of business; or
(u) Seller has not agreed, whether or not in writing, to do any of
the foregoing.
SECTION 2.14. Certain Practices. Neither the Seller, nor any of its
directors or officers, nor to the best knowledge of Seller, its 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
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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 Seller or any
subsidiary; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; given any favor or gift which is not deductible for
federal income tax purposes; or made any bribe, kickback, or other payment of a
similar or comparable nature, whether lawful or not, 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 2.15. Compliance with Law; Licenses and Permits. Except as set
forth on Schedule 2.15, the Seller has complied in all material respects with
all laws, ordinances, legal requirements, rules, regulations and orders
applicable to it, its operations, properties, assets, products and services.
Except as set forth on Schedule 2.15, there is no existing law, rule,
regulation or order, whether federal, state or local, which would prohibit or
materially restrict the Buyer from, or otherwise materially adversely affect
the Buyer in, conducting the Business in the manner heretofore conducted by the
Seller in any jurisdiction in which the Business is now conducted. The Seller
possesses all franchises, permits, licenses, certificates and consents required
from any governmental or regulatory authority in order for the Seller to carry
on its business as currently conducted and to own and operate its properties
and assets as now owned and operated and all of such licenses and permits are
set forth on Schedule 2.15.
SECTION 2.16. Employee Benefits.
(a) Set forth on Schedule 2.16 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 Seller or its ERISA
Affiliates provides (directly or indirectly, individually or jointly through
others) benefits or compensation to or on behalf of employees or former
employees of the Seller or its ERISA Affiliates, whether formal or informal,
whether or not written ("Employee Plan"). On request by the Buyer, the Seller
shall furnish a copy of each Employee Plan and a copy of any related materials.
The Seller will maintain the benefits listed on Schedule 2.16 in full force and
effect through the Effective Date. Except as set forth on Schedule 2.16, the
Buyer 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 Seller for services rendered prior to the Effective Date.
(b) Each Employee Plan covering any present or former employee of the
Seller 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 with all such requirements for continuation coverage.
(c) Except as set forth on Schedule 2.16, there are no actions, suits
or claims pending (other than routine claims for benefits) or threatened
against or with respect to 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. Except as set forth on
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Schedule 2.16, each Employee Plan which is intended to be qualified under
Section 401 of the Code and each amendment to such plan is subject to a
favorable determination letter from the Internal Revenue Service and each such
plan has at all times been maintained, by its terms and in operation, in
material compliance with Section 401 of the Code. Except with respect to the
Flexible Benefit Spending Account, the assets of each Employee Plan which is
not funded through the general assets of the Seller are at least equal to the
liabilities under such Employee Plan, and all assets of each Employee Plan are
shown on the books and records of such Employee Plan at fair market value. No
Employee Plan has unfunded liabilities that as of the Closing Date are not
accurately and fully reflected on the Sellers' Balance Sheet.
(e) Neither the Seller nor any of its ERISA Affiliates is or has been
a participant in, or is or has been obligated to maintain or to make
contributions to, a multi-employer plan (within the meaning of ERISA Section
3(37) and ERISA Section 40001(a)(3)) or an Employee Plan which is subject to
Title IV of ERISA. Neither the Seller nor any ERISA Affiliate has sponsored,
contributed to or been obligated under Title I or IV of ERISA to contribute to
a "defined benefit plan" (as defined in ERISA Section 3(35)). The Seller 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 the benefits pursuant to the continuation health coverage requirements
under Section 4980B of the Code, ERISA Section 601, or applicable state law).
(f) Neither the Seller nor its ERISA Affiliates is subject to and, to
the best knowledge of Seller, no facts exist which could subject the Seller or
any of its ERISA Affiliates to, any liability whatsoever which is directly or
indirectly related to any Employee Plan, including, but not limited to,
liability for benefit payments or related claims, any liability for any tax or
related penalty under the Code, or liability for any damages or penalties
arising under Title I or Title IV of ERISA other than claims for medical
benefits or distribution requests processed in the normal course of business.
No reportable event under Section 4043 of ERISA, has occurred or, to the best
knowledge of the Seller, will occur with respect to such Employee Plan.
(g) Termination of or withdrawal from any Employee Plan immediately
after the Closing Date would not subject the Buyer to any liability, tax or
penalty whatsoever.
(h) 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.
(i) All contributions to or under each Employee Plan and all expenses
of each Employee Plan are fully deductible for income tax purposes for the
taxable year for which such contributions are made or such expenses are paid.
All contributions to or under each Employee Plan have been made when due under
the terms of such Employee Plan in accordance with applicable law.
(j) Neither the Seller nor its ERISA Affiliates have entered into any
contract, agreement or arrangement (whether oral or written) under which the
Seller or its ERISA Affiliates have assumed any liability relating to its
clients' retirement plans, nor have the Seller and/or its ERISA Affiliates made
any
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verbal representations that the use of any employees of the Seller or its ERISA
Affiliates would have no adverse consequence on such client retirement plans.
(k) Neither Flexible nor Great Lakes has engaged in employee leasing
as defined in this Section 2.16(k). Employee leasing is defined solely for
purposes of this Section 2.16(k) to mean the placement by an employer
(customer) of all or most of its existing work force onto the payroll of an
employee leasing firm and an explicit co-employment relationship following the
termination-lease back.
(l) For purposes of this Section 2.16, the term "ERISA" shall mean
the Employee Retirement Income Security Act of 1974, as amended, and the term
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Seller is treated as a single employer
under Section 414(b), (c), (m), (o) or (t) of the Code.
(m) All obligations of Seller to employees under each Employee Plan
for all periods ending prior to the Closing Date have been properly paid or
accrued on the Balance Sheet.
SECTION 2.17. Fixed Assets. Except as shown on Schedule 2.17, the
Seller 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 2.18. Insurance. The Seller is, and will be through the Closing
Date, insured with insurers in respect of its properties, assets and businesses
as set forth on the attached Schedule 2.18. Schedule 2.18 lists the insurance
coverage carried by the Seller, which insurance will remain in full force and
effect with respect to all events occurring prior to the Closing Date. Except
as set forth on Schedule 2.18, the Seller (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 non-renewal of any such policy
or binder, (iii) is not aware of any threatened or proposed cancellation or
non-renewal 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 2.19. Outstanding Contracts. Schedule 2.19 sets forth a
description of all existing contracts, agreements, leases, commitments,
licenses and franchises, which involve obligations or commitments by the Seller
of $10,000 or more and are not cancelable by the Seller without penalty within
30 days (collectively "Contracts"), whether written or oral, relating to the
Seller. Seller has delivered or made available to the Buyer true, correct and
complete copies of all of the Contracts specified on Schedule 2.19 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 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 2.19.1, the Seller and, to the best knowledge of Seller, each
other party thereto have materially performed all the obligations required
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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 Seller has no present expectation or intention of not fully performing all
its obligations under each of the Contracts, and Seller has no knowledge of any
breach or anticipated breach by the other party to any of the Contracts to
which the Seller is a party. Except as set forth on Schedule 2.19.2, none of
the Contracts has been terminated; no notice has been given by any party
thereto of any alleged default by any party thereunder; and Seller is not aware
of any intention or right of any party to declare another party to any of the
Contracts to be in default. Except as set forth on Schedule 2.19.3, there
exists no actual or, to the best knowledge of Seller, threatened termination,
cancellation or limitation of the business relationship of the Seller by any
party to any of the Contracts.
SECTION 2.20 Outstanding Leases. Schedule 2.20 sets forth a
description of each agreement by which the Seller leases each parcel of real
property (the "Leased Parcels") used in connection with the Business
(collectively, the "Leases"). Seller has delivered or made available to the
Buyer true, correct and complete copies of all of the Leases specified on
Schedule 2.20. All rents due under the Leases have been paid. All of the
Leases are 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 2.20, the Seller and
to the best knowledge of Seller, each other party thereto have performed all
the obligations required to be performed by it, 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 Seller has no present expectation or intention of not
fully performing all its obligations under each of the Leases, and Seller has
no knowledge of any breach or anticipated breach by the other party to any of
the Leases. Except as set forth on Schedule 2.20, none of the Leases has been
terminated; no notice has been given by any party thereto of any alleged
default by any party thereunder; and the Seller is not aware of any intention
or right of any party to declare another party to any of the Leases to be in
default. There exists no actual or, to the best knowledge of Seller,
threatened termination, cancellation or limitation of the business relationship
of the Seller with any party to any of the Leases.
SECTION 2.21. Intellectual Properties. Schedule 2.21 contains an
accurate and complete list of all domestic and foreign letters, patent,
patents, patent applications, patent licenses, software licenses and know-how
licenses, trade name, trademarks, copyrights, unpatented inventions, service
marks, trademark registrations and applications, service mark registrations and
applications and copyright registrations and applications, trade secrets or
other confidential proprietary information owned or used by the Seller in the
operation of the Business (collectively the "Intellectual Property"). Except
as set forth on Schedule 2.21 and except for commercial software licensed for
use on personal computers, the Seller owns the entire right, title and interest
in and to the Intellectual Property, trade secrets and technology used in the
operation of its Business and each item constituting part of the Intellectual
Property which is owned by the Seller has been, to the extent indicated in
Schedule 2.21, duly registered with, filed in or issued by, 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 2.21 and such
registrations, filings and issuances remain in full force and effect. There
are no pending or, to the best knowledge of the Seller, threatened proceedings
or litigation or other adverse claims affecting or with respect to the
Intellectual Property. There is, to the best knowledge of the Seller, no
reasonable basis upon which a claim may be asserted against the Seller for
infringement of any domestic or foreign letters patent, patents, patent
applications, patent licenses and know-how licenses, trade names, trademark
registrations and applications, common law
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trademarks, service marks, service mark registrations or applications
copyrights, copyright registrations or applications, trade secrets or other
confidential proprietary information. To the best knowledge of the Seller, no
Person is infringing the Intellectual Property.
SECTION 2.22. Proprietary Information of Third Parties. Except as
disclosed on Schedule 2.22, no third party has claimed or, to the best
knowledge of Seller, has reason to claim that any Person employed by or
consulting with the Seller ("Related Person") has (i) violated or may be
violating any of the terms or conditions of such person's employment, non-
competition or non-disclosure 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. No third party has
requested information from the Seller which suggests that such a claim might be
contemplated. Except as disclosed on Schedule 2.22, to the best knowledge of
Seller, no related person has employed or proposes to employ any trade secret
or any information or documentation proprietary to any former employer 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 Seller, and Seller has no reason to believe there will be
any such employment or violation.
SECTION 2.23. Transactions with Affiliates. Except as disclosed on
Schedule 2.23, no member or manager of the Seller, 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 Seller, 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 2.24. Taxes. Except as set forth on Schedule 2.24, all federal,
state, local and foreign tax returns and tax reports required to be filed by
the Seller on or before the date hereof have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such returns
and reports are required to be filed and all amounts shown as owing thereon
have been paid. All taxes (including, without limitation, income, accumulated
earnings, property, sales,use, franchise, value added, fuel, employees' income
withholding and social security taxes) which have become due or payable or are
required to be collected by the Seller or are otherwise attributable to any
periods ending on or before the Effective Date and all interest and penalties
thereon, whether disputed or not, have been paid or will be paid in full or
adequately reflected on the Balance Sheet or the Seller's books and records on
or prior to the Effective Time. Except as set forth on Schedule 2.24, all
deposits required by law to be made by the Seller with respect to employees'
withholding taxes have been duly made, and as of the Effective Time all such
deposits due will have been made. The Seller has delivered to the Buyer true
and complete copies of all of Seller's state and federal income tax returns for
the fiscal periods ended December, 1995 and 1994 and all reports and results of
income tax audits, if any, related thereto. Except as set forth on Schedule
2.24, no examination of any tax return of the Seller is currently in progress.
There are no outstanding agreements or waivers extending the statutory period
of limitations applicable to any such tax return.
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SECTION 2.25. Litigation. Except as set forth on Schedule 2.25, there
is no (i) action, suit, claim, proceeding or investigation pending or, to the
best knowledge of the Seller, threatened against or affecting the Seller
(whether or not Seller is a party or prospective party thereto), 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 Seller or (iii)
governmental inquiry pending or threatened against or involving the Seller, and
Seller knows of no basis for any of the foregoing. The Seller has not received
any opinion or memorandum or legal advice from legal counsel to the effect that
it is exposed, from a legal standpoint, to any liability or disadvantage which
may be material to the business, prospects, financial condition, operations,
property or affairs of the Seller. There are no outstanding orders, writs,
judgments, injunctions or decrees served upon the Seller by any court,
governmental agency or arbitration tribunal against the Seller. To the best
knowledge of Seller, there are no facts or circumstances which may result in
institution of any action, suit, claim or legal administrative or arbitration
proceeding or investigation against, involving or affecting the Seller or the
transactions contemplated hereby. The Seller 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 2.25, there is no action or suit by the Seller
pending or threatened against others.
SECTION 2.26. Environmental Matters. The Seller and, to the best
knowledge of Seller, all Leased Parcels are in 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 2.26, the Seller has not received
notice of, nor does the Seller have knowledge of, any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or
plans of the Seller or the Seller'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 2.26, 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 2.27. Broker's or Finder's Fees. Except as set forth on
Schedule 2.27, no agent, broker, person or firm acting on behalf of the Seller
is, or will be, entitled to any commission or broker's or finder's fees from
the Seller or from any person controlling, controlled by or under common
control with the Seller in connection with any of the transactions contemplated
herein.
SECTION 2.28. Disclosure. All Documents delivered or to be delivered by
the Seller, and to the best knowledge of Seller all Documents delivered or to
be delivered on behalf of the Seller, in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct in all material
respects. Neither this Agreement, nor any of the other Documents contains any
untrue
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statement of a material fact or omits a material fact necessary to make the
statements made by the Seller herein or therein, in light of the circumstances
in which made, not misleading. There is no fact which materially and adversely
affects the business, prospects or financial condition of the Seller or its
properties or assets, which has not been set forth in the Documents.
SECTION 2.29. Accounts Receivable. All accounts receivable of the
Seller that are reflected on the Balance Sheet on the Balance Sheet Date or on
the accounting records of the Seller 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. 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 Seller 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, 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 Buyer shall re-assign such accounts in excess of
such reserve to the Seller for collection and Seller shall reimburse Buyer (by
direct payment or set-off of Escrow) for the balance of such uncollectible
account. 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.
SECTION 2.30. Continued Operations. This transaction shall be effective
March 5, 1997, and the Seller shall continue to conduct its operations and
business activities in the ordinary course of business through the Closing
Date. The Seller shall not engage in any distribution or sales of assets
outside the ordinary course of business, issue, redeem or pay distributions
with respect to any shareholder, declare any bonuses or salary increases, or
otherwise engage in any transaction outside the ordinary course of its business
prior to the Closing Date, without the prior approval of the Buyer. Except
with regard to the Excluded Assets, the Seller shall not enter into any
contractual arrangements, purchase any capital assets, incur additional
indebtedness prior to the Closing Date, or sell, lease or dispose of any asset,
or mortgage, pledge, or allow the imposition of any lien or other encumbrance
on any asset, without the prior approval of Buyer. The Seller shall
immediately notify Buyer of any changes in the status of any customer
accounting for more than 5% of the Seller's annual revenues, including a change
in terms, the loss of such a customer, the addition of such a new customer, or
other similar changes.
SECTION 2.31 Protection of Creditors. The transfer to Buyer by the
Seller 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 Seller 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.
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SECTION 2.32 Securities Exemptions. The Shares are being acquired by
the Seller for its own account, for investment purposes only and with 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 "Act") and the rules and regulations thereunder.
The Shares have not been registered under the Act or any state securities laws
pursuant to exemptions afforded by Sections 3 or 4, or both, of the Act and the
exemptions under the applicable state securities laws. Seller has been
afforded full and complete access to all relevant financial and other
information regarding StaffMark. Each Stockholder is an "accredited investor,"
as such term is defined in rule 501(a) of the Act. Seller has not paid a
commission for these Shares. Seller will not offer, sell, assign, pledge,
hypothecate, transfer or otherwise dispose of the Shares except after full
compliance with all of the applicable provisions of the Securities Act and the
rules and regulations of the Securities and Exchange Commission, applicable
state securities laws and regulations, and any legends that appear on the
certificate evidencing the Shares. Seller is familiar with the provisions of
Rule 144 of the Act, and realizes that sales of the Shares may be required to
be made pursuant to the terms of that rule.
SECTION 2.33 Stock Option Agreements. Each Seller has notified any
holders of outstanding options to purchase Seller of the transactions
contemplated by this Agreement and such optionees have elected not to exercise
such option to purchase an interest of Seller prior to the date hereof.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents and
warrants to the Seller as follows:
SECTION 3.1. Organization. StaffMark, SAC2 and SAC3 is each a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to transact business as a
foreign corporation in each jurisdiction in which the failure to so qualify
would have a material adverse impact on the Buyer's ability to purchase the
Businesses pursuant to this Agreement and perform its obligations under this
Agreement.
SECTION 3.2. Corporate Power and Authority. The Buyer has the
corporate power and authority to execute, deliver and perform this Agreement
and the other Documents. The execution, delivery and performance of the
Documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action of the Buyer. The Documents to be executed and
delivered by the Buyer have been duly executed and delivered by, and constitute
the legal, valid and binding obligation of the Buyer enforceable against the
Buyer in accordance with their terms.
SECTION 3.3. Validity, Etc. Neither the execution and delivery by the
Buyer of this Agreement and the other Documents, the consummation by the Buyer
of the transactions contemplated hereby or thereby, nor the performance by the
Buyer of this Agreement and such other agreements in compliance with the terms
and conditions hereof and thereof will: (i) violate, conflict with or result
in any breach of any trust agreement, articles of incorporation, bylaw,
judgment, decree, order, statute or regulation applicable to the Buyer, (ii)
violate, conflict with or result in a breach, default or termination (or give
rise to any right of termination, cancellation or acceleration) under any law,
rule or regulation or
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any judgment, decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture, note, license,
agreement or other instrument to which the Buyer is a party, or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer.
SECTION 3.4. Disclosure. All Documents delivered or to be delivered by
or on behalf of the Buyer in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct in all material
respects. Neither this Agreement, nor any of the Documents, contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements made by Buyer herein or therein, in light of the circumstances
in which made, not misleading. There is no fact which may have a material
adverse effect on the Buyer's ability to pay or otherwise perform its
obligations under this Agreement, which has not been set forth in the
Documents.
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 Buyer of this Agreement.
SECTION 3.6. StaffMark Stock. At the time of issuance thereof, the
Shares to be delivered to the Seller pursuant to this Agreement will constitute
valid and legally issued shares of StaffMark, fully paid and nonassessable.
The Shares to be issued to the Seller pursuant to this Agreement will not be
registered under the Securities Act of 1933, and shall be subject to the
limitations and restrictions in the Lock-up and Registration Rights Agreement.
ARTICLE IV. 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. Seller and Buyer shall each use its best
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 the
Buyer's ownership and operation of the Seller's Business after the Closing
Date. Prior to the Closing Date, the Seller will use commercially reasonable
efforts to preserve its relationships with its employees, customers and others
having business relationships with the Seller and will maintain the Employee
Information, the Records and the Electronic Records under its control and
custody in a manner consistent with past practice.
SECTION 4.3. Tax Returns. The Seller shall cause to be prepared and
timely filed, at its sole expense, all of its required tax returns for all
periods up to and including the Effective Date. The Seller shall be
responsible for the payment of, and will indemnify, defend and hold the Buyer
harmless against all taxes due or assessed which relate to the operations of
the Businesses for all periods up to and including the Effective Date.
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SECTION 4.4. Investigations. Seller shall give Buyer and its
employees, accountants, attorneys and other authorized representatives full
access during all reasonable times to all the premises, properties, books and
records, and furnish Buyer with such financial and operating data, analyses and
other information of any kind respecting Seller's business and properties as
Buyer shall from time to time request. Any investigation shall be conducted in
a manner which does not unreasonably interfere with business operations.
SECTION 4.5. Payment of Liabilities. Except for the Assumed
Liabilities, Seller shall pay and satisfy in full all of its other obligations
and liabilities, of any nature whatsoever, which accrue prior or subsequent to
the Effective Date.
SECTION 4.6. Employees and Consultants. Buyer and Seller have
determined in good faith that the closing of the transactions contemplated by
this Agreement will not result in an "employment loss" within the meaning of
the Workers Adjustment Retraining and Notification act, 29 U.S.C. Section 2101
et seq. (the "Warn Act"). Seller will make all of its employees and
consultants relating to the Business available to be hired by the Buyer.
Notwithstanding the foregoing and except as otherwise set forth in this
Agreement, the Buyer shall be under no obligation to hire any such employees
and consultants. Buyer and Seller understands and acknowledges that each is an
employer subject to the Warn Act. The Seller shall be responsible for any Warn
Act violations based on or arising from acts, events or omissions prior to the
Closing, and the Buyer shall be responsible for any Warn Act violations based
on or arising from acts, events or omissions after the Closing. At the Closing
Seller shall provide to the Buyer a list of all employees or former employees
terminated by Seller during the ninety (90) day period prior to the Closing.
Buyer represents and warrants that during the first ninety (90) days after the
Closing it will not terminate any employee or employees whose termination
would, in the aggregate with terminations by the Seller during the ninety (90)
day period prior to the Closing, result in a violation of the Warn Act. Buyer
will indemnify and hold harmless Sellers and Stockholders from any and all
claims brought under the Warn Act relating to any termination(s) of employee(s)
by Buyer, including course of defense of any such claims. Nothing herein shall
be deemed either to affect or to limit in any way the management prerogatives
of Buyer with respect to employees, or to create or to grant to such employees
any third party beneficiary rights or claims or causes of action of any kind or
nature.
SECTION 4.7. Obligations Concerning Employees. The Seller 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
Date"). Buyer will be responsible for all liabilities associated with the
Employees which relate to the period subsequent to the Employee Transfer Date
subject to Section 1.1(d) hereof and the Employee Leasing Agreement.
After the Closing Date, Buyer will notify the relevant parties that Buyer will
be responsible for expenses associated with benefit plans for the Employees.
On the Closing Date, the Seller agrees to provide Buyer with a true and
complete list of the FICA wages and FICA withholdings related to compensation
paid by the Seller to the Employees prior to the Closing Date.
SECTION 4.8. Employee Benefits.
(a) To the extent possible, Buyer will assume as of the Closing Date,
subject to Section 1.1(d) hereof and the Employee Leasing Agreement,
all rights and obligations of Sellers as sponsor under any Employee Plan
covering solely employees of Sellers, provided, Buyer shall not assume and
Sellers shall be solely liable for operational deficiencies of any kind under
any such
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Employee Plan (including non-compliance with its terms and applicable law)
occurring prior to the Closing Date. If Buyer is unable to assume any Employee
Plan, then Buyer will establish plans with substantially the same terms and
conditions as any such Employee Plan and provide benefits thereunder after the
Closing Date to Employees of Sellers who become employees of the Buyer.
(b) Buyer, or an employee plan designated by Buyer, will assume all
of the previously disclosed obligations and liabilities of Sellers and any
Employee Plan covering Sellers' current or former employees effective as of the
termination of the Employee Leasing Agreement, including but not limited to
obligations under Section 4980B of the Code, Section 601 of ERISA and
applicable state law regarding continuation health coverage, provided Buyer
shall not assume and Sellers shall be solely liable for operational
deficiencies of any kind under any such Employee Plan (including non-compliance
with its terms and applicable law) occurring prior to the termination of the
Employee Leasing Agreement.
SECTION 4.9. Bulk Transfer Compliance. Buyer hereby waives compliance
by the Seller with the provisions of Article 6 of the Uniform Commercial Code
as in effect in the State of Indiana (the "Bulk Sales Statutes"). The
Stockholders shall indemnify, defend and hold Buyer harmless from and against
any loss, liability, cost, expense or damage resulting from the assertion of a
claim made against the Transferred Assets or Buyer by an creditor of the Seller
pursuant to the Bulk Sales Statutes, or any other applicable law related to
bulk sales.
SECTION 4.10. Non-Competition Covenant. Jean A. Curtis agrees that for
a period of two years after the Closing Date she will not, directly or
indirectly, as a stockholder, partner, officer, director, agent, independent
contractor, consultant, employee, or otherwise, except for the benefit of
StaffMark:
(a) engage in any business related to the provision of
temporary staffing services or executive search and placement or
employee leasing with a radius of 100 miles of any existing
office of Seller;
(b) purposefully interfere or attempt to interfere with
any of Buyer's agreements and contracts (regardless of whether
these agreements and contracts are in writing or verbal) or
business relationships;
(c) solicit for employment or hire, either directly or
indirectly, for such party or for another entity, any of the
employees employed by Buyer; and
(d) take any action or fail to take any action which is
likely to adversely affect Buyer's relationship with, or
purposefully interfere with the business relationship of or
solicit the business or orders of: (A) any customer of Buyer, or
(B) a prospective or potential customer of Buyer.
Notwithstanding the foregoing, the Stockholders shall not be prohibited
from operating NOPS as it is currently operated by the Stockholders.
SECTION 4.11. Employee Stock Options. Buyer shall grant employees of
Sellers, as solely determined by officers of Sellers, an aggregate of 20,000
options to purchase StaffMark common stock at
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a price per share equal to the market value of StaffMark common stock on the
Closing Date. Such options shall vest 40% two years from the date of grant and
an additional 20% each year thereafter.
SECTION 4.12. Corporate Names. Within fifteen (15) days of Closing the
Stockholders shall cause the names of each Seller to be changed such that the
new name of each Seller is not similar to the existing name.
SECTION 4.13. Non-Competition Agreements. Each Seller shall use its
best efforts to cause each employee of each Seller for which there is no
existing and assignable non-competition agreement with Seller to execute a non-
competition agreement with Buyer within thirty (30) days of Closing.
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Sellers pursuant
to Section 1.2 and 1.3 hereof and to consummate the other 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 Buyer in
its sole discretion:
SECTION 5.1. Representations and Warranties True. All of the
representations and warranties made by each Seller in Article II of this
Agreement shall be true 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 Buyer shall have in all
material respects performed and complied with all covenants and conditions
required by this Agreement to be performed or complied with by it prior to or
at the Closing Date; and each Seller shall have been furnished certificates of
the President of the Seller, dated the Closing Date, in his corporate capacity,
certifying to the truth in all material respects of such representations and
warranties as of the Closing Date and to the fulfillment in all material
respects of such covenants and conditions.
SECTION 5.2. Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any material
license, permit or agreement relating to the Business from terminating prior to
its scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained and all permits listed in
Schedule 2.15 shall have been transferred or reissued to the Buyer.
SECTION 5.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted to restrain, enjoin or otherwise prevent
or question the legality of the consummation of the transactions contemplated
by this Agreement.
SECTION 5.4. Opinion of Counsel to the Sellers. The Buyer shall have
received an opinion from counsel to Sellers, dated as of the Closing Date, in
form and substance reasonably satisfactory to Buyer.
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SECTION 5.5. Closing Documents. The Sellers shall have delivered all
of the Schedules, resolutions, certificates, documents and instruments required
by this Agreement.
SECTION 5.6. Approval of the Buyer and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the direction of, the Sellers hereunder or incident to its performance
hereunder, and all other related matters, shall be reasonably satisfactory as
to form and substance to the Buyer and its counsel.
SECTION 5.7. Employment Agreements. The Buyer shall have received
executed non-competition/employment agreements with Douglas H. Curtis and
Robert P. Curtis in form and content acceptable to Buyer and Douglas H. Curtis
and Robert P. Curtis (the "Employment Agreements").
SECTION 5.8. Additional Agreements. Buyer and affiliates shall have
entered into such additional agreements as may reasonably be required to be
entered into by such parties on or before the Closing.
SECTION 5.9. Adverse Change. There shall have been no material adverse
change in the Transferred Assets or condition (financial or otherwise) of any
Seller from the date of this Agreement through the Closing Date.
SECTION 5.10. Lock-Up and Registration Rights Agreement. The
Stockholders shall have delivered an executed Lock-Up and Registration Rights
Agreement.
SECTION 5.11. Escrow Agreement. The Sellers shall have delivered an
executed Escrow Agreement.
ARTICLE VI. CONDITIONS TO THE SELLERS' OBLIGATIONS
The obligation of the Sellers to transfer the Transferred Assets to
Buyer and to consummate the other 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 Sellers in their sole
discretion:
SECTION 6.1. Representations and Warranties True. All of the
representations and warranties made by Buyer in Article III of this Agreement
shall be true 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 Buyer shall have in all material respects
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing
Date; and the Sellers shall have been furnished certificates of the President
and the Chief Financial Officer of the Buyer, dated the Closing Date, in his
corporate capacity, certifying to the truth in all material respects of such
representations and warranties as of the Closing Date and to the fulfillment in
all material respects of such covenants and conditions.
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SECTION 6.2. Closing Documents. The Buyer shall have delivered all of
the Schedules, resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 6.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted to restrain, enjoin or otherwise prevent
or question the legality of the consummation of the transactions contemplated
by this Agreement.
SECTION 6.4. Approval of the Sellers and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the direction of, the Buyer hereunder or incident to its performance
hereunder, and all other related matters, shall be reasonably satisfactory as
to form and substance to the Sellers and its counsel.
SECTION 6.5. Additional Agreements. Buyer and affiliates shall have
entered into such additional agreements as may reasonably be required to be
entered into by such parties on or before the Closing.
SECTION 6.6. Escrow Agreement. The Buyer shall have delivered an
executed Escrow Agreement.
SECTION 6.7. Employment Agreements. The Buyer shall have delivered the
Employment Agreements.
SECTION 6.8. Opinion of Counsel to Buyer. The Sellers shall have
received an opinion of counsel to Buyer, dated as of the Closing Date, in form
and substance reasonably satisfactory to Sellers.
ARTICLE VII. THE CLOSING AND CERTAIN CLOSING DELIVERIES
SECTION 7.1. Time and Place of 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 Barnett & McNagny, 215 East Berry Street,
Fort Wayne, Indiana, on March 17, 1997, or at such other place, date and time
as may be mutually agreed upon by the parties (the "Closing Date") via
facsimile signatures of the parties hereto, with original signatures of the
parties to be exchanged within five (5) business days of Closing. The
transactions contemplated by this Agreement shall be effective for accounting
purposes as of 12:01 A.M. (CST) (the "Effective Time") on March 5, 1997, (the
"Effective Date").
SECTION 7.2. Deliveries by the Sellers.
(1) At the Closing, the Sellers will deliver or cause to be delivered
to the Buyer the following:
(a) All required consents of third parties to the sale
conveyance, transfer, assignment and delivery of the Transferred Assets and
each Business of each Seller hereunder;
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(b) A certificate of the Secretary of each of Flexible, HRA
and Great Lakes certifying as of the Closing Date, (i) a true, correct, and
complete copy of the Articles of Incorporation of such corporation and all
amendments thereto as in effect on the Closing Date; (ii) a true, correct, and
complete copy of the Bylaws of such corporation and all amendments thereto as
in effect on the Closing Date; (iii) a true, correct, and complete copy of the
resolutions approved and adopted by such corporation's Stockholders authorizing
and approving the execution, performance and delivery of this Agreement and the
transactions contemplated by this Agreement; and (iv) Good Standing Certificate
from the Indiana Secretary of State;
(c) The affidavit of the Seller certifying as to its non-
foreign status in accordance with Section 1445(6)(2) of the Code.
(d) The opinion of Sellers' counsel required by Section 5.4
above;
(e) Executed Employment Agreements;
(f) Executed Lock-Up and Registration Rights Agreement;
(g) All other documents, instruments and writings required to
be delivered by the Sellers at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
SECTION 7.3. Deliveries by the Buyer.
(1) At the Closing, the Buyer will deliver the following to or for
the account of Sellers or certain of its employees, as the case may be:
(a) The Purchase Price as required by Section 1.2 above,
including the Shares and an executed copy of the Escrow Agreement;
(b) A certificate of an executive officer of Buyer certifying
as of the Closing Date (i) a true, correct, and complete copy of the Articles
of Incorporation of the Buyer and all amendments thereto as in effect on the
Closing Date; (ii) a true, correct, and complete copy of the bylaws of the
Buyer and all amendments thereto as in effect on the Closing Date; (iii) a
true, correct, and complete copy of the resolutions approved and adopted by the
Board of Directors of the Buyer authorizing the transactions contemplated
herein; (iv) Good Standing Certificate from the Delaware Secretary of State;
(c) Executed Employment Agreements;
(d) All other documents, instruments and writings required to
be delivered by the Buyer at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
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ARTICLE VIII. INDEMNIFICATION
SECTION 8.1. Survival. All representations and warranties in this
Agreement and the Documents shall survive the Closing and any investigation at
any time made by or on behalf of any party for a period of three years and all
such representations and warranties shall expire on the third anniversary of
the Closing Date, except that (a) claims, if any, asserted in writing prior to
such third anniversary identified as a claim for indemnification pursuant to
this Article VIII shall survive until finally resolved and satisfied in full,
and (b) tax or environmental claims arising from a breach of Sections 2.24 and
2.26, respectively, shall survive for the full period of the applicable statute
of limitations, and until finally resolved and satisfied in full if asserted on
or prior to the expiration of any such period. The representations and
warranties shall not be affected or otherwise diminished by any investigation
at any time representations and warranties were made.
SECTION 8.2. Indemnification by Sellers. Subject to the terms herein,
the Stockholders, jointly and severally, shall indemnify, defend, and hold the
Buyer and its officer, directors, and employees, and their respective
successors and assigns (the "Seller's Indemnitees") harmless from, against and
with respect to any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense of any kind or character, including reasonable
attorney's and paralegal fees (the "Damages"), exceeding in the aggregate
$25,000 and arising out of or in any manner incident, relating or attributable
to:
(a) Any inaccuracy in any representation or breach of any
warranty of any Seller or Stockholder contained in this
Agreement;
(b) Any failure by Seller or Stockholders to perform or
observe, or to have performed or observed, in full, any
covenant, agreement or condition to be performed or
observed by it under any of the Documents;
(c) Reliance by the Buyer on any books or records of the
Sellers or on any written information furnished to the
Buyer pursuant to this Agreement by or on behalf of the
Sellers in the event that such books and records or
written information are false or inaccurate; or
(d) Liabilities or obligations of, or claims against, the
Buyer (whether absolute, accrued, contingent or otherwise)
relating to, or arising out of, the operation of the
Business prior to the Closing Date or facts and
circumstances relating specifically to the business, the
Leased Parcels or the Sellers existing at or prior to the
Closing Date, whether or not such liabilities, obligations
or claims were known on such date, excluding only the
Assumed Liabilities.
SECTION 8.3. Notice to Sellers, Etc. If any of the matters as to which
the Seller's Indemnitees are entitled to receive indemnification under Section
8.2 should entail litigation with or claims asserted by parties other than the
Sellers, the Sellers shall be given prompt notice thereof and shall have the
right, at its expense, to control such claim or litigation upon prompt notice
to Buyer of its election to do so. To the extent requested by the Sellers, the
Buyer, at its expense, shall cooperate with and assist the Sellers, in
connection with such claim or litigation. Buyer shall have the right to
appoint single counsel
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to consult with and remain advised by the Sellers in connection with such claim
or litigation. The Sellers shall have final authority to determine all matters
in connection with such claim or litigation; provided, however, that the
Sellers shall not settle any third party claim without the consent of the
Buyer, which shall not be unreasonably denied or delayed.
SECTION 8.4. Indemnification by Buyer. The Buyer shall indemnify,
defend, and hold the Sellers and its Stockholders and officers and employees
and their respective successors and assigns (the "Buyer's Indemnitees")
harmless from, against and with respect to any claim, liability, obligation,
loss, damage, assessment, judgment, cost and expense of any kind or character,
including reasonable attorney's and paralegal fees (the "Damages"), exceeding
in the aggregate $25,000 and arising out of or in any manner incident, relating
or attributable to:
(a) Any inaccuracy in any representation or breach of warranty
of the Buyer contained in this Agreement;
(b) Any failure by the Buyer to perform or observe, or to have
performed or observed, in full, any covenant, agreement or
condition to be performed or observed by it under any of
the Documents;
(c) Reliance by the Sellers on any books or records of the
Buyer or reliance by the Sellers on any written
information furnished to the Sellers pursuant to this
Agreement by or on behalf of the Buyer in the event that
such books and records or written information are false or
inaccurate; or
(d) The failure of Buyer to pay or perform the Assumed
Liabilities, Contracts and Leases subsequent to the
Closing Date; or
(e) Liabilities or obligations of, or claims against, the
Sellers (whether absolute, accrued, contingent or
otherwise) relating to or arising out of, the operation of
the Business subsequent to the Closing Date.
SECTION 8.5. Notice to the Buyer, Etc. If any of the matters as to
which the Buyer's Indemnitees are entitled to receive indemnification under
Section 8.4 should entail litigation with or claims asserted by parties other
than the Buyer, the Buyer shall be given prompt notice thereof and shall have
the right, at its expense, to control such claim or litigation upon prompt
notice to Sellers of its election to do so. To the extent requested by the
Buyer, the Sellers, at its expense shall cooperate with and assist the Buyer,
in connection with such claim or litigation. Sellers shall have the right to
appoint single counsel to consult with and remain advised by the Buyer in
connection with such claim or litigation. The Buyer shall have final authority
to determine all matters in connection with such claim or litigation; provided,
however, that the Buyer shall not settle any third party claim without the
consent of the Sellers, which shall not be unreasonably denied or delayed.
SECTION 8.6. Right of Set-Off. Upon notice to Sellers specifying in
reasonable detail the basis for such set-off, Buyer may give notice of a Claim
under the Escrow Agreement for amounts to which it may be entitled under this
Article VIII. The exercise of such right of set-off by Buyer in good faith,
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whether or not ultimately determined to be justified, will not constitute an
event of default under the Escrow Agreement. Neither the exercise of nor
failure to exercise such right of set-off or to give a notice of a Claim under
the Escrow Agreement will constitute an election of remedies or limit Buyer in
any manner in the enforcement of any other remedies that may be available to
it.
SECTION 8.7. Survival of Indemnification. The obligations to indemnify
and hold harmless pursuant to this Article VIII shall survive the Closing of
the purchase of the Business contemplated hereby for a period of three years,
notwithstanding any investigation at any time made by or on behalf of any
party, except that (a) claims, if any, asserted in writing prior to such second
anniversary identified as a claim for indemnification pursuant to this Article
VIII shall survive until finally resolved and satisfied in full, and (b) tax or
environmental claims arising from a breach of Sections 2.24 and 2.26,
respectively, shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if asserted on or
prior to the expiration of any such period.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1. Knowledge of Sellers. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
best knowledge of Seller, Seller confirms that it has made due and diligent
inquiry of its directors and officers as to the matters that are the subject of
such representations and warranties.
SECTION 9.2. Knowledge of Buyer. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the best of
knowledge of Buyer, Buyer confirms that it has made due and diligent inquiry of
its President, Vice Presidents and Chief Financial Officer as to the matters
that are the subject of such representations and warranties.
SECTION 9.3. "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 9.4. 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.
If to the Buyer:
StaffMark, Inc.
302 East Millsap Road
Fayetteville, Arkansas 72703
Attn: Terry C. Bellora, Chief Financial Officer
Fax No.: (501) 973-6019
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With a copy to:
Wright, Lindsey & Jennings
200 West Capitol Avenue, Suite 2200
Little Rock, Arkansas 72201
Attn: Fred M. Perkins III, Esq.
Fax No.: (501) 376-9442
If to Sellers:
Douglas H. Curtis
3206 Covington Lake Drive
Fort Wayne, Indiana 46804
With a copy to:
Barrett & McNagny
215 East Berry Street
P.O. Box 2263
Fort Wayne, Indiana 46801-2263
Attn: Patrick G. Michaels
Fax No. (219) 423-8920
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 9.4.
SECTION 9.5. Entire Agreement. This Agreement and the other 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. No
statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the other Documents shall affect or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
SECTION 9.6. 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 9.7. Assignment/Binding Effect. Neither this Agreement, nor
any right hereunder, may be assigned by any of the parties hereto without the
prior written consent of the other parties; provided, however, Buyer may assign
its rights (but not its obligations) hereunder to a wholly-
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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 9.8. 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 or entity shall be regarded as a third-party
beneficiary of this Agreement.
SECTION 9.9. 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 Indiana, except as otherwise
expressly provided in this Agreement or in an Annex or Schedule hereto.
SECTION 9.10. Severability. In the event that any arbitral 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 arbitral tribunal determines it enforceable, and as so limited shall
remain in full force and effect. In the event that such arbitral 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 9.11. 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 9.12. 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 9.13. Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any
other party to this Agreement, the party having such right to investigate shall
have the right to rely fully upon the representations and warranties of the
other party expressly contained herein, unless such party has actual knowledge
otherwise, which shall be proved by the other party by clear and convincing
evidence.
SECTION 9.14. 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.
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SECTION 9.15. 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 9.16. Publicity. Except by the mutual agreement between the
Sellers and Buyer, 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.
SECTION 9.17. 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.
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IN WITNESS WHEREOF, the Buyer and Sellers have each caused this
Agreement to be executed to be executed by their respective duly authorized
officers all as of the day and year first above written.
BUYER:
STAFFMARK ACQUISITION CORPORATION TWO
By: /s/ Clete T. Brewer
----------------------------------------------
Clete T. Brewer, President
STAFFMARK ACQUISITION CORPORATION THREE
By: /s/Clete T. Brewer
---------------------------------------------
Clete T. Brewer, President
STAFFMARK, INC.
By: /s/Clete T. Brewer
----------------------------------------------
Clete T. Brewer, President and Chief
Executive Officer
SELLERS:
FLEXIBLE PERSONNEL, INC.
By: /s/ Douglas H. Curtis
----------------------------------------------
Douglas H. Curtis, President
GREAT LAKES SEARCH ASSOCIATES, INC.
By: /s/ Douglas H. Curtis
----------------------------------------------
Douglas H. Curtis, President
H.R. AMERICA, INC.
By: /s/ Douglas H. Curtis
----------------------------------------------
Douglas H. Curtis, President
STOCKHOLDERS:
/s/ Douglas H. Curtis
--------------------------------------------------
Douglas H. Curtis, Individually
/s/ Douglas H. Curtis
--------------------------------------------------
Jean A. Curtis, Individually
/s/ Robert P. Curtis
--------------------------------------------------
Robert P. Curtis, Individually
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EXHIBIT 99.1
STAFFMARK ACQUIRES $45 MILLION STAFFING COMPANY
Expands Presence Into Indiana, Michigan, and Ohio
FAYETTEVILLE, AR -- As part of the Company's strategy to become a national
provider of diversified staffing services, StaffMark, Inc. (NASDAQ: STAF)
announced today that it has acquired Flexible Personnel ("Flexible"), an
independent provider of staffing and human resource management services
headquartered in Ft. wayne, Indiana. This is StaffMark's sixth acquisition
since its initial public offering in October, 1996, and its third acquisition
in 1997. With 1996 revenues of approximately $45 million, Flexible is also
StaffMark's largest acquisition to date. Flexible operates 40 offices in
Indiana, Michigan, and Ohio. This acquisition will be accounted for as an
asset purchase and the Company expects it to have a positive impact on 1997
EPS. Terms of the transaction were not disclosed.
"Flexible is an outstanding company and an excellent addition to StaffMark,"
said Clete T. Brewer, president and CEO. "As part of our goal to become a
national staffing services company, an important aspect of StaffMark's
acquisition strategy is to expand into new geographic areas. The acquisition
of Flexible puts StaffMark in Indiana, Michigan, and Ohio, three new states for
our Company, and allows us to develop a stronger presence in the Midwest."
Brewer noted that following this acquisition, StaffMark will operate 134
offices in 12 states and Canada.
"Since its founding in 1986 by Doug Curtis, Flexible has continued to grow,
adding new offices and new services each year. Mr. Curtis and his staff have
developed an excellent reputation for providing quality service in each of
their markets and we are looking forward to having them as part of the
StaffMark team," added Brewer.
Flexible provides temporary and direct placements in the light industrial,
clerical, professional, and technical industries. Outplacement and on-site
management programs and management search and direct placement services are
also provided by the company. In addition, Flexible offers a wide array of
training, testing and human resource and risk management services to its
customers.
A focus on value-added customized services such as employee training,
employment law education, and on-site management assistance has allowed
Flexible to grow at a rapid rate.
In 1992 and 1995, Flexible was featured in Inc. magazine's ranking of the top
500 fastest growing companies in the United States. Inc. also featured an
article on the success of Flexible's Employment Law Seminar series in December
1995. Other awards for Flexible include the Ft. Wayne Small Business of the
Year Award and the Outstanding Indiana Business Award.
StaffMark, Inc. is a leading provider of diversified staffing services to
businesses, professional and service organizations, health care providers, and
governmental agencies. The Company has operations in Arkansas, Colorado,
Georgia, Indiana, Michigan, Missouri, North Carolina, Ohio, Oklahoma, South
Carolina, Tennessee, Virginia, and British Columbia.
This release contains forward-looking statements which involve risk and
uncertainties with respect to growth opportunities and their impact on 1997
earnings. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of loss of
existing customers, loss of key management, unexpected costs, or operational
problems and those certain risk factors set forth under "Risk Factors" and
elsewhere in the Company's Prospectus dated September 262, 1996, made under the
Securities and Exchange Act of 1934.
Note: News releases and other information on StaffMark, Inc. can be accessed
at no charge at http://www.ctaonline.com/staf on the Internet.
