SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
September 4, 1996 (August 20, 1996)
COMFORCE Corporation
________________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware
________________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation)
1-6081 36-2262248
________________________ ____________________________________
(Commission File Number) (I.R.S. Employer Identification No.)
2001 Marcus Avenue, Lake Success, NY 11042
________________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (516) 352-3200
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Item 2. Acquisition or Disposition of Assets
On August 20, 1996, COMFORCE Corporation (the "Company"), through its
subsidiary, COMFORCE Information Technologies, Inc., purchased, pursuant to the
Stock Purchase Agreement entered into on such date with Steve Gunner and Paul
Baldwin, all of the stock of Force Five, Inc. ("Force Five") for a purchase
price of $1,500,000 and approximately 27,400 shares of the Company's Common
Stock (valued at $500,000 based on the average closing price on the American
Stock Exchange of the Company's Common Stock for the 20 trading days prior to
closing), plus contingent income payments payable over three years in an
aggregate amount not to exceed $2 million. The purchase of the Force Five stock
was determined by arm's length negotiations between the parties. The cash
portion of the purchase price was paid by the Company from working capital,
including funds drawn from the Company's bank line of credit.
Force Five is in the business of information technology consulting to
leading companies nationwide. Force Five will operate under the Company's
Information Technology platform.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses acquired.
It is impracticable for the Company to file the financial
statements required for the acquisitions described in Item 2 of this Current
Report on Form 8-K concurrently with the filing of this Report. Such financial
statements will be filed with the Commission as soon as the same are available,
but in no event later than 60 days after the date hereof.
(b) Pro forma financial information.
It is impracticable for the Company to file pro forma
financial statements taking into account the acquisitions described in Item 2 of
this Current Report on Form 8-K concurrently with the filing of this Report.
Such pro forma financial statements will be filed with the Commission at the
time the financial statements for these acquisitions are filed.
(c) Exhibits
10.1 Stock Purchase Agreement dated August 19, 1996 among COMFORCE
Information Technologies, Inc., the Company, Steve Gunner and Paul
Baldwin, with Addendum thereto, and Amendment thereto dated August 20,
1996.
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SIGNATURE
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.
COMFORCE Corporation
____________________
(Registrant)
By /s/ Andrew Reiben
____________________________________________
Andrew Reiben, Chief Accounting Officer
Dated: September 4, 1996
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Exhibit 10.1
STOCK PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated the ______ day of August 1996, by and among
COMFORCE INFORMATION TECHNOLOGIES, INC. (hereinafter referred to as the
"Purchaser"), COMFORCE CORPORATION (hereinafter referred to as "COMFORCE"), both
Delaware corporations, with their principal offices at 2001 Marcus Avenue, Lake
Success, NY 11042, and FORCE FIVE, INC., a Texas corporation, with its principal
office located at 5055 Keller Springs Road, Suite 550, Dallas, Texas 75248
(hereinafter referred to as "Company"), and STEVE GUNNER and PAUL BALDWIN
residing at 6401 Stonebrook Circle, Plano, Texas 75093 and 5353 Keller Springs
Road, #1221, Dallas, Texas 75248 respectively (hereinafter collectively referred
to as "Sellers" or "Seller").
WHEREAS, Sellers own 9,000 shares of common stock, $1.00 par value,
being all of the issued and outstanding shares of capital stock (the "Stock") of
the Company.
WHEREAS, the Sellers desire to sell and the Purchaser desires to
acquire the Stock and to take over the business of the Company and operate it
thereafter as its own, subject only to certain liabilities enumerated herein,
for the purchase price hereinafter described and upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of such sale and of the foregoing and
of the mutual agreements hereinafter set forth, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. In addition to the terms defined throughout
this Agreement (as defined), the following terms shall have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"Accounts Receivable" or "Receivable" means amounts, in any form, to be
or expected to be received from Customers or any other Person to whom services
have been rendered by the Company prior to Closing.
"Adjustment Date" shall have the meaning ascribed thereto in Section
5.1.
"Affiliate" means any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person and,
without limiting the generality of the foregoing,
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includes (i) any Person which beneficially owns or holds 25% or more of any
class of voting securities of such Person or 25% or more of the equity interest
in such Person, (ii) any Person of which such Person beneficially owns or holds
25% or more of any class of voting securities or in which such Person
beneficially owns or holds 25% or more of the equity interest in such Person and
(iii) any director, officer or employee of such Person. For the purposes of this
definition, the term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, and except as otherwise defined, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" means this Agreement together with all exhibits, schedules,
supplements and documents as may be attached hereto or incorporated herein by
reference.
"Billable Employees" means those employees, consultants and independent
contractors of the Company who work or perform services which are on assignment
on any basis to Company's Customers and for whom a direct charge to the Customer
is made.
"Business" means providing by the Company a wide range of technical and
consulting services to Customers and Clients through the use of skilled
personnel who are generally computer programmers, systems analysts, technicians
and other skilled personnel. The personnel are generally utilized by the Clients
and Customers on a temporary, project or peak period basis. Primary lines of
business activity include information technology, network design and
configuration, information services, software design and programming, premises
network and data services, support services, systems analysis, technical
publications, consulting and technical staff augmentation services as of the
Closing Date. As the context requires, Business also means such services
provided by the Company after the Closing.
"Closing" means the consummation of the within transaction including,
but not limited to, the execution and delivery of all Property, funds,
documents, certificates, resolutions, assignments and opinions contemplated in
this Agreement.
"Closing Date" means the established date for the Closing, which date
shall be and mean such other date as shall be agreed in writing upon by the
parties.
"Code" shall have the meaning ascribed thereto in Section 6.34.
"Corporate Income Tax Due" The Corporate Income Tax Due will be the
Company's tax liability, if any, resulting from all operations of the Business
prior to the Closing Date. This liability will reflect all items properly
reportable on its short period tax return, as well as any tax liability related
to the remaining adjustment under Section 481(a) of the Internal Revenue Code
which will properly be reflected on any consolidated tax return subsequently
filed by COMFORCE.
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"Company's Balance Sheet" shall have the meaning ascribed thereto in
Sections 6.6 and 6.12 below.
"COMFORCE Stock" shall have the meaning ascribed in Section 3.1(a)(ii)
below.
"Contingent Payment Escrow Funds" shall mean those funds held in escrow
pursuant to the terms of Section 3.1(c) below.
"Customers" or "Clients" those Persons to which Company has made sales
or rendered services during any time prior to Closing.
"Employee" shall have the meaning ascribed thereto in Section 6.18.
"Escrow Agent" shall have the meaning ascribed thereto in the Escrow
Agreement.
"Escrow Agreement" has the meaning ascribed thereto in Section 3.1.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Intellectual Property" shall have the meaning ascribed thereto in
Section 6.9.
"Material" as applied to liabilities or claims in this Agreement shall
mean an individual liability or claim of $10,000.00 or liabilities or claims
which in the aggregate equal or exceed $25,000.00, except as otherwise defined
in Section 11.4 below.
"Negative Covenants" shall have the meaning ascribed thereto in Article
XVI.
"Net Available Markup" means the difference between total direct costs
of Billable Employees including wages, per diem, social security taxes, Medicare
taxes, FUTA taxes, SUI taxes, workers compensation insurance, medical benefits,
travel expenses, legal fees, 401(k) contributions, and the billing rate for
Billable Employees less any discounts as expressed as a percentage of Net Sales.
"Net Current Assets" shall mean total current assets less all
liabilities other than Corporate Income Tax Due accrued as of the Closing Date
and based upon the Company's Balance Sheet at Closing. Net Current Assets
specifically excludes all Personal Property.
"Net Income" means the net operating income of the Business acquired
hereunder, before allocation of Federal and State income taxes and the
Purchaser's general overhead, administrative and management costs and fees. The
operating expenses to be deducted from the revenue of the Business are all
expenses incurred by the Business except those specifically excluded and which
expenses shall include, but not be limited to, office rental, telephone and
utility expense, wages, salary and commissions of the Sellers, contractor
compensation, per diem payment, equipment
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charges, warranty accruals, payroll associated costs, workers compensation
insurance charges, deductions and expenses, sales and recruiting expenses,
depreciation and interest and other charges which are directly related to the
Business acquired hereunder.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a business trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Personal Property" shall have the meaning ascribed thereto in Section
6.7.
"Plan" shall have the meaning ascribed thereto in Section 6.34.
"Property" means all of the following assets of the Company to the
extent the same are utilized by Company in connection with the operation of the
Business as of the date hereof and/or at any time prior to Closing:
(a) "General Intangibles" - the sole and exclusive right, to use the
names "Force Five, Inc.", as provided under Section 2.05 of the Texas Business
Corporation Act, and all common law trademark, service mark and copyright rights
associated with the Business.
(b) "Customer Materials" - any and all agreements, understandings,
orders, requirements and inquiries from or with customers (present and/or past)
and/or prospective Customers arising out of or relating to the operation of
and/or the Business including, without limitation, any and all of such materials
from or with any of Customers.
(c) "Resumes" - all information for or with respect to current, former
or prospective Billable Employees in whatever medium that it be manifested,
depicted, stored or presented including, but not limited to, paper, hardcopy,
computer disks, tapes and databases of the Company whose services are, may be,
will be, or have been provided to Customers of the Company prior to the date
hereof.
(d) "Real Property" - those leasehold interests described on the
Schedules at Section 6.8.
(e) "Records" - the originals of those business, financial and payroll
records of the Company, evidencing the Customer Materials, Resumes, General
Intangibles, Equipment and/or the Company's Billable Employees and Employees.
(f) "Equipment" - all of the furniture and equipment utilized by the
Company as set forth on the Schedule at ss.2.2(e).
(g) "Billable Employees Goodwill" - the right to hire and employ those
Billable Employees whose services have been provided to Customers by the Company
at any time during the
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last 12 months subject to the Billable Employee's right to employment by third
parties not related to Affiliates of the Company.
"Purchase Price" has the meaning ascribed thereto in Article III of
this Agreement.
"Purchaser" has the meaning ascribed thereto in the Preamble.
"Receivables" shall have the meaning ascribed thereto in Section 3.5.
"Receivables Collection Period" shall have the meaning ascribed thereto
in Section 3.5(b) of this Agreement.
"Seller" or "Sellers" has the meaning ascribed thereto in the Preamble.
"Stock" has the meaning ascribed thereto in the Preamble.
"Tax Escrow Funds" shall have the meaning ascribed thereto in Section
3.1(b) below.
"Transfer Agent" shall mean Chemical Mellon Financial Services, 111
Founders Plaza, Suite 1100, Hartford, Connecticut 06108.
"U.S. $ or $" means the currency of the United States of America.
"Valuation" shall have the meaning ascribed thereto in Section 3.1(f).
1.2 Certain Terms. All references to Articles, Paragraphs and Sections
herein are to the Articles, Paragraphs and Sections of this Agreement unless
otherwise specified.
ARTICLE II
DELIVERY OF THE ASSETS OF THE BUSINESS
2.1 Upon the terms and subject to the conditions set forth in this
Agreement and in consideration of the payment to the Sellers of the Purchase
Price described in Section 3.1, the Sellers hereby agree to sell and transfer to
the Purchaser on the Closing Date, and Purchaser agrees to purchase and accept
from the Sellers on the Closing Date, the Stock duly executed for transfer to
the Purchaser.
2.2 Upon delivery of the Stock, the Company shall also deliver to the
Purchaser possession of all assets of the Business at the Company's current
place of business, with the exception of the corporate minute book which will be
delivered at the Purchaser's place of business, including but not limited to:
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(a) All contracts, understandings and work orders issued
pursuant thereto held by the Company with Customers for the providing of
services and personnel, including those listed in the Schedule at Section 2.2(a)
hereto.
(b) All files, information stored or kept in any way, and
records pertinent, relevant or in any way connected with the performance of
services under the contracts referred to in 2.1 (a) above.
(c) All sales records and client listings dealing with or
pertaining to former, current or prospective Customers including but not
necessarily limited to records of sales calls and follow-ups previously made in
connection with the solicitation of business.
(d) All personnel files, data and records relating to all of
the Company's employees wherever located, in whatever form in which they exist
and whatever medium maintained or stored, including but not necessarily limited
to all payroll records, and resume files maintained by Company including those
with respect to personnel previously employed by the Company, and those being
maintained for possible future use by Company in the performance and conduct of
the Business, all payroll records, and year-to-date earning statements and
reports. It being agreed that such personnel files, payroll records, earning
statements, reports and inventory of resumes are an essential and important
element of the Stock being purchased herein. Sellers represent that they and the
Company have utilized their best efforts to maintain the files and inventory of
Resumes in a current and usable condition and will continue to do so up to the
Closing Date.
(e) The office furniture, fixtures, supplies, machinery,
systems, brochures, sales material, computer equipment, and any other equipment
owned by the Company wherever located, listed and whether or not described in
the Schedule at Section 2.2(e) which is annexed and made a part hereof.
(f) All signs, designs, logos and any and all other similar
assets, including without limitation, the name "Force Five, Inc.", and any
variations of such name; good will; and trade names used and usable by the
Company with respect to the conduct of the Business.
(g) All right, title and interest which the Company has to
intellectual property computer software and computer data bases utilized in the
Business.
(h) All keys, combinations, security devices and codes for or
with respect to all offices, storage units, vaults, safety deposit boxes and the
like of the Company;
(i) The originals or all permits, licenses, consents,
authorizations and/or permissions for or with respect to the Business;
(j) A copy of all computer software and programs, licenses
utilized in connection with the operation of the Business;
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(k) All physical embodiments of the Property;
(l) Executed counterparts, and/or copies, as the case may be,
of the instruments and documents required to be delivered to the Purchaser at
the Closing as herein provided;
(m) All leaseholds and leasehold improvements; and
(n) All other assets owned by the Company which in the
Purchaser's judgment are necessary or advisable in order to carry on the
Business.
ARTICLE III
PURCHASE PRICE
3.1 Upon the terms and subject to the conditions, and the performance
of the Sellers' and the Company's obligations and duties set forth in this
Agreement, and in consideration for the conveyance, transfer and assignment of
the Stock to the Purchaser as described in Section 1 above and in consideration
of the Sellers' Negative Covenants contained in Article XVI, the Purchaser shall
pay to the Sellers the purchase price and the separate consideration for the
Negative Covenants ("Purchase Price") payable as follows:
(a) On the date of Closing, an initial payment of ONE MILLION
DOLLARS ($1,000,000.00) payable by payment of: (i) FIVE HUNDRED THOUSAND DOLLARS
($500,000.00) to Sellers in cash certified funds or wire transfer; (ii) shares
of COMFORCE's common stock ("COMFORCE Stock") with a value of FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00) as determined in accordance with Section 3.6
herein to Sellers with the stock certificates to be delivered by COMFORCE's
Transfer Agent as soon as practicable after Closing; and (iii) the sum of FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) together with the Tax Escrow Funds
referenced in Section 3(b) below in cash, certified funds or wire transfer
placed into an escrow account to be maintained in accordance with Section 3.1(c)
and (d) hereinbelow ("Escrow Funds"). Notwithstanding the foregoing Purchaser
shall pay cash consideration otherwise due at Closing to the Sellers hereunder
directly to any lienholder of the Company, including NationsBank, to the extent
of and to satisfy any indebtedness of the Company existing on the Closing Date.
Provided, however, the Purchaser acknowledges and agrees that any funds
otherwise payable to the Seller by the Purchaser at Closing used to pay down any
indebtedness of the Company existing as of the Closing Date (i.e., the Company's
line of credit with NationsBank) shall be distributed to the Sellers as the
Accounts Receivable are collected post-Closing.
(b) In addition to the Purchase Price payable at Closing
pursuant to Section 3.1(a) immediately above, the Purchaser agrees to pay to the
Sellers the Net Current Assets of the Business less the Corporate Income Tax Due
by reason of the conduct of the Business prior to the Closing Date. Upon
notification by the Sellers, which the Sellers agree to provide within sixty
(60) days from the Closing Date, of the Corporate Income Tax Due, estimated to
be $165,000.00, together with
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documentation which establishes the correct amount to the reasonable
satisfaction of the Purchaser, the Escrow Agent will pay the Purchaser (or the
Purchaser's designee) an amount equal to the Corporate Income Tax Due. Such
payments for Corporate Income Tax Due will reduce the Sellers' liability for
taxes due, as described in Section 11.3 below. Any remaining balance from the
Tax Escrow Funds will be promptly paid by the Escrow Agent to the Sellers. In
the event that the Tax Escrow Funds are insufficient to pay the Corporate Income
Tax Due, the Sellers will pay within a reasonable time an additional amount to
the Purchaser (or the Purchaser's designee) to make up the shortfall.
(c) Subject to the provisions of Section 8.4 below and the
terms of the Escrow Agreement the Contingent Payment Escrow Funds will be
released to Purchaser and Seller respectively, as follows:
(i) The Contingent Payment Escrow Funds will be
released to the Sellers at the end of one (1) year from the Closing Date
("Release Date"), provided that, on a continuous basis during said one (1) year
the number of Billable Employees equals at least eighty percent (80%) of the
number of Billable Employees on the payroll of the Business sold by Seller as of
the Closing Date, the gross sales revenue generated by the Billable Employees
generates at least SIX MILLION FOUR HUNDRED AND EIGHTY THOUSAND DOLLARS
($6,480,000.00) (90% of gross sales revenue of $7,200,000.00); and the Net
Income of the Business as conducted post-Closing equals or exceeds $425,000.00
for the one (1) year period ending on the Release Date.
(ii) If any of the headcount, sales revenue or the
Net Income fails to satisfy the requirements set forth in 3.1(c)(i) immediately
above as of the Release Date, then the Contingent Payment Escrow Funds will be
held and released as follows:
A. If the Business sold by Sellers reaches
and maintains the headcount, and annualized sales revenue and Net Income figures
for a period of ninety (90) consecutive days within a period of one (1) year
from the Release Date, then the balance of the Contingent Payment Escrow Fund
will be paid to the Sellers by the Escrow Agent.
B. If the Business sold by Sellers fails to
reach and maintain the headcount, sales revenue and Net Income figures as
provided in Section 3.1(c)(ii)(A) above, then the balance of the Contingent
Payment Escrow Funds will be paid to the Purchaser by the Escrow Agent.
The Purchaser and the Sellers each agree to give the Escrow Agent adequate and
timely written notice concerning any payments to be properly made from any of
the Escrow Funds and the satisfaction of any condition to payment.
(d) In addition to the payments set forth in Sections 3.1(a),
(b) and (c) above, the Purchaser shall pay the Sellers an amount not to exceed
$666,666.00 per year for a period of three (3) years on each of January 1, 1998,
1999 and 2000, provided that the annual potential earn-out of $666,666.00 per
year shall be reduced on a dollar for dollar basis for each dollar the Net
Income of
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the Business sold by Seller is greater than $435,000.00 but less than
$522,000.00, $626,000.00 and $751,000.00 for December 31, 1997, 1998 and 1999,
respectively. No earnout shall be due or payable in any year in which annual Net
Income is less than $435,000.00. Payments due, if any, will be due within
forty-five days of the end of each respective earn-out period.
(e) The Purchaser and Sellers agree that the Negative
Covenants of the Sellers have a value separate, apart and distinct from the
value of the Stock and Business. The Negative Covenants are a prime
consideration for the transaction contemplated by this Agreement without which
the Purchaser would not enter into this Agreement. The parties, after due
consideration and valuation, agree that part of the Purchase Price be allocated
to the Negative Covenants in accordance with Section 3.1(f) below.
(f) (i) The value to be ascribed and the separate amount to be
allocated from the Purchase Price in consideration for the Negative Covenants
shall be established by an independent valuation chosen by the Purchaser
("Valuation"), provided that the Valuation is no greater than $1,000,000.00. If
the Valuation is greater than $1,000,000.00 then the amount ascribed to the
Negative Covenants shall be deemed to be $1,000,000.00.
(ii) The amount ascribed to the Negative Covenants
shall be payable as follows:
(A) $500,000.00 of the Purchase Price
payable at Closing pursuant to Section 3.1(a)(i) shall be paid at Closing;
(B) The balance of the Negative Covenants
Valuation will be paid by the Purchaser to the Sellers on January 10, 1997.
(C) If the Valuation is less than
$1,000,000.00, the difference between the sum of the Purchase Price paid in
consideration of the Negative Covenants pursuant to Section 3.1(f)(ii)(A) and
(B) will be paid by the Purchaser to the Sellers on January 10, 1997; provided
that the total Valuation is at least $500,000.00. If the total Valuation is less
than $500,000.00 then $500,000.00 will be paid to the Sellers by the Purchaser
on January 10, 1997.
Within five (5) business days of its receipt of the Valuation, the Purchaser
shall provide the Seller with a copy of the Valuation. Both the Purchaser and
the Sellers agree to utilize the value ascribed to the Negative Covenants in the
Valuation in the preparation of any post-closing tax returns which request such
information.
3.2 The Purchaser agrees to provide the Sellers with an accounting
statements, in reasonable detail, which will indicate the information necessary
to make the calculations referenced in Section 3.1 above and Section 3.3 below.
The determination of Net Income and calculation of any pay-out will be made in
accordance with GAAP. Said statements will be deemed final and
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correct unless the Sellers shall within 45 days from the date of delivery of the
accounting statements contests the information therein by giving Purchaser
written notice. If the Sellers do not contest the accounting statements within
the 45 day period, the statements will be deemed correct and Sellers shall have
waived all right to contest the statements. Any notice hereunder must specify
the disagreement in sufficient detail so that the Purchaser may understand the
nature and extent of the disagreement.
3.3 Notwithstanding anything to the contrary herein contained, the
Purchaser shall have the right to reduce any post closing payments due to
Sellers by the following amounts:
(a) the full amount of any payment for vacation/bonus paid to
any Billable Employee who leaves the employ of the Purchaser at any time within
ninety (90) days from the date of payment of such vacation/bonus; and
(b) the full amount of any payment for holiday paid to any
Billable Employee who leaves the employ of Purchaser at any time within ninety
(90) days from the date of payment of such holiday pay.
3.4 The Purchaser hereby guarantees payment of the bonus of $150,000.00
to each of the Sellers declared in the resolution by the Board of Directors of
the Company, dated August 8, 1996, net of payroll deductions and taxes required
by law, in the event that the Company is unable to pay such obligation.
3.5 The collection of Accounts Receivables due and owing to the Company
at the time of Closing will be accomplished as follows:
(a) The Purchaser agrees to invoice the Company's Clients for
all outstanding sums legally due and owing the Company for work performed by or
on behalf of the Company in the ordinary course of the Business prior to the
Closing Date. The Sellers agree to cooperate in this effort and shall provide
notice to the Clients to remit directly to the Purchaser.
(b) The Purchaser shall use reasonable efforts to collect the
Accounts Receivable, with the assistance of the Sellers, for a period of one
hundred twenty (120) days following the Closing Date ("Receivables Collection
Period"). The Purchaser shall not be obligated to bring suit or action to
effectuate collection.
(c) The Purchaser shall provide the Sellers with monthly
reports indicating the amounts billed, amounts received, date of payment,
amounts outstanding and any notice of any counterclaim, denial, set-off or
refusal to pay.
(d) The Sellers shall provide the Purchaser with complete and
accurate information and documentation in order to allow the Purchaser to
collect the Accounts Receivable.
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(e) After deduction is made for the benefit of the Purchaser
for unpaid liabilities which existed prior to the Closing Date, amounts paid to
Sellers as bonuses with associated payroll taxes and deductions which were
accrued by the Company prior to the Closing date and are referenced in Section
3.4 above and Corporate Income Tax Due (all to the extent not previously
reimbursed or otherwise deducted from the Purchase Price) the Purchaser shall
pay to the Sellers the balance of the Accounts Receivable as it is collected on
a monthly basis. Once paid Purchaser will have no further obligation to Sellers
with respect to the Accounts Receivable except that if the Purchaser does
receive Receivables after the end of the Receivables Collection Period, the
Purchaser will forward them to the Sellers as soon as practicable.
(f) To the extent not already applied any Accounts Receivable
collected during the Receivables Collection Period will be utilized to reimburse
Purchaser for any sums Purchaser paid to employee or others as wages or payroll
related withholdings or deductions earned or required to be paid prior to
Closing.
(g) Any amounts billed or received by any party to this
Agreement for services rendered after the Closing Date shall be the sole and
exclusive property of Purchaser and to the extent same are received by Sellers,
Sellers will promptly pay them over to Purchaser.
3.6 The value of the shares of COMFORCE's Stock to be paid to the
Sellers as consideration hereunder shall be the market value of the common
stock, par value $.01, of COMFORCE at Closing calculated by determining the
simple average of the closing price of COMFORCE's common stock for twenty (20)
business days immediately prior to the day of Closing as set forth in the
schedule at Section 3.6.
3.7 The Purchaser and/or COMFORCE shall have no obligation to register
the COMFORCE Stock delivered as part of the Purchase Price paid pursuant to
section 3.1(a) above. The Sellers shall rely on their right to sell the COMFORCE
Stock pursuant to Rule 144. Other than the prohibitions and limitations of Rule
144, Purchaser and/or COMFORCE shall not restrict Sellers sale of the COMFORCE
Stock issued pursuant to Section 3.1(a).
3.8 COMFORCE will use all reasonable efforts to file a Form S-8 with
the SEC to register by December 31, 1996 the COMFORCE Stock distributable
pursuant and subject to the COMFORCE Long-Term Stock Investment Plan, the terms
of this Agreement and the terms of the employment agreements between the
Purchaser and the respective Sellers. COMFORCE will use all reasonable efforts
to keep the Form S-8 effective during the entire vesting schedule as set forth
in the Seller's employment agreements. COMFORCE will grant stock options to
Company employees in such amounts as are indicated on the Schedule at Section
3.8 pursuant to vesting schedules established by the Purchaser.
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ARTICLE IV
ASSUMPTION OF LIABILITIES BY PURCHASER
4.1 The Purchaser shall not assume any contingent or undisclosed
liabilities of the Company or the Sellers and shall be responsible only for
those liabilities set forth on the Company's Balance Sheet set forth on the
Schedule at Section 4.1.
ARTICLE V
CLOSING AND CLOSING DATE
5.1 The Closing for the transactions contemplated by this Agreement
(the "Closing") shall take place on or about August 19, 1996 ("Closing Date") at
Purchaser's office. All adjustments will be made as of midnight immediately
before the Closing Date if the Closing is on Monday, and if Closing is not on a
Monday, then midnight immediately before the first Monday following the Closing
("Adjustment Date"). The date the Purchaser will take over and assume operation
of the Business previously operated by the Sellers will be the Closing Date. The
parties shall adjust all expenses on a pro rata basis as of the Adjustment Date.
5.2 At the Closing, the Sellers shall deliver or cause the Company to
deliver to the Purchaser the following:
(a) the Stock free and clear of all liens, claims and
encumbrances duly endorsed for transfer or accompanied by duly executed stock
assignment powers;
(b) Verification in a form satisfactory to the Purchaser that
the Company has at the time of Closing:
(i) not less than 60 Billable Employees suitable for
Purchaser's Business; and
(ii)the Net Available Markup of not less than 25% for
all Billable Employees listed on the Schedule at Section 5.2(b).
(c) Good Standing Certificates from all states in which the
Company does or, within the one year preceding Closing, did business or
performed services.
(d) The Sellers will from time to time at the Purchaser's
request, whether prior to, at, or after the Closing, and without further
consideration, execute and deliver such further instruments and conveyances and
transfers, and take such other action as the Purchaser may reasonably require to
more effectively convey and transfer to the Purchaser any of the Stock or assets
owned by the Company being conveyed or delivered hereunder incident to the sale
of Stock.
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(e) Employment agreements between Steve Gunner and Purchaser
and Paul Baldwin and Purchaser executed by them in substantially the same form
as annexed hereto as Exhibit "A" and "B" and such other employment agreements,
in a form reasonably acceptable to the Sellers, for those listed on the Schedule
at Section 5.2(e).
(f) Shareholders certification in the form annexed as Exhibit
"C".
(g) A statement of Accounts Receivable balance at the Closing
Date.
(h) All of the Company's corporate, financial, operations and
accounting books and records, journals, the general ledger and all other
journals and ledgers which constitute books of original entry, bank statements,
canceled checks and internal financial statements.
5.3 The Purchaser shall have the absolute right in its sole discretion
to waive any Closing requirement at or before Closing. If the Purchaser does not
waive its rights in whole or in part and the Sellers are not ready, willing and
able to perform as of Closing, the Purchaser shall have the right to terminate
this Agreement or postpone the Closing upon written notice to the Seller
specifying in reasonable detail the reason for termination or postponement. In
the event of such termination, all of the Purchaser's obligations shall
terminate without further loss, damage, cost, claim, right or remedy in favor of
the Sellers or the Company.
5.4 The Sellers hereby agree promptly to pay all employee wages and
payroll charges, trade and other accounts payable upon which have accrued prior
to the Closing Date. If the Sellers do not pay such liability accounts payable
on the later of the due date thereof or the tenth (10th) day following notice
from the Purchaser to pay such accounts or give the Purchaser notice that it has
a dispute as to the amount due, then the Purchaser may pay such accounts
payable, and thereafter, such amounts shall be reimbursed by the Sellers to the
Purchaser, or, at the Purchaser's option, may be applied against any monies due
the Sellers held in escrow under the terms of this Agreement.
5.5 The Sellers also agree (i) to cure any breaches or defaults that
may exist on the Closing Date, with respect to any of the contracts or
agreements assumed by Purchaser hereunder, and (ii) to make all payments due or
to become due thereunder attributable to periods ending on or before the Closing
Date other than those on the Company's Balance Sheet and Section 4.1. In the
event the Sellers fail to cure any such breach or default or make any such
payment when requested to do so by the Purchaser, the Purchaser will have the
right to cure any such breach or default or make any such payment on or after
the tenth (10th) day following the Purchaser's request that Sellers do so. Any
amounts so paid by the Purchaser to cure any such breach or default shall be
reimbursed by the Sellers to the Purchaser, or at the Purchaser's option, may be
applied against any moneys due the Sellers under the right of offset granted in
Section 8.2.
5.6 Commencing with the execution of this Agreement and to the extent
not previously delivered at or before Closing, the Purchaser and the Sellers
agree to commence the preparation of and make diligent application for, to
follow up on, and to actively and diligently pursue all approvals
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and consents reasonably requested by the Purchaser, including but not limited
to, the consents for approval of assignment of Customer and Billable Employee
contracts in a form reasonably acceptable to the Purchaser. If all such
consents, and approvals are not available at Closing, Sellers agree to
diligently pursue obtaining such approvals and consents after the Closing at the
Purchaser's request.
ARTICLE VI
SELLERS' REPRESENTATIONS AND WARRANTIES
In order to induce the Purchaser to execute and perform this Agreement,
and with the knowledge that the Purchaser will rely thereon, the Sellers, and
the Company where referenced below, do hereby represent, warrant, covenant and
agree (which representations, survival warranties, covenants and agreements
shall be and be deemed to be continuing and survive the execution and delivery
of this Agreement and the Closing Date) as follows:
6.1 The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and where the Company
conducts business as a foreign corporation, with full power and authority,
corporate and otherwise, and with all licenses, permits, certifications,
registrations, approvals, consents and franchises necessary to own or lease and
operate its properties and to conduct its business as presently being conducted.
The Company is duly qualified to do business as a foreign corporation, and is in
good standing, in all jurisdictions, if any, wherein such qualification is
necessary.
6.2 The Sellers own and have good and marketable title in and to the
Stock, and Company owns good and marketable title in the Property and assets
delivered hereunder, free and clear of all liens, claims and encumbrances and
rights and option of others (except as herein expressly provided to the
contrary).
6.3 The authorized and outstanding capitalization of the Company is as
set forth in the Schedule at Section 6.3; as of the date hereof and at the
Closing there shall not be authorized and/or issued and outstanding any shares
of capital stock of the Company and/or rights to purchase shares of capital
stock of the Company except as set forth on the Schedule at Section 6.3. All
shareholders of the Company and the respective amounts owned by each are listed
on the Schedule at Section 6.3. The issued and outstanding shares of the Company
have been duly authorized and validly issued, and all such outstanding shares
are fully paid and nonassessable. There are not now nor will there be at the
Closing any outstanding trust agreements, options, warrants and similar rights
to purchase shares of the Company's capital stock. There are no preemptive
rights except those of the Sellers which are hereby waived effective at the
Closing Date. No holder of such outstanding shares of Company capital stock is
subject to personal liability solely by reason of being such a holder. During
the period from the date hereof through the Closing, there will be no shares of
the capital stock of the Company issued. Except as herein provided, no dividends
or other distributions of the assets of the Company have been or will be
declared and/or paid prior to the Closing on or with respect to the
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capital stock of the Company. Upon the delivery of the certificates evidencing
the Stock duly endorsed in blank or accompanied by duly executed stock
assignment powers, the Purchaser shall acquire good and marketable title in and
to the Stock free and clear of all liens, claims and encumbrances and rights and
options of others.
6.4 (i) The Sellers and the Company, as the case may be, have the full
power and/or authority, corporate and otherwise, to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby; (ii) the
execution, delivery and performance of this Agreement, the consummation by the
Sellers and the Company of the transactions herein contemplated and the
compliance by the Company with the terms of this Agreement have been duly
authorized by all necessary corporate action, and this Agreement has been duly
and properly authorized, executed and delivered by the Sellers and the Company;
(iii) this Agreement is the valid and binding obligation of the Sellers and the
Company, enforceable in accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies; (iv) the execution, delivery and
performance of this Agreement by the Sellers and the Company and the
consummation by the Sellers and the Company of the transactions herein
contemplated does not, and will not, with or without the giving of notice or the
lapse of time, or both, (A) result in any violation of the Articles of
Incorporation, and all amendments thereto, or By-laws, and all amendments
thereto, of the Company, (B) result in a breach of or conflict with any of the
terms or provisions of, or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company and/or the Stock of the Sellers, and/or pursuant to, any
indenture, mortgage, note, contract, commitment or other agreement or instrument
to which the Sellers or the Company is a party or by which the Company or any of
the Company's properties or assets are or may be bound or affected; (C) violate
any existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any of its properties or businesses; or (D) have any effect on any
agreement, permit, certification, registration, approval, consent, license or
franchise necessary for the Company to own or lease and operate any of its
properties and to conduct its businesses or the ability of the Company to make
use thereof. No consent, approval, authorization or order of any court,
Customer, governmental agency, authority or body and/or any party to an
agreement to which the Sellers or the Company is a party and/or by which it is
bound, is required in connection with the execution, delivery and performance of
this Agreement, and/or the consummation by the Sellers or the Company of the
transactions contemplated by this Agreement except as noted on the Schedule at
Section 6.4.
6.5 The Company is not in violation of, or in default under, (i) any
term or provision of its Articles of Incorporation, and all amendments thereto,
or By-Laws, and all amendments thereto; (ii) any term or provision or any
financial covenant of any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of its
properties or business is or may be bound or affected; or (iii) any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign,
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having jurisdiction over it or any of its properties or business. The Company
owns, possesses or has obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties and
to conduct the Business or operations as presently conducted and all such
governmental and other licenses, permits, certifications, registrations,
approvals, consents and other authorizations are outstanding and in good
standing, and there are no proceedings pending or, to the best of its knowledge,
threatened, or any basis therefor existing, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or authorizations.
6.6 Prior to the date hereof the Sellers have delivered to Purchaser
the financial statements including the Company's Balance Sheet ("Unaudited
Financial Statements") for 1994 and 1995, and unaudited interim financial
statement ("Interim Statements") of the Company described on the Schedule at
Section 6.6 annexed hereto and made a part hereof; copies of which Unaudited
Financial Statements and Interim Statements (collectively the "Financial
Statements") have been delivered to the Purchaser prior to Closing. The
Financial Statements fairly present the financial position of the Company as of
the respective dates thereof and the results of operations, and changes in
financial position of the Company as of the respective dates thereof and the
results of operations, and changes in financial position of the Company, for
each of the periods covered thereby. The Unaudited Financial Statements have
been prepared in conformity with GAAP, applied on a consistent basis throughout
the entire periods involved. As of the date of any balance sheet forming a part
of the Financial Statements, and except as and to the extent reflected and
reserved against therein, the Company did not have any material liabilities,
debts, obligations or claims (absolute or contingent) asserted against it and/or
which should have been reflected in a balance sheet or the notes thereto; and
all assets reflected thereon are properly reported and present fairly the value
of the assets therein stated in accordance with GAAP.
6.7 The financial and other books and records of the Company (including
those forming a part of the Property) (i) are in all material respects true,
complete and correct and have, at all times, been maintained in accordance with
good business and accounting practices; (ii) contain a complete and accurate
description, and specify the location, of all trucks, automobiles (with the
exception of those automobiles listed on the Schedule at Section 6.7),
machinery, equipment, furniture, supplies, tools, drawings and all other
tangible personal property (collectively, the "Personal Property") owned by, in
the possession of, or used by the Company in connection with the operation of
the Business in the normal course of business; (iii) except as set forth on the
Schedule at Section 6.7 annexed hereto and made a part hereof, none of such
Personal Property is leased or subject to a security agreement, conditional
sales contract or other title retention or security agreement or is other than
in the possession of and under the control of the Company, (iv) the Personal
Property reflected in such books and records constitutes all of the tangible
personal property necessary for the conduct by the Company of the Business as
now conducted and all of the same is in normal operating condition and the use
thereof as presently employed conforms to all applicable laws and regulations,
and (v) set forth all of the meetings and records of the stockholders and
directors and all actions taken by them.
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6.8 Annexed hereto as a Schedule at Section 6.8 is a schedule setting
forth the addresses of each parcel of improved or unimproved real property owned
by or leased to the Company. The Schedule at Section 6.8 is true, correct and
complete in all respect; each of such leases are in full force and effect with
no event of default in existence or event or occurrence which, with the passage
of time and/or giving of notice would or could mature into an event of default
thereunder.
6.9 The Company has full legal right, title and interest to all common
law rights under applicable patent, copyright, trademark and trade secret law
that may be owned by Company (the "Intellectual Property"). The Company has not
prosecuted, and has no pending applications for, any patent, copyright or
trademark. To the knowledge of the Sellers the conduct of the Company's Business
and use of the Intellectual Property does not infringe or misappropriate any
rights asserted by any Person. The Company licenses only standard software for
use in the Business, and all license fees for the use of such software has been
fully paid. The Company's trade secrets and proprietary information have been
and are, to the extent practicable, maintained and disclosed on a "need to know"
basis and, where appropriate, the Company has utilized confidentiality
agreements to preserve the confidentiality of such information.
6.10 The Customer Materials, Resumes and Records represent all of such
materials at any time utilized in connection with, arising out of or relating to
the Business; and the Company or any employee, officer, director or shareholder
of the Company has or shall retain copies thereof and have not prior to the date
hereof, and shall not prior to the Closing, provide to any person or entity or
authorize or permit another to make, receive or utilize any of such Customer
Materials, Resumes or Records and/or the information therein or thereon
reflected except as may be required by the Customers in the ordinary course of
the Company's Business.
6.11 Except as listed on the Schedule at Section 6.11, the Company does
not have any material liabilities, debts, obligations or claims asserted against
it, whether accrued, absolute, contingent or otherwise, and whether due or to
become due, including, but not limited to, liabilities on account of due and
unpaid taxes, other governmental charges or lawsuits.
6.12 Since the date of the most recent balance sheet included in the
Financial Statements, there has been no material adverse change to the Business
of the Company nor its prospects and the Company has not, except as set forth on
the Schedule at Section 6.12 annexed hereto and made a part hereof: (i) incurred
any obligation or liability (absolute or contingent, secured or unsecured)
except non-material obligations and liabilities incurred in the ordinary course
of the operation of the Business as carried on at and prior to such date; (ii)
canceled, without payment in full, any notes, loans or other obligations
receivable or other debts or claims held by it; (iii) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien any contract,
permit, license, franchise or other agreement other than sales or other
dispositions of goods or services in the ordinary course of business at
customary prices; (iv) increased compensation payable to any of its officers,
directors or other employees including in the term "compensation", salaries,
fringe benefits, pensions, profit participation and payment of benefits of any
kind whatsoever with the exception of the bonus payable to the Sellers pursuant
to Section 3.4; (v) changed or entered into any line of
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business other than that conducted by it on such date or entered into any
transaction in the ordinary course of its business; (vi) conducted any line of
business in any manner except by transactions customary in the operation of its
business as conducted on such date; (vii) warranted or guaranteed any work,
product or services to Customers; (viii) declared, made or paid, or set aside
for payment, any cash or non-cash dividends or other distribution on any shares
of its capital stock; (ix) changed or modified any accounting method or practice
(including any change in depreciation, amortization and/or goodwill policies or
rates); (x) waived or released any rights or claims; (xi) made any capital
expenditure; (xii) paid any amounts to shareholders except the usual salary and
benefits with the exception of the bonus payable to the Sellers pursuant to
Section 3.4; (xiii) incurred any damage, destruction or loss (whether or not
covered by insurance) which materially adversely affects its assets, business,
options or financial condition; or (xiv) experienced any labor dispute, court or
government action, order or decree; (xv) entered into any agreement to take any
of the actions above referenced.
6.13 The Sellers or the Company have not incurred any liability for any
finder's fees or similar payments in connection with the transactions herein
contemplated except as set forth herein.
6.14 Except as set forth on the Schedule at Section 6.14, the Company
is not in default under the terms of any outstanding agreement related to the
business, operations, properties, assets or condition of the Company; and there
exists no event of default or event which, with notice and/or the passage of
time, or both, would constitute any such default, except for technical defaults
which will not individually or in the aggregate have a materially adverse effect
on the Business.
6.15 Except as set forth on the Schedule at Section 6.15, there are no
claims, litigation, actions, suits, proceedings, arbitrations, investigations or
inquiries against the Sellers or the Company before any court or governmental
agency, court or tribunal, domestic, or foreign, or before any private
arbitration tribunal, pending, or, to the best of the knowledge of the Sellers,
threatened against the Company or involving its properties or businesses; nor,
to the best of the knowledge of the Sellers, is there any basis for any such
claim, action, suit, proceeding, arbitration, investigation or inquiry to be
made by any person and/or entity, including without limitation any customer,
supplier, lender, shareholder, former or current employee, agent or landlord.
There are no outstanding orders, judgments or decrees or any court, governmental
agency or other tribunal specifically naming the Company and/or enjoining the
Company from taking, or requiring the Company to take, any action, and/or by
which the Company, and/or its properties or businesses are bound or subject.
6.16 Except as otherwise set forth in the Schedule at Section 6.16, the
Company has filed all federal, state, municipal and local tax returns (whether
relating to income, sales, franchise, withholding, real or personal property,
employment or otherwise) required to be filed under the laws of the United
States and all applicable states and localities, and has paid in full all taxes
which are due pursuant such returns or claimed to be due by any taxing authority
or otherwise due and owing including cut-off and short period returns as
provided in section 11.3. No penalties or other charges are or will become due
with respect to the late filing of any such return. Each such tax return
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heretofore filed by the Company correctly and accurately reflects the amount of
its tax liability thereunder. The Company has withheld, collected and paid all
other levies, assessments, license fees and taxes to the extent required and,
with respect to payments, to the extent that the same have become due and
payable. The Company has made all required filings with Regulatory Authorities
on a timely basis, other than filings the failure to make which on a timely
basis (or at all) does not and will not have a material adverse effect on the
Company, and except for tax returns and filings relating to benefit plans which
are covered elsewhere in this Agreement. None of such filings contain any
misstatement of a material fact, or omits to state a material fact necessary in
order to make any such filing not misleading.
6.17 The Company is or has not been: (i) a party to any collective
bargaining agreement or discussions or negotiations with any individual or group
looking toward any such agreement, (ii) experienced any strike, material
grievance or unfair labor practice claim, suit or administrative proceeding,
(iii) any knowledge that any Employee or Billable Employee or group of Employees
or Billable Employees has filed seeking recognition as a collective bargaining
representative or unit which would include Employees or Billable Employees, (iv)
any knowledge that any former employer of any of its employees is contemplating
remedial action of any nature against that employee or the Company based on the
employee having terminated the former employment and having become an employee
of the Company, or based on the employee having misappropriated proprietary
information or intellectual property of the former employer. Except as set forth
on Schedule 6.17 attached hereto, the Company is not a party to any agreements
of the following nature: (i) employment agreements; (ii) noncompetition
agreements; (iii) consulting agreements; (iv) pension and profit-sharing plans;
(v) bonus plans; (vi) stock purchase plans; (vii) hospitalization, disability
and other insurance plans; (viii) severance or termination pay plans and
policies; (ix) deferred compensation; (x) stock option plan; and (xi) other
employee benefit, welfare or fringe benefit plans ("Plans"). The Company has no
liability to pay post-retirement benefits with respect to any Billable Employee,
Employee or former Employee or Billable Employee. Any such plans to which any of
the Company is a party have been administered in accordance with their terms,
involve no material unfunded liability of the Company, and have had all
presently anticipated payments properly accrued in accordance with GAAP
consistently applied. The Company has complied with all applicable laws relating
to ERISA (as defined below), employment, immigration, civil rights and equal
employment opportunities.
6.18 The Schedule at Section 6.18 lists each person who serves as a
full-time employee of the Company and is not a Billable Employee ("Employee"),
including the Employee's name, title or position and years of service with the
Company.
6.19 Neither the Company nor its present or former officers, directors,
employees or agents (including any third party acting on behalf of the Company)
have: (i) directly or indirectly, made or authorized to be made, any bribes,
kickbacks or other payments of a similar nature, whether lawful or not, to any
person or entity, public or private, regardless of the form thereof, whether in
money, property or services, to obtain favorable treatment in securing business
or to obtain special concessions or to pay for favorable treatment for business
secured or for special concessions already
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obtained; (ii) paid funds or property of any kind that was donated, loaned or
made available, directly or indirectly, for the benefit of, or for the purpose
of opposing, any government or subdivision thereof, political party, candidate
or committee, either domestic or foreign; (iii) the Company has not made any
loans, donations, or other disbursements, directly or indirectly, to officers or
employees of the Company, for contributions made, or to be made, directly or
indirectly, for the benefit of, or for the purpose of opposing, any government
or subdivision thereof, political party, candidate or committee, either domestic
or foreign; and (iv) the Company has not and does not maintain a bank account or
other account of any kind, whether domestic or foreign, which account was not
reflected in the corporate books and records or which account was not listed,
titled or identified in the name of the Company. The representation with respect
to the Company's former officers, directors, employees or agents shall be
limited to the knowledge of the Sellers.
6.20 The corporate record books of the Company have been duly and
properly maintained, are in good order, complete, accurate, up to date and with
all necessary signatures, and set forth all meetings and actions heretofore held
and/or taken by the shareholders and/or directors of the Company, as the case
may be, and/or as set forth in all certificates of votes of shareholders or
directors heretofore furnished to anyone at any time.
6.21 The copies of the Articles of Incorporation (and all amendments
thereto) and the By-Laws of the Company heretofore delivered by the Company, are
true, correct and complete in all respects; are, and shall remain, in full force
and effect; and shall not be altered, amended, modified, terminated or rescinded
prior to the Closing without the prior written consent of the Purchaser in each
instance.
6.22 The officers and members of the Board of Directors of the Company
are as set forth on the Schedule at Section 6.22 and during the period from the
date hereof until the Closing, there shall be no change in such officerships
and/or memberships without the prior written consent of the Purchaser in each
instance.
6.23 Except as set forth on the Schedule at Section 6.23 annexed hereto
and made a part hereof, no officer or director of the Company or the Sellers
(and/or any member of their respective immediate families) has a financial
interest (direct or indirect) in any competitor, supplier or Customer of the
Company.
6.24 Each of the agreements and purchase orders described on the
Schedule at Section 2.2(a) annexed hereto and made a part hereof are in full
force and effect, have not been altered, amended, modified, terminated or
rescinded, are fully enforceable in accordance with their respective terms.
There exists no event of default with respect to any agreement or purchase order
referenced which would individually or in the aggregate have a material adverse
effect on the Business.
6.25 Other than as set forth on the Schedule at Section 6.25 annexed
hereto and made a part hereof, the Company is not a party (i) to any material
contract or agreement which cannot be terminated on no more than 90 days prior
written notice from the Company to the other party thereto
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with the exception of contracts with Billable Employees; or (ii) to any
agreement not entered into in the ordinary course of business.
6.26 The Customer contracts of the Company are effective and there
exists no breach or default with respect to same which breach or default,
individually or in the aggregate, would have a material adverse effect on the
Business. The copies of those contracts previously delivered to the Purchaser
are accurate and complete and there exist no amendments or set of facts with
respect to same which were not previously disclosed and that no amendments,
changes or modifications to said contracts will be made without the prior
written consent of the Purchaser. There are no present conditions or set of
facts that the requirements for personnel in such contracts shall materially be
reduced or changed adversely, and there are not any past deficiencies in the
Company's performance of services under such contracts that might adversely
affect the continuation of supplying services under such contracts.
6.27 There have been no past proceedings or are there any proceedings
now pending nor, to Seller's knowledge or belief, threatened against the Company
before the National Labor Relations Board, State Department of Labor, State
Commission on Human Rights and Opportunities, State Department of Labor, Equal
Employment Opportunity Commission, Immigration and Naturalization Service or any
other local, state or Federal agencies having jurisdiction over employee rights
with respect to hiring, tenure, conditions of employment or immigration matters
within the three year period prior to the execution of this Agreement. The
Company has conducted and currently conduct its business in compliance with all
applicable federal, state, and local requirements with respect to air and water
quality, with respect to generation, transportation, handling, treatment,
storage and disposal of waste (including hazardous waste, if any), and with
respect to health and safety laws.
6.28 The Company has properly made, reported and remitted all
appropriate Federal, State and local payroll related deductions and taxes
including: FICA, FUTA, SUI and income tax withholdings presently due and owing;
all applicable Sales and Use Taxes; and the Sellers further warrant that they
will report and remit all withholdings and taxes due for activities prior to the
Closing Date.
6.29 None of the contracts referenced or listed on the Schedule at
Section 2.2(a) were obtained or executed based in whole or in part on the fact
or representation that the Company is a minority or woman owned or operated
business or a small business enterprise as those or similar terms are defined by
Federal or state statutes or regulations.
6.30 The Company has paid all Employees and Billable Employees in
accordance with applicable state and federal law. All non exempt employees have
been paid appropriate and correct premium wages where applicable. There have
been no past or present exempt employees on the payroll of the Company; no
payment for the lease and/or rental of vehicles or equipment; and no payment or
reimbursement to employees for moving, meals, incidental or lodging expenses
(commonly known as per diem payments) and no payments to Billable Employees as
consultants or
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independent contractors with the exception of those listed on the Schedule at
Section 6.30 annexed hereto and made a part hereof.
6.31 The Company has not retained the services of any independent
contractor or consultant for assignment to Customers except as listed on the
Schedule at Section 6.31 annexed hereto and made a part hereof.
6.32 There are no contracts, agreements, or arrangements, written or
oral, relating to the conduct of the business of the Company to be sold
hereunder to which the Company is a party or is bound, except as may be referred
to in this Agreement, or any schedule or exhibit annexed hereto.
6.33 The Schedule at Section 6.33 contains a complete and correct list
of all insurance policies in effect as of the time of this Agreement. The
Company represents that the coverage provided is through reputable insurers and
is valid, outstanding, enforceable and adequate to fully cover the Business
operations and against all suits, claims, obligations, damages and liabilities
arising from the conduct of the business or the property utilized therein,
including damage to property or personal injury (including death). The Company
reasonably believes the coverage and Business practices are sufficient to avoid
the Company being a co-insurer under the policies. All payments and insurance
recoveries are listed on the Company's financial statements. The Schedule at
Section 6.33 contains a detailed description of each pending insurance policy
claim which relates to the Company's Business or assets. The Company has not
failed to give, in a timely manner, any notice required under any such policy to
preserve its rights thereunder. The Company shall keep all insurance coverages
in effect through the date of Closing.
6.34 The Schedule at Section 6.34 hereto lists each employee benefit
plan as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), as well as all programs, stock
purchase, option or bonus plans, or payroll practices with respect to which
Seller has any obligation (individually "Benefit Plan" and collectively
"Benefits Plans") which have been in effect at any time during the last five
years. Sellers and Company and each plan fiduciary have complied in all respects
with ERISA, the Internal Revenue Code of 1986, as amended, and all regulations
thereunder (the "Code") and other applicable law. Seller has no obligation to
provide medical, dental, life insurance or other benefits under an employee
welfare benefit plan to retired or otherwise terminated employees other than as
is required under ERISA. The consummation of the transactions contemplated in
this Agreement will not entitle any employee of Seller to severance pay,
unemployment compensation or any similar payment. There are no disputed claims
under any Benefit Plan which have been or may reasonably be asserted other than
claims for benefits in the ordinary course of the operation of the Benefit Plan
and there are no pending government investigations, proceedings or inquiries
with respect to any Benefit Plan. For each Benefit Plan, the following documents
(as applicable) were timely filed with the cognizant government or
administrative agency or department and have been delivered to Purchaser: (a)
copy of Benefit Plan document, trust agreement, and/or related insurance or
annuity contract; (b) Summary Plan Description; (c) Summaries of material
Modifications and other communications to employees, other than benefit reports;
(d) Annual Reports/Returns for the most recent year; and (e)
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all determination letters, rulings, exemptions, waivers and opinions issued by
the Internal Revenue Service, Pension Benefit Guaranty Corporation or Department
of Labor. No Company and its Affiliates and its "controlled groups" (as defined
in ERISA ss.404(a)(14)) Plan has been terminated or will be terminated prior to
Closing. Company does not contribute to any "multi-employer plan" as defined in
ERISA nor has Company or any "controlled group" withdrawn from any
multi-employer plan in whole or in part so as to incur withdrawal liability.
6.35 To the knowledge of the Sellers any and all Accounts Receivable
are good, valid and collectible. The Accounts Receivable as shown on the
Financial Statements are true and accurate and no agreement or understanding
between the Company and its account debtors exists or has existed that will
affect the Account Receivable.
6.36 All work-in process arises from bona fide transactions in the
ordinary course of the Business and is billable and collectible without
off-sets, credits, special arrangements or discounts.
6.37 There is no Customer warranty related work or liability related
thereto.
6.38 The execution of this Agreement or the consummation of the
transaction contemplated herein does not give creditors or lenders to the
Company or Sellers the right or ability to accelerate payments and/or grant said
lenders or creditors the right or ability to seize, possess, take or hold any of
Company's assets.
6.39 The Sellers represent that they are both "green card" holders, and
the Sellers' immigration status of "permanent residents" is not related to or
conditioned upon employment by the Company; and there is no prohibition to
Sellers remaining in the United States during the anticipated terms of their
employment agreements with the Purchaser and Earn-Out period. Schedule 6.39
attached hereto sets forth (i) the Billable Employees that have visas and/or
"green cards" and, if applicable, the expiration date thereof and (ii) all
pending unapproved labor certifications for the Billable Employees. The
Company's general practice is to extend the H-1 visas for Billable Employees for
an additional three years and eventually apply for "green cards" for the
Billable Employees. To the best of the Sellers' knowledge and belief, all
applications for visas and Labor Certification Applications were properly
completed, filed and executed by all necessary parties as required by law.
6.40 The representations, warranties, covenants and agreement of the
Sellers and the Company contained in this Agreement, or in any statement,
Schedule, Exhibit or certificate furnished by the Seller or the Company pursuant
to this Agreement when read in their entirety, including, without limitation,
those contained in this Section 6.40, are true, complete, accurate and correct
in all respects as of the date hereof and shall be true, accurate and correct
and complete, in all respects as of the Closing; and will not contain any untrue
statement of any material fact, or omit to state a material fact in order to
make any or all of such representations and warranties not materially misleading
as of this date and as of the Closing Date; and at the Closing the Seller shall
deliver to the Purchaser a certificate, executed by Sellers remaking each of the
Seller's representations,
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warranties, covenants and agreement set forth in this Agreement, including
without limitation, those set forth in this Section 6.40.
ARTICLE VII
PURCHASER'S AND COMFORCE'S REPRESENTATIONS AND WARRANTIES
The Purchaser and COMFORCE represents and warrants to the Seller and,
with respect to COMFORCE, except to the extent otherwise previously publicly
disclosed, as follows:
7.1 The Purchaser and COMFORCE are corporations duly organized, validly
existing and in good standing under and by virtue of the laws of the State of
Delaware, and the execution and delivery of this Agreement and the purchase
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Purchaser and COMFORCE. COMFORCE has made available a true
and correct copy of its Certificate of Incorporation and Bylaws, and also the
Certificate of Incorporation and Bylaws of the Purchaser, each as amended to
date, to counsel for the Company.
7.2 The Purchaser and COMFORCE have corporate power to execute and
perform this Agreement, and to consummate the transactions contemplated hereby.
7.3 The execution and performance of this Agreement by the Purchaser
and COMFORCE will not conflict with, or result in a breach of, any of the terms,
conditions, or provisions of any law or any regulations, order, writ,
injunction, or decree of any court or governmental instrumentality, or of the
corporate charter or by-laws of COMFORCE or the Purchaser or of any agreement,
whether written or oral, or other instrument to which it is a party or by which
it is bound, or constitute (with the giving of notice or the passage of time, or
both) a default thereunder except as listed in the Schedule at Section 7.3.
7.4 The capital structure of COMFORCE, including Stock Option Plans, is
as listed in its most recent public disclosures. The shares of COMFORCE Stock to
be issued pursuant to this Agreement will be duly authorized, validly issued,
fully paid and nonassessable at the time of issuance.
7.5 There is no material litigation pending against COMFORCE or the
Purchaser except as listed in the Schedule at Section 7.5.
7.6 As of their respective filing date, all documents filed with the
SEC by COMFORCE (collectively, the "SEC Documents") complied in all material
respects with the requirements of the Securities and Exchange Act of 1934, as
amended ("Exchange Act") or the Securities Act of 1933, as amended (the
"Securities Act"), as the case may be, and none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they
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were made, not misleading, except to the extent corrected by a subsequently
filed document with the SEC and except for changes which may be required by the
SEC in pending filings. The financial statements of COMFORCE, including the
notes thereto, included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles consistently applied,
and fairly present the consolidated financial position of COMFORCE as to the
date thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, reoccurring audit
adjustments).
7.7 COMFORCE has not incurred, and will not incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
7.8 To the best of their knowledge, COMFORCE has complied with, is not
in violation of any material federal, state or local statute, law or regulation
with respect to the conduct of its business, with the ownership or operation of
its business, assets or properties which would have a material adverse effect on
business, and has received no notice thereof, except as disclosed on the
Schedule at Section 7.8.
7.9 None of the representations or warranties made by COMFORCE or the
Purchaser in this Agreement nor any statement made on any Schedule, Exhibit, SEC
Document or certificate furnished by COMFORCE or the Purchaser pursuant to this
Agreement, when read in their entirety, contains or will contain any untrue
statement of a material fact at the Closing Date, or omits or will omit to state
any material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which made, not misleading.
ARTICLE VIII
INDEMNIFICATION AND OFF SET
8.1 In addition to the indemnifications set forth in other sections
hereof and subject to the limitations hereinafter described, the Sellers and the
Company agree, jointly and severally, to indemnify, exonerate, defend and save
the Purchaser and COMFORCE and their respective officers, directors, employees
and representatives, successors and assigns (collectively the "Purchaser" for
the purposes of this Section 8) harmless from, against, for and in respect of
the full amounts of any and all damages, losses, demands, obligations, tax,
interest, penalty, suit, judgment, order, lien, liabilities, debts, claims,
actions, causes of action, encumbrances, costs and expenses, whether
administrative, judicial or otherwise, of every kind and nature, including,
without limitation, reasonable attorneys', consultants', accountants' and expert
witness fees, suffered, sustained, incurred or required to be paid at any time
after the Closing by the Purchaser based upon, arising out of, resulting from or
because of:
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(a) any obligations of the Sellers or the Company incurred in
connection with the making and performance of this Agreement;
(b) any claim, demand or cause of action asserted against the
Purchaser with respect to any claims, obligations or liabilities whatsoever,
whether disclosed or undisclosed, absolute or contingent, direct or indirect due
or to become due, now existing or arising hereafter, for debts, liabilities,
contractual obligations, violations, torts, events or incidents existing,
incurred, accrued or occurring prior to Closing;
(c) the untruth, inaccuracy, incompleteness, violation or
breach of any representation, warranty, agreement, undertaking or covenant of
the Sellers or the Company contained in or made pursuant to this Agreement or
any acts or circumstances constituting untruth, inaccuracy, violation or breach;
or
(d) any claims made against or expense incurred by the
Purchaser including, but not limited to, those with respect to the conditions or
operations of the Company made by regulatory or administrative agencies having
jurisdiction over the Company resulting from violations of local, state or
federal laws or regulations by the Company or any of their respective agents,
servants or employees, or resulting form a failure to collect or remit state or
local taxes, arising prior to the Closing; and agrees to pay all reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees,
interest, and penalties) incurred by the Purchaser in connection with any
action, suit, proceeding, demand, assessment or judgment incident to any of the
matters indemnified against.
8.2 Sellers, being the holders of all of the issued and outstanding
shares of Company, individually hereby grant to Purchaser the right of full
offset against any monies due Sellers, either under this Agreement or any other
agreement the Sellers may have with Purchaser, or Purchaser's Affiliates,
including commissions (but not base salary) due under employment agreements, for
the purpose of applying same to any sums that might become due to Purchaser as a
result of the indemnities herein made or as a result of a breach of any of the
covenants, representations or warranties herein contained. Said right of offset
shall in no way limit Purchaser's ability to collect any funds due and owing to
it from the Sellers or the Company.
8.3 The Sellers' representations and warranties and their obligation to
indemnify shall apply to any damages, losses, demands, obligations, tax,
interest, penalty, suit, judgment, order, lien, liabilities, debts, claims,
actions, causes of action, encumbrances, costs and expenses, and any set for
facts or circumstances related thereto, which accrued or arose during the four
(4) year period commencing with the Closing Date, provided that, Purchaser
provides written notice to Sellers during said four (4) year period which
specifies the claim for indemnity in reasonable detail.
8.4 In order to establish security and a ready source of cash in the
event of any breach of any covenant, representation or warranty contained in
this Agreement, Seller agrees to deposit the sum of FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00) in cash otherwise payable as part
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of the Initial Payment payable under Section 3.1(a) into an Escrow Fund to be
maintained in accordance with the terms of an Escrow Agreement in substantially
the same form as annexed hereto as Exhibit "D". The amount deposited in escrow
shall not constitute a limitation of Seller's liability.
8.5 Notwithstanding anything to the contrary in this Article VIII, the
Seller's liability to indemnify shall be limited to an amount equal to the
Purchase Price paid or due and payable hereunder such as the payment of
earn-outs hereunder.
ARTICLE IX
EFFECTIVE DATES OF TRANSACTIONS
9.1 After the Closing Date:
(a) The Purchaser shall pay for all supplies and equipment
actually delivered or services actually rendered after the effective date,
provided, however, that such supplies and equipment or such services were
purchased or rendered in the ordinary course of the business and are necessary
for the continuation of the business.
(b) The Purchaser shall be obligated to perform all contracts
and purchase orders with clients with respect to items not performed prior to
effective date, provided that such contracts and purchase orders were entered
into by Company in the ordinary course of business, disclosed to Purchaser prior
to Closing, and further provided that such obligations arise from services
rendered on or after the date of Closing.
(c) All expenses paid or obligations incurred by Company, if
any, as a result of which Purchaser will receive after effective date the
benefit of a portion of the consideration for such expenses shall be prorated
between the parties in an equitable manner reflecting the relative benefit
received by each. All expenses paid or obligations incurred by Purchaser (other
than Payables) as a result of which Company has received on or before effective
date the benefit of a portion of the consideration for such expenses shall be
prorated between the parties in an equitable manner reflecting the relative
benefit received by each. All of such prorations shall be made in accordance
with normal business practice.
(d) All obligations of the Company for commissions payable to
commission sales agents which relate to sales made on or before effective date
shall remain the obligation of the Company and shall be adjusted in the purchase
price.
(e) All inquiries and communications received by the Sellers
after the effective date will be forthwith mailed to the Purchaser to the extent
the same relate to the business sold by the Sellers hereunder.
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ARTICLE X
COVENANTS AND AGREEMENT BY SELLER
From the date hereof until the Closing Date, if the dates are not the
same, Sellers covenant and agree that:
10.1 Conduct of Business.
(a) The Sellers shall operate the Business in the usual and
ordinary course;
(b) The Sellers shall not remove or transfer from the Company
any assets for less than full and fair consideration, including but not limited
to, the payment of cash dividends;
(c) The Sellers shall permit the officers and other authorized
representatives of the Purchaser (i) full and unrestricted access, from time to
time and at one or more times, to the plants, properties, offices and books and
records of the Company, during normal business hours, and in connection with
such books and records, such inspection shall be at the offices where such
records are normally maintained, and such parties shall be entitled to make
copies of and abstracts from any of such books and records; (ii) the opportunity
to meet, correspond and communicate with the officers, directors, employees,
counsel and accountants to the Company, and to secure from each such information
as such parties shall deem necessary or appropriate; and (iii) to review and
copy such other, further and additional financial and operating date, materials
and information as to the business and operations of the Company as may be
requested by such parties; provided, however that all such information and
material secured by such parties in the course of such investigation shall be
and be deemed to be confidential and shall be used solely in connection with the
transactions herein described, and all written memoranda and documents and/or
other tangible evidence of such information shall either be returned to the
Sellers and/or destroyed in the event the subject acquisition is not
consummated.
(d) The Company shall maintain all insurance coverages in full
force and effect.
(e) The Company shall retain the Business' Employees and
Billable Employees so that they will remain employable after Closing.
(f) The Sellers shall take and perform any and all actions
necessary to render accurate and/or maintain the accuracy of, all of the
representations and warranties of the Sellers herein contained and/or satisfy
each covenant or condition required to be performed or satisfied by the Sellers
and the Company at or prior to the Closing and/or to cause or permit the
implementation of the within acquisition.
(g) The Sellers shall not take or perform any action which
would or might cause any representation or warranty made by the Sellers and the
Company herein to be rendered
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inaccurate, in whole or in part and/or which would prevent, inhibit or preclude
the satisfaction, in whole or in part of any covenant required to be performed
or satisfied by the Sellers and the Company at or prior to the Closing and/or
the implementation of the within acquisition.
(h) The Sellers shall cause the Company to perform, in all
material respects all of the Sellers' and Company's obligations under all
material agreements, leases and documents relating to or affecting the Property
and Business; and use its best efforts to preserve, intact, the relationships
with the Company's suppliers, customers, employees and other having business
relations with the Company so that the Business will be intact at Closing.
(i) Immediately advise the Purchaser of any event, condition
or occurrence which constitutes or may, with the passage of time and/or giving
of notice constitute, a breach of any representation or warranty of the Company
herein contained and/or which prevents, inhibits or limits or may prevent,
inhibit or limit the Company from satisfying, in full and on a timely basis, any
covenant, term or condition herein contained and/or implementing this Agreement.
(j) The Sellers and the Company will permit access to Customer
representatives and will accompany and introduce the Purchaser representatives
to the Customers as may be requested, among other things, the Sellers'
performance, the existence of any defaults prices an prospects for further work.
This access will not obviate or release the Sellers or the Company from
liability for any representation or warranty made with respect to the Customers
or Customer contracts. Other than obligations to preserve confidential
information as contained in this Agreement, the Purchaser shall have no
liability with respect to or arising out of meeting with the Customers.
ARTICLE XI
COVENANTS AND AGREEMENTS BY SELLERS AND COMPANY
11.1 Steve Gunner, Paul Baldwin and Purchaser shall enter into
employment agreements in accordance with the terms contained in Exhibits "A" and
"B" hereto.
11.2 The Sellers will cause the Company to file any short period tax
return(s) required to be filed with the appropriate taxing authorities for the
period beginning January 1, 1996 and ending on the Closing Date ("short period
tax return").
11.3 The Sellers will be responsible for all taxes due, if any, and
will be entitled to all tax refunds owed, if any, be reason of the conduct of
the Business prior to Closing. The determination of taxes due or refunds owed
will reflect (i) items properly appearing on any short period tax return that
may be filed (or that would be filed if such a return were necessary), as well
as (ii) any item of income, deduction, loss, or credit that accrues prior to the
Closing Date, but which is not or would not be properly reflected on any short
period tax return filed on a cash basis method of accounting.
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11.4 The Sellers shall deliver to the Purchaser restated Profit and
Loss Statements for the period January 1, 1996 to the Closing Date at or before
Closing, and audited financial statements for years ending December 31, 1995
and, if requested, 1994 no later than thirty days from the date of Closing. The
cost of such audited financials shall be paid equally by the Purchaser and the
Sellers for 1995 Audited Financials and by the Purchaser for 1994 Audited
Financials. The Purchaser will notify the Sellers within ten (10) days of
Closing whether or not it will require 1994 Audited Financials. For the purposes
of this Section 11.4, materiality shall mean $25,000.00 for any single item
and/or the aggregate difference between the Audited and Unaudited Financial
Statements. If the Profit and Loss Statement indicates a material difference for
the year ending on December 31, 1995, then the Sellers shall indemnify the
Purchaser by paying the difference between the Unaudited and Audited Financial
Statement multiplied by a factor of six (6). Said reimbursement will be subject
to the Escrow Agreement and indemnification and offset provisions contained in
Article VIII.
ARTICLE XII
SELLERS' CONDITIONS TO CLOSING
12.1 The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is, unless waived by the Sellers, subject to the
fulfillment, on or before the Closing, of each of the following conditions:
(a) No third party injunction or restraining order shall be in
effect which prohibits, restricts or enjoins, and no suit, action or proceeding
shall be pending which seeks to prohibit, restrict, enjoin, nullify, seek
material damages with respect to or otherwise materially adversely affect the
consummation of the transactions contemplated hereby;
(b) All material covenants of the Purchaser under this
Agreement to be performed prior to the Closing shall have been performed in all
material respects, except to the extent attributable to actions expressly
permitted or consented to by the Seller in writing;
(c) At the Closing, the Seller shall have received a
certificate, executed by the authorized officers of the Purchaser (effective as
of the Closing), and in form and content reasonably acceptable to Sellers as set
forth in Exhibit "E", certifying the truth and accuracy of the representations
and warranties of the Purchaser herein contained.
(d) The Sellers shall have received from Purchaser a
certificate from the Department of State of the State of Delaware to the effect
that Purchaser is in good standing in such state;
(e) All material authorizations, approvals or waivers of any
federal or state regulatory bodies shall have been obtained;
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(f) The Sellers shall have received all certificates,
instruments, agreements and other documents to be delivered at or before Closing
as provided in this Agreement and a certificate signed by an officer of
Purchaser confirming the matters set forth in paragraphs (a), (b), (c) and (e)
above; and
(g) The Purchaser shall tender to the Sellers the Purchase
Price required to be paid at Closing in immediately available funds by check,
cash or bank wire to an account designated by Seller and by delivery of COMFORCE
Stock in the appropriate amount in accordance with Section 3.1(a).
(h) The Sellers shall have received an opinion of counsel to
the Purchaser in a form reasonably acceptable to the Sellers and their counsel.
(i) The Employment Agreements for Paul Baldwin and Steve
Gunner shall have been duly executed and delivered and shall be in full force
and effect.
ARTICLE XIII
PURCHASER'S CONDITIONS TO CLOSING
13.1 The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is, unless waived by the Purchaser, subject to
the fulfillment, on or before the Closing, of each of the following conditions:
(a) No injunction or restraining order shall be in effect
which prohibits, restricts or enjoins, and no suit, action or proceeding shall
be pending which seeks to prohibit, restrict, enjoin, nullify, seek material
damages with respect to or otherwise materially adversely affect the
consummation of the transactions contemplated hereby;
(b) All covenants of the Sellers and Company under this
Agreement to be performed prior to the Closing shall have been performed in all
material respects, except to the extent attributable to actions expressly
permitted or consented to by the Purchaser in writing;
(c) At the Closing, Purchaser shall have received a
certificate, executed by the President and Secretary of the Company (effective
as of the Closing), and in form and content reasonably acceptable to Purchaser,
certifying the truth and accuracy of the representations and warranties of the
Sellers and Company herein contained as set forth in Exhibit "C".
(d) The Purchaser shall have received from the Company a
Certificate of Good Standing from the Comptroller of the State of Texas to the
effect that the Company is in good standing in Texas;
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(e) The Purchaser shall have received all the Stock properly
endorsed for transfer or accompanied by duly executed stock assignment powers to
the Purchaser, Property, assets, certificates, instruments, agreements, books
and records, and other documents to be delivered by the Sellers and the Company
at or before Closing as provided in this Agreement.
(f) Prior to the Closing there shall not have occurred any
material adverse change in the Business, nor shall any event have occurred or
condition exist which, with the passage of time or the giving of notice, may
cause or create any such adverse material change.
(g) Prior to the Closing, all corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be in form and
content reasonably satisfactory to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all counterpart originals or
certified or other copies of such documents and instruments as they may
reasonably request.
(h) All statutory requirements for the valid consummation by
the Sellers of the transactions herein described shall have been fully and
timely satisfied; all authorizations, consents and approvals of all Federal,
state and local governmental agencies and authorities required to be obtained in
order to permit consummation by the Sellers of the transactions herein
described, and/or to permit the Business to continue unimpaired in all material
respects immediately following the Closing shall have been obtained and shall be
in full force and effect; and no action or proceeding to suspend, revoke,
cancel, terminate, modify or alter any of such authorizations, consents or
approvals shall be pending or threatened.
(i) The Purchaser shall have received all the documentation
including Steve Gunner's, Paul Baldwin's and the other key employee's employment
agreements required to be delivered to it pursuant the provisions of the
Agreement.
(j) The Purchaser shall have received an opinion of counsel to
the Company in a form reasonably acceptable to the Purchaser and its counsel.
(k) Purchaser shall have received the resignations of all
Directors of the Company effective as of the Closing Date and the cancellation
of any employment or other agreements between the Company and its employees
which the Purchaser does not wish to assume.
In the event all of the conditions to Closing have not been satisfied as of the
Closing Date and have not been waived by the Purchaser, then in addition to
whatever other rights Purchaser may have, it shall also have the right to
postpone the Closing Date for a period or periods not to exceed 6 months. During
said period the Sellers and the Company shall use their best efforts to secure
performance and obtain all documentation and other items required by the
Purchaser to close the transaction contemplated hereby. The Seller shall keep
the Purchaser apprised of its progress and notify the Purchaser once all
documents and other items necessary to close have been obtained.
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ARTICLE XIV
TERMINATION
14.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and any agreement ancillary hereto may be
terminated and the transactions contemplated hereby abandoned at any time prior
to or at the Closing by:
(a) mutual consent of the Sellers and the Purchaser;
(b) the Sellers, if any of the conditions set forth in Article
XII shall not have been met and shall not have been waived by the Sellers as of
the Closing Date, and at such time the Sellers are not in material breach or
default of its obligations contained in this Agreement; or
(c) the Purchaser, if any of the conditions set forth in
Article XIII shall not have been met and shall not have been waived by the
Purchaser as of the Closing Date, and at such time the Purchaser is not in
material breach or default of any of its obligations contained in this
Agreement.
Any party desiring to terminate this Agreement pursuant to this Article XIV
shall give notice of such termination to the other party hereto in accordance
with Section 19.7.
14.2 Effect of Termination. If this Agreement is terminated in
accordance with Section 14.1, then all rights and obligations of the parties
hereunder shall terminate and be of no further effect; provided, however, that
no such termination shall relieve any party of liability for any breach of its
obligations under this Agreement prior to such termination.
ARTICLE XV
PUBLIC ANNOUNCEMENT
15.1 The Sellers recognize and agree that the Purchaser is a public
company and that the Sellers and the Company will not make any public
announcement concerning this Agreement or the negotiations and to keep same
confidential unless given written permission from the Purchaser to make any
announcement or otherwise disclose the information. The Purchaser shall have the
right to announce the transaction contemplated hereby and/or the negotiations
between the parties with notice to the Sellers and whether or not the
announcement is required by law, regulations or the rules of any public stock
exchange on which Purchaser's stock is listed. The Purchaser will give the
Sellers prior notice of any announcement it believes is necessary or proper.
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ARTICLE XVI
NEGATIVE COVENANTS
16.1 It is understood by the parties herein that the negative covenants
contained in this Section and the one following are a prime and essential
consideration on which the Purchaser will rely prior to and after the Closing
Date in consummating the transaction contemplated by this Agreement. The parties
further agree that the value of the Business purchased hereunder would be
significantly less if the Sellers were free to compete with the Purchaser in the
absence of the Negative Covenants and that the Sellers are being paid a separate
and distinct consideration for the value of these Negative Covenants in
accordance with Sections 3.1(e) and (f) above.
16.2 The Sellers agree that in consideration of the sale of its
business to the Purchaser that for a period of three (3) years after the Closing
Date, they jointly and individually, will not:
(a) directly or indirectly, own, manage, operate, control, be
employed by, participate in, render service to, solicit customers for, assist,
or be connected with any business which competes with the Purchaser, or any of
its affiliated corporations with respect to the business of supplying technical
personnel and services to others within the States of Texas and
___________________. The Sellers having represented to the Purchaser that they
operated throughout the entirety of those states while employed by the Company;
(b) solicit or accept any business from clients of the Company
that the Sellers may have contacted, been assigned or been responsible for at
any time during the three (3) year period prior to Closing and at any time
during which the Sellers have been employees of the Purchaser after closing; or
(c) approach directly or indirectly any employee (Billable
Employee or staff) without regard to location for the purpose of attempting to
or actually soliciting or hiring that employee from its/his account or the
account of another.
16.3 It is recognized by the Sellers that an action for damages may not
be an adequate remedy for the Purchaser in the event of the breach of any of the
negative covenants or confidentiality provisions contained in this Agreement,
and therefore, it is agreed that in addition to any other rights the Purchaser
may have in the event of a breach of this Agreement, the Purchaser shall have
the right to judicial enforcement of said covenants by way of injunction,
restraining order or any other similar equitable relief. If any portion of the
foregoing covenants is invalid or unenforceable due to area or time, such fact
shall not affect the validity or enforceability of the remaining portions or
prevent enforcement of restrictions to the extent a court of competent
jurisdiction may consider reasonable. The parties agree that in any event said
restrictions shall be enforced to the maximum extent permitted by law.
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16.4 The time period of the negative covenant shall be extended for a
period of time equal to that time period utilized during the pendency of any
action for enforcement; provided, however, that the extension period shall not
be longer than the remainder of the three (3) year covenant period from the time
of Closing, eighteen (18) months from the date of notice of waiver contained in
Section 16.7 below, or one (1) year from the date of a final unappealable
judgment, whichever is later.
16.5 The Sellers recognize and agree that from time to time certain
confidential information has been during the course of their employment with the
Company, and after Closing will be made available to the Sellers by the
Purchaser, to assist the Sellers in their job. Sellers recognize and agree that
such confidential information which has been compiled, created, and maintained
by special effort and expense of the Company and which is not generally
available to the trade or the public at large is a trade secret and agrees that
such information disclosed to the Sellers remains at all times the property of
the Company and further, the Sellers agree that such information shall not be
divulged by the Sellers either during their employment or after terminated for
any reason whatsoever, the Sellers shall upon such termination deliver
immediately to the Purchaser's representative all correspondence, resumes,
letters, call reports, price or bid lists, manuals, mailing lists, customer
lists, lists of names of employees and temporary or permanent placement,
advertising materials, marketing plans and information, ledgers, and copies and
memoranda thereof, supplies, equipment, checks, petty cash, credit cards, etc.,
and all other materials and records of any kind that may be in Sellers' hands as
pertain to the Company and/or Company's Clients.
16.6 The parties recognize and agree that the foregoing restrictive
covenants including, but not limited to, the time periods and geographical areas
of restriction, are fair and reasonable and properly required for the adequate
protection of the Purchaser's interests and do not represent undue hardship for
the Sellers. Therefore neither party shall challenge same. The parties further
recognize that in the event that any of the restrictive covenants are deemed to
be unreasonable by a court of competent jurisdiction, the Sellers shall agree
and submit to any area or period of time as the court shall deem reasonable.
16.7 Sellers agree not to use the name Force Five, Inc. or any
derivation thereof for the purpose of conducting any business except for the
purpose of collecting Accounts Receivables and identifying the Company for
payment of taxes or government filings.
16.8 For the purposes of this Article XVI, the Purchaser shall be
deemed to mean the Purchaser and any successor company to which all or
substantially all of the assets of Company are assigned and/or which employs the
Sellers or either of them.
16.9 It is the intention of the parties that the terms of this Article
XVI constitute not only a part of this Agreement, but also agreements separate
and distinct from the purchase of Stock hereunder.
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ARTICLE XVII
NO BROKERS
17.1 The parties represent and warrant to the other that there are no
claims for brokerage commissions or finders' fees in connection with the
transactions contemplated hereby.
ARTICLE XVIII
FEES AN EXPENSES
18.1 Except as herein otherwise provided, each of the parties hereto
shall pay its own legal and accounting charges and other expenses incident to
the execution of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE XIX
MISCELLANEOUS
19.1 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. All covenants and
agreements made by or on behalf of any of the parties hereto shall be binding
upon and inure to the benefit of their respective successors and assigns, unless
otherwise specifically set forth herein. The terms and provisions of this
Agreement may not be modified or amended, except in writing signed by all
parties hereto. No representations, warranties, or covenants, express or
implied, have been made by any party to this Agreement in connection with the
subject matter hereof, except as expressly set forth in this Agreement and the
exhibits hereto. The headings in this Agreement are for the convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
19.2 No terms and provisions hereof, including, without limitation, the
terms and provisions contained in this sentence, shall be waived, modified or
altered so as to impose any additional obligations or liability or grant any
additional right or remedy, and no custom, payment, act, knowledge, extension of
time, favor or indulgence, gratuitous or otherwise, or words or silence at any
time, shall impose any additional obligation or liability or grant any
additional right or remedy or be deemed a waiver or release of any obligation,
liability, right or remedy except as set forth in a written instrument properly
executed and delivered by the party sought to be charged, expressly stating that
it is, and the extent to which it is, intended to be so effective. No assent,
express or implied, by either party, or waiver by either party, to or of any
breach of any term or provision of this Agreement or of the exhibits or
schedules shall be deemed to be an assent or waiver to or of such or any
succeeding breach of the same or any other such term or provision.
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19.3 The captions of this Agreement are for convenience and reference
only, and in no way define, describe, extend or limit the scope or intent of
this Agreement or the intent of any provisions hereof.
19.4 The Sellers agree that they will, at any time before and after the
Closing, execute and deliver all additional documents, and do any other acts or
things that may be reasonably requested by the Purchaser in order to further
perfect the Purchaser's rights and interests contemplated hereunder and that
they will aid in the prosecution, defense or other litigation with third persons
of any rights arising from this Agreement, all without further consideration.
19.5 Jurisdiction. This Agreement shall be governed by the State of New
York. Any judicial proceeding brought against any of the parties to this
Agreement on any dispute arising out of this Agreement or any matter related
hereto shall be brought in the courts of the State of New York or in the United
States District Court for the Eastern District of New York (or the Bankruptcy
Courts), and, by execution and delivery of this Agreement, each of the parties
to this Agreement accepts for itself or himself the process in any action or
proceeding by the mailing of copies of such process to such party at its or his
address as set forth in Section 19.7, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each party hereto
irrevocably waives to the fullest extent permitted by law any objection that it
or her may nor or hereafter have to the laying of the venue of any judicial
proceeding brought in such courts and any claim that any such judicial
proceeding has been brought in an inconvenient forum. The foregoing consent to
jurisdiction shall not constitute general consent to service of process in the
State of New York for any purpose except as provided above and shall not be
deemed to confer rights on any person other than the respective parties to this
Agreement. EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
UNDER THIS AGREEMENT.
19.6 Captions. The Article and Section captions used herein are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
19.7 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) three days after the date of
sending such notice by certified mail, return receipt requested, or (c) the next
business day if sent by facsimile transmission or by an over night courier
service, and in each case of mailing, postage prepaid and at the respective
addresses or numbers set forth below:
To Sellers:
Steven Gunner and Paul Baldwin
At the addresses first noted above
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with a copy to:
Christopher Volkmer, Esq.
Munsch, Hardt, Kopf, Harr & Dinan, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
FAX: (214)855-7584
To Purchaser:
COMFORCE Information Technologies, Inc.
2001 Marcus Avenue
Lake Success, New York 11042
Attn: Christopher P. Franco
FAX: (516)352-1953
To COMFORCE:
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
Attn: President
FAX: (516)352-1953
with a copy to:
Marc D. Freedman
Attorney At Law
70 Hilltop Road, Suite 2000
Ramsey, NJ 07446
Attn: Marc D. Freedman, Esq.
FAX: (201)825-4505
19.8 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by the Sellers, other than by operation of law
or with the prior written consent of the Purchaser, and any purported transfer,
assignment, pledge or hypothecation in violation of this Section shall be void.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective administrators, successors and permitted
assigns. Notwithstanding the foregoing the Purchaser may assign its rights and
obligations hereunder, in whole or in part, to one or more Affiliate or
subsidiary companies whether now or hereinafter formed upon notice to the
Sellers. Furthermore, the Purchaser reserves the right to transfer all or part
of its assets, including
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those transferred incident to the sale of Stock hereunder, to its Affiliate on
or after Closing. Sellers hereby agree and consent to any such assignment or
transfer and in the event thereof acknowledge the right of the Affiliate to
possess and enforce all of Purchaser's rights under this Agreement, the Escrow
Agreement and their respective employment agreements to the same extent as
Purchaser.
19.9 Severability. In the event any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction or
arbitration panel, the remaining provisions of this Agreement shall nevertheless
be binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
19.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one instrument. Facsimile signatures shall be
acceptable to bind the respective parties to the terms of this Agreement.
19.11 Entire Agreement. This Agreement, including the Schedules and
other documents referred to herein, contains the entire understanding of the
parties hereto with respect to the purchase of the assets under this Agreement
and supersedes all prior agreements, correspondence, conversation, negotiations
and understandings between the parties with respect to such subject matter. The
Schedules and Exhibits annexed hereto are an integral part of this Agreement.
19.12 Amendments. This Agreement may not be changed orally, but only by
an agreement in writing signed by all of the parties hereto, and no waiver of
compliance with any provision or condition hereof and no consent provided for
herein shall be effective unless evidenced by an instrument in writing duly
executed by the party hereto seeking to be charged with such waiver or consent.
19.13 Third Party Beneficiaries. Each party hereto intends that this
agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto and their respective
successors and assigns as permitted under Section 19.8.
19.14 Additional Offers. Sellers and Company agree not to offer, to
sell or entertain any offers to purchase the assets and properties covered by
this Agreement or the Stock of Seller during the pendency of this Agreement and
for a period of ninety (90) days after the scheduled Closing Date as may be
extended from time to time.
19.15 Gender. As used in this Agreement, any gender includes a
reference to all other genders and the singular includes a reference to the
plural and vice versa. References to "Sellers" in the Agreement shall not
preclude or inhibit Purchaser from seeking to enforce or enforcing its rights,
indemnities or claims against either or both of the Sellers individually without
the necessity of including the other individual Seller.
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ARTICLE XX
EFFECT OF CLOSING
20.1 The terms of this Agreement shall survive the Closing and shall
not become merged therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
COMFORCE CORPORATION FORCE FIVE, INC.
By:_______________________ By:__________________________
Steve Gunner, President
Title:____________________
COMFORCE INFORMATION SELLERS
TECHNOLOGIES, INC.
("Purchaser")
By:___________________________ ___________________________
Steve Gunner, Individually
Title:_________________________
___________________________
Paul Baldwin, Individually
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August 20, 1996
COMFORCE Corporation
c/o Andrew Reiben
2001 Marcus Avenue
Lake Success, NY 11042
RE: Amendment to Stock Purchase Agreement
Gentlemen:
Reference in made to the Stock Purchase Agreement and attached Addendum, dated
August 19, 1996 ("Agreement"), by and among COMFORCE Information Technologies,
Inc., as Purchaser, COMFORCE Corporation ("COMFORCE"), Force Five, Inc.
("Company"), and Steve Gunner and Paul Baldwin, as Sellers. Unless otherwise
defined, the capitalized terms used in this letter are used as defined in the
Agreement.
Notwithstanding the language set forth in Sections 3.1(a) and (f)(ii)(A)-(C) of
the Agreement, the parties to the Agreement hereby acknowledge and agree that
the Purchase Price allocable to the Negative Covenants shall be determined
pursuant to the Valuation referenced in Section 3.1(f)(i) of the Agreement, and
that the Valuation shall have a range of $500,000 to $1,000,000. The parties of
the Agreement agree to file their respective tax returns in accordance with the
value allocated to the Negative Covenants in the Valuation. The parties further
acknowledge and agree that the cash portion of the Purchase Price payable at
Closing shall be $1,000,000 (subject to reduction by the Purchaser in accordance
with Sections 3.1(a) and 3.1(b) of the Agreement), and that no further payments
for the Negative Covenants shall be made.
If the foregoing is acceptable to you, please so indicate by signing this letter
in the space provided below, whereupon the Agreement, as expressly amended as
provided herein, shall remain in full force and effect in accordance with its
terms.
____________________________________
Steve Gunner
____________________________________
Paul Baldwin
FORCE FIVE, INC. a Texas corporation
____________________________________
By: Steve Gunner, President
ACCEPTED AND AGREED
THIS 20th DAY OF AUGUST, 1996
COMFORCE CORPORATION,
a Delaware corporation
__________________________________
By:_______________________________
Its:______________________________
COMFORCE INFORMATION
TECHNOLOGIES, INC.,
a Delaware corporation
By:_______________________________
Its:_______________________________
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ADDENDUM TO STOCK PURCHASE AGREEMENT BY AND BETWEEN
___________________________________________________
PURCHASER, COMFORCE, COMPANY AND SELLERS
________________________________________
The parties to the Agreement hereby acknowledge and agree that the
following amendatory language shall be deemed to be a part of the Agreement.
Unless otherwise defined herein, all capitalized terms shall have the meanings
ascribed thereto in the Agreement. The amendatory language is indicated below by
underlining the additional language to be inserted in the Agreement.
"Net Available Markup" means the difference between total direct costs
of all Billable Employees including wages, per diem, social security taxes,
Medicare taxes, FUTA taxes, SUI taxes, workers compensation insurance, medical
benefits, travel expenses, legal fees, 401(k) contributions, and the billing
rate for all Billable Employees less any discounts as expressed as a percentage
of net sales. As used herein, the term "net sales" refers to the Company's
numbers as set forth on Schedule 6.6 and before the audit to be performed in
accordance with Section 11.4 hereof.
"Net Income" means . . . payroll associated costs, payroll related
employer taxes (but only to the extent such taxes are directly attributable to
Billable Employees and Employees of the Business), workers compensation
insurance charges. . . .
2.2 (b) "2.1(a)" shall be amended to read "2.2(a)"
Section 3.1(a)(i) shall be deleted in its entirety and the following shall be
substituted therefor:
3.1(a)(i) ONE MILLION DOLLARS ($1,000,000) to the Sellers in cash, certified
funds or wire transfer ($500,000 of which is allocable to the Negative Covenants
pursuant to Section 3.1(f)(ii)(A);
Section 3.1(b) shall be deleted in its entirety and the following shall be
substituted therefor:
3.1 (b) In addition to the Purchase Price payable at Closing pursuant to Section
3.1(a) immediately above, the Purchaser agrees to pay the Sellers the Net
Current Assets of the Business, which sum shall include all deposits on Personal
Property and Equipment and all payroll advances (later recouped) to Billable
Employees and Employees made prior to the Closing Date, less the Corporate
Income Tax Due by reason of the conduct of the Business prior to the Closing
Date. Upon calculation of the actual amount necessary to pay the Corporate
Income Tax Due, the Sellers shall deliver to the Escrow Agent and Purchaser, no
later than sixty (60) days from the Closing Date, completed and executed tax
returns for the appropriate federal and state taxing authorities. Unless the
Escrow Agent receives a contrary notice from the Purchaser, the Escrow Agent
shall, within ten (10) days after receipt of such tax return(s), deliver to the
Sellers a check or checks from the Tax Escrow Funds payable to the federal and
state taxing authorities. Upon receipt of such checks, the Sellers shall
promptly forward such checks and the tax returns to the taxing authorities. Such
payments for Corporate Income Tax Due shall reduce the Sellers' liability for
taxes due, as described
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in Section 11.3 below. Any remaining balance from the Tax Escrow Funds shall be
promptly paid by the Escrow Agent to the Sellers. In the event that the Tax
Escrow Funds are insufficient to pay the Corporate Income Tax Due, the Sellers
shall have a reasonable time to make up the shortfall, and the Escrow Agent
shall retain the Tax Escrow Funds until such time as the Sellers notify the
Escrow Agent that they are prepared to make the payment of the Corporate Income
Tax Due.
3.1(f)(i) The value to be ascribed and the separate amount to be allocated
[delete text] to the Negative Covenants shall be established by an independent
valuation chosen by the Purchaser ("Valuation") provided that the Valuation is
no greater than $1,000,000. The Sellers and Purchaser shall each be permitted to
provide input to the firm conducting the Valuation, and the Purchaser and
Sellers agree to provide each other such information regarding the Valuation
that the other party may, from time to time, reasonably request. If the
Valuation is greater than $1,000,000, then the amount ascribed to the Negative
Covenants shall be deemed to be $1,000,000.
4.1 . .Company's Balance Sheet and as set forth on the Schedule at Section 4.1.
5.5 . .other than those on the Company's Balance Sheet and as set forth on the
Schedule at Section 4.1.
ARTICLE VII
___________
Delete the first seven words thereof and insert the following: The
Purchaser and COMFORCE represent and warrant. . . .
9.1 Each reference to "effective date" shall be amended to read "Closing Date."
11.3 (a) [insert current Section 11.3 to the Agreement]
(b) The Sellers will cause the Company to change its method of tax
accounting from the cash basis to the accrual basis method effective January 1,
1996, in accordance with IRS Revenue Procedure 92-75.
(c) The Sellers will be responsible for all taxes owed by the Company,
if any, and will be entitled to all tax refunds to which the Company is
entitled, if any, by reason of the conduct of the Business prior to Closing. The
determination of taxes owed or refunds due will reflect items properly appearing
on any short period tax return which may be filed (or which would be filed if
such a return were necessary), as well as any adjustment required by Section
481(a) of the Internal Revenue Code as a result of the change to the Company's
method of accounting described in Section 11.3(b).
16.2 (a) . . . within the States of Texas and California, Arkansas, Oklahoma
and Ohio.
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