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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 1998
STAFFMARK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20971 71-0788538
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
302 East Millsap Road, Fayetteville, Arkansas 72703
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (501) 973-6000
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On January 9, 1998, StaffMark, Inc. (the "Company") completed the purchase
of all of the outstanding equity interests of Strategic Legal Resources, LLC, a
New York limited liability company ("SLR"). SLR provides legal professionals to
law firms, corporations and financial institutions and is headquartered in New
York, New York. The total consideration paid for the membership interests of SLR
was approximately $13.8 million, consisting of approximately $12.3 million in
cash and 46,320 shares of the Company's common stock, plus a contingent earnout
based upon the future performance of SLR. The purchase price was determined as a
result of direct negotiations with SLR and its members.
Item 7. Financial Statements and Exhibits
(a) It is impracticable to provide the required financial
statements for the business acquired by the registrant. The
registrant will file the required financial statements for
such acquired business within 60 days of the date that this
Form 8-K is due.
(b) It is impracticable to provide the required pro forma
financial information for the business 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 exhibit is filed with this Form 8-K:
2.1 Membership Interest Purchase Agreement dated as of
January 9, 1998, by and among StaffMark, Inc., Elihu
Gordis, Jay B. Horowitz, Eugene Greene and Kristin E.
Vickery. /1/
/1/ The Company will furnish supplementally a copy of any
omitted schedule to the Securities and Exchange
Commission upon request.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STAFFMARK, INC.
(Registrant)
Date: January 23, 1998 By:/s/ Terry C. Bellora
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Terry C. Bellora
Chief Financial Officer
EXHIBIT INDEX
2.1 Membership Interest Purchase Agreement dated as of
January 9, 1998, by and among StaffMark, Inc., Elihu
Gordis, Jay B. Horowitz, Eugene Greene and Kristin E.
Vickery. /1/
/1/ The Company will furnish supplementally a copy of any
omitted schedule to the Securities and Exchange
Commission upon request.
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EXHIBIT 2.1
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
STAFFMARK, INC.,
ELIHU GORDIS, JAY B. HOROWITZ,
EUGENE GREENE AND KRISTIN E. VICKERY
* * * * * * * * * * * * * *
JANUARY 9, 1998
* * * * * * * * * * * * *
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TABLE OF CONTENTS
<TABLE>
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PAGE
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INDEX TO EXHIBITS .................................................... iv
ARTICLE I. DEFINITIONS ............................................... 1
SECTION 1.1 Definitions ..................................... 1
ARTICLE II. PURCHASE AND SALE OF THE INTERESTS ...................... 4
SECTION 2.1. Sale of the Interests .......................... 4
SECTION 2.2. Consideration for the Interests ................ 4
SECTION 2.3. The Closing .................................... 4
SECTION 2.4. Actions at the Closing ......................... 4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF EACH MEMBER .......... 5
SECTION 3.1. Ownership of the Interests ..................... 5
SECTION 3.2. Authority Relative to this Agreement ........... 5
SECTION 3.3. Securities Exemptions .......................... 5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS ........... 5
SECTION 4.1. Organization and Qualification ................ 5
SECTION 4.2. Entity Power .................................. 6
SECTION 4.3. Capitalization of the LLC ..................... 6
SECTION 4.4. No Violation; Consents ........................ 6
SECTION 4.5. Subsidiaries and Investments .................. 6
SECTION 4.6. Books and Records ............................. 6
SECTION 4.7. Financial Statements .......................... 7
SECTION 4.8. Absence of Undisclosed Liabilities ............ 7
SECTION 4.9. Labor and Employee Relations .................. 7
SECTION 4.10. Real Property ................................. 8
SECTION 4.11. Powers of Attorney; Absence of Limitations
on Competition; Guarantees .................... 8
SECTION 4.12. Significant Customers ......................... 8
SECTION 4.13. Absence of Certain Changes; Conduct of Business 9
SECTION 4.14. Certain Practices ............................. 10
SECTION 4.15. Compliance with Law; Licenses and Permits ..... 10
SECTION 4.16. Employee Benefits ............................. 10
SECTION 4.17. Fixed Assets .................................. 11
SECTION 4.18. Insurance ..................................... 11
SECTION 4.19. Outstanding Contracts ......................... 11
SECTION 4.20. Outstanding Leases ............................ 12
SECTION 4.21 Intellectual Properties ....................... 12
SECTION 4.22. Proprietary Information of Third Parties ...... 12
SECTION 4.23. Transactions with Affiliates .................. 13
SECTION 4.24. Taxes ......................................... 13
SECTION 4.25. Litigation .................................... 13
SECTION 4.26. Environmental Matters ......................... 14
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SECTION 4.27. Broker's or Finder's Fees ..................... 14
SECTION 4.28. Accounts Receivable ........................... 14
SECTION 4.29. Projections ................................... 14
SECTION 4.30. Disclosure .................................... 15
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF STAFFMARK .............. 15
SECTION 5.1. Organization ................................... 15
SECTION 5.2. Corporate Power and Authority .................. 15
SECTION 5.3. Validity, Etc .................................. 15
SECTION 5.4. The StaffMark Shares ........................... 15
SECTION 5.5. SEC Filings .................................... 16
SECTION 5.6. Events Subsequent to September 30, 1997 ........ 16
SECTION 5.7. Broker's or Finder's ........................... 16
ARTICLE VI. PRE-CLOSING COVENANTS AND AGREEMENTS .................... 16
SECTION 6.1. Cooperation .................................... 16
SECTION 6.2. Best Efforts ................................... 16
SECTION 6.3. Investigations ................................. 16
SECTION 6.4. Distributions .................................. 16
SECTION 6.5. Corporate Matters .............................. 17
SECTION 6.6. Notice of Developments ......................... 17
SECTION 6.7. Exclusivity .................................... 17
ARTICLE VII. POST-CLOSING COVENANTS ................................. 17
SECTION 7.1. Post-Closing Covenants of the Members .......... 17
SECTION 7.2. Post-Closing Covenants of StaffMark ............ 18
ARTICLE VIII. CONDITIONS TO STAFFMARK'S OBLIGATIONS ................. 19
SECTION 8.1. Representations and Warranties True;
Satisfaction of Covenants ..................... 19
SECTION 8.2. Consents ...................................... 19
SECTION 8.3. No Obstructive Proceeding ..................... 19
SECTION 8.4. Opinion of Counsel to the LLC ................. 19
SECTION 8.5. Closing Documents ............................. 19
SECTION 8.6. Intentionally Omitted ......................... 19
SECTION 8.7. No Material Adverse Change .................... 19
SECTION 8.8. Indemnification Agreement ..................... 20
SECTION 8.9. Escrow Agreement .............................. 20
SECTION 8.10. Employment Agreements ......................... 20
SECTION 8.11. Noncompetition Agreement ...................... 20
SECTION 8.12. Purchase Price Certificate .................... 20
ARTICLE IX. CONDITIONS TO THE MEMBERS' OBLIGATIONS .................. 20
SECTION 9.1. Representations and Warranties True;
Satisfaction of Covenants ...................... 20
SECTION 9.2. Closing Documents .............................. 20
SECTION 9.3. No Obstructive Proceeding ...................... 20
SECTION 9.4. Employment Agreements .......................... 21
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SECTION 9.5. Opinion of Counsel to StaffMark ................ 21
SECTION 9.6. Purchase Price Certificate ..................... 21
SECTION 9.7. Earnout Agreement .............................. 21
ARTICLE X. SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; REMEDIES ..................................... 21
SECTION 10.1. Survival of Representations,
Warranties and Covenants ...................... 21
SECTION 10.2. Remedies ...................................... 21
ARTICLE XI. TERMINATION .............................................. 21
SECTION 11.1. Termination of Agreement ...................... 21
SECTION 11.2. Effect of Termination ......................... 22
SECTION 11.3. Other Termination Matters ..................... 22
ARTICLE XII. MISCELLANEOUS .......................................... 23
SECTION 12.1. Notices ...................................... 23
SECTION 12.2. Entire Agreement ............................. 24
SECTION 12.3. Modifications and Amendments ................. 24
SECTION 12.4. Assignment/Binding Effect .................... 24
SECTION 12.5. Parties in Interest .......................... 24
SECTION 12.6. Governing Law ................................ 24
SECTION 12.7. Severability ................................. 24
SECTION 12.8. Interpretation ............................... 25
SECTION 12.9. Headings and Captions ........................ 25
SECTION 12.10. Expenses ..................................... 25
SECTION 12.11. Gender ....................................... 25
SECTION 12.12. Publicity .................................... 25
SECTION 12.13. Counterparts ................................. 25
SECTION 12.14. Exhibits and Schedules ....................... 25
SECTION 12.15. Telecopy Execution and Delivery .............. 25
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INDEX TO EXHIBITS
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ANNEX I -- Form of the Purchase Price Certificate
EXHIBIT A -- Form of the Earnout Agreement
EXHIBIT B -- Form of the Restrictive Legend
EXHIBIT C -- Form of the Opinion of Counsel to the Members
EXHIBIT D -- Form of the Indemnification Agreement
EXHIBIT E -- Form of the Escrow Agreement
EXHIBIT F -- Form of the Noncompetition Agreements
EXHIBIT G -- Form of the Opinion of Counsel to StaffMark
INDEX TO SCHEDULES
Schedule 2.2 -- List of Members and their Percentage Ownership of the Interests
Schedule 3.1 -- Security Interests, Liens and Other Matters With Respect to the Interests
Schedule 4.1 -- Organization and Qualification
Schedule 4.2 -- Capitalization of the LLC
Schedule 4.4 -- No Violation; Consents
Schedule 4.6 -- Books and Records
Schedule 4.7 -- Financial Statements
Schedule 4.8 -- Absence of Undisclosed Liabilities
Schedule 4.9(A) -- Labor and Employee Relations
Schedule 4.9(B) -- Attorneys
Schedule 4.11 -- Powers of Attorney; Absence of Limitations on Competition; Guarantees
Schedule 4.12 -- Significant Customers
Schedule 4.13 -- No Adverse Change
Schedule 4.15 -- Compliance with Law
Schedule 4.16 -- Employee Benefits
Schedule 4.17 -- Claims on Fixed Assets
Schedule 4.18 -- Insurance
Schedule 4.19.1 -- Notice of Contract Defaults
Schedule 4.19.2 -- Termination of Contracts
Schedule 4.19.3 -- Limitations on Contracts
Schedule 4.19.4 -- Contracts Requiring Consent of Other Party
Schedule 4.20 -- Leases
Schedule 4.21 -- Intellectual Properties
Schedule 4.22 -- Proprietary Information of Third Parties
Schedule 4.23 -- Transactions with Affiliates
Schedule 4.25 -- Litigation
Schedule 4.26 -- Environmental Matters
Schedule 4.27 -- Brokers
Schedule 7.2 -- Stock Option Financial Targets
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is
entered into this 9th day of January, 1998, by and among StaffMark, Inc., a
Delaware corporation ("StaffMark"), Elihu Gordis, Jay B. Horowitz, Eugene Greene
and Kristin E. Vickery (each such person, whether a General Member (as defined
below) or a Limited Member (as defined below), is sometimes individually
referred to as a "Member" and such persons are sometimes collectively referred
to as the "Members.") The Members in the aggregate own all of the outstanding
membership Interests (as hereinafter defined) of Strategic Legal Resources, LLC,
a New York limited liability company (the "LLC"). StaffMark and the Members are
sometimes collectively referred to as the "Parties" and are sometimes referred
to herein separately as a "Party".
RECITALS
WHEREAS, the LLC is engaged in the business of providing permanent,
contractual and temporary personnel (the "Business");
WHEREAS, the Members desire to sell or otherwise transfer all the issued
and outstanding membership Interests to StaffMark;
WHEREAS, StaffMark desires to purchase all of the Interests from the
Members; and
WHEREAS, the Parties desire that the purchase of the Interests by
StaffMark from the Members will be treated as an asset purchase for federal,
state and local income tax purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, representations,
warranties, agreements and covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Parties, the Parties hereby agree as follows:
I. ARTICLE
1.1 SECTION
(a) The following terms have the meanings set forth below:
"Adverse Consequences" means all damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees
and expenses, as well as consequences, effects or circumstances that are
adverse to the business, assets or financial condition of the LLC.
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"Average Closing Price" means the average of the price per share closing
sales prices of the StaffMark Common Stock for the five (5) day trading
period ending on the last business day prior to the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"General Member" has the meaning ascribed thereto in the Operating
Agreement.
"Governmental Authority" means any government, governmental entity,
department, commission, board, agency, political subdivision or
instrumentality, any court, tribunal, judicial or arbitral body and
professional or ethical licensings review or regulatory body, whether
federal, state, local or foreign.
"Interests" means with respect to any Member, any Interest (as that term
is defined in the Operating Agreement) of the LLC.
"Knowledge" means all facts and circumstances and information which are
either within the actual knowledge of the LLC or any officer, member or
corporate or administrative full-time employee of the LLC or that should
have been known to such persons in the exercise of reasonable care and
due inquiry.
"Liability" means any liability (whether known or unknown, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due).
"Limited Member" has the meaning ascribed thereto in the Operating
Agreement.
"Operating Agreement" means that certain Operating Agreement of the LLC
dated as of July 31, 1995, as amended to date.
"Ordinary Course of Business" means the ordinary course of business of
the LLC consistent with past custom and practice (including with respect
to quantity and frequency).
"Person" means an individual, a general partnership, a limited
partnership, a corporation, a limited liability company, a limited
liability partnership, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a governmental entity.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, restrictions, restraint on alienation or other security
interest, other than liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation, limited partnership, limited
liability partnership, limited liability company, or joint venture with
respect to which a specified Person (directly or indirectly) owns a
majority of the common stock or ownership interests, as applicable, or
has the power to vote or direct the voting of sufficient securities or
ownership interests, as applicable to elect a majority of the directors,
committee members or general partner, as applicable.
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(b) The following terms have the meanings defined for such
terms in the Sections set forth below:
<TABLE>
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Term Section
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Accounts Receivable 4.29
Agreement Preamble
Balance Sheet 4.7
Balance Sheet Date 4.7
Benefit Plan 4.17
Breaching Party 10.2
Business Recitals
Closing 2.3
Closing Date 2.3
Contracts 4.19
Documents 4.4
Earnout Agreement 2.2(c)
Escrow Agent 2.2(b)
Escrow Agreement 8.9
Employment Agreements 8.10
ERISA 4.16
Financial Statements 4.7
GAAP 4.7
Indemnification Agreement 8.8
Intellectual Property 4.21
LLC Preamble
LLC Transaction Costs 12.10
Leased Parcels 4.20
Leases 4.20
Most Recent Fiscal Year End 4.7
Noncompetition Agreements 8.11
Parties Preamble
Party Preamble
Projections 4.29
Purchase Price 2.2
Purchase Price Certificate 2.2(a)
Related Person 4.22
SEC Filings 5.5
Securities Act 3.3
StaffMark Preamble
StaffMark Common Stock 2.2(a)
StaffMark Shares 2.2(a)
Substance or Substances 4.26
Tax or Taxes 4.24
Up-Front Purchase Price 2.2(a)
WARN 4.9(e)
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ARTICLE II. PURCHASE AND SALE OF THE INTERESTS
SECTION 2.1. Sale of the Interests . Subject to the terms and conditions
of this Agreement, at the Closing, the Members are selling and transferring the
Interests to StaffMark, and StaffMark is purchasing the Interests from the
Members.
SECTION 2.2. Consideration for the Interests . In consideration for the
transfer of the Interests, upon the terms and subject to the conditions set
forth in this Agreement, StaffMark shall pay to the Members an aggregate
purchase price (the "Purchase Price") as follows:
(a) at the Closing, StaffMark is delivering to the Members (or
to the Escrow Agent on behalf of the Members): (i) the shares of
StaffMark common stock, $.01 par value (the "StaffMark Common Stock")
set forth in the certificate delivered by the Members and agreed upon by
StaffMark in the form of Annex "I" attached hereto (the "Purchase Price
Certificate"), based on the Average Closing Price (the "StaffMark
Shares"); (ii) the amount of cash set forth in the Purchase Price
Certificate, said cash to be payable in immediately available funds by
certified check or wire transfer (the sum of the total dollar value of
items (i) plus (ii) which constitute a portion of the Purchase Price is
sometimes hereinafter referred to as the "Up-Front Purchase Price") in
the respective amounts as set forth on Schedule 2.2 attached hereto;
(b) at the Closing, StaffMark is depositing into escrow with
Mercantile Bank National Association, St. Louis, Missouri (the "Escrow
Agent"), ten percent (10%) of the Up-Front Purchase Price in shares of
the StaffMark Common Stock, as further set forth in the Purchase Price
Certificate, based upon the Average Closing Price; and
(c) subsequent to the Closing, StaffMark shall pay the earnout
amounts pursuant to and in accordance with the Earnout Agreement by and
among StaffMark and the Members in the form attached hereto as Exhibit
"A" (the "Earnout Agreement").
SECTION 2.3. The Closing . The closing of the transactions contemplated
by this Agreement (the "Closing") is taking place at the offices of Morgan,
Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178; Phone (212)
309-6000; Facsimile (212) 309-6273, commencing at 9:00 a.m. local time on
January 9, 1998 (the "Closing Date").
SECTION 2.4. Actions at the Closing . At the Closing: (i) the Members
are delivering or, as applicable, are causing the LLC to deliver to StaffMark
the various certificates, instruments and documents referred to in Article VIII
and any other certificates and documents reasonably requested by StaffMark; (ii)
the Members are delivering certificates representing all of the Interests
endorsed in blank or accompanied by duly executed assignment documents; and
(iii) StaffMark is delivering to the Members the various certificates and
documents referred to in Article IX and the Up-Front Purchase Price as
contemplated by Section 2.2. The transaction contemplated by this Agreement will
be effective for accounting purposes as of 12:01 AM (CDT) on December 1, 1997.
The transactions contemplated by this Agreement will be effective for income tax
purposes as of 11:59 PM (EST) on January 1, 1998.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF EACH MEMBER
SECTION 3.1. Ownership of the Interests . Each Member represents and
warrants that he or she as applicable, owns that percentage of the outstanding
Interests of the LLC on Schedule 3.1 and that there are no other Interests of
the LLC issued and outstanding. Each Member represents and warrants that except
as set forth on Schedule 3.1 he owns his or her Interest free and clear of all
pledges, security interests, liens, charges, encumbrances, equities, claims,
options or limitations of every kind and has the full power to sell and transfer
his or her Interest to StaffMark without obtaining the consent or approval of
any other Person or Governmental Authority.
SECTION 3.2. Authority Relative to this Agreement . Each Member
represents and warrants: (a) that such Member has full legal power, capacity and
authority to execute and deliver this Agreement, including the Schedules hereto,
and the other documents (including certain Exhibits) executed in connection
herewith and to consummate the transactions contemplated hereby; and (b) that
this Agreement and the Documents (as defined) have been duly and validly
executed and delivered by such Member and each constitutes a valid and binding
obligation of such Member, enforceable against such Member in accordance with
its terms.
SECTION 3.3. Securities Exemptions . The StaffMark Shares are being
acquired by each Member for his or her own account, as applicable, 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 "Securities Act")
and the rules and regulations thereunder. Each Member has been afforded full and
complete access to all relevant financial and other information regarding
StaffMark. Each Member will not offer, sell, assign, pledge, hypothecate,
transfer or otherwise dispose of the StaffMark 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, and applicable
state securities laws and regulations. Certificates representing the StaffMark
Shares will contain a restrictive legend in the form attached hereto as Exhibit
"B." Each Member is familiar with the provisions of Rule 144, as amended and
promulgated under the Securities Act, and realizes that sales of the StaffMark
Shares may be subject to restrictions pursuant to the terms of that rule.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
As an inducement to StaffMark to enter into this Agreement and to
consummate the transactions contemplated hereby, the Members jointly and
severally represent and warrant to StaffMark as follows:
SECTION 4.1. Organization and Qualification . The LLC is a limited
liability company duly formed, validly existing and is subsisting under the laws
of the State of New York. The LLC is duly qualified or otherwise authorized to
transact business and is in good standing as a foreign LLC in the states set
forth on Schedule 4.1 attached hereto, which are all states in which either the
ownership or use of its properties, or the nature of the activities conducted by
it, requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the LLC. The Members have delivered
to StaffMark complete and correct copies of the LLC's Articles of Formation and
the Operating Agreement as currently in effect.
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SECTION 4.2. Entity Power. The LLC has the power and authority to own
and hold its properties and to carry on its business as now conducted, including
the right to use the name "Strategic Legal Resources, LLC." The LLC does not
currently use any fictitious names.
SECTION 4.3. Capitalization of the LLC. The LLC has authorized
capitalization consisting solely of membership interests, of which such
membership interests are held by the persons and in the percentages reflected on
Schedule 3.1 attached hereto. All Interests have been duly authorized and
validly issued and are fully paid and nonassessable, and such Interests have
been so issued pursuant to an appropriate exemption from federal and state
securities laws. None of the Interests have been issued in violation of any
preemptive right. The LLC has no other equity securities or other evidence of
ownership outstanding other than the Interests possessed by the Members. Except
as set forth in this Agreement or on Schedule 3.1, there are no outstanding
subscriptions, options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for the
purchase, issuance, transfer or sale of any of the Interests or any equity
securities of the LLC or other evidence of ownership in the LLC. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to the LLC. There are no voting trusts, proxies or other agreements
or understandings with respect to the Interests of the LLC.
SECTION 4.4. No Violation; Consents. Except as set forth on Schedule
4.4, neither the execution and delivery of this Agreement or the Exhibits and
the Schedules hereto and the other documents and instruments contemplated hereby
(the "Documents"), the consummation of the transactions contemplated hereby, nor
the performance of this Agreement or the other Documents in compliance with the
terms and conditions thereof by the LLC will: (i) violate, conflict with or
result in any breach of the Articles of Formation or the Operating Agreement of
the LLC or any trust agreement, judgment, decree, injunction, order, writ,
statute, rule or regulation applicable to the LLC; (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 LLC under any law, statute, rule, regulation or
any judgment, decree, order, governmental permit, license or order applicable to
the LLC or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, Contract or other instrument or obligation related to
the LLC or to the LLC's ability to consummate the transactions contemplated
hereby or thereby, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained in writing and provided to StaffMark; or (iii) require the
consent, waiver, authorization, approval of or filing with any Governmental
Authority or of any other Person. The LLC will give any required notices to
third parties, and the LLC will obtain any third party consents required to be
obtained due to the consummation of the transactions contemplated hereby.
SECTION 4.5. Subsidiaries and Investments. The LLC has no Subsidiaries
and does not own, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any other Person.
SECTION 4.6. Books and Records. To the extent required by law, the
minute books of the LLC, which have been and will be made available by the
Members to StaffMark and its representatives, contain accurate records of all
meetings of and actions or written consents by the officers, directors and
Members of the LLC set forth in such minute books and are correct and complete.
Except as set forth on Schedule 4.6, the LLC does not have any of its records,
systems, controls, data or information recorded,
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stored, maintained, operated or otherwise wholly or partly dependent upon or
held by any means (including electronic, mechanical or photographic process
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the LLC.
SECTION 4.7. Financial Statements. Attached hereto collectively as
Schedule 4.7 are the following financial statements (the "Financial
Statements"): (i) the reviewed balance sheet of the LLC as of December 31, 1996
(the "Most Recent Fiscal Year End"), the reviewed statements of income and
expenses, changes in membership capitalization and cash flow for the fiscal
years then ended; (ii) the compiled balance sheet of the LLC (the "Balance
Sheet") as of November 30, 1997 (the "Balance Sheet Date") and the compiled
statements of income and the expenses, changes in membership capitalization and
cash flow for the eleven (11) months then ended. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") on a consistent basis and were prepared from the books and records of
the LLC other than the compiled Financial Statements as of November 30, 1997 and
for the eleven month period ended November 30, 1997 which do not include
footnote disclosure. Such books and records are complete and correct in all
material respects, accurately reflect all transactions of the LLC, and have been
made available to StaffMark for examination. The Financial Statements fairly
present the financial position of the LLC as of the dates thereof and the
results of its operations for the periods ended on the dates thereof. Since the
Balance Sheet Date and except as disclosed in the Schedules referenced in this
Agreement: (i) there has been no change in the assets, Liabilities or financial
condition of the Business of the LLC from that reflected in its Balance Sheet
other than in the Ordinary Course of Business; and (ii) none of the business,
prospects, financial condition, operations, property or affairs of the LLC has
been materially adversely affected by any occurrence or development,
individually or in the aggregate, whether or not insured against. The Balance
Sheet reflects, as of the Balance Sheet Date, all Liabilities of the LLC related
to the LLC, to the extent such items are required to be reflected on such
Balance Sheet under GAAP.
SECTION 4.8. Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically
reflected or reserved against in its Balance Sheet or except as set
forth on Schedule 4.8, the LLC has no Liabilities, except for
Liabilities incurred since the date thereof in the Ordinary Course of
Business.
(b) The LLC maintains adequate coverage under a full-premium
policy with respect to workers' compensation matters and represents and
warrants there is no unrecorded Liability with respect thereto for which
StaffMark 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 in accordance with GAAP.
(c) The LLC is not bound by any agreement, or subject to any
charter or other corporate restriction or any unusual legal requirement,
which has, or in the future can reasonably be expected to have, a
material adverse effect on the LLC.
SECTION 4.9. Labor and Employee Relations.
(a) Schedule 4.9(A) sets forth a list of each employment or
collective bargaining agreement to which the LLC is a party as well as a
list of all employment agreements with
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corporate or administrative employees of the LLC (including, but not
limited to, incentive and/or bonus compensation agreements, but
excluding deferred benefit agreements) and the standard form of
agreements with attorneys and/or paralegals who are employees (but not
corporate or administrative employees) of the LLC. Schedule 4.13(a) sets
forth the base salary and any bonuses or commissions for the prior year
and the current fiscal year paid by the LLC for each corporate or
administrative employees. Schedule 4.9(B) sets forth the LLC's billing
register for the week ended December 21, 1997 for each attorney,
paralegal or legal secretary of the LLC and such attorney's, paralegal's
or legal secretary's gross pay rate, all benefits and billing rates.
(b) No labor organization or group of employees of the LLC has
made a pending demand for recognition or certification, and there are no
representation proceedings presently pending or threatened with the
National Labor Relations Board or any other federal, state, or other
Governmental Authority involving employees of the LLC. There are no
other organizing activities involving the LLC presently being conducted
or threatened (in writing) by any labor organization or group of
employees of the LLC.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
labor disputes or material grievances pending or threatened (in writing)
against the LLC, and there have been no actual or threatened material
labor disputes or work stoppages within the last three (3) years. There
are no unfair labor practice charges or complaints pending or threatened
(in writing) by or on behalf of any employee or group of employees of
the LLC.
(d) There are no complaints, charges or claims pending or,
threatened (in writing) against the LLC by any Governmental Authority
based on, arising out of, in connection with, or otherwise relating to
the employment or termination of employment by the LLC of any
individual.
(e) The LLC has been and is in substantial compliance with all
laws, regulations and orders relating to the employment of the
employees, including but not limited to all such laws, regulations and
orders relating to wages, hours, the Workers Adjustment and Restraining
Notification Act, 29 U.S.C. Section 151 et seq. ("WARN"), the National
Labor Relations Act, as amended, 29 U.S.C. Section 151 et. seq., and any
comparable state or local laws or regulations, equal employment
opportunity discrimination laws or regulations, civil rights laws or
regulations safety and health laws or regulations, workers' compensation
laws or regulations and the collection and payment of withholding and/or
social security taxes.
SECTION 4.10. Real Property. The LLC owns no real property.
SECTION 4.11. Powers of Attorney; Absence of Limitations on Competition;
Guarantees. Except as set forth in Schedule 4.11, (i) no power of attorney or
similar authorization given by the LLC presently is in effect or outstanding;
(ii) no contract or agreement to which the LLC is a party or is bound or to
which the LLC's properties or assets is subject limits the freedom of the LLC to
compete in any line of business or with any Person; and (iii) the LLC is not a
party to or bound by any guarantee of any debt or obligation of any other
Person.
SECTION 4.12. Significant Customers . Set forth on Schedule 4.12 is a
true and correct list of the LLC's ten largest customers for the most recent
eleven (11) month and two (2) week period ended
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December 14, 1997, together with the amount of services attributable to such
customers expressed in dollars and as a percentage of total sales and services.
Except as set forth on Schedule 4.12, none of the customers identified on
Schedule 4.12 has terminated, reduced, or threatened to terminate or reduce, its
request for services of the LLC during the period covered by such schedule or
prior to the Closing Date.
SECTION 4.13. Absence of Certain Changes; Conduct of Business. Except
as set forth on Schedule 4.13 or otherwise agreed to in connection with this
Agreement, during the period from the Balance Sheet Date to and including the
date of this Agreement, except in the Ordinary Course of Business:
(a) the LLC has not canceled any indebtedness owing to it or any
claims that it might have possessed, waived any material rights of
substantial value or sold, leased, assigned, 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 Security Interest;
(b) the LLC has not made any changes in the types, nature,
composition or quality of the services of its business and there has not
been any material adverse change in the sales, revenue or net income of
its business;
(c) the LLC has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases and
licenses);
(d) no party (including the LLC) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which
the LLC is a party or by which it is bound;
(e) the LLC has not made any capital expenditure (or series of
related capital expenditures) either involving more than $7,500;
(f) the LLC has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person;
(g) the LLC 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 $7,500;
(h) the LLC has not delayed or postponed the payment of accounts
payable and other Liabilities;
(i) the LLC has not granted any license or sublicense of any
rights under or with respect to any patents, trademarks or copyrights;
(j) the LLC has not accelerated collection of accounts
receivables through special inducements;
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(k) the LLC has not declared, set aside, or paid any dividend or
made any distribution with respect to its Members (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(l) the LLC has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(m) the LLC has not made any loan to, or entered into any other
transaction with, any of its Members, officers, or employees;
(n) the LLC 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;
(o) the LLC has not granted any increase in the base
compensation of any of its directors, officers, or employees other than
increases in compensation in the Ordinary Course of Business;
(p) the LLC has not adopted, amended, modified or terminated any
bonus, profit sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, or
employees (or taken any such action with respect to any other Employee
Plan);
(q) the LLC has not made any other change in employment terms
for any of its directors, officers, or employees; or
(r) the LLC has not agreed, whether or not in writing, to do any
of the foregoing.
SECTION 4.14. Certain Practices. Neither the LLC, nor any of its
officers, directors, Members, or employees have, directly or indirectly, used
any LLC funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of the LLC or any subsidiary; 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 4.15. Compliance with Law; Licenses and Permits . Except as set
forth on Schedule 4.15, the LLC has substantially complied and is in substantial
compliance 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 4.15, there is no existing law, rule,
regulation or order, whether federal, state or local, which would prohibit or
restrict the LLC from conducting the Business in substantially the same manner
heretofore conducted by the LLC in any jurisdiction in which the Business is now
conducted. The LLC possesses all franchises, permits, licenses, certificates and
consents required
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from any Governmental Authority in order for the LLC 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 in full force and
effect.
SECTION 4.16. Employee Benefits. Schedule 4.16 briefly describes all
defined benefit plans, defined contribution plans, welfare plans, medical
insurance and other employee benefit plans and programs maintained or formerly
maintained by the LLC or any predecessor or former affiliates of such entity for
the past three (3) years ("Benefit Plans"). As respects all Benefit Plans: (a)
there are no funding deficiencies (determined on a plan termination basis); (b)
no Reportable Event, as defined by the Employee Retirement Income Security Act
("ERISA"), has occurred during the last two (2) years; (c) no Benefit Plan is a
Multiemployer Plan (as defined in Section 4001 of ERISA); (d) no Benefit Plan
provides for medical benefits, life insurance or other similar benefits to
retirees or their families; (e) no Benefit Plan is self-funded except to the
extent indicated in Schedule 4.16; (f) the LLC has not effected a termination or
partial termination of any Benefit Plan or participation in any Benefit Plan
within the last five (5) years, except for the replacement of health, disability
and life carriers; (g) no disabled current or former employee claims or receives
or is entitled to receive disability , pension, health, welfare or life
insurance benefits from the LLC; (h) all Benefit Plans may be terminated or
modified by the LLC in its discretion without penalty or premium, except as
required by any of the Benefit Plans; and (i) all Benefit Plans otherwise have
been and are in compliance with all applicable laws, rules and regulations.
SECTION 4.17. Fixed Assets. Except as shown on Schedule 4.17, the LLC
has good and marketable title to all of its assets reflected on the Balance
Sheet, free and clear of all Security Interests. All of the LLC's assets,
whether owned or leased, are adequate and usable, are in good operating
condition and repair and have been properly maintained, ordinary wear and tear
excepted.
SECTION 4.18. Insurance. Schedule 4.18 lists the insurance coverage
carried by the LLC, which insurance will remain in full force and effect with
respect to all events occurring prior to the Closing Date. StaffMark has been
provided with an accurate list of all insurance loss runs or worker's
compensation claims received for the past three policy years. Except as set
forth on Schedule 4.18, the LLC: (i) has not failed to give any notice or
present any claim under any such policy or binder in due and timely fashion;
(ii) has not received notice of cancellation or nonrenewal of any such policy or
binder; (iii) is not aware of any threatened or proposed cancellation or
nonrenewal of any such policy or binder; (iv) has not received notice and is not
otherwise 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 4.19. Outstanding Contracts. The LLC has delivered or made
available to StaffMark true, correct and complete copies of all existing written
contracts, agreements, personal property, leases, commitments, licenses and
franchises, relating to the LLC (collectively the "Contracts"). All of the
Contracts are in full force and effect and enforceable in accordance with their
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 4.19.1, the LLC and each
other party thereto have materially performed all the obligations required to be
performed by it, have received no notice of default and are not in default (with
due notice of lapse of time or both) under any of the Contracts. The LLC has no
present expectation or intention of not fully performing all its obligations
under each of the
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Contracts, and the LLC is not aware of any breach or anticipated breach by the
other party to any of the Contracts to which the LLC is a party except for
normal concessions in the Ordinary Course of Business. Except as set forth on
Schedule 4.19.2, none of the Contracts have been terminated; no notice has been
given by any party thereto of any alleged default by any party thereunder; and
the LLC 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
4.19.3, there exists no actual or, threatened termination, cancellation or
limitation of the business relationship of the LLC by any party to any of the
Contracts. Except as set forth on Schedule 4.19.4, none of the Contracts require
the consent of the other party thereto in connection with the transactions
contemplated by this Agreement.
SECTION 4.20. Outstanding Leases. Schedule 4.20 sets forth each
agreement by which the LLC leases each parcel of real property (the "Leased
Parcels") used in connection with the LLC's Business (collectively, the
"Leases"). The LLC has delivered or made available to StaffMark true, correct
and complete copies of all of the Leases specified on Schedule 4.20. All rents
due under the Leases have been paid in accordance with the terms thereof. Each
of the Leases is in full force and effect and enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be subject to or
affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on Schedule 4.20, the LLC and each
other party to the Leases have performed all the obligations required to be
performed by them, have received no notice of default and are not in default
(with due notice or lapse of time or both) under any of the Leases. The LLC has
no present expectation or intention of not fully performing all its obligations
under each of the Leases, and the LLC is not aware of any breach or anticipated
breach by the other party to any of the Leases. Except as set forth on Schedule
4.20, 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 LLC 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 threatened termination,
cancellation, or limitation of the business relationship of the LLC with any
party to any of the Leases.
SECTION 4.21. Intellectual Properties. The registered servicemark
"Strategic Legal Resources" is the only intellectual property owned by the LLC
other than customer lists and information that can be categorized as "know-how"
(collectively, the "Intellectual Property"). Except as set forth on Schedule
4.21 and except for commercial software licensed for use on personal computers
or provided pursuant to agreement, the LLC owns the entire right, title and
interest in and to the Intellectual Property, used in the operation of its
business and each item constituting part of the Intellectual Property which is
owned by the LLC has been, to the extent indicated in Schedule 4.21, duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark office or such other Governmental Authorities, domestic or
foreign as are indicated in Schedule 4.21 and such registrations, filings and
issuance remain in full force and effect. To the Knowledge of the LLC, there are
no pending or threatened proceeding or litigation or other adverse claims
affecting or with respect to the Intellectual Property. To the Knowledge of the
LLC, there is no reasonable basis upon which a claim may be asserted against the
LLC 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 trademarks, service marks, service
mark registrations or applications copyrights, copyright registrations or
applications, trade secrets or other confidential proprietary information and to
the Knowledge of the LLC, no Person is infringing on the Intellectual Property.
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SECTION 4.22. Proprietary Information of Third Parties. Except as
disclosed on Schedule 4.22, no third party has claimed (in writing) that any
Person employed by or consulting with the LLC ("Related Person") has: (i)
violated or may be violating any of the terms or conditions of such person's
employment, noncompetition or nondisclosure agreement with such third party;
(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party; or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from the LLC which suggests that such a claim might be
contemplated. To the Knowledge of the LLC, 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 LLC, and the
LLC has no reason to believe there will be any such employment or violation.
SECTION 4.23. Transactions with Affiliates. Except as disclosed on
Schedule 4.23, no Member, director, or officer of the LLC, or member of the
family of any such person, or any LLC, 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 LLC, 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 4.24. Taxes. All federal, state, local and foreign Tax returns
and Tax reports required to be filed by the LLC on or before the date hereof
have been timely filed with the appropriate Governmental Authorities 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 which have become due
or payable or are required to be collected by the LLC or are otherwise
attributable to any periods ending on or before the Closing 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 in accordance with
GAAP or the LLC's books and records on or prior to the Closing Date. All
deposits required by law to be made by the LLC with respect to employees'
withholding taxes have been duly made. The LLC has delivered to StaffMark true
and complete copies of all of the LLC's state and federal income tax returns for
the fiscal periods ended December 1996 and 1995 and any interim periods
subsequent to the Most Recent Fiscal Year End and all reports and results of
income tax audits, if any, related thereto. To the Knowledge of the LLC, no
examination of any Tax return of the LLC is currently in progress. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any such Tax return. Since the inception of the LLC, the LLC has
been classified as a "partnership" for federal, state and local income Tax
purposes.
"Tax" or "Taxes" means all taxes, including any interest, penalties or
other additions to tax, which the LLC is required to pay, withhold or collect
(including without limitation all income taxes, payroll and employee withholding
taxes, unemployment insurance, social security taxes, welfare taxes, sales and
use taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, real and personal property taxes, assessments, environmental taxes,
transfer taxes, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other similar obligations).
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SECTION 4.25. Litigation. Except as set forth on Schedule 4.25, there
is no: (i) action, suit, claim, proceeding or investigation pending or
threatened against or affecting the LLC (whether or not the LLC is a party or
prospective party thereto), at law or in equity, or before or by any
Governmental Authority; (ii) arbitration proceeding pending relating to the LLC;
or (iii) governmental inquiry pending or threatened (in writing) against or
involving the LLC, and to the Knowledge of the LLC there is no basis for any of
the foregoing. The LLC 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
LLC. There are no outstanding orders, writs, judgments, injunctions or decrees
served upon the LLC by any court, Governmental Authority or against the LLC.
There are no facts or circumstances which are reasonably anticipated to result
in institution of any action, suit, claim or legal administrative or arbitration
proceeding or investigation against, involving or affecting the LLC or the
transactions contemplated hereby. The LLC is not in default with respect to any
order, writ, injunction or decree known to or served upon it from any
Governmental Authority. Except as disclosed on Schedule 4.25, there is no action
or suit by the LLC pending or threatened against others.
SECTION 4.26. Environmental Matters. The LLC has been and is in
substantial compliance with all applicable laws, rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities with respect
to all environmental statutes, rules and regulations. Except as set forth on
Schedule 4.26, there are no past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the LLC,
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 4.26, 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
Governmental Authority.
SECTION 4.27. Broker's or Finder's Fees. Except as set forth on
Schedule 4.27, no agent, broker, Person or firm acting on behalf of the LLC is,
or will be, entitled to any commission or broker's or finder's fees from the LLC
or from any person controlling, controlled by or under common control with the
LLC in connection with any of the transactions contemplated hereby.
SECTION 4.28. Accounts Receivable. All accounts receivable of the LLC
that are reflected on the Balance Sheet on the Balance Sheet Date or on the
accounting records of the LLC as of the Closing Date (collectively, the
"Accounts Receivable") 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 LLC 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
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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 fifty (150) days after the day on which it first becomes due and
payable. After such 150-day period, StaffMark shall reassign any uncollectible
account to the Members for collection and StaffMark shall have the right to make
a claim in accordance with the Indemnification Agreement and the Escrow
Agreement; provided, however, the Members shall not have the right to dispute
such claim for the balance of such uncollectible account. There is no contest,
claim, or right of set-off, other than adjustments 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 4.29. Projections. The LLC has made certain projections
concerning sales, growth, profitability and other matters available to
StaffMark. These projections have been delivered to StaffMark in documents
entitled "Projections" dated December 24, 1997 (the "Projections"). The
Projections were reasonable when made and to the Knowledge of the LLC continue
to be a reasonable projection of the LLC's future results of operations for
periods covered by the Projections, subject to the inherent risks and
uncertainties associated with any projections of performance.
SECTION 4.30. Disclosure. All Documents delivered or to be delivered
by the LLC and all Documents delivered or to be delivered on behalf of the LLC
by its agents, in connection with this Agreement and the transactions
contemplated hereby are true, complete and correct in all material respects.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF STAFFMARK
As an inducement to each of the Members to enter into this Agreement and
to consummate the transactions contemplated hereby, StaffMark represents and
warrants to each of the Members as follows:
SECTION 5.1. Organization. StaffMark is 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 where the conduct of its business requires it to be so qualified,
except where the failure to be so qualified would not have a material adverse
effect on StaffMark.
SECTION 5.2. Corporate Power and Authority. StaffMark has the corporate
power and authority to execute, deliver and perform this Agreement and the other
Documents to which it is a party. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate action of each of StaffMark.
This Agreement constitutes the legal, valid and binding obligation of StaffMark
enforceable against it in accordance with its terms and each of the Documents,
when executed by StaffMark will constitute a valid and binding obligation of
StaffMark, enforceable against it in accordance with its terms.
SECTION 5.3. Validity, Etc. Neither the execution and delivery by either
StaffMark of this Agreement and any Documents to which such StaffMark is a
party, nor the consummation by StaffMark of the transactions contemplated hereby
or thereby, nor the performance by StaffMark of this Agreement or the Documents
in compliance with the terms and conditions hereof and thereof will: (i)
violate, conflict with or result in any breach of the certificate of
incorporation or bylaws of either StaffMark, or any trust agreement, judgment,
decree, injunction, order, writ, statute, rule or regulation applicable to
StaffMark; (ii) violate, conflict with or result in a breach, default or
termination (or give rise to any right of
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termination, cancellation or acceleration) of the maturity of any payment date
or any of the obligations of StaffMark under any law, statute, rule, regulation
or any judgment, decree, order, governmental permit, license or order applicable
to StaffMark or any of the terms, conditions or provisions of any Security
Interest or other instrument or obligation related to StaffMark or to
StaffMark's ability to consummate the transactions contemplated hereby or
thereby to which StaffMark is a party, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and except for any such default that
would not result in an adverse effect on its business; or (iii) require the
consent, waiver, authorization or approval of any Governmental Authority or of
any other Person.
SECTION 5.4. The StaffMark Shares. The StaffMark Shares when delivered
hereunder will be duly authorized, validly issued, and fully paid and
nonassessable and will be free and clear of any Security Interests, except for
any transfer restrictions imposed by the state and federal securities laws. The
StaffMark Shares will be issued pursuant to Section 4(2) of the Securities Act
promulgated thereunder. Certificates representing the Interests issued to the
LLC will contain a restrictive legend in substantially the form of Exhibit "B"
attached hereto.
SECTION 5.5. SEC Filings. StaffMark has filed with the SEC on a timely
basis all forms, reports, schedules, and statements that were required to be
filed with the SEC since October 2, 1996 (the "SEC Filings"). As of their
respective dates, the SEC Filings were prepared in accordance with the
Securities Act and the Securities Exchange Act, as applicable, and did not
contain any untrue statements of a material fact or omit any material fact
required to be stated in those documents necessary to make the statements in
those documents not misleading.
SECTION 5.6. Events Subsequent to September 30, 1997. Since September
30, 1997, no event or circumstance has occurred which individually or in the
aggregate is reasonably likely to result in a material adverse change in the
financial position or results of operations of StaffMark and its subsidiaries
taken as a whole.
SECTION 5.7. Broker's or Finder's. No agent, Person or firm acting on
behalf of StaffMark is, or will be, entitled to any commission or broker's or
finder's fees from StaffMark or from any Person controlling, controlled by or
under common control with StaffMark in connection with the transactions
contemplated herein, for which the Members will have any obligation.
ARTICLE VI. PRE-CLOSING COVENANTS AND AGREEMENTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
SECTION 6.1. 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 6.2. Best Efforts. StaffMark and the Members shall cause the
LLC to each use their 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
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which are necessary for the consummation of the transactions contemplated by
this Agreement. Prior to the Closing Date, the Members will cause the LLC to use
commercially reasonable efforts to preserve its relationships with its
employees, customers, and others having business relationships with the LLC.
SECTION 6.3. Investigations. The Members shall cause the LLC to give
StaffMark 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 StaffMark with such financial and
operating data, analyses and other information of any kind respecting the LLC's
business and properties as StaffMark shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with business operations of the LLC.
SECTION 6.4. Distributions. Prior to the Closing, the Members shall
cause the LLC to not pay any dividends, distributions, consulting fees or
management fees to the Member(s) of the LLC. Prior to the Closing, the LLC shall
not increase management compensation policies or plans, and shall conduct no
transactions with, or transfer anything of value, directly or indirectly, to the
Members.
SECTION 6.5. Corporate Matters. During the period from the date of this
Agreement to the Closing, the Members will not allow the LLC: (i) to amend its
Articles of Formation or the Operating Agreement; (ii) to issue any Interests;
(iii) to issue or create any warrants, obligations, subscriptions, options,
convertible securities, or other commitments under which any additional
Interests or any other equity interest might be directly or indirectly
authorized, issued or transferred from treasury; (iv) to otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 4.14 above; or (v) agree to do any of the acts listed above.
SECTION 6.6. Notice of Developments. The Members will cause the LLC to
give prompt written notice to StaffMark of any material adverse development
causing a breach of any of the representations and warranties in Article IV
above.
SECTION 6.7. Exclusivity. The Members will not and will not allow the
LLC to: (i) solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets, of the LLC
(including any acquisition structured as a merger, consolidation, or share
exchange); or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing. The Members or the LLC pursuant to instruction from the Members will
notify StaffMark immediately if any person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
ARTICLE VII. POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
SECTION 7.1. Post-Closing Covenants of the Members.
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, the Members will take such further action
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(including the execution and delivery of such further instruments and
documents) as any other Party may request, all at the sole cost and
expense of the requesting Party (unless the requesting Party is entitled
to indemnification therefor).
(b) Transition. Following the Closing Date, the Members will not
take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business
associate of the LLC from maintaining the same business relationships
with StaffMark after the Closing as it maintained with the LLC prior to
the Closing.
(c) Tax Returns. Following the Closing Date, the Members shall
cause to be prepared and filed, at their sole expense all of the LLC's
required income Tax returns for all Tax periods ending prior to January
1, 1998; provided, however, that the Members will provide StaffMark
copies of such proposed tax returns prior to filing for StaffMark's
review and comment, which review and comment, if any, will be promptly
tendered to the Members and their representatives. The Members shall be
responsible for the payment of all income Taxes due or assessed which
relate to the LLC for all periods up to and including January 1, 1998.
(d) 754 Election. Following the Closing Date, the Members shall:
(i) timely make an election under Section 754 of the Code (and any
comparable election under state or local Tax law) with respect to the
LLC's final Tax return for the tax period January 1, 1998; and (ii)
complete the timely filing of such election in accordance with the
provisions of the Treasury Regulation 1.754-1(b) (or any comparable
provisions of state or local Tax law) or any successor provision. The
Members represent that the LLC is qualified to make such election. Sixty
(60) days following the Closing Date, the Parties shall agree upon the
fair market value of the assets of the LLC. The Members (nor any of
their respective affiliates) shall not take any position on any Tax
return or with any taxing authority that is inconsistent with the 754
election agreed upon fair market values and shall not seek to revoke
such 754 election; provided, however, that the Members through the LLC
(and any of their respective affiliates) may take a tax position
consistent with any examination adjustments made by the Internal Revenue
Service or applicable state, local or foreign taxing authorities. The
Members shall cause the LLC to provide StaffMark with a copy of the
proposed 754 election and related proposed Tax returns for its review
and comment, if any, before filing such election, as well as a copy of
the final 754 election and final related Tax returns concurrent with the
filing of the election and the related Tax returns.
(e) Nondisclosure of Confidential Information. The Members
recognize and acknowledge that they have and will have access to certain
confidential information of StaffMark (including, but not limited to,
list of customers, and costs and financial information) that StaffMark
considers to be valuable, special and unique property of StaffMark.
Following the Closing Date, the Members agree that they will not
disclose, and that they will use reasonable efforts to prevent
disclosure by any other Person of, any such confidential information to
any Person, except to authorized representatives of StaffMark. The
Members recognize and agree that violation of any of the agreements
contained in this Section 7.1(e) will cause irreparable damage or injury
to StaffMark, the exact amount of which may be impossible to ascertain,
and that, for such reason, among others, StaffMark shall be entitled to
seek an injunction, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and
not in limitation of, any other rights and remedies StaffMark may have
against the Members.
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SECTION 7.2. Post-Closing Covenants of StaffMark.
(a) Stock Options. As of the Closing Date, StaffMark shall grant
employees (other than Elihu Gordis and Jay Horowitz) of the LLC
designated by the President and Chief Executive Officer of the LLC an
aggregate of 25,000 non-qualified stock options under its 1996 Stock
Option Plan to purchase StaffMark Common Stock at a price per share
equal to the closing stock price on the Closing Date. The options would
vest 40% after two (2) years, 60% after three (3) years, 80% after four
(4) years, and 100% after five (5) years. StaffMark will grant employees
(other than Elihu Gordis and Jay Horowitz) of the LLC designated by the
President and Chief Executive Officer of the LLC an aggregate of 15,000
additional non-qualified stock options under its 1996 Stock Option Plan
to purchase StaffMark Common Stock at a price per share equal to the
closing stock price on the date of grant, if the LLC equals or exceeds
the calendar year 1998 financial targets set forth in Schedule 7.2, the
foregoing options will be granted promptly following StaffMark's
determination that the financial targets set forth on Schedule 7.2 have
been satisfied. The options would vest 40% after two (2) years, 60%
after three (3) years, 80% after four (4) years, and 100% after five (5)
years.
(b) Availability of Rule 144. StaffMark shall take all commercially
reasonable steps to file future reports with the SEC on a timely basis
and otherwise satisfy the prerequisites to permit the Members to utilize
Rule 144 with respect to the StaffMark Shares.
(c) Maintenance of the LLC during the Earnout Period. During the period
commencing on the Closing Date and ending on June 30, 1999, StaffMark
will maintain the separate existence of the LLC or its corporate
successor and otherwise abide by the terms of the Earnout Agreement
executed the date hereof, the terms of which are specifically
incorporated herein and made a part hereof.
ARTICLE VIII. CONDITIONS TO STAFFMARK'S OBLIGATIONS
The obligation of StaffMark to consummate the transactions contemplated
hereby is subject to the satisfaction, on or before the Closing Date, of the
following conditions, each of which may be waived (in writing) by StaffMark in
its sole discretion:
SECTION 8.1. Representations and Warranties True; Satisfaction of
Covenants. All of the representations and warranties made by each of the
Members in Article III and of the Members in Article IV of this Agreement shall
be true and correct 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 Members shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
them prior to or at the Closing Date. The Members shall cause the President of
the LLC to deliver a certificate to StaffMark to the effect that each of the
above conditions are satisfied in all respects.
SECTION 8.2. Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license,
permit, Contract or agreement of the LLC from terminating prior to its scheduled
termination, as a result of the consummation of the transactions contemplated
hereby, shall have been obtained.
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SECTION 8.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any Governmental Authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 8.4. Opinion of Counsel to the LLC. StaffMark shall have
received an opinion from counsel to the Members, dated as of the Closing Date,
in form and substance of Exhibit "C" attached hereto reasonably satisfactory to
counsel to StaffMark.
SECTION 8.5. Closing Documents. The Members shall have delivered all of
the Schedules, resolutions, certificates, documents and instruments required by
this Agreement to be delivered by them and those required by the LLC.
SECTION 8.6. Intentionally Omitted.
SECTION 8.7. No Material Adverse Change. From the date of this
Agreement through the Closing Date: (i) there shall have been no material
adverse change in the assets, liabilities, or financial condition of the
business of the LLC from that reflected in the Balance Sheet outside the
Ordinary Course of Business; and (ii) none of the business, financial condition,
operations, property, business prospects or affairs of the LLC shall have been
materially adversely affected by any occurrence or development, individually or
in the aggregate, whether or not insured against.
SECTION 8.8. Indemnification Agreement. StaffMark shall have received a
counterpart executed copy of the "Indemnification Agreement" from each of the
Members in substantially the form of Exhibit "D" attached hereto.
SECTION 8.9. Escrow Agreement. StaffMark shall have received a
counterpart executed copy of the "Escrow Agreement" from each of the Members in
substantially the form of Exhibit "E" attached hereto.
SECTION 8.10. Employment Agreements. StaffMark shall have received a
counterpart executed copy of employment agreements from Elihu Gordis and Jay B.
Horowitz for employment with the LLC each dated as of the Closing Date which are
satisfactory to StaffMark (the "Employment Agreements").
SECTION 8.11. Noncompetition Agreement. StaffMark shall have received a
counterpart executed copy of the "Noncompetition Agreement" in the form of
Exhibit "F" attached hereto from each of the Members.
SECTION 8.12. Purchase Price Certificate. StaffMark shall have received
a counterpart executed Purchase Price Certificate from the Members.
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ARTICLE IX. CONDITIONS TO THE MEMBERS' OBLIGATIONS
The obligation of the Members 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 Members in
writing in their sole discretion:
SECTION 9.1. Representations and Warranties True; Satisfaction of
Covenants. All of the representations and warranties made by StaffMark in
Article V of this Agreement shall be true and correct 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. StaffMark shall have 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. An executive
officer of StaffMark shall deliver a certificate to the LLC to the effect that
each of the above conditions are satisfied in all respects.
SECTION 9.2. Closing Documents. StaffMark shall have delivered all of
the Exhibits, Schedules, resolutions, certificates, documents and instruments
required by this Agreement.
SECTION 9.3. No Obstructive Proceeding. No suit, action or other
proceeding shall have been instituted by any Governmental Authority or third
party to restrain, enjoin or otherwise prevent or question the legality of the
consummation of the transactions contemplated by this Agreement.
SECTION 9.4. Employment Agreements. Messrs. Gordis and Horowitz shall
have received counterpart executed Employment Agreements from the LLC each dated
as of the Closing Date which are satisfactory to such persons.
SECTION 9.5. Opinion of Counsel to StaffMark. The Members shall have
received an opinion of counsel to StaffMark, dated as of the Closing Date, in
form and substance of Exhibit "G" reasonably satisfactory to the counsel for the
Members.
SECTION 9.6. Purchase Price Certificate. The Members shall have
received a counterpart executed Purchase Price Certificate from StaffMark.
SECTION 9.7. Earnout Agreement. The Members shall have received a
counterpart executed Earnout Agreement from StaffMark.
ARTICLE X. SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; REMEDIES
SECTION 10.1. Survival of Representations, Warranties and Covenants.
All of the representations and warranties of the Parties contained in this
Agreement shall survive for eighteen (18) months following the Closing Date;
except, that, the survivability periods as to the representations and warranties
in Section 4.24 (Taxes) shall survive for the full period of the statute of
limitations applicable to the matters described in such section. Certain
covenants of the parties in this Agreement are post-closing covenants and shall
survive the Closing Date for the time periods so indicated in each such section.
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SECTION 10.2. Remedies. In the event that a Party (the "Breaching
Party") breaches any provision of this Agreement, then the other Party may
exercise all of its remedies under this Agreement. The Breaching Party shall be
liable to the other party for any Adverse Consequences the other party suffers
resulting from, arising out of, relating to, or caused by any such breach
subject as to remedies against the Members in accordance with the
Indemnification Agreement dated the date hereof among the Members and StaffMark,
the terms of which are incorporated herein by reference, it being the intention
of the Parties that all disputes will be settled by arbitration.
ARTICLE XI. TERMINATION
SECTION 11.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) StaffMark and the Members may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) StaffMark may terminate this Agreement at any time prior to
the Closing; (i) in the event the Members have breached any
representation, warranty, or covenant contained in this Agreement in any
material respect; (ii) in the event that StaffMark is not satisfied with
its business, legal, accounting, environmental, labor, employee matters,
operational or financial due diligence; (iii) if there is discovered or
should there occur any event or condition which could reasonably be
expected to have a material adverse effect on the LLC; or (iv) if the
Closing shall not have occurred on or before January 31, 1998;
(c) The LLC may terminate this Agreement any time prior to the
Closing; (i) in the event StaffMark has breached any representation,
warranty or covenant contained in this Agreement in any material
respect; (ii) if there is discovered or should there occur any event or
condition which could reasonably be expected to have a material adverse
effect on StaffMark but such event shall not include any effects or
changes on the price of the StaffMark Common Stock; or (iii) if the
Closing shall not have occurred on or before January 31, 1998;
(d) StaffMark may terminate this Agreement if a Governmental
Authority adopts, enters, enacts or issues a final and nonappealable
order, or adopts, enacts, enforces, or holds applicable to the Agreement
a law, or a suit, action, or proceeding is threatened or pending before
a Governmental Authority, that directly or indirectly: (i) declares this
Agreement to be illegal; (ii) permanently enjoins, restrains or
otherwise prohibits the acquisition of the Interests by StaffMark
pursuant to this Agreement or the transactions contemplated hereby;
(iii) prohibits the ownership or operation by StaffMark (or any of its
affiliates) of all or a material portion of the assets of the LLC; or
(iv) compels StaffMark (or any of their Affiliates) to segregate or
dispose of all or a material portion of the assets of the LLC; or
(e) The LLC may terminate this Agreement if a Governmental
Authority adopts, enters, enacts or issues a final and nonappealable
order, or adopts, enacts, enforces or holds applicable to this Agreement
a law or a suit, action or proceeding is threatened or pending before a
Governmental Authority that directly or indirectly: (i) declares the
Agreement to be illegal; or (ii)
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permanently enjoins, restrains, or otherwise prohibits this Agreement or
the transactions contemplated hereby.
Termination of this Agreement by any Party pursuant to clauses (b) or (c) above
will be valid only if a notice of termination, signed by or on behalf of the
Party electing the termination, is given to the other Party to this Agreement.
Termination of this Agreement in accordance with clause (a) above will be
effective as of the date specified in the Parties' written agreement of
termination. Termination of this Agreement in accordance with clauses (d) or (e)
above will be effective on the effective date of the law or order that makes the
Agreement illegal or permanently enjoins, restrains, or prohibits consummation
of the Agreement, ownership of the Interests.
SECTION 11.2. Effect of Termination. If this Agreement is terminated in
accordance with the provisions of Section 11.1, a Party will not have any
further right, Liability or obligation with respect to the other Party (except
for any Liability of a Party then in breach).
SECTION 11.3. Other Termination Matters. The confidentiality provisions
contained in Section 7.1(e) of this Agreement shall survive termination pursuant
to Section 11.1 above for a period of one (1) year following any such
termination date.
ARTICLE XII. MISCELLANEOUS
SECTION 12.1. 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 StaffMark:
StaffMark, Inc.
302 East Millsap Road
Fayetteville, Arkansas 72703
Attn: Terry C. Bellora, Chief Financial Officer
Phone: (501) 973-6000
Fax No.: (501) 973-6019
With a copy to:
Gordon Y. Allison, Esq.
302 East Millsap Road
Fayetteville, Arkansas 72703
Attn: Gordon Y. Allison, Executive
Vice President - General Counsel
Phone: (501) 973-6057
Fax No.: (501) 973-6019
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If to the Members:
Eugene Greene
40 East 94th Street
New York, New York 10028
Elihu Gordis
440 West End Avenue
New York, New York 10024
(212) 724-7571
Jay B. Horowitz
177 East 75th Street
New York, New York 10021
(212) 439-8446
Kristin E. Vickery
101 West 12th Street
Apartment 8E
New York, New York 10011
With a copy to:
J. Gregory Milmoe, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
Phone: (212) 735-3000
Fax No.: (212) 735-2001
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 12.1.
SECTION 12.2. Entire Agreement. This Agreement and the Documents embody
the entire agreement and understanding between the Parties hereto with respect
to the subject matter hereof and supersede all prior oral or written agreements
and understandings relating to the subject matter hereof.
SECTION 12.3. 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 12.4. Assignment/Binding Effect. Neither this Agreement, nor
any right or obligation hereunder, may be assigned by any of the Parties hereto
without the prior written consent of the other Parties. This Agreement shall be
binding upon, and inure to the benefit of, the heirs, representatives,
successors and permitted assigns.
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SECTION 12.5. Parties in Interest. Nothing in this Agreement, express
or implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement shall be construed to create any rights or obligations except among
the Parties hereto, and no Person shall be regarded as a third-party beneficiary
of this Agreement.
SECTION 12.6. 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 Delaware without giving effect to
any choice or conflict of law provision or rule that would cause the application
of the laws of any jurisdiction other than the State of Delaware
SECTION 12.7. Severability. In the event that any Governmental
Authority shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such tribunal
determines it enforceable, and as so limited shall remain in full force and
effect. In the event that such Governmental Authority 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 12.8. 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 12.9. 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 12.10. Expenses. StaffMark 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. The Members shall be responsible for and bear all of their own fees
and expenses, as well as the fees and expenses of the LLC (including the fees
and expenses of any attorneys, accountants, appraisers, or others engaged by
such Parties or the LLC) incurred in connection with this Agreement and the
transactions contemplated hereby if this Agreement and the transactions
contemplated hereby are consummated (collectively the "LLC Transaction Costs")
and in no event shall the LLC Transaction Costs be incurred by the LLC, if the
Agreement and the transactions contemplated hereby are consummated. If the
Agreement and the transactions are not consummated, then the LLC will be
responsible for all of the LLC Transaction Costs.
SECTION 12.11. 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.
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SECTION 12.12. Publicity. Except by the mutual agreement between
StaffMark and the Members, no Party shall issue any press release or otherwise
make any public statement with respect to the execution of, or the transactions
contemplated by, this Agreement except as may be required by law, rule or
regulation.
SECTION 12.13. Counterparts. This Agreement may be executed in one or
more counterparts, and by different Parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 12.14. Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
SECTION 12.15. Telecopy Execution and Delivery. A facsimile telecopy or
other reproduction of this Agreement may be executed by one or more Parties
hereto, and an executed copy of this Agreement may be delivered by one or more
Parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such Party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any Party hereto, all Parties
hereto agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction thereof.
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IN WITNESS WHEREOF, StaffMark has caused this Agreement to be executed
by its duly authorized officers as of the day and year first above written and
each of the Members have each caused this Agreement to be executed as of the day
and year first above written.
STAFFMARK, INC.
By: /s/ Ted Feldman
---------------------------
Name: Ted Feldman
-------------------------
Title: Chief Operating Officer
------------------------
THE MEMBERS:
By: /s/ Elihu Gordis
---------------------------
Elihu Gordis
By: /s/ Jay B. Horowitz
---------------------------
Jay B. Horowitz
By: /s/ Eugene Greene
---------------------------
Eugene Greene
By: /s/ Kristin E. Vickery
---------------------------
Kristin E. Vickery
27
