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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): November 19, 1996
(November 4, 1996)
COMFORCE Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-6081 36-2262248
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(Commission File Number) (I.R.S. Employer Identification No.)
2001 Marcus Avenue, Lake Success, NY 11042
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(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
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The RHO Transaction
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On November 4, 1996, COMFORCE Corporation (the "Company"), through its
subsidiary COMFORCE Technical Services, Inc., entered into a definitive
agreement with RHO Company, Inc. ("RHO"), and J. Scott Erbe, the controlling
stockholder of RHO, to purchase all of the stock of RHO for $14.8 million, plus
a three year contingent payout based on future earnings of RHO payable in stock
in an aggregate amount not to exceed $3.3 million. The purchase price was
determined through arms length negotiations between the parties. RHO provides
specialists for its customers primarily in the technical services and
information technology sectors.
RHO's headquarters are located in Redmond, Washington. The Company
added nine branch offices with the acquisition of RHO.
The Continental Transaction
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On November 8, 1996, the Company, through its subsidiary, COMFORCE
Global, Inc., purchased, pursuant to (i) the Asset Purchase Agreement as entered
into with Continental Field Service Corporation, Michael Hill and Roy Hill and
(ii) the Asset Purchase Agreement as entered into with Progressive Telecom, Inc.
and Beth Wilson Hill, respectively, substantially all of the assets of
Continental Field Services Corporation and its affiliate, Progressive Telecom,
Inc. (collectively, "Continental"), for a purchase price of $4.4 million in
cash, 36,800 shares of the Company's Common Stock valued at $575,000 (in
accordance with the agreement of the parties based on an average closing price
on the American Stock Exchange of the Company's Common Stock), and contingent
income payments payable over three years in an aggregate amount not to exceed
$1.2 million. The purchase of the assets was determined by arm's length
negotiations between the parties. The cash portion of the purchase price was
paid by the Company from the proceeds of a private placement of the Company's
Series F Preferred Stock, from the proceeds from the exercise of certain
warrants, and with funds from the Company's credit facility.
Continental's headquarters are located in Elmsford, New York.
Continental will provide services principally to the Company's customers in the
telecommunications market.
Item 7. Financial Statements and Exhibits
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(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 on which a Form 8-K is required to be filed
reporting each event.
(b) Pro forma financial information.
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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.
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(c) Exhibits
2.1 Subscription Agreement dated October 28, 1996 by and among RHO
Company, Inc., J. Scott Erbe, COMFORCE Corporation and COMFORCE
Technical Services, Inc.
2.2 Stock Sale and Termination Agreement dated October 28, 1996 by and
between James R. Ratcliff and RHO Company, Inc.
2.3 Letter Agreement dated November 4, 1996 amending Stock Sale and
Termination Agreement between RHO Company, Inc. and James R. Ratcliff.
2.4 Asset Purchase Agreement dated October 25, 1996 by and among
Continental Field Service Corporation, Michael Hill, Roy Hill and
COMFORCE Global, Inc.
2.5 Asset Purchase Agreement dated October 25, 1996 by and among
Progressive Telecom, Inc., Beth Wilson Hill and COMFORCE Global, Inc.
2.6 Amendment to Escrow Agreement and Purchase Agreements dated November 8,
1996 by and among Continental Field Service Corporation, Progressive
Telecom, Inc., Michael Hill, Roy Hill, Beth Wilson Hill, McCarthy,
Fingar, Donovan, Drazen & Smith, and COMFORCE Global, Inc.
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SIGNATURE
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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
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(Registrant)
By /s/ Andrew Reiben
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Andrew Reiben, Chief Accounting Officer
Dated: November 19, 1996
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EXHIBIT 2.1
SUBSCRIPTION AGREEMENT
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THIS SUBSCRIPTION AGREEMENT, made and entered into as of the 28th day
of October, 1996, by and between RHO COMPANY, INC., a Washington corporation,
having its principal office at 4002 - 148th Street N.E., Redmond, WA 98052 (the
"Company") and J. SCOTT ERBE ("Erbe"), an individual residing at 7701 NE 8th,
Medina, WA 98039,
A
N
D
COMFORCE CORPORATION, a Delaware corporation ("COMFORCE"), and COMFORCE
TECHNICAL SERVICES, INC., a Delaware corporation (the "Buyer"), both of which
have their principal offices at 2001 Marcus Avenue, Lake Success, NY 11042,
W I T N E S S E T H:
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WHEREAS, the Company is authorized to issue 50,000 shares of common
stock, par value $1.00 per share (the "Company Common Stock"), of which
49,999.99 shares are issued and outstanding; and
WHEREAS, COMFORCE owns all of the issued and outstanding stock of the
Buyer ("COMFORCE Stock"); and
WHEREAS, Erbe and James Ratcliff (the "Shareholders") are the sole
shareholders of the Company; and
WHEREAS, Buyer wishes to purchase from the Company and the Company
desires to issue to Buyer the Company Common Stock in accordance with and
subject to the terms hereof; and
WHEREAS, Ratcliff and the Company have this day executed and delivered
a Stock Sale and Termination Agreement (the "Ratcliff Agreement") whereby, among
other things, Ratcliff has agreed to sell his shares of Company Common Stock to
the Company and to terminate his employment with the Company;
NOW, THEREFORE, in consideration of the promises, covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
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I. PURCHASE OF STOCK BY BUYER.
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1.1 Purchase of Stock by Buyer. Upon the terms and subject to the
--------------------------
conditions set forth in this Agreement, on the Closing Date (as defined herein),
Buyer shall contribute to the Company,(a) Fourteen Million Eight Hundred
Thousand Dollars ($14,800,000) in immediately available funds paid in accordance
with the written instructions of the Company, and (b) a Contingent Payment
Certificate (the "Contingent Certificate") of COMFORCE in th form attached as
Exhibit 1.1 that entitles its holder, subject to the conditions set forth
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therein, to receive an aggregate number of shares of COMFORCE Stock that is the
highest whole number of shares of COMFORCE Stock that has an aggregate value not
greater than Three Million Three Hundred Thirty-Three Thousand Three Hundred
Thirty-Three Dollars ($3,333,333), said value to be determined based on the
average closing price of said stock as quoted on the American Stock Exchange on
each of the twenty (20) consecutive business days ending on the third (3rd)
business day occurring immediately prior to the Closing Date. In consideration
for such contribution, the Company shall issue 101,000 shares of Company Common
Stock to Buyer.
1.2 Evidence of Stock Ownership. On the Closing Date, the Company
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shall deliver to the Buyer a certificate or certificates representing the
Company Common Stock issuable by the Company pursuant to Section 1.1 hereof.
1.3 Earnest Money.
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(a) Buyer has paid on behalf of the Company to Ratcliff the
sum of $566,667 (the "Ratcliff Earnest Money") which has been used to pay the
Initial Payment payable to Ratcliff under the Ratcliff Agreement.
(b) Buyer has delivered to Miller, Nash, Wiener, Hager &
Carlsen (the "Escrow Agent"), to be held under and disbursed in accordance with
an Earnest Money Escrow Agreement (the "Earnest Money Escrow Agreement") of even
date herewith between the Company, Buyer and the Escrow Agent, Five Hundred
Thousand Dollars ($500,000) (together with interest accrued thereon through the
Closing or termination of this Agreement, the "Company Earnest Money"). If the
Company Earnest Money is distributed to the Company in accordance with the
Earnest Money Escrow Agreement, it shall be invested in an interest bearing
account at a financial institution acceptable to Buyer and held, applied and/or
distributed as provided in subsection (c) of this Section.
(c) In the event the transactions contemplated by this
Agreement shall close, Buyer shall receive credit against the purchase price of
stock in the Company to be purchased by Buyer in the full amount of the Ratcliff
Earnest Money and the Company Earnest Money. If the transactions contemplated by
this Agreement fail to close for any reason other than a breach of or material
misrepresentation in this Agreement by the Company or Erbe, the Company shall be
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entitled to retain the Company Earnest Money and shall not be obligated to
return the Ratcliff Earnest Money, all of which shall constitute liquidated
damages and not a penalty. If the transactions contemplated by this Agreement
fail to close as a result of a breach of or material misrepresentation in this
Agreement by the Company or Erbe, the Company shall promptly repay to Buyer the
amount of the Ratcliff Earnest Money and the Company Earnest Money.
II. CONCURRENT TRANSACTIONS
-----------------------
2.1 Sale of Common Stock by Erbe. On the Closing Date, subject to
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the conditions set forth in this Agreement, Erbe shall sell, assign, transfer
and convey to the Company 33,333.33 shares of Company Common Stock, representing
all of the stock of the Company owned by him, and in consideration therefor, the
Company shall (a) pay to or at the direction of Erbe in immediately available
funds the sum of Three Million Three Hundred Ninety-One Thousand Three Hundred
Thirty-Three Dollars ($3,391,333) and (b) deliver to Erbe the Contingent
Certificate.
2.2 Sale of Common Stock by Ratcliff. On the Closing Date, subject
--------------------------------
to the conditions set forth herein, the Company shall consummate the purchase of
Company Common Stock from Ratcliff pursuant to the Ratcliff Agreement.
2.3 Conveyance of Common Stock to the Company. On the Closing
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Date, Erbe shall deliver to the Company the certificates evidencing the shares
of Company Common Stock he owns accompanied by stock power(s) duly endorsed in
blank and shall execute and deliver an instrument in form satisfactory to Buyer
whereby he terminates his rights under the Stock Redemption and Purchase
Agreement dated as of February 6, 1991 among the Company, Erbe and Ratcliff.
2.4 Repayment of Certain Debt Obligations. A portion of the cash
-------------------------------------
contributed to the Company by Buyer shall be used by the Company to repay in
their entirety the promissory notes (the "Cash Payoff Notes") to Barbara L.
Ratcliff and Erbe described in the Financial Statements.
2.5 Tax Distribution. Immediately prior to the Closing, the
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Company Common Stock in an amount that in the aggregate does not exceed the
lesser of (a) __________________ Dollars ($__________) or (b) the aggregate
estimated income tax liability of the Shareholders with respect to income of the
Company for the tax year or partial tax year ending immediately prior to the
Closing Date.
III. CLOSING DATE
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3.1 Closing Date. The closing with respect to the transactions
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provided for in this Agreement (the "Closing") shall take place at 2001 Marcus
Avenue, Lake Success, New York at 10 o'clock a.m. local time on the earlier of
(a) the date five (5) business days after COMFORCE completes an underwritten
public offering of its Common Stock, it being understood
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that COMFORCE contemplates closing said offering between December 15, 1996 and
January 15, 1997, (b) February 28, 1997, or (c) at such other place or on such
other date as the parties hereto may mutually agree (the "Closing Date").
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND
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SHAREHOLDERS.
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The Seller and Erbe hereby represent and warrant to the Buyer as
follows:
4.1 Organization; Power; Good Standing. The Company is a
----------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington. The Company has all requisite corporate power and
authority to own, operate and lease its properties, to carry on its business as
now being conducted and to enter into this Agreement and perform its obligations
hereunder. The copies of the Articles of Incorporation and Bylaws of the
Company, as amended as of the date hereof, which have been delivered by the
Company to the Buyer, are complete and correct. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each of the
jurisdictions listed in Section 4.1 of the Disclosure Schedule (the "Disclosure
--------------------------------------
Schedule") that has been executed and delivered by the parties concurrently with
the execution and delivery of this Agreement and the Company has not failed to
qualify in any other jurisdiction in which property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary.
4.2 Subsidiaries; Names; Capital Stock; Officers and Directors.
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(a) Company has no subsidiaries.
(b) The Company has not used any name for itself or its
operations since January 1, 1991 other than Rho Company, Inc. and the other
names set forth in Section 4.2(b) of the Disclosure Schedule.
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(c) The authorized capital stock of the Company consists
of 50,000 shares of common stock, $1.00 par value, 49,999.99 shares of which are
outstanding. All of such outstanding shares are owned by the Shareholders as set
forth in Section 4.2(c) of the Disclosure Schedule and have been duly issued,
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fully paid for and are non-assessable. The Company holds no shares of its common
stock in its treasury. Except as set forth in Section 4.2(c) of the Disclosure
--------------------------------
Schedule, there are no outstanding or authorized subscriptions, options,
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warrants, calls, rights, commitments or any other agreements of any character
obligating the Company to issue any additional shares of its common stock or any
securities convertible into or evidencing the right to subscribe for any shares
of its common stock, nor are there any voting trusts or any other agreements or
understandings with respect to the voting common stock of the Company.
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(d) Section 4.2(d) of the Disclosure Schedule sets out a
-----------------------------------------
true and complete list of the officers and directors of the Company.
(e) Any and all Company Common Stock issuable to Buyer
hereunder shall, when issued in accordance with the terms hereof, be duly
authorized, fully paid and non-assessable.
(f) The shareholders of the Company have held a meeting
and authorized the amendment of the Company's Articles of Incorporation to
change the capital structure to consist of 1,000,000 shares of common stock, $1
par value (the "Amendment"), and the Company has received all consents necessary
so that it can file the Amendment in connection with the transactions
contemplated by this Agreement.
4.3 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance by the Company of this Agreement and the other agreements
contemplated hereby to which the Company is a party have been duly and
effectively authorized by all necessary corporate action by the Company. This
Agreement and the other agreements contemplated hereby to which they are parties
have been duly executed by the Company and Erbe and are valid, legally binding
and enforceable obligations of the Company and Erbe.
4.4 Effect of Agreement. Except as set forth in Section 4.4 of the
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Disclosure Schedule, the execution, delivery and performance of this Agreement
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by the Company and Erbe and the consummation of the transactions contemplated
hereby will not (i) require the consent, approval or authorization of any
person, corporation, partnership, joint venture or other business association or
public authority; (ii) violate, with or without the giving of notice or the
passage of time, or both, any provisions of law or statute or any rule,
regulation, order, award, judgment or decree of any court or governmental
authority applicable to the Company or Erbe; or (iii) with or without the giving
of notice, the passage of time, or both conflict with or result in a breach or
termination of any provision of, accelerate the performance or maturity of,
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of the assets of the Company or upon any of Company Common
Stock pursuant to any corporate charter, bylaw, indenture, note, bond, mortgage,
deed of trust, lease, contract, permit, agreement or other instrument, or any
order judgment, award, decree, statute, ordinance, regulation or any other
restriction of any kind or character, to which the Company or Erbe is a party,
or by which the Company or Erbe or any of their respective assets may be bound.
4.5 Financial Statements. The audited balance sheets as of
--------------------
December 31, 1995 and September 30, 1996 (the "Balance Sheet Date"), the audited
statements of income and retained deficit for the years ended December 31, 1994
and 1995 and the nine months ended September 30, 1996, the audited statements of
cash flows for the years ended December 31, 1994 and 1995 and the nine months
ended September 30, 1996, the unaudited statements of income and retained
deficit and cash flows for the nine months ended September 30, 1995, and the
footnotes to
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financial statements, all as set forth in Section 4.5 of the Disclosure
-----------------------------
Schedule, are in accordance with the books and records of the Company, are
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complete and correct in all material respects, fairly present the financial
position and results of operations of the Company as of the dates and for the
periods indicated and have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with prior years. The
audited balance sheet for the years ended 1993, 1994 and 1995 and the statements
of income and retained earnings for the same periods and the unaudited balance
sheet and statement of income and retained earnings for the _______ months ended
on the Balance Sheet Date, described above, are collectively referred to herein
as the "Financial Statements."
4.6 Undisclosed Liabilities. Except as and to the extent disclosed
-----------------------
therein, the Company has, at the date of the Financial Statements, no
liabilities or obligations of any kind, whether accrued, absolute, contingent or
otherwise, whether or not such liabilities or obligations would have been
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles. Neither the Company nor Erbe knows or
has any reasonable grounds to know of any basis, as of the date of the Financial
Statements, for assertion against the Company of any claim or liability of any
nature in any amount not fully disclosed in the Financial Statements.
4.7 Absence of Certain Changes or Events. Since the Balance Sheet
------------------------------------
Date, in conducting its business and affairs, including but not limited to use
and operation of the Company's assets, the Company has not:
(a) incurred any obligation or liability (contingent or
otherwise) except (i) normal trade or business obligations incurred in the
ordinary course of business, the performance of which will not, individually or
in the aggregate, have a material adverse effect on the Company's financial
condition or results of operations and (ii) obligations under contracts,
agreements, leases and easements described in Section 4.7(a) of the Disclosure
--------------------------------
Schedule, the performance of which will not, individually or in the aggregate,
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have a material adverse effect on the Company's financial condition or results
of operations;
(b) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (contingent or otherwise), except (i) current
liabilities included in the Financial Statements, (ii) current liabilities that
have been incurred since the Balance Sheet Date in the ordinary course of
business and consistent with past practices in all material respects and (iii)
scheduled payments pursuant to obligations under contracts, agreements, leases
and easements described in Section 4.7(a) of the Disclosure Schedule;
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(c) mortgaged, pledged or subjected to any lien, charge,
security interest or to any other encumbrance any of the assets of the Company
(whether tangible or intangible);
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(d) made any material additions to, sold, assigned,
transferred, conveyed, leased or otherwise disposed of, or agreed to sell,
assign, transfer, convey, lease or otherwise dispose of any of its assets or
properties, except for fair consideration in the ordinary course of business;
(e) canceled or compromised any debt or claim, except for
adjustments made in the ordinary course of business which, in the aggregate, are
not material;
(f) waived or released any rights, whether or not in the
ordinary course of business;
(g) transferred or granted any rights under any
concessions, leases, licenses, agreements, patents, inventions, trademarks,
trade names, copyrights, or with respect to any know-how;
(h) made or granted any general wage or salary increase
or entered into any employment contract with any officer or employee involving
an annual basic rate of compensation in excess of $50,000 or a period of
employment of more than thirty days;
(i) entered into any transaction, contract or commitment
other than in the ordinary course of business;
(j) made any capital expenditure or entered into any
commitment therefor which, individually, exceeds $10,000;
(k) suffered any material casualty loss or damage,
whether or not such loss or damage shall have been covered by insurance;
(l) suffered any material adverse change in its
operations, earnings, assets, liabilities, properties, business or prospects or
in its condition, financial or otherwise;
(m) declared any dividend or made any payment or other
distribution in respect of the Company's capital stock to its shareholders;
(n) purchased, redeemed, issued, sold or otherwise
acquired or disposed of any of its shares of capital stock or any evidence of
its indebtedness or other of its securities or granted any options, warrants or
other rights to purchase or convert any obligation into any shares of capital
stock or any evidence of indebtedness or other securities of the Company;
(o) made any charitable contribution not in accordance
with past practice or entered into any commitment therefor;
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(p) lost any supplier or suppliers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Company;
(q) lost any customer or customers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Company; or
(r) introduced any material change with respect to the
operation of its business, including its method of accounting, whether by act or
by lapse of time or attention.
4.8 Tax Matters. The Company has duly filed with the appropriate
-----------
United States, state and local governmental agencies, and with the appropriate
foreign countries and political subdivisions thereof, all tax returns and
reports required to be filed; such returns and reports are accurate and
complete; and the Company has paid in full or made adequate provisions for all
taxes, interest, penalties, assessments or deficiencies shown to be due on such
tax returns and reports or claimed to be due by any taxing authority or
otherwise due and owing. The Company has made all withholdings of tax required
to be made under all applicable United States, state and local tax regulations
and such withholdings have either been paid to the appropriate governmental
agencies or set aside in accounts for such purpose or accrued, reserved against
and entered upon the books of the Company. The provisions for income taxes
payable reflected in the Financial Statements are adequate. The United States
income tax liabilities of the Company have been examined and reported on by the
Internal Revenue Service (or closed by applicable statutes of limitations) and
finally determined and fully paid for all fiscal years prior to and including
the fiscal year ended December 31, 199__. Except as described in Section 4.8 of
--------------
the Disclosure Schedule, the Company has not executed or filed with the Internal
- -----------------------
Revenue Service or any other taxing authority, domestic or foreign, any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any taxes. Except as described in Section
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4.8 of the Disclosure Schedule, the Company is not a party to any pending action
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or proceeding, nor is any action or proceeding threatened, by any governmental
authority for assessment or collection of taxes and no claim for assessment or
collection of taxes has been asserted against the Company.
4.9 Title of Shareholders to Shares; Title to Properties; Absence
-------------------------------------------------------------
of Liens and Encumbrances; Leases.
---------------------------------
(a) Except as set forth in Section 4.9 of the Disclosure
Schedule, the Shareholders are the owners of all of the outstanding shares of
Company Common Stock. Erbe and, to the best of the Company's and Erbe's
knowledge, Ratcliff own all of their respective shares of the Company Common
Stock free and clear of any and all liens, claims, charges, security interests,
encumbrances and restrictions of any kind whatsoever ("Liens") or other
obligations or commitments, and the issued and outstanding shares of Company
Common Stock have been duly authorized and are fully paid and non-assessable.
Upon delivery by Erbe of those
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shares he owns to the Company in accordance herewith, the Company shall receive
the shares free of Liens.
(b) The Company owns no real property and has good title
to all of its personal property and assets, tangible and intangible (including
all property reflected in the Financial Statements or in Section 4.10 of the
-------------------
Disclosure Schedule), free and clear of all Liens. Upon delivery of the stock
- -------------------
certificates representing said shares together with stock powers as described in
Section 1.2 hereof, Buyer will have good title to the shares purchased by Buyer
hereunder (the "Purchase Shares") free and clear of any Liens or claims of
others, other than those created by Buyer.
4.10 List of Properties, Contracts and Other Data. Section 4.10 of
-------------------------------------------- ---------------
the Disclosure Schedule is a correct and complete list setting forth the
- -----------------------
following information with respect to the assets of the Company (indicating in
each case, where appropriate, whether or not the consent by a third party is
required in connection with the sale of the Purchase Shares to the Buyer):
(a) all leases and easements of real property to which
the Company is a party and belonging to or used in its business, and a brief
description of the principal buildings and structures located thereon and the
equipment located therein, with the annual rental rate of each lease and
easement, the termination date of each lease and easement and the conditions of
renewal thereof being given in each case;
(b) all rights, licenses, leases of personal property,
permits, franchises, concessions, certificates of public convenience and the
like to which the Company is a party and belonging to or used in its business,
together with a brief description of the terms thereof;
(c) (i) all United States and foreign patents, trademarks
and trade names, trademark and trade name registrations, copyrights and
copyright registrations, unexpired as of the date hereof, all United States and
foreign applications pending for patents, for trademark or trade name
registrations, or for copyright registrations, and all trademarks, trade names
in use by the Company, all of the foregoing belonging to or used in its business
and being owned in whole or in part as noted thereon by the Company and (ii) all
licenses granted by or to the Company (with the exception of licenses relating
to off-the-shelf software) and all other material agreements to which the
Company is a party, which relate in whole or in part to any items of the
categories mentioned in clause (i) above or to any other proprietary rights
belonging to or used in its business, whether owned by the Company or otherwise;
(d) all policies of insurance in force (with a notation
as to the status of premiums paid thereon) with respect to the Company,
including without limitation those covering its properties, buildings,
machinery, equipment, fixtures, public liability and operations;
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(e) all existing contracts and commitments belonging to
or used in the Company's business (including loan agreements, credit agreements
and security agreements) to which the Company is a party or by which the Company
or any of its properties or assets is bound, except (i) contracts or commitments
involving the payment by or to the Company of less than $5,000 with respect to
any one contract or commitment or $20,000 with respect to any related group of
contracts or commitments, (ii) contracts or commitments terminable by the
Company without liability or expense on thirty days' notice or less, and (iii)
contracts or commitments for the purchase or sale of merchandise or services
entered into in the ordinary course of business, the performance of which by the
Company will extend over a period of less than three months and which will not
individually or in the aggregate, have any material adverse effect on the
financial condition or results of operations of the Company;
(f) all collective bargaining agreements, pension plans,
employment and consulting agreements, executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans and hospitalization insurance or other plans or
arrangements providing for benefits for employees or former employees of the
Company (indicating, with respect to each of the individuals named pursuant to
subparagraph (h) below, the amount received in the year ended December 31, 1996
under each such agreement, plan or arrangement);
(g) the names and current annual salary rates of all
present directors and officers of the Company and the names and current annual
salary rates of all employees of the Company whose current basic annual salary
rate (exclusive of sales commissions and bonuses) is $50,000 or more;
(h) the names of all retired employees of the Company who
are receiving or are entitled to receive any unfunded pensions not covered by
any pension plan to which the Company is a party, their ages and their current
annual unfunded pension rates;
(i) the name of each bank or other financial institution
from which credit commitments to the Company are outstanding, together with a
brief description of such commitments; and
(j) the name of each bank in which the Company has an
account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto.
True and complete copies of all documents, including all amendments
thereto, referred to in such list have been delivered to the Buyer. All
documents, rights, obligations and commitments referred to in such list are
valid and enforceable in accordance with their terms for the periods stated
therein and there is not under any of them any existing breach, default, event
of default or event which with the giving of notice or lapse of time, or both,
would constitute a default nor had
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any party thereto given notice of or made a claim with respect to any breach or
default. To the best knowledge of the Company and Erbe, there are no existing
laws, regulations or decrees, which adversely affect any of such documents,
rights, obligations or commitments. None of the contracts referenced or listed
on Schedule 4.10 was 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.
4.11 Litigation. Except as disclosed in Section 4.11 of the
---------- -------------------
Disclosure Schedule, there are no claims, actions, suits, proceedings or
- -------------------
investigations pending or threatened against or affecting the Company at law or
in equity or in admiralty, or before or by any federal, state, municipal or
governmental or nongovernmental department, commission, board, bureau, agency or
instrumentality, United States or foreign, nor does the Company or Erbe know of
any facts which would provide a basis for any such claim, action, suit,
proceeding or investigation. Except for the McDonnell Douglas litigation which
involves a claim of approximately $300,000, no claim, action, suit, proceeding
or investigation described in Disclosure Schedule 4.11 could, if adversely
------------------------
decided, have a material adverse effect on the condition (financial or
otherwise), assets, liabilities, earnings or business of the Company.
4.12 Labor Matters. Except as disclosed in Section 4.12 of the
------------- -------------------
Disclosure Schedule, there are no controversies pending or threatened between
- -------------------
the Company and any of its employees and the Company has not taken or failed to
take any action which would provide a reasonable basis for any such controversy.
There are no proceedings now pending nor, to Company's or Shareholders'
knowledge or belief, threatened against the Company before the National Labor
Relations Board, any state department of labor, any state commission on human
rights, the Equal Employment Opportunity Commission or any other local, state or
federal agencies having jurisdiction over employee rights with respect to
hiring, tenure or conditions of employment, nor have there been any such
proceedings since January 1, 1993. The Company has complied with respect to all
employees, including without limitation staff employees and those chargeable to
others, with all laws relating to the employment of labor, including any
provisions thereof relating to wages, hours, collective bargaining and the
payment of social security and similar taxes, and is not liable for any arrears
of wages or any taxes or penalties for failure to comply with any of the
foregoing. All non-exempt employees have been paid appropriate and correct
premium wages where applicable. All exempt employees have been properly
designated as such in accordance with applicable law and all payments and
reimbursements to employees for moving, meals, incidental or lodging expenses
(commonly known as per diem payments) have been in accordance with applicable
tax and labor laws. There have been no payments to employees or employees
chargeable to others as consultants or independent contractors within the past
three (3) years with the exception of those listed on Section 4.12 of the
-------------------
Disclosure Schedule. To the best of Company's and Erbe's knowledge, there are no
- -------------------
present employees of the Company who will not be available for employment by the
Buyer on substantially the same terms and conditions as they
11
<PAGE>
are presently employed by the Company. There are no organizational efforts
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company.
4.13 Patents; Trademarks; Intellectual Property Rights. The Company
-------------------------------------------------
has protected by way of trademark, trade name or otherwise the names set forth
in Section 4.13 of the Disclosure Schedule. Sections 4.10 and 4.13 of the
--------------------------------------- -----------------------------
Disclosure Schedule list all patents, trademarks, trade names, copyrights,
- -------------------
registrations, and, except for licenses relating to off-the-shelf software,
computer hardware and software, necessary for the conduct of the Company's
business as now conducted. Except as described in Sections 4.10 or 4.13 of the
----------------------------
Disclosure Schedule, all such rights owned by the Company are in good standing,
- -------------------
are valid and enforceable and are free from any default on the part of the
Company. The Company is not a licensor of any patents, trademarks, trade
secrets, registrations, applications, technical information, data, formulae,
computer hardware and software or proprietary know-how ("Intellectual Property
Rights") nor is the Company violating the Intellectual Property Rights of
others. No director, officer or employee of the Company owns, directly or
indirectly, in whole or in part, any of the Intellectual Property Rights or
interests therein which the Company has used, is presently using, or the use of
which is necessary for the Company's business as now conducted.
4.14 Assets. The tangible personal property of the Company is in
------
good operating condition, normal wear and tear excepted, and are fit for their
intended purpose. There are no actions pending or threatened or consent decrees,
orders or agreements entered by the United States, any state or local regulatory
agency or court with respect to the compliance of such property with applicable
laws, statutes, ordinances or regulations, including, without limitation, the
Environmental Laws (as that term is defined in Section 4.23 hereto).
4.15 Insurance.
---------
(a) All insurable properties of the Company belonging to
or used in its business are adequately insured for the Company's benefit against
all risks usually insured against by persons owning or operating similar
properties in the localities where such properties are located, all under valid
and enforceable policies insured by insurers of recognized responsibility.
(b) The Company is adequately insured, for its benefit,
against all product liability claims relating to products manufactured,
fabricated, sold or delivered by it to the same extent that the risks of such
claims are insured against by persons manufacturing, fabricating, selling or
delivering similar products, all under valid and enforceable policies insured by
insurers of recognized responsibility.
4.16 Trade Notes and Accounts Receivable and Trade Notes and
-------------------------------------------------------
Account Payable.
---------------
(a) The trade notes and accounts receivable of the
Company reflected on the Financial Statements and all trade notes and accounts
receivable arising thereafter and prior to the
12
<PAGE>
Closing Date arose and will arise from bona fide transactions in the ordinary
course of business of the Company, and are (except for normal claims and
allowances which are consistent with the Company's past experience and which in
the aggregate are not material) current and fully collectible, less the
applicable allowance for doubtful accounts.
(b) The trade notes and accounts payable of the Company
reflected on the Financial Statements and all trade notes and accounts payable
arising thereafter and prior to the Closing Date arose and will arise from bona
fide transactions in the ordinary course of business of the Company and were
paid or are not yet due and payable.
4.17 Licenses; Permits; Authorizations. Section 4.17 of the
--------------------------------- -------------------
Disclosure Schedule is a schedule of all approvals, authorizations, consents,
- -------------------
licenses, orders and permits (except for sales and use tax permits and franchise
tax regulations) of all governmental agencies, whether United States, state or
local, or foreign, required by the nature of the business conducted by the
Company to permit the continued operation of such business in the manner in
which it was conducted as of the date hereof (indicating in each case, where
appropriate, whether or not the consent by a third party to the transfer to the
Buyer is required and the expiration date of any governmental approvals). The
Company has all material approvals, authorizations, consents, licenses, orders
and other permits of all governmental agencies, whether United States, state,
local or foreign, required to permit the operation of the Company's business as
presently conducted and the Company's business is and has been operated in all
material respects in compliance therewith.
4.18 Compliance with Applicable Law. The conduct of the Company's
------------------------------
business does not violate or infringe any domestic or foreign laws, statutes,
ordinances or regulations or any right or patent, trademark, trade name,
copyright, know-how or other proprietary right of third parties, the enforcement
of which would adversely affect the Company's business or the value of its
properties and assets.
4.19 Pension and Employee Benefit Plans.
----------------------------------
(a) The Company is not a party to and has not contributed
to any employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or employee
welfare benefit plans (as defined in Section 3(1) of ERISA and including, in
each case, multi-employer plans) or any incentive, bonus, profit sharing,
deferred compensation, stock option, stock purchase plan or agreement,
severance, termination or other compensation plan or arrangement, or any other
material employee fringe benefit plans presently maintained by, or contributed
to by the Company or any current Affiliate, as defined below, except those
described on Section 4.10 of the Disclosure Schedule. The Company's pension
---------------------------------------
plans that are intended to be income tax qualified (the "Plans") are duly
qualified under Section 401 of the Internal Revenue Code (the "Code"), all
reports and actions required to be taken in connection with such Plans have been
so taken, there have been no reportable events or prohibited transactions in
connection with such Plans nor any termination or
13
<PAGE>
partial termination with respect thereto or to any other plan maintained by the
Company or by an entity controlling, controlled by or under common control with,
the Company.
(b) A true and complete copy of (1) each Plan and any
related agreement, and (2) all summary plan descriptions, (3) the most recent
annual report, (4) the most recent actuarial valuation (if applicable), (5) any
other financial statements or disclosures, and (6) the most recent determination
letter received from the Internal Revenue Service (if applicable), with respect
to any Plan, has been furnished to the Buyer.
(c) The Company, each current Affiliate and each of the
Plans, are in compliance in all material respects with the applicable provisions
of ERISA, and those provisions of the Code applicable to Plans.
(d) Except as may be disclosed on the Balance Sheet,
neither the Company nor any current Affiliate has any liability with respect to
any Plan that is not fully reflected in the materials delivered to Buyers
pursuant to subsection (b), nor is any asset of the Company or any current
Affiliate subject to any lien under Code Section 401(a)(29), ERISA Section
302(f) or Code Section 412(n), ERISA Section 4068 or arising out of any action
filed under ERISA Section 4301(b).
(e) Neither the Company or any other employer (an
"Affiliate") that is, or was at any time after September 2, 1974, together with
the Company, treated as a "single employer" under section 414(b), 414(c) or
414(m) of the Code incurred any liability which could subject any of the parties
to this Agreement to material liability under Section 4062, 4063 or 4064 of
ERISA.
(f) Neither the Company nor any current Affiliate is
required to contribute to any multiemployer plan, within the meaning of Section
4001(a)(3) or ERISA. Neither the Company nor any Affiliate, while an Affiliate,
has incurred any withdrawal liability, within the meaning of Section 4201 of
ERISA to any multiemployer pension plan, which liability has not been fully paid
as of the date hereof.
4.20 Certain Relationships; Transactions with Management.
---------------------------------------------------
(a) Section 4.20 of the Disclosure Schedule accurately
describes all relationships among the directors, the officers and the
shareholders of the Company.
(b) Except as described in Section 4.20 of the Disclosure
Schedule, the Company is not a party to any contract, lease or commitment with
any officer, director or shareholder (or any affiliate of any such officer,
director or shareholder) of the Company, nor are there any loans outstanding to
any of such persons (or any affiliate of any such person) from the Company.
14
<PAGE>
(c) Neither the Company nor the Shareholders (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.
4.21 Adverse Agreements; No Adverse Change.
-------------------------------------
(a) Except as disclosed in Section 4.21 of the Disclosure
------------------------------
Schedule, the Company is not a party to or subject to any agreement or
- --------
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule or regulation which adversely
affects or, insofar as the Company can now foresee, may in the future adversely
affect its business operations, prospects, properties, assets or conditions,
financial or otherwise.
(b) Except as disclosed in Section 4.21 of the Disclosure
------------------------------
Schedule, there has not been any adverse change in, or development adversely
- --------
affecting, the business, assets, financial position or results of operations of
the Company (including, without limitation, any fire or other casualty loss to
any of the assets of the Company) nor is the Company aware of any such adverse
change or development which may occur in the future.
4.22 Assets Relationship to Business of the Company. The assets
----------------------------------------------
owned or leased by the Company constitute all of the properties and assets used
or useful in or necessary to the conduct of the business and affairs of the
Company and, as such, constitute all of the properties and assets necessary in
order for the Buyer to conduct business operations subsequent to the Closing in
the manner in which the same are presently conducted by the Company.
4.23 Environmental Matters.
---------------------
(a) The Company owns no real property. The Company leases
office space for its operations as listed in Section 4.23 of the Disclosure
------------------------------
Schedule.
- --------
(b) There are no outstanding notices of violation,
orders, claims, citations, complaints, penalty assessments, suits or other
proceedings, administrative, civil, criminal, at law or in equity pending
against Company and, to the best knowledge of the Company and Erbe, no
investigation or review is pending or threatened against Company by any
governmental entity with respect to any alleged violation of any federal, state
or local environmental law, regulation, ordinance, standard, permit or order in
connection with the conduct of the business of the Company.
(c) The Company has no actual knowledge of any violation
by the Company of The Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), The Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), The Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, The Clean Water
Act, the Toxic Substances Control Act and The Clean Air
15
<PAGE>
Act or any rule or regulation promulgated pursuant to any of the foregoing
statutes, or any other applicable environmental law, statute, rule, regulation
or ordinance (all of the foregoing are hereinafter sometimes collectively
referred to as the "Environmental Laws").
(d) Except as otherwise disclosed in Section 4.23 of the
-------------------
Disclosure Schedule, neither the Company, nor any of its officers, employees,
- -------------------
agents or independent contractors has arranged, by contract, agreement or
otherwise, (i) for the disposal or treatment of, or (ii) with a transporter for
the transport or disposal or treatment of, any hazardous substance (as defined
by CERCLA, as amended);
(e) To the best knowledge of the Company and Erbe, no
predecessor of the Company has arranged by contract, agreement or otherwise, (i)
for the disposal or treatment of, or (ii) with a transporter for transport for
the disposal or treatment of, any hazardous substances (as defined by CERCLA, as
amended);
(f) The Company is neither an "owner" or "operator" of a
"facility" as defined by CERCLA, as amended; and
(g) Except as otherwise set forth in Section 4.23 of the
-------------------
Disclosure Schedule, the Company did not "own" or "operate" any "facility" at
- -------------------
the time any hazardous substances were disposed of within the meaning of CERCLA,
as amended.
(h) To the best of the Company's and Erbe's actual
knowledge, without undertaking any investigation, no hazardous, toxic or
polluting substances have been released, discharged or disposed of on property
now or formerly owned or operated by Company. To the best of Company's and
Erbe's actual knowledge, without undertaking any investigation, no PCBs,
asbestos or urea formaldehyde insulation is present at any such property. The
Company has not received from any federal, state or local environmental
regulatory entity or third party requests for information, notice of claim,
demand letters, or other notification that in connection with the conduct of the
business, it is or may be potentially responsible with respect to any
investigation or clean-up of hazardous substance releases at any sites.
(i) To the best of the Company's and Erbe's knowledge, no
wastes generated by Company have ever been sent directly or indirectly to any
site listed or formally proposed for listing on the National Priority List
promulgated pursuant to CERCLA or to any site listed on any state list of
hazardous substance sites requiring investigation or clean-up.
4.24 Books and Records. The books, records and work papers of the
-----------------
Company are complete and correct, have been maintained in accordance with good
business practices and accurately reflect the basis for the financial condition
and results of operations of the Company set forth in the Financial Statements
referred to in Section 4.5 hereof. The corporate record books of the Company
have been duly and properly maintained, are in good order; complete, accurate,
16
<PAGE>
and up to date; and set forth all meetings and actions heretofore held and/or
taken by the stockholders and/or directors of the Company.
4.25 Improper Payments. Neither the Company (including any present
-----------------
or former officers, directors, employees or agents or other 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, to obtain special concessions to pay for
favorable treatment for business secured or for special concessions already
obtained or to otherwise attempt to influence any such person or entity to take
or refrain from taking any action relating to the Company; (ii) paid, donated,
leased or made available funds or property of any kind, 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) made any loans, donations, or other disbursements, directly or
indirectly, to officers or employees of the Company, so that contributions,
donations, loans or payment could 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; or
(iv) maintained 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.
4.26 Use of Independent Contractors. The Company has not retained
------------------------------
the services of any independent contractor or consultant for assignment to
customers within the past three (3) years except as described on Section 4.26 of
---------------
the Disclosure Schedule.
- -----------------------
4.27 Other Information. None of the information and documents
-----------------
furnished or to be furnished by the Company to the Buyer or any of its
representatives in connection with the execution, delivery and closing of this
Agreement is or will be false or misleading, or contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact required to make the statements therein fair and accurate.
IV.A. SPECIAL REPRESENTATIONS AND WARRANTIES OF ERBE
----------------------------------------------
Erbe represents and warrants to COMFORCE that Erbe (i) has been offered
an opportunity to review the documents that COMFORCE has filed with the
Securities and Exchange Commission (the "SEC") during 1996; (ii) has been
offered the opportunity to ask questions of appropriate officers of COMFORCE
with respect to its business and affairs, and such officers have answered all
such questions to Erbe's satisfaction; (iii) will acquire COMFORCE Stock
thereunder for Erbe's own account for investment purposes and with no intention
of resale other than in accordance with the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities laws; (iv) has the
requisite knowledge and experience in financial and
17
<PAGE>
business matters to be able to evaluate the merits and risks of an investment in
the COMFORCE Stock; (v) is aware that the offer and sale of the COMFORCE Stock
has not been registered under the Securities Act or any applicable state
securities laws and that any COMFORCE Stock received under the Contingent
Certificate will constitute "restricted securities" within the meaning of such
term under Rule 144 of the Rules of the SEC ("Rule 144"), that the shares will
be subject to the resale restrictions of Rule 144 (unless the shares are
registered or another exemption from registration is available under the
Securities Act), and that, if Erbe is at any time deemed to be an "affiliate" of
COMFORCE, the COMFORCE Stock will be subject to the additional resale
restrictions under Rule 144 applicable to affiliates; (vi) is aware that until
any COMFORCE Stock received under the Contingent Certificate is registered under
the Securities Act, Erbe may be unable to liquidate Erbe's investment in the
shares despite a need to do so; and (vii) is aware that any certificate or
certificates evidencing COMFORCE Stock issued under the Contingent Certificate
will bear a customary legend relating to said restrictions.
V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer and COMFORCE jointly and severally represent and warrant to
Erbe as follows:
5.1 Organization; Good Standing; Power. The Buyer and COMFORCE are
----------------------------------
respectively corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware and have all requisite corporate power
and authority to own, lease and operate their properties, to carry on their
businesses as now being conducted and to enter into this Agreement and perform
their obligations hereunder.
The copies of the Articles of Incorporation and Bylaws of the
Buyer and COMFORCE, which have been delivered to the Company are complete and
correct. The Buyer and COMFORCE are duly qualified to do business as foreign
corporations and are in good standing in each of the jurisdictions in which the
property owned, leased or operated by them or the nature of the business
conducted by them after the consummation of the transaction contemplated
hereunder makes such qualification necessary.
5.2 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance of this Agreement, and the transactions contemplated hereby by the
Buyer and COMFORCE, have been duly and effectively authorized and ratified by
all necessary corporate action. This Agreement has been duly executed by Buyer
and COMFORCE and is a valid, legally binding and enforceable obligation of Buyer
and COMFORCE.
5.3 Effect of Agreement. The execution, delivery and performance
-------------------
of this Agreement and the consummation of the transactions contemplated hereby
do not (i) require the consent, approval or authorization of any person,
corporation, partnership, joint venture or other business association or other
public authority; (ii) violate, with or without the giving of notice or the
18
<PAGE>
passage of time, or both, any provisions of law applicable to the Buyer or
COMFORCE; or (iii) conflict with or result in a breach or termination of any
provision of, or constitute a default under, or result in the creation of any
Lien upon any of the properties or assets of the Buyer or COMFORCE pursuant to
any indenture, corporate charter, bylaw, indenture mortgage, deed of trust,
lease, contract, agreement or other instrument or any order, judgment, award,
decree, statute, ordinance, regulation or any other restriction of any kind or
character, to which the Buyer or COMFORCE is a party, or by which the Buyer or
COMFORCE or any of their assets or properties may be bound.
5.4 Investment Intent. Buyer is acquiring the Purchase Shares for its
-----------------
own account for investment and not with a view to or for sale in connection with
any distribution thereof. Buyer acknowledges that the Purchase Shares have not
been registered under the Securities Act, or the securities laws of any state
and that the Stock may not be sold, transferred, or disposed of except in
accordance with the provisions of the Securities Act, rules and regulations
thereunder, and any applicable state or federal securities laws or applicable
exemption therefrom.
VI. TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
6.1 Access to Information; Customer Interviews.
------------------------------------------
(a) Access to Information. The Company shall give to the
---------------------
Buyer, its employees, counsel, accountants, engineers and other consultants and
representatives, full access during normal business hours throughout the period
prior to the Closing Date to the assets, books, contracts, commitments and
records of the Company for such purposes as Buyer deems appropriate, including
but not limited to testing of the assets provided the same does not unreasonably
interfere with the Company's business, and will furnish to the Buyer during such
period all such information concerning the affairs of the Company as the Buyer
or its representatives may reasonably request. The Buyer shall use its best
efforts to cause its representatives to hold in strict confidence all
information so obtained from the Company and, if the transactions herein
provided for are not consummated as contemplated herein, the Buyer will return
all such data as the Company may reasonably request.
(b) Contact with Company Customers. The Company shall
------------------------------
cooperate fully with Buyer in arranging meetings or telephone conferences with
the Company's principal contacts at its customers that are designated by Buyer
as customers that Buyer wishes to contact so that Buyer can, jointly with the
Company, meet with an make good faith inquiries regarding the customers'
satisfaction with the Company and the services or products the Company provides
the customers and regarding the willingness of the customers to continue to
order services or products, as the case may be, from the Company following the
acquisition of the Company Common Stock by the Buyer.
19
<PAGE>
6.2 Conduct of the Company's Business Pending the Closing Date.
----------------------------------------------------------
The Company hereby agrees that, except as otherwise provided in this Agreement,
prior to the Closing Date it will:
(a) operate its business only in the usual, regular and
ordinary manner and, to the extent consistent with such operation, use its best
efforts to preserve its present business organization and reputation intact,
keep available the services of its present officers and employees and preserve
its present relationships and good will with persons having business dealings
with it;
(b) maintain all of its properties in customary repair,
order and condition, reasonable wear and use excepted, and maintain insurance
upon all of its properties and with respect to the conduct of its business in
such amounts and of such kinds comparable to that in effect on the date hereof;
and, in the event of a casualty, loss or damage to any of such properties prior
to the Closing Date for which the Company is insured, the Company shall, at
Buyer's option, either repair or replace such damaged property or transfer the
proceeds of such insurance to the Buyer;
(c) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years; endeavor to
comply with all laws and contractual obligations applicable to it and to the
conduct of its business; and perform all of its obligations without default;
(d) use its best efforts to comply duly with all laws
applicable to it and the conduct of its business;
(e) conduct its operations so as to comply with all
Environmental Laws;
(f) make no amendment in its Articles of Incorporation or
Bylaws; and enter or agree to enter into no merger or consolidation with, or
sale of a significant amount of its assets to, any corporation or change the
character of its business in any manner;
(g) make no change in the number of shares of its capital
stock issued and outstanding; and grant or make no option, warrant or any other
right to purchase or to convert any obligation into shares of its capital stock;
(h) declare, pay or make no dividend or other distribution
or payment in respect of shares of the Company's capital stock; and purchase or
redeem none of such shares and dispose of no evidence of indebtedness or other
security of the Company;
(i) make or grant no general wage or salary increase or
increase in compensation payable or to become payable to any employee, officer,
director or agent; pay or
20
<PAGE>
provide for no bonus, stock option, stock purchase, profit sharing, deferred
compensation, pension, multi-employer pension, retirement or other similar
payment or arrangement except in the ordinary course of administering existing
plans referred to in Section 4.10 of the Disclosure Schedule; pay or provide for
---------------------------------------
no unfunded pensions, not covered by any pension plan, other than the unfunded
pensions, if any, referred to in Section 4.10 of the Disclosure Schedule and
---------------------------------------
enter into no employment or consulting agreement or sales agency with respect to
the performance of personal services which is not terminable without liability
by Company on thirty days notice or less.
(j) (i) incur or become subject to, or agree to incur or
become subject to, no obligation or liability (contingent or otherwise), subject
to the exceptions enumerated in Section 4.7 hereof; (ii) discharge or satisfy no
lien or encumbrance and pay no obligation or liability (contingent or
otherwise), subject to the exceptions enumerated in Section 4.7 hereof; (iii)
mortgage, pledge or subject to lien, charge, security interest or any other
encumbrance none of its assets or properties; (iv) sell, assign, transfer,
convey, lease or otherwise dispose of, or agree to sell, assign, transfer,
convey, lease or otherwise dispose of, none of its assets or properties, except
for fair consideration in the ordinary course of business; (v) acquire or lease
(other than a renewal of an existing lease in the ordinary course of business),
or agree to acquire or lease (other than a renewal of an existing lease in the
ordinary course of business, no material assets of property; (vi) cancel or
compromise no debt or claim, except for adjustments or settlements made in the
ordinary course of business; (vii) waive or release no rights; (viii) transfer
or grant no rights under any concessions, leases, licenses, agreements, patents,
inventions, trade names, trademarks, copyrights, or with respect to any know-how
or Intellectual Property Rights; (ix) modify, change or terminate no existing
license, lease, contract or other document referred to in Section 4.10 of the
-------------------
Disclosure Schedule; (x) make no capital expenditures and enter into no
- -------------------
commitments therefor which, individually exceed $10,000; (xi) enter into no
collective bargaining agreement and, through negotiation or otherwise, make no
commitment or incur any liability to any labor organization; (xii) make no
charitable contribution; (xiii) enter into no transaction and make or enter into
no contract or commitment which by reason of its size or otherwise is not in the
ordinary course of business; and (xiv) make no amendment or modification and
waive no rights under the Ratcliff Agreement or the Escrow Agreement executed
thereunder.
(k) make no change in the banking and safe deposit
arrangements reflected in Section 4.10 of the Disclosure Schedule without prior
---------------------------------------
written notice to the Buyer, giving the details of such change; and grant no
powers of attorney, except as disclosed in writing to the Buyer;
(l) make no renovation of property involving any
obligation on the part of the Company in excess of $10,000 in the aggregate;
(m) make no change in its accounting procedures; and
21
<PAGE>
(o) use its best efforts not to permit any event to occur
which would result in any of the Company's or Erbe's representations and
warranties contained in this Agreement not being true and correct at and as of
the time immediately after the occurrence of such transaction or event.
6.3 Consents. The Company and Erbe agree that they shall use their
--------
best efforts to obtain prior to the Closing Date all such consents, assignments,
and approvals as may be required in order to enable them to perform their
obligations hereunder, including, but not limited to, all consents and approvals
required so that the Company may continue to enjoy after the Closing Date all
rights and benefits presently enjoyed by it. It is expressly acknowledged and
agreed by the Company and Erbe that Buyer intends to negotiate with the
Company's bank lenders to obtain their consent to the transactions contemplated
hereby. The Company, Erbe and the Buyer agree to jointly conduct such
negotiations with such lenders for their consent to the transaction and such
additional borrowings by Buyer as it deems appropriate to consummate this
transaction.
6.4 Key Employees. Erbe and the Company shall use their best efforts
-------------
to assist the Buyer in obtaining employment agreements in form satisfactory to
Buyer, the effectiveness of which shall be conditioned upon the Closing, between
the Company and such employees of the Company as Buyer designates in writing to
Erbe and the Company.
6.5 Amendment of the Company's Articles. The Company agrees to file
-----------------------------------
the Amendment promptly after the date hereof.
VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COMPANY AND ERBE.
-----------------------------------------------------------
The obligations of the Company and Erbe under this Agreement are
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions:
7.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Buyer and COMFORCE herein contained shall be true and
correct on and as of the Closing Date, with the same force and effect as though
made on and as of such date, except as affected by the transactions contemplated
hereby.
7.2 Performance of Agreements. The Buyer and COMFORCE shall have
-------------------------
performed all obligations and agreements and complied with all covenants and
conditions contained in this Agreement to be performed or complied with by it
at or prior to the Closing Date.
7.3 Officers' Certificate. Buyer and COMFORCE shall have furnished
---------------------
the Company with a certificate, dated as of the Closing Date, of their
respective President or Vice President, to the effect that the Buyer and
COMFORCE have fulfilled the conditions specified in Sections 7.1 and 7.2
hereof.
22
<PAGE>
7.4 Resolutions of Board of Directors. The Company and Erbe shall have
---------------------------------
received from the Buyer and COMFORCE a certified copy of the Resolutions of the
Boards of Directors of the Buyer and COMFORCE approving this Agreement and
authorizing the consummation of the transactions contemplated hereby.
7.5 Opinion of Counsel for the Buyer. The Company and Erbe shall have
--------------------------------
received an opinion of counsel for the Buyer and COMFORCE, dated the Closing
Date, satisfactory in form and substance to the Company, Erbe and its counsel,
to the effect that:
(a) The Buyer and COMFORCE are corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware
and have all requisite corporate power and authority to own, lease and operate
its property, to carry on its business and to enter into this Agreement and
perform its obligations hereunder.
(b) The execution, delivery and performance of this Agreement
by the Buyer and COMFORCE and the consummation of the transactions contemplated
hereby have been duly and effectively authorized and ratified by all necessary
corporate action on the part of the Buyer and COMFORCE and do not require the
consent, approval or authorization of any person or public authority, do not
violate, with or without the giving of notice and/or the passage of time, any
provision of law now applicable to the Buyer and COMFORCE and do not conflict
with or result in a breach or termination of any provision of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance upon
any of the properties or assets of the Buyer and COMFORCE pursuant to, any
indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument known to such counsel, to which the Buyer and COMFORCE is a party or
by which the Buyer or COMFORCE or any of its assets and properties may be bound
and will not result in a violation of the Certificates of Incorporation or
Bylaws of the Buyer and COMFORCE.
(c) This Agreement has been duly executed by the Buyer and
COMFORCE and is the valid, legally binding and enforceable obligation of the
Buyer and COMFORCE, except as the same may be limited or otherwise affected by
applicable bankruptcy, insolvency or other laws affecting creditors' rights or
contractual obligations generally.
7.6 Erbe Consulting Agreement. The Company shall have executed and
-------------------------
delivered to Erbe a Consulting Agreement (the "Erbe Consulting Agreement") in
the form attached hereto as Exhibit 7.6, which shall among other things
terminate all prior employment agreements and arrangements between the Company
and Erbe.
7.7 Release of Personal Guaranties. Any personal guaranties of the
------------------------------
Shareholders relating to indebtedness of the Company shall have been released by
the beneficiaries thereof or the obligations of the Company supported by the
guaranties shall have been paid or shall on the Closing Date be paid in full.
23
<PAGE>
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
------------------------------------------------
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions.
8.1 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of the Company herein contained shall be true and correct on and as
of the Closing Date with the same force and effect as though made on and as of
such date, except as affected by transactions contemplated hereby.
8.2 Performance of Agreements. The Company shall have performed all
-------------------------
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
8.3 Officers' Certificate. The Company shall have furnished the Buyer
---------------------
with a certificate dated as of the Closing Date, of the President or Vice
President of the Company, to the effect that the Company has fulfilled the
conditions specified in Sections 8.1 and 8.2 hereof. Such certificate shall
include a schedule which shall contain an update of the information disclosed in
the Disclosure Shedule and a complete and correct list and description of the
information specified in Section 4.10 as of a date not more than three (3) days
prior to the Closing Date.
8.4 Resolutions of Board of Directors. The Buyer shall have received
---------------------------------
from the Company a certified copy of the Resolutions of the Board of Directors
of the Company approving this Agreement and authorizing the consummation of the
transactions contemplated hereby.
8.5 Opinion of Counsel for the Company and Erbe. The Buyer shall have
-------------------------------------------
received an opinion of counsel for the Company and Erbe, dated the Closing Date,
in form and substance satisfactory to the Buyer and its counsel, to the effect
that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; the Company has all requisite corporate power to enter into this
Agreement and to perform its obligations hereunder; and the Company has all
requisite corporate power and authority to own, lease and operate its properties
as now owned, leased and operated, and to carry on its business as now being
conducted.
(b) The statements made in Section 4.2(c) are correct.
(c) The execution, delivery and performance by the Company of
this Agreement and the other documents as required hereby to be executed by the
Company and the consummation of the transactions contemplated hereby and thereby
have been duly and effectively authorized by all necessary corporate action on
the part of the Company.
24
<PAGE>
(d) The execution, delivery and performance of this Agreement
by the Company and Erbe and the consummation of the transactions contemplated
hereby do not require the consent, approval, authorization, license, order or
permit of any person or public authority (except those consents, approvals,
authorizations, licenses, orders and permits which have been duly obtained,
specifying the same), do not violate, with or without the giving of notice or
the passage of time, or both, any provision of law now applicable to the Company
and do not conflict with or result in a breach or termination of any provision
of, or constitute a default under, or result in the creation of any lien,
charge, or encumbrance upon any of the properties or assets of the Company or
Erbe pursuant to, any corporate charter, bylaws, indenture, mortgage, deed of
trust, lease, contract, agreement or other instrument, or any order, judgment,
award, decree, statute, ordinance, regulation or any other restrictions of any
kind or character, known to such counsel, to which the Company or Erbe is a
party or by which the Company or Erbe or any of their respective assets or
properties may be bound and will not result in a violation of the Company's
Articles of Incorporation or Bylaws.
(e) This Agreement and the other documents the Company is
required to execute hereunder have been duly executed by the Company and are the
valid, legally binding and enforceable obligations of the Company, except as the
same may be limited or otherwise affected by applicable bankruptcy, insolvency
or other laws affecting creditors' rights or contractual obligations generally.
(f) The Company Common Shares issued to Buyer are validly
issued, fully paid and non-assessable.
(g) Upon delivery of the Purchase Shares as provided in the
Agreement, Buyer will acquire good title thereto, free and clear of any Liens
other than Liens created by Buyer.
(h) Erbe has the legal capacity to execute and deliver this
Agreement and any other documents required to be executed and delivered by Erbe
hereunder, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated thereby. This Agreement and the other documents
required to be delivered by Erbe hereunder constitute the valid and legally
binding obligations of Erbe, enforceable against Erbe in accordance with the
respective terms of said agreements, except as the same may be limited or
otherwise affected by applicable bankruptcy, insolvency or other laws affecting
creditors' rights or contractual obligations generally.
(i) Except as disclosed in Section 4.11 of the Disclosure
------------------------------
Schedule, to the knowledge of such counsel, without undertaking any
- --------
investigation, there are no actions, suits or proceedings pending or, threatened
against or affecting the Company at law or in equity or in admiralty, or before
or by any United States, state, municipal or other governmental or
non-governmental department, commission, board, bureau, agency, or
instrumentality, nor does such counsel know of any facts which would provide a
basis for any such action, suit or proceeding.
25
<PAGE>
8.6 Actual or Threatened Actions. There shall not be any actual or, in
----------------------------
the opinion of the Buyer, threatened action or proceeding by or before any court
or other governmental body or agency which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Buyer to own, operate or control the Company or affect the
right of the Company to own, operate or control its assets and business after
the Closing Date.
8.7 Material Changes. Prior to the Closing Date there shall be no
----------------
material adverse change in the Company's condition (financial or otherwise),
assets, liabilities, or business, including, without limitation, a loss of any
material amount of its business or any material customers or reasonable cause to
believe that such a loss is probably within one (1) year after the Closing.
8.8 Consents. All required consents shall have been received by the
--------
Buyer including, but not limited to, all consents and approvals required to
permit the Company to enjoy after the Closing Date all rights and benefits
presently enjoyed by the Company, including without limitation, such consents
and approvals as are required to avoid a default or event that, with the passage
of time or giving of notice, will be a default under any agreement between the
Company and its customers.
8.9 Erbe Consulting Agreement. Erbe shall have executed and delivered
-------------------------
to the Company the Erbe Consulting Agreement.
8.10 Satisfactory Completion of Due Diligence. Buyer shall not have
----------------------------------------
given the Company a notice within thirty (30) days after execution and delivery
of this Agreement that, as a result of its due diligence investigation of the
Company, Buyer, in its reasonable discretion, is terminating this Agreement (in
which case, this Agreement shall thereupon be terminated), it being understood
that in some instances Buyer and/or its counsel have not reviewed matters or
documents disclosed in the Disclosure Schedule and that the Disclosure Schedule
may be amended by the Company during the twenty (20) days following the date
hereof due to the constraints in preparation of this Agreement. No such
amendment shall be deemed to modify the representations and warranties herein
until it is approved by Buyer in writing. Closing of the transactions
contemplated by this Agreement shall constitute approval by Buyer of such
amendments.
8.11 Customer Interviews. Buyer, based on interviews conducted pursuant
-------------------
to Section 6.1(b) hereof with such of the Company's customers as it designates,
shall have ascertained to Buyer's reasonable satisfaction that the customers are
satisfied with the services provided by the Company and intend, after the
Closing Date, to continue to utilize the services of the Company at least
consistent with levels and in a manner consistent in all material respects with,
the customers' practices prior to the date hereof.
26
<PAGE>
8.12 Termination of Option. Barbara L. Ratcliff shall have
---------------------
effectively terminated her option to purchase Common Stock of the Company by a
document satisfactory to the Buyer in its reasonable discretion.
8.13 Cancellation of Cash Payoff Notes. Barbara L. Ratcliff and Erbe
---------------------------------
shall have deposited with counsel for the Company or the Buyer, to be held in
escrow pending funding, the Cash Payoff Notes, together with instructions to
deliver the Cash Payoff Notes, marked canceled, to the Company upon confirmation
that funds have been delivered in accordance with written payoff instructions of
Ratcliff and Erbe.
8.14 Minimum Net Worth. Net Equity (as defined herein) of the Company
-----------------
at Closing, taking into account the transactions contemplated hereby (the "Pro
Forma Net Equity"), shall be at least One Million Dollars ($1,000,000). For
purposes of this Section, Net Equity shall mean the total assets less total
liabilities of the Company, determined in accordance with generally accepted
accounting principles applied on a basis consistent with the Company's past
practices. At Closing, Erbe and the Company shall deliver to Buyer a balance
sheet (the "Pre-Closing Balance Sheet") as of the last month ending at least
fifteen (15) days prior to the Closing Date, a pro forma balance sheet (the "Pro
Forma Balance Sheet") developed from the Pre-Closing Balance Sheet that gives
effect to the transactions contemplated hereby on a pro forma basis and a
certificate of Erbe and the Company (a) certifying that the representations and
warranties set forth in Section 4.5 hereof regarding the Financial Statements
are applicable to the Pre-Closing Balance Sheet, (b) setting forth any and all
material changes to the Net Equity of the Company occurring since the date of
the Pre-Closing Balance Sheet, and (c) certifying that the Pro Forma Net Equity
of the Company as of the Closing Date is at least One Million Dollars
($1,000,000).
8.15 Nine Month Audit. A nationally-recognized firm of independent
----------------
public accountants satisfactory to Buyer shall have performed an audit of a
balance sheet of the Company as of September 30, 1996 and of related financial
statements for the nine month period ending as of said date (the "Nine Month
Statements"), which statements shall be delivered to Buyer on or before November
15, 1996 and which statements (a) shall include an unqualified opinion of said
accounting firm, (b) shall confirm that there has been no material adverse
change to the business or operations of the Company since the Balance Sheet
Date, (c) shall not reveal that any representation or warranty of the Company or
Erbe contained herein is false, and (d) shall not result in any material
adjustments being made to any prior Financial Statements. Upon delivery of the
Nine Month Statements to Buyer, those statements shall be deemed to be Financial
Statements for purposes of this Agreement.
IX. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-----------------------------------------------------
INDEMNIFICATION
---------------
9.1 Events of Default. A breach of any representation or warranty by
-----------------
the Company, Erbe or the Buyer, or a breach as a result of the failure of the
Company, Erbe or the Buyer to
27
<PAGE>
perform any of their covenants and obligations under this Agreement, shall be
considered a default hereunder giving rise to the indemnification set forth in
Section 9.3 and Section 9.4 hereof.
9.2 Survival of Representations, Etc. All representations, warranties
--------------------------------
and agreements made by the Company, Erbe and the Buyer in this Agreement or in
any exhibit, certificate, document or instrument delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
and the remedies of the Buyer and Erbe with respect thereto, shall survive the
Closing hereunder for the following periods:
(a) With respect to the representations and warranties of the
Company and Erbe as contained in this Agreement and all related documents, any
claim arising thereunder must be brought within a period of three (3) years
following the Closing Date.
(b) With respect to the representations and warranties of the
Company and Erbe as to federal, state and other taxes and the Environmental Laws
any claim arising thereunder must be brought within thirty (30) days after the
expiration of the period of the applicable statutes of limitation, including any
extensions thereof.
(c) With respect to the representations, warranties and
agreements of the Buyer and COMFORCE as contained herein and all related
documents, any claim arising thereunder must be brought by Erbe within a period
of three (3) years following the Closing Date, except that the representations,
warranties, and agreements of Buyer and COMFORCE contained in the Contingent
Certificate shall continue for a period of three (3) years after the issuance of
shares of COMFORCE Stock pursuant to the Contingent Certificate.
9.3 Indemnification to the Buyer. Erbe agrees to indemnify and hold
----------------------------
the Buyer harmless against and in respect of:
(a) two-thirds (2/3) of all obligations and liabilities of the
Company, whether accrued, absolute, fixed, contingent or otherwise, not set
forth in the Balance Sheet or disclosed in the Disclosure Schedule of this
Agreement of which they are aware or should reasonably be aware;
(b) two-thirds (2/3) of any loss, liability or damage suffered
or incurred by the Buyer because of a breach of any obligation of the Company or
Erbe incurred under this Agreement, or because any representation or warranty by
the Company or Erbe contained herein, in any document furnished or required to
be furnished pursuant to this Agreement by the Company or Erbe or any of their
representatives to the Buyer or any of its representatives, or any documents
furnished to the Buyer in connection with the closing hereunder, shall be false
as of the Closing Date; provided, however, that Erbe shall be liable for all of
any such loss, liability or damage suffered as a result of a breach of the
representations and warranties contained in
28
<PAGE>
Section 4.2(c) or Article IV.A., or to the extent they relate to the shares of
Company Common Stock of Erbe, in Section 4.9(a); and
(c) two-thirds (2/3) of all reasonable costs and expenses
(including accounting and attorneys' fees) incurred by the Buyer in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against it in this Section 9.3.
9.4 Indemnification to Erbe. The Buyer and COMFORCE, jointly and
-----------------------
severally, agree to indemnify and hold Erbe harmless against and in respect of:
(a) any loss, liability or damage suffered or incurred by Erbe
because of a breach of any obligation of the Buyer or COMFORCE incurred under
this Agreement, or because any representation or warranty by the Buyer or
COMFORCE contained herein, in any document furnished or required to be furnished
pursuant to this Agreement by the Buyer or COMFORCE or any of their
representatives to Erbe or any of their representatives, or any documents
furnished to the Buyer in connection with the closing hereunder, shall be false
as of the Closing Date; and
(b) all reasonable costs and expenses (including accounting
and attorneys' fees) incurred by Erbe in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against it in this Section 9.4.
9.5 Representation, Cooperation and Settlement.
------------------------------------------
(a) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give prompt written notice to the party from
which the indemnification is sought (the "Indemnifying Party") of any claim
against the Indemnified Party which might give rise to a claim by the
Indemnified Party against the Indemnifying Party based on the indemnity
agreement contained in Section 9.3 or Section 9.4 hereof, stating the nature and
basis of the first-mentioned claim and the amount thereof. No failure to give
such notice shall excuse any Indemnifying Party from any obligation hereunder
except to the extent the Indemnifying Party is prejudiced by such failure.
(b) The Indemnified Party shall have full responsibility and
authority with respect to the disposition of any action, suit or proceeding
brought against it. In the event any action, suit or proceeding is brought
against the Indemnified Party with respect to which the Indemnifying Party may
have liability under the indemnity agreements contained in Section 9.3 or 9.4
hereof, however, the Indemnifying Party shall have the right, without prejudice
to the Indemnified Party's rights under this Agreement, at the Indemnifying
Party's sole expense, to be represented by counsel of its own choosing and with
whom counsel for the Indemnified Party shall confer in connection with the
defense of any such action, suit, or proceeding. The Indemnified Party shall
make available to the Indemnifying Party and its counsel and accountants, all
books
29
<PAGE>
and records of the Indemnified Party relating to such action, suit or
proceeding and the parties agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such action, suit or proceeding.
9.6 Limits on Indemnification. Notwithstanding anything to the contrary
-------------------------
contained in this Agreement (a) Erbe shall not be liable for any claim for
indemnification or contribution pursuant to Section 9.3 unless and until the
aggregate amount of indemnifiable losses payable by Erbe in the aggregate equals
or exceeds $100,000, in which event Erbe shall be liable for the excess of the
total amount payable under Section 9.3 over $100,000 and (b) in no event shall
Erbe be liable for aggregate losses under Section 9.3, in excess of the
aggregate amount of consideration received by Erbe hereunder and under the
Contingent Certificate and as a result of any distributions made pursuant to
Section 2.5 hereof.
X. REGISTRATION RIGHTS
-------------------
(a) COMFORCE promptly, but in any event within thirty (30)
days after each issuance of COMFORCE Stock under the Contingent Certificate,
will prepare and file with the SEC a Registration Statement on Form S-3 or on
such other form as may be required by the SEC (the "Form S-3") for the purpose
of registering under the Securities Act such number of the shares of COMFORCE
Stock received by Erbe under the Contingent Certificate together with any
additional shares of COMFORCE Stock issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of, such shares of
COMFORCE Stock (together, the "Registrable Shares"), as he indicates that he may
wish to sell from time to time in non- underwritten offerings within two years
after the purchase of the shares of COMFORCE Stock as a result of the exercise.
At the option of COMFORCE, the Form S-3 may include shares of COMFORCE Stock
held by other parties. Erbe will supply to COMFORCE such information concerning
himself and his intentions with respect to the sale of the COMFORCE Stock as is
necessary for inclusion in the Form S-3. COMFORCE will use its best efforts to
cause the Form S-3 to become effective as soon as possible after it is filed.
(b) COMFORCE will use its best efforts to keep the Form S-3
continuously in effect for a period of up to two years from the date on which it
become effective by means of filing Forms 10-K, 10-Q and 8-K and annual reports
under the Securities Exchange Act of 1934 (the "1934 Act") and/or by amendment
of the Prospectus included in the Form S-3 (the "Prospectus"), or if earlier,
until Erbe has completed the sale of such of the Registrable Shares as Erbe
desires to sell. COMFORCE will advise Erbe if, at any time during such two-year
period, sales by means of the Prospectus must be suspended pending the filing of
additional documents under the 1934 Act and/or amendment of the Prospectus. Erbe
understands that there may be periods of time within such two-year period when
it is in the best interests of Company and its stockholders to defer disclosure
of pending corporate transactions until they have reached a more advanced stage
and that during such periods sales of the Registrable Shares by means of the
Prospectus will have to be suspended.
30
<PAGE>
(c) If the proposed manner of sale of the shares of COMFORCE
Stock shall require that COMFORCE register or qualify such shares for sale under
state securities or blue sky laws, COMFORCE will use its best efforts to effect
such registration or qualification; provided, however, that COMFORCE shall not
be required to qualify generally to do business, subject itself to general
taxation or general consent to service of process in any jurisdiction where it
would not otherwise be required to do so but for this subsection (c).
(d) COMFORCE will furnish to Erbe (a) two complete copies of
the Form S-3, with all exhibits, (b) two copies of all documents incorporated by
reference therein, and reasonable quantities of the Prospectus as amended from
time to time.
(e) The Company will cause to be furnished to Erbe, upon his
request made not more often than once per quarter, at the time of a disposition
of the Registrable Shares, an opinion of counsel for the Company (which opinion
shall be in form reasonably satisfactory to the Erbe and its counsel) to the
effect that a registration statement covering the offering of such Registrable
Shares has been filed with the SEC under the Securities Act and has been made
effective by order of the SEC, that a prospectus complying as to form with the
requirements of the Securities Act is available for delivery, that no stop order
has been issued by the SEC suspending the effectiveness of such registration
statement and that, to the best of such counsel's knowledge, no proceedings for
the issuance of such a stop order are threatened or contemplated, and that the
securities included in the offering covered by such registration statement have
been registered or qualified, or exempted from such registration or
qualification, under the securities or blue sky laws of each state in which the
Company has been required to register or qualify such Registrable Shares as
contemplated to this Article X.
(f) The Company will notify Erbe and its counsel promptly
after the Company receives notice that any registration statement, supplement or
amendment has become effective, any registration statement is required to be
amended or supplemented, or any stop order with respect thereto has been issued.
(g) Erbe shall be responsible for notifying brokers through
whom sales of the Registrable Shares are effected by means of the Form S-3 that
such shares have been registered on Form S-3 and for supplying copies of the
Prospectus to such brokers.
(h) All expenses incurred by COMFORCE in complying with
subsections (a) through (d) above including, without limiting the generality of
the foregoing, registration and filing fees, transfer agents' fees and expenses,
fees and expenses of complying with state securities or blue sky laws and
expenses of COMFORCE's attorneys and accountants, and printing expense, shall be
paid by COMFORCE; provided, however, that all brokerage fees and commissions and
underwriting discounts and commissions arising from the sale of the Registrable
Shares by Erbe shall be borne by Erbe.
31
<PAGE>
(i) In connection with the registration of any Registrable
Shares under the Securities Act pursuant to this Agreement, COMFORCE shall
indemnify and hold harmless Erbe, any broker or any other person acting on
behalf of Erbe and each other person, if any, who controls any of the foregoing
persons within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several (or actions in respect thereof), to
which any of the foregoing persons may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement contained in the Form S-3, any preliminary prospectus
or final prospectus contained therein or otherwise filed with the SEC, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made not misleading, or any
violation by COMFORCE of the Securities Act or state securities or blue sky laws
applicable to COMFORCE and relating to action or inaction required of COMFORCE
in connection with such registration or qualification under such state
securities or blue sky laws; and shall reimburse Erbe, such broker or such other
persons acting on behalf of Erbe and each such controlling person for any legal
or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that COMFORCE shall not be liable in any such case to the
extent that such loss, claim, damage, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said Form S-3, preliminary prospectus, final
prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity with
written information furnished to COMFORCE through an instrument duly executed by
Erbe specifically for use in the preparation thereof.
(j) If the indemnification provided for in subsection (i) is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such loss, claim, damage, liability or action in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions which resulted in such loss, claim, damage, liability or
action as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact, or omission or alleged omission of a material
fact, relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
32
<PAGE>
(k) Erbe agrees to execute and deliver from time to time such
customary lock-up letters relating to the COMFORCE Stock as any underwriter
participating in an underwritten offering or proposed underwritten offering of
securities of COMFORCE requires.
XI. MISCELLANEOUS
-------------
11.1 Brokerage. The Company and Erbe represent and warrant to the Buyer
---------
that neither the Company nor Erbe has incurred any obligations or liabilities,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other like payments in connection with this Agreement or the transactions
contemplated hereby. The Buyer and COMFORCE represent and warrant to Erbe that
neither the Buyer nor COMFORCE has incurred any obligations or liabilities,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other like payments in connection with this Agreement or the transactions
contemplated hereby. The Company and Erbe on the one hand and the Buyer and
COMFORCE on the other agree to indemnify and hold the other harmless against and
in respect of any such obligations or liabilities based in any way on
agreements, arrangements or understandings claimed to have been made by it or
them with any third party and not disclosed herein.
11.2 Waivers and Amendment.
---------------------
(a) The Company and Erbe, on the one hand, or the Buyer and
COMFORCE, on the other hand may, by written notice to the other, (i) extend the
time for the performance of any of the obligations or other actions of the
other; (ii) waive any inaccuracies in the representations or warranties of the
other contained in this Agreement; (iii) waive compliance with any of the
covenants of the other contained in this Agreement; and (iv) waive or modify
performance of any of the obligations of the other.
(b) This Agreement may be amended, modified or supplemented
only by a written instrument executed by all the parties hereto. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
11.3 Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, the Buyer and COMFORCE shall pay the fees and
expenses of their counsel, accountants, other experts and all other expenses
incurred by it incident to the negotiation, preparation and execution of this
Agreement, and the Company and Erbe shall pay any and all such fees and expenses
incurred by the Company or Erbe incident to the negotiation, preparation
33
<PAGE>
and execution of this Agreement and the performance by the Company and Erbe of
their obligations hereunder. Notwithstanding the foregoing, Buyer and COMFORCE
agree that unless Buyer and COMFORCE terminate this Agreement because the
Closing does not occur due to a default by the Company or Erbe of their
respective obligations hereunder, Buyer and COMFORCE shall be responsible for
and pay the fees paid or payable to the firm of independent public accountants
in connection with the work done relating to issuance of the Nine Month
Statements.
11.4 Maintenance of Documents. Buyer agrees that it will preserve the
------------------------
books and records of Company and not permit their destruction or place them
outside of Buyer's control for a period of seven (7) years after the date hereof
without first giving Erbe a reasonable opportunity to obtain custody of such
books and records. Buyer shall allow Erbe's representatives access to such books
and records upon reasonable request and during normal business hours for
examination and/or copying for legitimate purposes in connection with
transactions occurring prior to the Closing Date.
11.5 Occurrences of Conditions Precedent. Each of the parties
-----------------------------------
hereto agrees to use its best efforts to cause all conditions precedent to its
obligations under this Agreement to be satisfied.
11.6 Termination by Mutual Consent. This Agreement may be terminated
-----------------------------
at any time prior to the Closing Date by mutual consent of Erbe and Buyer.
11.7 Termination by Erbe. Provided neither Erbe nor the Company is in
-------------------
default of any of their material representations, warranties, agreements or
covenants under this Agreement, Erbe may terminate this Agreement by written
notice to Buyer on the Closing Date if any condition to the performance of Erbe
and the Company hereunder shall not be fulfilled on or before the Closing Date.
11.8 Termination by Buyer. Provided it and COMFORCE are not in default
--------------------
of any of their material representations, warranties, agreements and covenants
under this Agreement, Buyer may terminate this Agreement by written notice to
Erbe and the Company on the Closing Date if any condition to the performance of
Buyer hereunder shall not be fulfilled on or before the Closing Date or prior to
the Closing Date in accordance with the express provisions of Article VIII or if
it has become apparent that any condition set forth in Article VIII cannot be
satisfied on or before the Closing Date despite diligent effort by the Company
and Erbe to satisfy said condition.
11.9 Notices. All notices, requests, demands and other communications
-------
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by fax,
recognized overnight delivery service, or registered or certified mail, return
receipt requested, postage prepaid:
34
<PAGE>
(a) If to the Company or Erbe, to:
Rho Company, Inc.
4002 - 148 Street N.E.
Redmond, WA 98052
FAX No.:
J. Scott Erbe
7701 NE 8th
Medina, WA 98039
FAX No.:
with a copy to:
Miller, Nash, Wiener, Hager & Carlsen
4400 Two Union Square
601 Union Street
Seattle, WA 98101
Attention: James R. Dickens, Esq.
FAX No.: (206) 622-7485
(b) If to the Buyer or COMFORCE, to:
COMFORCE Corporation
or COMFORCE Technical Services, Inc.
2001 Marcus Avenue
Lake Success, NY 11042
FAX No.:
with a copy to:
Doepken Keevican & Weiss
37th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
FAX No.: (412) 355-2609
Attention: David J. Hirsch, Esq.
or to such other address as any party shall have specified by notice in writing
to the other.
35
<PAGE>
11.10 Integration Clause. This Agreement and the Exhibits hereto
------------------
constitute the entire agreement between Buyer, COMFORCE, Erbe and Company with
respect to the subject matter hereof.
11.11 Binding Effect; Benefits. This Agreement shall inure to the
------------------------
benefit of and be binding upon the parties hereto and their successors; nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, or their successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.12 Non-assignability. This Agreement and any rights pursuant hereto
-----------------
shall not be assignable by either party without the prior written consent of the
other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to
another corporation that is directly or indirectly controlled by COMFORCE and
may assign its rights hereunder to secure its obligations to parties providing
loans or other credit facilities to Buyer or its affiliates. The responsibility
of COMFORCE with respect to the issuance of the Contingent Certificate shall not
be delegated without the prior written consent of Erbe.
11.13 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and in accordance with the laws of the
State of Delaware.
11.14 Section and Other Headings. The section and other headings
--------------------------
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
11.15 Counterparts. This agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
36
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed and delivered this Agreement as of the date first
above written.
COMFORCE CORPORATION
By: /s/ Christopher P. Franco
-----------------------------------------------
Name: Christopher P. Franco
--------------------------------------------
Title: Executive Vice President
--------------------------------------------
COMFORCE TECHNICAL SERVICES, INC.
By: /s/ Christopher P. Franco
-----------------------------------------------
Name: Christopher P. Franco
-----------------------------------------------
Title: Executive Vice President
-----------------------------------------------
RHO COMPANY, INC.
By: /s/ J.S. Erbe
-----------------------------------------------
Name: J.S. Erbe
-----------------------------------------------
Title: President
-----------------------------------------------
/s/ J.S. Erbe
-----------------------------------------------
J. Scott Erbe
37
<PAGE>
EXHIBIT 2.2
STOCK SALE AND TERMINATION AGREEMENT
This Stock Sale and Termination Agreement is made and entered
into as of the 28th day of October, 1996, by and between James R. Ratcliff
("Seller") and RHO Company, Inc., a Washington corporation (the "Company").
WHEREAS, Seller is the owner of 16,666.66 shares (the
"Shares") of Common Stock of the Company and has been employed as the Vice
President of the Company; and
WHEREAS, the Company has entered into a Subscription Agreement
(the "CTS Agreement") of even date herewith with COMFORCE Technical Services,
Inc. ("CTS"), a Delaware corporation, whereby CTS is to purchase 101,000 shares
of Common Stock of the Company, and
WHEREAS, it was a condition of the execution and delivery of
the CTS Agreement that Ratcliff execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
Section 1. Purchase and Sale of Shares.
(a) Subject to the terms and conditions set forth herein, the
Seller agrees to and will sell, transfer, assign and deliver to the Company at
the Closing (as hereinafter defined), free and clear of all liens, options,
pledges, encumbrances, security interests or other claims, and the Company
agrees to and will purchase and accept from the Seller, the Shares.
(b) The total consideration payable for the Shares shall be
One Million Seven Hundred Thousand Dollars ($1,700,000) payable as follows:
(i) Five Hundred Sixty-Six Thousand Six Hundred
Sixty-Seven Dollars ($566,667) (the "Initial
Payment") has been paid to Seller by the Company on
the date hereof in immediately available funds. Said
payment to Seller is irrevocable and non-refundable.
(ii) The remainder, consisting of One Million One
Hundred Thirty-Three Thousand Three Hundred Thirty
Three Dollars ($1,133,333) (The
<PAGE>
"Second Payment") shall be due and payable on the
Closing Date in immediately available funds by wire
transfer in accordance with Seller's written
instructions given to the Company at least two (2)
business days prior to the Closing Date.
Section 2. Closing. The Closing shall take place at the
principal offices of the Company at the date and time of the closing (the "CTS
Closing") of the transactions contemplated by the CTS Agreement or if the
Company, at its option, elects to consummate the transactions contemplated
hereby thereafter and prior to a termination as provided in Section 11, at such
other date and time as is designated by the Company by at least five (5) days'
advance written notice to Seller. Such event is referred to as the "Closing" and
such date and time are referred to as the "Closing Date." If the CTS Agreement
is terminated, either party may terminate this Agreement as provided in
Section 11.
Section 3. Termination of Employment at Closing.
(a) Until the Closing Date or termination of this Agreement
pursuant to Section 11 hereof, Seller shall be considered to be on vacation from
his position with the Company. He shall receive pay during such period as if he
were on vacation until he has fully utilized all of his accrued and unpaid
vacation, at which time he will be deemed to be on paid leave from his
employment with the Company. The Company shall not terminate Seller's employment
during such vacation and paid leave.
(b) Subject to receipt by Seller of all of the payments
described in Section 1 hereof and delivery of the promissory note as described
in subsection (c) below, Seller hereby resigns effective on the Closing Date as
an employee and/or consultant of the Company and from any and all positions,
directorships and offices Seller may have with the Company. The Employment
Agreement (the "Employment Agreement") dated as of January 6, 1996 between the
Seller and the Company and any and all other agreements or arrangements whereby
Seller has been employed by or provided services to the Company shall be
terminated as of the Closing Date. In the event that this Agreement is
terminated for any reason, Seller's employment with the Company shall be
unaffected by this Agreement. In addition, in consideration of Seller's
termination of his employment with the Company, as described in this subsection
(b), the Company releases Seller, effective as of said termination, from any and
all of the terms and conditions of the Employment Agreement relating to
non-competition and/or non-interference. Said release shall not affect Seller's
obligations under Section 6 hereof.
(c) In further consideration for the agreements of Seller set
forth in subsections (b) and (d) of this Section, the Company will deliver to
Seller on the Closing Date a Promissory Note (the "Note") in the form attached
as Exhibit A.
(d) Seller on the one hand, and the Company and J. Scott Erbe
("Erbe") on the other hand, hereby release and forever discharge, effective on
the Closing Date, the Company,
2.
<PAGE>
Erbe and the Company's stockholders, directors, officers, employees, agents,
representatives, successors and assigns (the "Related Persons") on the one hand,
and Seller on the other hand, from any and all obligations arising from all
agreements with respect to Seller's employment with the Company or Seller's
provision of services to the Company, whether written or oral, including but not
limited to, the Employment Agreement. Seller on the one hand, and the Company
and Erbe on the other hand, hereby release and forever discharge, effective on
the Closing Date, any claim Seller on the one hand, and the Company and Erbe on
the other hand, may now have, or may hereafter have, in connection with Seller's
employment or the termination of his employment with the Company. Seller on the
one hand, and the Company and Erbe on the other hand, hereby confirm and agree
that it is Seller's intention on the one hand, and the Company's and Erbe's on
the other hand, by this release to release, effective on the Closing Date, the
Company, Erbe and the Related Persons on the one hand, and Seller on the other
hand, from any and all claims, demands, damages, actions, suits of any and every
nature, known or unknown, relating to Seller's employment with or provision of
services to the Company to the date of this release, including, but not limited
to, claims arising under federal or state statutes or common law, for breach of
contract or for incentive compensation, bonuses, vacation or severance pay.
Notwithstanding the foregoing, this release shall not release any party from its
obligations under this Agreement or the Note.
(e) If either party terminates this Agreement pursuant to
Section 11 hereof, all the provisions of this Section shall thereafter be of no
further force or effect.
(f) Until the Closing Date, nothing in this Section shall be
deemed to release or waive, or to constitute an admission with respect to, any
rights of Seller against or with respect to the Company or Erbe on the one hand,
or any rights of the Company and Erbe against or with respect to Seller on the
other hand, or the Employment Agreement or the Stock Redemption Agreement, as
defined below.
Section 4. Escrow of Shares.
(a) On the date hereof, Seller has deposited the stock
certificate evidencing the Shares and a stock power endorsed by Seller in blank
with Lillick & Charles LLP (the "Escrow Agent") to be held in accordance with an
escrow agreement in the form attached hereto as Exhibit B (the "Escrow
---------
Agreement") among the Seller, the Company and the Escrow Agent.
(b) Seller shall retain all voting rights and rights to cash
dividends and distributions with respect to the Shares and all rights and
interests of any kind and nature whatsoever in the Stock Redemption Agreement,
as defined below, and in any other agreement relating to the Shares until the
Closing and until the Note and all payments payable pursuant to Section 1 have
been received by Seller.
3.
<PAGE>
(c) On the Closing Date, upon tender of the Second Payment and
the Note by the Company to the Seller, Seller shall join with the Company in
giving the Escrow Agent written instructions to release the Certificate and
Stock Power to the Company.
Section 5. Stock Redemption Agreement; Consent to CTS
Agreement. The terms of the Stock Redemption and Purchase Agreement (the "Stock
Redemption Agreement") dated as of February 6, 1991 among Seller, the Company
and Erbe are hereby waived to the extent they in any way conflict with or
prohibit any action taken or transaction consummated or to be consummated
hereunder. Subject to the receipt by Seller of all payments described in Section
1 hereof and delivery of the Note, Seller shall have no further obligation or
right under the Stock Redemption Agreement. Seller consents to the execution and
delivery by Erbe and the Company of the CTS Agreement.
Section 6. Covenants of Seller.
(a) The Seller will not for a period of three (3) years from
the date of this Agreement either directly or indirectly on his own account, or
as agent, stockholder, owner, employer, employee, or otherwise, solicit any
business from any party: (i) that is a client of the Company on the date hereof
or on the Closing Date, or (ii) that is a potential client of the Company that
Seller may have contacted or been assigned to at any time during his period of
employment with the Company other than prior to the Closing Date on behalf of
the Company.
(b) The Seller agrees that he shall not for a period of three
(3) years after the date hereof, either directly or indirectly for his own
individual purposes or those of another, contact or communicate with any
employee of the Company without regard to his/her location, for the purpose of
attempting to or actually soliciting or hiring that employee on Seller's own
account or on the account of another.
Section 7. Seller's Representation and Warranty. The Seller
represents and warrants to the Company that, except for certain restrictions on
the sale of the Shares under that certain Stock Redemption Agreement, which,
subject to the conditions described in Section 5 hereof, have been effectively
waived and released, he is the owner, free and clear of any liens, options,
pledges, encumbrances, security interests or other claims (collectively,
"Liens"), of all of the Shares and that, upon release of the Certificate and
Stock Power to the Company, the Company shall receive good title to the Shares,
free of any and all Liens.
Section 8. Company's Representation and Warranty. All
necessary action has been taken to authorize execution and delivery hereof by
the Company and its consummation of the transactions contemplated hereby and the
execution, delivery and performance of this Agreement are not in violation of
the Company's governing documents or any other document to which it is a party
or bound, nor do they require the consent or approval of any party that has not
been obtained.
4.
<PAGE>
Section 9. Conditions to Seller's Obligation to Close. The
obligation of the Seller to sell the Shares shall be subject to the fulfillment
at or prior to the Closing Date of each of the following conditions:
(a) The representations and warranties of the Company
contained in this Agreement shall have been true and correct at and as of the
date hereof, and they shall be true and correct at and as of the Closing Date
with the same force and effect as though made at and as of that time.
(b) There shall not have been issued an effective order of any
court or other governmental body which shall restrain, prohibit or invalidate
the sale of the Shares to the Company.
(c) The Company shall have tendered all payments to Seller as
described in Section 1 hereof and shall have delivered the Note to Seller.
(d) Any personal guaranties of the Seller relating to
indebtedness of the Company shall have been released by the beneficiaries
thereof, in such documented form as is reasonably acceptable to Seller, or the
obligations of the Company supported by the guaranties shall have been paid in
full.
Section 10. Conditions to Company's Obligation to Close. The
obligation of the Company to purchase the Shares shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
(a) The representations and warranties of the Seller contained
in this Agreement shall be true and correct at and as of the Closing Date with
the same force and effect as though made at and as of that time.
(b) There shall not have been issued an effective order of any
court or other governmental body which shall restrain, prohibit or invalidate
the sale of the Shares to the Company.
(c) The CTS Closing shall have occurred.
Section 11. Termination. In the event the Closing Date does
not occur on the earlier of (a) the CTS Closing Date or, if the CTS Agreement is
terminated, on the date sixty (60) days after the date of such termination or
(b) April 30, 1997, Seller or the Company may, by written notice to the other
party hereto, terminate this Agreement and, at such time the Company shall join
with Seller in giving instructions to the Escrow Agent to release all of the
Shares to Seller. In such case Seller shall be entitled to retain the Initial
Payment and this Agreement shall be terminated and be null and void for all
purposes and the Company and Seller shall have no further obligations hereunder,
except for any monetary damage claim either one of them may have
5.
<PAGE>
against the other as a result of the breach of this Agreement or a material
misrepresentation in this Agreement, it being understood that the irrevocable
and non-refundable nature of the Initial Payment shall in no way limit any such
claim.
Section 12. Release of the Company and CTS. CTS and the
Company and their respective affiliates hereby release and forever discharge,
effective on the Closing Date, Seller and his heirs, successors and assigns from
any and all obligations or claims any of them may now have, or may hereafter
have, in connection with the CTS Agreement and the transactions contemplated
thereby.
Section 13. Distribution of Profits.
(a) On or before the Closing Date, the Company shall
distribute and pay in readily available funds to the Seller a distribution of
his share of the reasonably estimated profits of the Company anticipated to be
reported or actually reported to Seller on his IRS Form K-1 from the Company for
1996. In the event there is a dispute between Seller and the Company regarding
the amount payable to Seller under this Section that cannot be resolved on or
before the date the transactions contemplated by the CTS Agreement are otherwise
ready to close, said dispute shall not delay the Closing, it being understood
that said dispute shall be resolved after the Closing as described herein and
that, provided that the CTS Closing has occurred, COMFORCE Corporation has
guaranteed payment of any and all amounts payable to Seller under this Section.
(b) If there is a dispute as to the distribution required to
be made hereunder to Seller, the Company shall cause Coopers & Lybrand,
COMFORCE's independent accountants, Arthur Anderson & Co, which has been the
Company's independent accountants, or another "Big 6" firm of independent
accountants to determine the amount payable to Seller hereunder. Said
determination, which shall be made in writing and delivered to Seller promptly
after it is received by the Company together with any amount payable under this
Section, shall be conclusive and binding on the parties.
Section 14. Notices. Notices, requests, instructions, demands
and other communications hereunder shall be in writing and shall be deemed to
have been given when delivered personally by first class registered or certified
mail, recognized overnight delivery service, charges prepaid, or confirmed fax,
as follows:
(a) If to Seller, to:
James R. Ratcliff
5469 Suncrest Drive
Anaheim Hills, CA 92807
Fax No.:714/998-4474
6.
<PAGE>
and to:
Ronald W. Bachli
Lillick & Charles LLP
Two Embarcadero Center
San Francisco, CA 94111
Fax No.: (415) 421-4799
(b) If to the Company, to:
RHO Company, Inc.
4002-148th Street N.E.
Redmond, WA 98052
ATTENTION: ______________________
Fax No. ___________________________
with copies to:
Miller, Nash, Wiener, Hager & Carlsen
4400 Two Union Square
601 Union Street
Seattle, WA 98101
Attention: James R. Dickens, Esq.
FAX No.: (206) 622-7485
and to:
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, NY 11042
FAX No.:
and to:
David J. Hirsch
Doepken Keevican & Weiss
Professional Corporation
37th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
Fax No.: (412) 355-2609
7.
<PAGE>
or to such other address as any party shall have specified by
written notice to the other parties hereto.
Section 15. Amendment and Modification. The parties hereto may
amend, modify and supplement this Agreement in such manner as may be agreed upon
by them and COMFORCE in writing.
Section 16. Binding Effect No Assignment. The Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, assignees, heirs and legal representatives. Seller shall
not be entitled to assign his rights hereunder except with the Company's prior
written consent.
Section 17. Entire Agreement. This instrument contains the
entire agreement of the parties hereto with respect to the purchase of the
Shares and the other transactions contemplated herein, and supersedes all prior
understandings and agreements of the parties with respect to the subject matter
hereof.
Section 18. Headings. The descriptive headings in this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 19. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original.
Section 20. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Washington
applicable to contracts made and to be performed therein, without regard to the
conflicts of law principles thereof.
Section 21. Specific Performance. The parties hereto
acknowledge and agree that the failure of either the Company or the Seller to
fulfill their respective covenants and agreements hereunder will cause
irreparable injury to the other party for which damages, even if available, will
not be an adequate remedy. Accordingly, each party hereto does hereby consent to
the issuance of injunctive relief by any court of competent jurisdiction to
compel performance of its obligations and to the granting by any such court of
the remedy of specific performance by it of its obligations hereunder.
Section 22. Attorney's Fees. In any action at law or suit in
equity in relation to this Agreement, the prevailing party in such action or
suit shall be entitled to receive a reasonable sum for attorney's fees and all
other reasonable costs and expenses incurred in such action or suit.
8.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
/s/ James R. Ratcliff
---------------------------------
James R. Ratcliff
RHO COMPANY, INC.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
/s/ James R. Ratcliff
----------------------------
James R. Ratcliff
RHO COMPANY, INC.
By: /s/ J.S. Erbe
------------------------------
Name: J.S. Erbe
----------------------------
Title: President
---------------------------
J. Scott Erbe hereby executes this document solely to consent
and to agree to Section 5 hereof and the release contained in
Section 3(d) hereof.
/s/ J.S. Erbe
---------------------------------
J. Scott Erbe
COMFORCE Corporation, a Delaware corporation, hereby executes
this Agreement solely to agree to the terms of Section 13(b),
which terms shall be of no force or effect with respect to
COMFORCE Corporation unless and until the CTS Closing occurs.
COMFORCE CORPORATION
By: /s/ Christopher P. Franco
------------------------------
Name: Christopher P. Franco
----------------------------
Title: Executive Vice President
---------------------------
9.
<PAGE>
EXHIBIT 2.3
November 4, 1996
Rho Company, Inc.
4002-148th Street N.E.
Redmond, WA 98052
RE: Stock Sale and Termination Agreement between Rho Company,
Inc. ("RHO") and James R. Ratcliff ("Ratcliff")
-----------------------------------------------
The referenced Stock Sale and Termination Agreement (the "Stock Sale
Agreement") contemplates that the certificate (the "Certificate") evidencing
shares of common stock of RHO that are held in the name of Ratcliff will be
delivered to Lillick and Charles LLP to be held by it as escrow agent under the
Escrow Agreement (as defined in the Stock Sale Agreement). Since the execution
of the Stock Sale Agreement, it has become apparent that such an escrow is not
possible because the shares are held by Joseph D. Holmes, Jr. under a pledge
arrangement for the benefit of Barbara L. Ratcliff and the Estate of Raymond
Ratcliff. Accordingly, the parties have agreed that there will be no escrow of
the shares and any reference in the Stock Sale Agreement to the Escrow Agreement
shall be of no force and effect. The parties have further agreed that any
provision in the Stock Sale Agreement relating to the giving of instructions to
the Escrow Agent shall be deemed to be an agreement to provide appropriate
written instructions to Mr. Holmes as the holder of the Certificate under the
pledge arrangement. RHO confirms to Ratcliff that it will not consummate the
transactions contemplated by the Stock Sale Agreement unless before or
concurrently therewith it pays the obligations secured by the pledge
arrangements described above.
Please indicate your agreement to the terms of this letter in the space
provided below.
Very truly yours,
/s/ J. Scott Erbe
-----------------
J. Scott Erbe
President
Agreed to and accepted as to the
day and year of this letter
/s/ James R. Ratcliff
- ----------------------------------
James R. Ratcliff
<PAGE>
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, made and entered into on October 25,
1996 and effective as of the 1st day of November, 1996, by and between
CONTINENTAL FIELD SERVICE CORPORATION, a Delaware corporation (the "Seller"),
and MICHAEL HILL ("M. Hill"), an individual residing at 389 Hardscrabble Road,
Briarcliff, NY 10510 and ROY HILL ("R. Hill"), an individual residing at 5
Whitewood Road, White Plains, NY 10603 (M. Hill and R. Hill being collectively
sometimes referred to as the "Shareholders");
A
N
D
COMFORCE GLOBAL, INC., a Delaware corporation having its principal office at
2001 Marcus Avenue, Lake Success, NY 11042 (the "Buyer").
WHEREAS, the Seller desires to sell, and the Buyer desires to acquire,
substantially all of the assets, properties and business of the Seller, all in
consideration for cash and the assumption of certain liabilities of Seller as
set forth herein; and
WHEREAS, M. Hill and R. Hill own all of the issued and outstanding
shares of Common Stock of Seller;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:
I. SALE OF ASSETS AND RELATED TRANSACTIONS
---------------------------------------
1.1 Sale of Assets. On the terms and subject to the conditions of
--------------
this Agreement, on the Closing Date (as that term is defined in Section 3.1
hereof), Seller shall sell, convey, assign, transfer and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, all of the assets, properties,
rights and business of every kind and description, wherever located
(collectively, the "Assets"), other than the Excluded Assets described in
Section 1.4 hereof, belonging to the Seller including, without limitation, the
good will and name of the Seller and all property, tangible and intangible,
real, personal or mixed, prepayments, deposits and advances under agreements
assumed by Buyer pursuant to Section 2.1 hereof, supplies, leaseholds, leasehold
improvements, machinery, vehicles, furniture, office furnishings and fixtures,
rights under contracts to the extent not fully performed as of the Closing Date,
purchase orders, trade names, trademarks, trademark
<PAGE>
registrations, trademark applications, copyrights, copyright registrations,
copyright applications, patents, patent applications, inventions, trade secrets,
technical know-how, licenses, processes, formula, royalties, computer programs,
tapes, disks, computer hardware and software, technical information, blueprints,
drawings and other technical papers, procedures and processes and the like,
customer lists and files, and all books and records pertaining to any of the
aforementioned assets. Simultaneously with such delivery, Seller shall take all
additional steps as may be reasonably necessary to put Buyer in possession and
operating control of the Assets.
1.2 Instruments of Conveyance and Transfer. On the Closing Date, the
--------------------------------------
Seller shall deliver to Buyer such bills of sale, endorsements, assignments, and
other good and sufficient instruments of conveyance and assignment, satisfactory
in form and substance to Buyer and its counsel, as shall be effective to vest in
the Buyer, upon the Closing Date, full and complete right, title and interest in
and to the Assets, free and clear of all liens, taxes, charges and encumbrances.
1.3 Assignment of Contracts and Rights. Anything in this Agreement
----------------------------------
to the contrary notwithstanding, this Agreement shall not constitute an
Agreement to assign any claim, contract, license, lease, commitment, sale or
purchase order or any claim or right or any benefit arising thereunder or
resulting therefrom if an attempted transfer or assignment thereof, without the
consent of a third party thereto, would constitute a breach thereof or in any
way affect the rights of Buyer or of Seller thereunder. If such consent is not
obtained, or if an attempted transfer, sublease or assignment thereof would be
ineffective or would affect the rights of Seller thereunder so that Buyer would
not in fact receive all such rights, Seller will cooperate with Buyer to the
extent reasonably practicable to provide for Buyer the benefits under any such
claims, contracts, licenses, leases, commitments, sales or purchase orders or
any claim or right or any benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of Seller
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise, with costs of litigation, if any, borne solely by
Buyer; Buyer shall cooperate fully with Seller to obtain such releases of Seller
as Seller reasonably requests (it being understood that a failure to obtain any
such release shall not be required hereby and shall not excuse Seller from its
obligations hereunder); and any transfer, sublease or assignment to Buyer by
Seller of any property or property rights or any contract or Agreement which
shall require the consent or approval of any third party, shall be made subject
to such consent or approval being obtained.
1.4 Excluded Assets.
---------------
(a) The Assets shall not include cash, cash equivalents,
receivables, rights under contracts to the payment of money for services
rendered prior to the Closing Date, or other current assets of Seller in
existence on the Closing Date and shall not include the other assets of Seller
described in Exhibit 1.4 hereto (collectively, the "Excluded Assets").
-----------
2.
<PAGE>
(b) Seller and Buyer agree that to the extent projects or
contracts are performed before and after the Closing Date, but are invoiced by
Buyer after the Closing Date, Buyer will pay over to Seller on collection of
said invoices an amount equal to the percentage of the invoices as shall equal
the percentage of completion of such projects and contracts (as determined in
accordance with past practices of the Company) by Seller as at the Closing Date.
In the case of certain projects or contracts with respect to which, because of
special circumstances, such formula is unfair to Seller or Buyer, such
allocation shall be as set forth on Exhibit 1.4(b).
--------------
1.5 Consents. Seller shall use its best reasonable efforts to
--------
obtain all material consents to assignments of contracts in a timely manner.
II. CONSIDERATION FOR TRANSFER OF ASSETS.
------------------------------------
2.1 Consideration to be Paid.
------------------------
(a) In full consideration for the Assets, and subject to the
terms and conditions of this Agreement, the Buyer shall, on the Closing Date:
(i) pay to or upon the order of the Seller the amount
of One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000) in
immediately available funds (U.S. Dollars) by wire transfer to such account as
the Seller may designate;
(ii) pay the amount of Five Hundred Seventy-Five
Thousand Dollars ($575,000) in immediately available funds (U.S. Dollars) by
wire transfer to such account as the Escrow Agent may designate to be held in
accordance with an Escrow Agreement (the "Escrow Agreement") in the form
attached as Exhibit 2.1 (a);
---------------
(iii) cause to be delivered to Escrow Agent an aggregate
number of shares of COMFORCE Stock registered in the name of Seller that is the
highest whole number of shares of COMFORCE Stock that has an aggregate value not
greater than Five Hundred Seventy-Five Thousand Dollars ($575,000), said value
to be determined based on the average closing price of said stock as quoted on
the American Stock Exchange on each of the ten (10) business days ending on the
third (3rd) business day occurring immediately prior to the Closing Date, all of
which shall be Restricted Shares, as that term is defined in the Stockholders
Agreement attached hereto as Exhibit 7.8;
-----------
(iv) deliver to Seller a duly executed Contingent
Payment Certificate (the "Contingent Payment Certificate") in the form attached
as Exhibit 2.1 (b); and
---------------
(v) deliver an undertaking, satisfactory in form
and substance to the Seller and its counsel (the "Assumption Agreement"),
whereby the Buyer (A) assumes any
3.
<PAGE>
contracts disclosed in Schedule 4.10 hereto or are entered into subsequent to
the date hereof in the ordinary course of business agreements between Seller and
customers of or vendors to the Seller for services that have not been fully
performed as of the Closing Date, to the extent, and only to the extent, that
(1) the services under the assumed contracts and agreements are to be performed
after the Closing Date and (2) neither the Seller nor the other parties thereto
are in default thereunder as of the Closing Date.
2.2 Allocation of Consideration. The consideration payable
---------------------------
hereunder shall be allocated among the Assets as described in Exhibit 2.2
-----------
hereof.
III. CLOSING DATE
------------
3.1 Closing Date. The closing with respect to the transactions
------------
provided for in this Agreement (the "Closing") shall take place at 2001 Marcus
Avenue, Lake Success, New York at 10 o'clock a.m. local time as of November 1,
1996, or at such other place, on such other date or at such other time as the
parties hereto may mutually agree (the "Closing Date"). Notwithstanding the
foregoing, Seller shall receive the economic benefits and be responsible for the
liabilities and obligations of Seller's business until November 3, 1996.
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND
------------------------------------------------
SHAREHOLDERS.
------------
The Seller and Shareholders hereby jointly and severally represent and
warrant to the Buyer as follows:
4.1 Organization; Power; Good Standing. The Seller is a corporation
----------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Seller has all requisite corporate power and authority to
own, operate and lease its properties, to carry on its business as now being
conducted and to enter into this Agreement and perform its obligations
hereunder. The copies of the Articles of Incorporation and Bylaws of the Seller,
as amended as of the date hereof, which have been delivered by the Seller to the
Buyer, are complete and correct. The Seller is duly qualified to do business as
a foreign corporation and is in good standing in each of the jurisdictions
listed in Section 4.1 of the Disclosure Schedule (the "Disclosure Schedule")
--------------------------------------
that has been executed and delivered by the parties concurrently with the
execution and delivery of this Agreement and the Seller has not failed to
qualify in any other jurisdiction in which property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary except where such failure would materially and adversely affect its
business and operations. Seller is currently performing services in the
jurisdictions identified as jurisdictions in which it is performing services in
Section 4.1 of the Disclosure Schedule.
- --------------------------------------
4.
<PAGE>
4.2 Subsidiaries; Names; Capital Stock; Fictitious Names.
----------------------------------------------------
(a) Except as disclosed in Section 4.2(a) of the Disclosure
--------------------------------
Schedule, Seller has no subsidiaries.
- --------
(b) Neither the Seller nor any of its subsidiaries has used any
name for itself or its operations since January 1, 1991 other than Continental
Field Service Corporation and the other names set forth in Section 4.2(b) of the
---------------------
Disclosure Schedule.
- -------------------
4.3 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance by the Seller of this Agreement and the other agreements
contemplated hereby to which the Seller is a party have been duly and
effectively authorized by all necessary corporate action by the Seller. This
Agreement and the other agreements contemplated hereby to which they are parties
have been duly executed by the Seller and the Shareholders and are valid,
legally binding and enforceable obligations of the Seller and the Shareholders.
4.4 Effect of Agreement. Except as set forth in Section 4.4 of the
------------------- ------------------
Disclosure Schedule, the execution, delivery and performance of this Agreement
- -------------------
by the Seller and the Shareholders and the consummation of the transactions
contemplated hereby will not (i) require the consent, approval or authorization
of any person, corporation, partnership, joint venture or other business
association or public authority; (ii) violate, with or without the giving of
notice or the passage of time, or both, any provisions of law or statute or any
rule, regulation, order, award, judgment or decree of any court or governmental
authority applicable to the Seller or the Shareholders; or (iii) with or without
the giving of notice, the passage of time, or both conflict with or result in a
breach or termination of any provision of, accelerate the performance or
maturity of, constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any of the assets of the Seller pursuant to any
corporate charter, bylaw, indenture, note, bond, mortgage, deed of trust, lease,
contract, permit, agreement or other instrument, or any order judgment, award,
decree, statute, ordinance, regulation or any other restriction of any kind or
character, to which the Seller or any Shareholder is a party, or by which the
Seller or any Shareholder or any of their respective assets may be bound.
4.5 Financial Statements. The balance sheet of the Seller, as of
--------------------
December 31, 1993, 1994 and 1995, and related statements of income for each of
the three years then ended, compiled by the independent certified public
accountants for Seller, and the unaudited balance sheet of the Seller (the
"Balance Sheet"), as of September 30, 1996 (the "Balance Sheet Date"), and
related statement of income, all as set forth in Section 4.5 of the Disclosure
-----------------------------
Schedule, are in accordance with the books and records of the Seller, are
- --------
complete and correct in all material respects, fairly present in all material
respects, the financial position and results of operations of the Seller as of
the dates and for the periods indicated and have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
prior years. The compiled balance sheets for the years ended 1993, 1994 and 1995
and the statements of income and retained
5.
<PAGE>
earnings for the same periods and the unaudited balance sheet and statement of
income and retained earnings for the nine (9) months ended on the Balance Sheet
Date, described above, are collectively referred to herein as the "Financial
Statements."
4.6 Undisclosed Liabilities. Except as and to the extent disclosed
-----------------------
therein, the Seller had, at the date of the Financial Statements, no material
liabilities or obligations of any kind, whether accrued, absolute, contingent or
otherwise, whether or not such liabilities or obligations would have been
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles. Neither the Seller nor the
Shareholders know or have any reasonable grounds to know of any basis, as of the
date of the Financial Statements, for assertion against the Seller of any
material claim or liability of any nature in any amount not fully disclosed in
the Financial Statements.
4.7 Absence of Certain Changes or Events. Since the Balance Sheet
------------------------------------
Date, in conducting its business and affairs, including but not limited to use
and operation of the Seller's assets, the Seller has not:
(a) incurred any obligation or liability (contingent or
otherwise) except (i) normal trade or business obligations incurred in the
ordinary course of business, the performance of which will not, individually or
in the aggregate, have a material adverse effect on the Seller's financial
condition or results of operations and (ii) obligations under contracts,
agreements, leases and easements described in Section 4.7(a) of the Disclosure
--------------------------------
Schedule, the performance of which will not, individually or in the aggregate,
- --------
have a material adverse effect on the Seller's financial condition or results of
operations;
(b) mortgaged, pledged or subjected to any lien, charge,
security interest or to any other encumbrance any of the assets of the Seller
(whether tangible or intangible);
(c) made any material additions to, sold, assigned,
transferred, conveyed, leased or otherwise disposed of, or agreed to sell,
assign, transfer, convey, lease or otherwise dispose of any of its assets or
properties, except for fair consideration in the ordinary course of business;
(d) canceled or compromised any debt or claim, except for
adjustments made in the ordinary course of business which, in the aggregate, are
not material;
(e) waived or released any rights, whether or not in the
ordinary course of business;
(f) transferred or granted any rights under any concessions,
leases, licenses, agreements, patents, inventions, trademarks, trade names,
copyrights, or with respect to any know-how;
6.
<PAGE>
(g) made or granted any general wage or salary increase or
entered into any written employment contract with any officer or employee
involving an annual basic rate of compensation in excess of $80,000 or a period
of employment of more than thirty days;
(h) entered into any transaction, contract or commitment
performed its obligations under any contract or commitment, modified or amended
any contract or commitment other than in the ordinary course of business;
(i) made any capital expenditure or entered into any commitment
therefor which, individually, exceeds $50,000;
(j) suffered any material casualty loss or damage, whether or
not such loss or damage shall have been covered by insurance;
(k) suffered any material adverse change in its operations,
earnings, assets, liabilities, properties, business or prospects or in its
condition, financial or otherwise;
(l) lost any supplier or suppliers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Seller;
(m) lost any customer or customers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Seller; or
(n) introduced any material change with respect to the
operation of its business, including its method of accounting, whether by act or
by lapse of time or attention.
4.8 Tax Matters. The Seller has duly filed with the appropriate
-----------
United States, state and local governmental agencies, and with the appropriate
foreign countries and political subdivisions thereof, all tax returns and
reports required to be filed; such returns and reports are accurate and
complete; and the Seller has paid in full or made adequate provisions for all
taxes, interest, penalties, assessments or deficiencies shown to be due on such
tax returns and reports or claimed to be due by any taxing authority or
otherwise due and owing. The Seller has made all withholdings of tax required to
be made under all applicable United States, state and local tax regulations and
such withholdings have either been paid to the appropriate governmental agencies
or set aside in accounts for such purpose or accrued, reserved against and
entered upon the books of the Seller. The provisions for income taxes payable
reflected in the Financial Statements are adequate. The United States income tax
liabilities of the Seller have been examined and reported on by the Internal
Revenue Service (or closed by applicable statutes of limitations) and finally
determined and fully paid for all fiscal years prior to and including the fiscal
year ended December 31, 199[2]. Except as described in Section 4.8 of the
------------------
Disclosure Schedule, the Seller has not executed or filed with the Internal
- -------------------
Revenue Service or any other taxing authority, domestic or foreign, any
agreement or other document extending, or having the effect of extending, the
7.
<PAGE>
period for assessment or collection of any taxes. Except as described in Section
-------
4.8 of the Disclosure Schedule, the Seller is not a party to any pending action
- ------------------------------
or proceeding, nor is any action or proceeding threatened, by any governmental
authority for assessment or collection of taxes and no claim for assessment or
collection of taxes has been asserted against the Seller.
4.9 Title to Properties; Absence of Liens and Encumbrances.
------------------------------------------------------
(a) The Seller owns no real property.
(b) Schedule 4.9 of the Disclosure Schedule is a correct and
---------------------------------------
complete listing of all personal property owned of record or beneficially by the
Seller included in the Assets requiring specific documents of transfer other
than patent assignments, trademark assignments and bills of sale in order to
effectively transfer title of thereto from the Seller to the Buyer, together
with a brief description of the documents required.
(c) Seller has good title to all of the Assets (including all
property reflected in the Financial Statements or in Schedule 4.9 of the
-------------------
Disclosure Schedule), free and clear of claims, liens and encumbrances of any
- --------------------
sort whatsoever and will on the Closing Date, convey such title in the Assets to
Buyer.
4.10 List of Properties, Contracts and Other Data. Section 4.10 of
-------------------------------------------- ---------------
the Disclosure Schedule is a correct and complete list setting forth the
- -----------------------
following information with respect to the assets of the Seller (indicating in
each case, where appropriate, whether or not the consent by a third party is
required in connection with the sale of the Assets to the Buyer):
(a) all leases and easements of real property to which the
Seller is a party and belonging to or used in its business, and a brief
description of the principal buildings and structures located thereon and the
equipment located therein, with the annual rental rate of each lease and
easement, the termination date of each lease and easement and the conditions of
renewal thereof being given in each case;
(b) all rights, licenses, leases of personal property,
permits, franchises, concessions, certificates of public convenience and the
like to which the Seller is a party and belonging to or used in its business,
together with a brief description of the terms thereof;
(c)(i) all United States and foreign patents, trademarks and
trade names, trademark and trade name registrations, copyrights and copyright
registrations, unexpired as of the date hereof, all United States and foreign
applications pending for patents, for trademark or trade name registrations, or
for copyright registrations, and all trademarks, trade names, labels and other
trade rights in use by the Seller, all of the foregoing belonging to or used in
its business and being owned in whole or in part as noted thereon by the Seller
and (ii) all licenses granted by or to the Seller and all other agreements to
which the Seller is a party, which relate in whole or
8.
<PAGE>
in part to any items of the categories mentioned in clause (i) above or to any
other proprietary rights belonging to or used in its business, whether owned by
the Seller or otherwise;
(d) all policies of insurance in force (with a notation as to
the status of premiums paid thereon) with respect to the Seller, including
without limitation those covering its properties, buildings, machinery,
equipment, fixtures, public liability and operations;
(e) all existing contracts and commitments belonging to or
used in the Seller's business (including loan agreements, credit agreements and
security agreements) to which the Seller is a party or by which the Seller or
any of its properties or assets is bound, except (i) contracts or commitments
involving the payment by or to the Seller of less than $5,000 with respect to
any one contract or commitment or $20,000 with respect to any related group of
contracts or commitments, (ii) contracts or commitments terminable by the Seller
without liability or expense on thirty days' notice or less, and (iii) contracts
or commitments for the purchase or sale of merchandise or services entered into
in the ordinary course of business, the performance of which by the Seller will
extend over a period of less than three months and which will not individually
or in the aggregate, have any material adverse effect on the financial condition
or results of operations of the Seller; provided, however, that a list of
customers with 1996 billings shall satisfy the requirements in this subsection
(e);
(f) all collective bargaining agreements, pension plans,
employment and consulting agreements, executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans and hospitalization insurance or other plans or
arrangements providing for benefits for employees or former employees of the
Seller (indicating, with respect to each of the individuals named pursuant to
subparagraph (h) below, the amount received in the year ended December 31, 1995
under each such agreement, plan or arrangement);
(g) the names and current salary rates of all administrative
employees of the Seller;
(h) the names and current hourly rates of all billable
employees of the Seller;
(i) the names and percentage rates of all employees of the
Seller who perform fixed price work;
(j) the names of all retired employees of the Seller who are
receiving or are entitled to receive any unfunded pensions not covered by any
pension plan to which the Seller is a party, their ages and their current annual
unfunded pension rates;
9.
<PAGE>
(k) the name of each bank or other financial institution from
which credit commitments of the Seller are outstanding, together with a brief
description of such commitments; and
True and complete copies of all documents, including all amendments
thereto, referred to in such list have been delivered to the Buyer. All
documents, rights, obligations and commitments referred to in such list are
valid and enforceable in accordance with their terms for the periods stated
therein and there is not under any of them any existing breach, default, event
of default or event which with the giving of notice or lapse of time, or both,
would constitute a default nor had any party thereto given notice of or made a
claim with respect to any breach or default. To the best knowledge of the Seller
and the Shareholders, there are no existing laws, regulations or decrees, which
adversely affect any of such documents, rights, obligations or commitments. None
of the contracts referenced or listed in Section 4.10 of the Disclosure Schedule
---------------------------------------
was obtained or executed based in whole or in part on the fact or representation
that the Seller 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.
4.11 Litigation. Except as disclosed in Section 4.11 of the
---------- -------------------
Disclosure Schedule, there are no claims, actions, suits, proceedings or
- -------------------
investigations pending or threatened against or affecting the Seller at law or
in equity or in admiralty, or before or by any federal, state, municipal or
governmental or nongovernmental department, commission, board, bureau, agency or
instrumentality, United States or foreign, nor does the Seller or either
Shareholder know of any facts which would provide a basis for any such claim,
action, suit, proceeding or investigation. No claim, action, suit, proceeding or
investigation described in Disclosure Schedule 4.11 could, if adversely decided,
------------------------
have a material adverse effect on the condition (financial or otherwise),
assets, liabilities, earnings or business of the Seller.
4.12 Labor Matters. Except as disclosed in Section 4.12 of the
------------- -------------------
Disclosure Schedule, there are no controversies pending or threatened between
- -------------------
the Seller and any of its employees and the Seller has not taken or failed to
take any action which would provide a reasonable basis for any such controversy.
There are no proceedings now pending nor, to Seller's or Shareholders' knowledge
or belief, threatened against the Seller before the National Labor Relations
Board, any state department of labor, any state commission on human rights, the
Equal Employment Opportunity Commission or any other local, state or federal
agencies having jurisdiction over employee rights with respect to hiring, tenure
or conditions of employment, nor have there been any such proceedings since
January 1, 1993. The Seller has complied with respect to all employees,
including without limitation staff employees and those chargeable to others,
with all laws relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining and the payment of
social security and similar taxes, and is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing. All
non-exempt employees have been paid appropriate and correct premium wages where
applicable. Except as set forth in Section 4.25 of the Disclosure Schedule,
---------------------------------------
there have been no
10.
<PAGE>
payments for the lease and/or rental of vehicles or equipment; and no payments
or reimbursement to employees for moving, meals, incidental or lodging expenses
(commonly known as per diem payments) and no payments to employees or employees
chargeable to others as consultants or independent contractors within the past
three (3) years with the exception of those listed on Section 4.25 of the
-------------------
Disclosure Schedule. To the best of Seller's knowledge, there are no present
- -------------------
employees of the Seller who will not be available for employment by the Buyer on
substantially the same terms and conditions as they are presently employed by
the Seller. There are no organizational efforts presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Seller.
4.13 Patents; Trademarks; Intellectual Property Rights. The Seller
-------------------------------------------------
has protected by way of trademark, trade name or otherwise to the fullest extent
permitted by the law the names set forth in Section 4.13 of the Disclosure
------------------------------
Schedule. Sections 4.10 and 4.13 of the Disclosure Schedule list all patents,
- -------- -------------------------------------------------
trademarks, trade names, copyrights, trade secrets, registrations, applications,
technical information, data, formulae, blueprints, drawings, computer hardware
and software, proprietary know-how, manufacturing procedures, process and the
like ("Intellectual Property Rights") necessary for the conduct of the Seller's
business as now conducted. Except as described in Sections 4.10 or 4.13 of the
----------------------------
Disclosure Schedule, all such Intellectual Property Rights owned by the Seller
- -------------------
are in good standing, are valid and enforceable and are free from any default on
the part of the Seller. The Seller is not a licensor of any Intellectual
Property Rights, nor is the Seller violating the Intellectual Property Rights of
others. No director, officer or employee of the Seller owns, directly or
indirectly, in whole or in part, any of the Intellectual Property Rights or
interests therein which the Seller has used, is presently using, or the use of
which is necessary for the Seller's business as now conducted.
4.14 Assets.
------
The tangible personal property of the Seller is in good
operating condition, normal wear and tear excepted, and is for its intended
purpose. There are no actions pending or threatened or consent decrees, orders
or agreements entered by the United States, any state or local regulatory agency
or court with respect to the compliance of such property with applicable laws,
statutes, ordinances or regulations, including, without limitation, the
Environmental Laws (as that term is defined in Section 4.23 hereto).
4.15 Insurance.
---------
(a) All insurable properties of the Seller belonging to or used
in its business are adequately insured for the Seller's benefit against all
risks usually insured against by persons owning or operating similar properties
in the localities where such properties are located, all under valid and
enforceable policies insured by insurers of recognized responsibility, and (b)
the Seller is adequately insured, for its benefit, against all product liability
claims relating to products manufactured, fabricated, sold or delivered by it to
the same extent that the risks of such claims
11.
<PAGE>
are insured against by persons manufacturing, fabricating, selling or delivering
similar products, all under valid and enforceable policies insured by insurers
of recognized responsibility.
4.16 Licenses; Permits; Authorizations. Section 4.16 of the
--------------------------------- -------------------
Disclosure Schedule is a schedule of all approvals, authorizations, consents,
- -------------------
licenses, orders and permits (except for sales and use tax permits and franchise
tax regulations) of all governmental agencies, whether United States, state or
local, or foreign, required by the nature of the business conducted by the
Seller to permit the continued operation of such business in the manner in which
it was conducted as of the date hereof (indicating in each case, where
appropriate, whether or not the consent by a third party to the transfer to the
Buyer is required and the expiration date of any governmental approvals). The
Seller has all material approvals, authorizations, consents, licenses, orders
and other permits of all governmental agencies, whether United States, state,
local or foreign, required to permit the operation of the Seller's business as
presently conducted and the Seller's business is and has been operated in all
material respects in compliance therewith.
4.17 Compliance with Applicable Law. The conduct of the Seller's
------------------------------
business does not violate or infringe any domestic or foreign laws, statutes,
ordinances or regulations or any right or patent, trademark, trade name,
copyright, know-how or other proprietary right of third parties, the enforcement
of which would adversely affect the Seller's business or the value of its
properties and assets.
4.18 Pension and Employee Benefit Plans.
----------------------------------
(a) The Seller is not a party to and has not contributed to any
employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or employee
welfare benefit plans (as defined in Section 3(1) of ERISA and including, in
each case, multi-employer plans) or any incentive, bonus, profit sharing,
deferred compensation, stock option, stock purchase plan or agreement,
severance, termination or other compensation plan or arrangement, or any other
material employee fringe benefit plans presently maintained by, or contributed
to by the Seller or any current Affiliate, as defined below, except those
described on Section 4.10 of the Disclosure Schedule. The Seller's pension plans
---------------------------------------
(the "Plans") are duly qualified under Section 401 of the Internal Revenue Code
(the "Code"), all reports and actions required to be taken in connection with
such Plans have been so taken, there have been no reportable events or
prohibited transactions in connection with such Plans nor any termination or
partial termination with respect thereto or to any other plan maintained by the
Seller or by an entity controlling, controlled by or under common control with,
the Seller.
(b) A true and complete copy of (1) each Benefit Plan and any
related agreement, and (2) all summary plan descriptions, (3) the most recent
annual report, (4) the most recent actuarial valuation (if applicable), (5) any
other financial statements or disclosures, and (6) the most recent determination
letter received from the Internal Revenue Service (if applicable), with respect
to any Benefit Plan, has been furnished to the Buyer.
12.
<PAGE>
(c) The Seller, each current Affiliate and each of the Benefit
Plans, are in compliance in all material respects with the applicable provisions
of ERISA, and those provisions of the Code applicable to Benefit Plans.
(d) Except as may be disclosed on the Balance Sheet, neither
the Seller nor any current Affiliate has any liability with respect to any
Benefit Plan that is not fully reflected in the materials delivered to Buyers
pursuant to subsection (b), nor is any asset of the Seller or any current
Affiliate subject to any lien under Code Section 401(a)(29), ERISA Section
302(f) or Code Section 412(n), ERISA Section 4068 or arising out of any action
filed under ERISA Section 4301(b).
(e) Neither the Seller or any other employer (an "Affiliate")
that is, or was at any time after September 2, 1974, together with the Seller,
treated as a "single employer" under section 414(b), 414(c) or 414(m) of the
Code incurred any liability which could subject any of the parties to this
Agreement to material liability under Section 4062, 4063 or 4064 of ERISA.
(f) Neither the Seller nor any current Affiliate is required
to contribute to any multiemployer plan, within the meaning of Section
4001(a)(3) of ERISA. Neither the Seller nor any Affiliate, while an Affiliate,
has incurred any withdrawal liability, within the meaning of Section 4201 of
ERISA to any multiemployer pension plan, which liability has not been fully paid
as of the date hereof.
4.19 Certain Relationships; Transactions with Management.
---------------------------------------------------
(a) Section 4.19 of the Disclosure Schedule accurately
------------------------------------
describes all relationships among the directors, the officers and the
shareholders of the Seller.
(b) Except as described in Section 4.19 of the Disclosure
------------------------------
Schedule, the Seller is not a party to any contract, lease or commitment with
- --------
any officer, director or shareholder (or any affiliate of any such officer,
director or shareholder) of the Seller, nor are there any loans outstanding to
any of such persons (or any affiliate of any such person) from the Seller.
(c) Neither the Seller nor the Shareholders (and/or any member
of their respective immediate families) has a financial interest (direct or
indirect) in any competitor, supplier or customer of the Seller.
4.20 Adverse Agreements; No Adverse Change.
-------------------------------------
(a) Except as disclosed in Section 4.20 of the Disclosure
------------------------------
Schedule, the Seller is not a party to or subject to any agreement or instrument
- --------
or subject to any charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule or regulation which
13.
<PAGE>
adversely affects or, insofar as the Seller can now foresee, may in the future
adversely affect its business operations, prospects, properties, assets or
conditions, financial or otherwise.
(b) Except as disclosed in Section 4.20 of the Disclosure
------------------------------
Schedule, there has not been any adverse change in, or development adversely
- --------
affecting, the business, assets, financial position or results of operations of
the Seller (including, without limitation, any fire or other casualty loss to
any of the assets of the Seller) nor is the Seller aware of any such adverse
change or development which may occur in the future.
4.21 Assets Relationship to Business of the Seller. The Assets
---------------------------------------------
constitute all of the assets used or useful in or necessary to the conduct of
the business and affairs of the Seller other than the accounts receivable, cash
and cash equivalents of Seller, which are required to satisfy its working
capital needs, and, as such, constitute, together with the cash, cash
equivalents and accounts receivable, all of the assets necessary in order for
the Buyer to conduct business operations subsequent to the Closing in the manner
in which the same are presently conducted by the Seller.
4.22 Environmental Matters.
---------------------
(a) Seller has been issued and is in compliance with all
federal, state and local permits, certificates, licenses, approvals and other
authorizations and has filed all notifications, relating to air emissions,
effluent discharges and solid and hazardous waste storage, treatment and
disposal required in connection with the operation of the business of the
Seller.
(b) There are no outstanding notices of violation, orders,
claims, citations, complaints, penalty assessments, suits or other proceedings,
administrative, civil, criminal, at law or in equity pending against Seller and,
to the best knowledge of the Seller and the Shareholders, no investigation or
review is pending or threatened against Seller by any governmental entity with
respect to any alleged violation of any federal, state or local environmental
law, regulation, ordinance, standard, permit or order in connection with the
conduct of the business of the Seller.
(c) Except as otherwise disclosed on Section 4.23 of the
-------------------
Disclosure Schedule, the Seller is not in violation of The Comprehensive
- -------------------
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), The
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), The Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, The Clean Water Act, the Toxic Substances Control Act
and The Clean Air Act or any rule or regulation promulgated pursuant to any of
the foregoing statutes, or any other applicable environmental law, statute,
rule, regulation or ordinance (all of the foregoing are hereinafter sometimes
collectively referred to as the "Environmental Laws").
(d) Except as otherwise disclosed in Section 4.23 of the
-------------------
Disclosure Schedule, neither the Seller, nor any of its officers, employees,
- -------------------
agents or independent contractors has
14.
<PAGE>
arranged, by contract, agreement or otherwise, (i) for the disposal or treatment
of, or (ii) with a transporter for the transport or disposal or treatment of,
any hazardous substance (as defined by CERCLA, as amended);
(e) To the best knowledge of the Seller, no predecessor of the
Seller has arranged by contract, agreement or otherwise, (i) for the disposal or
treatment of, or (ii) with a transporter for transport for the disposal or
treatment of, any hazardous substances (as defined by CERCLA, as amended);
(f) The Seller is neither an "owner" or "operator" of a
"facility" as defined by CERCLA, as amended; and
(g) Except as otherwise set forth in Section 4.23 of the
-------------------
Disclosure Schedule, the Seller did not "own" or "operate" any "facility" at the
- -------------------
time any hazardous substances were disposed of within the meaning of CERCLA, as
amended.
(h) To the best of Seller's knowledge, no hazardous, toxic or
polluting substances have been released, discharged or disposed of on property
now or formerly owned or operated by Seller. To the best of Seller's knowledge,
no PCBs, asbestos or urea formaldehyde insulation is present at any such
property. There are no underground storage tanks at the property of the Seller.
The Seller has not received from any federal, state or local environmental
regulatory entity or third party requests for information, notice of claim,
demand letters, or other notification that in connection with the conduct of the
business, it is or may be potentially responsible with respect to any
investigation or clean-up of hazardous substance releases at any sites.
(i) To the best of Seller's knowledge, no wastes generated by
Seller have ever been sent directly or indirectly to any site listed or formally
proposed for listing on the National Priority List promulgated pursuant to
CERCLA or to any site listed on any state list of hazardous substance sites
requiring investigation or clean-up.
4.23 Books and Records. The books, records and work papers of the
-----------------
Seller are complete and correct, have been maintained in accordance with good
business practices and accurately reflect the basis for the financial condition
and results of operations of the Seller set forth in the Financial Statements
referred to in Section 4.5 hereof. The corporate record books of the Seller have
been duly and properly maintained, are in good order; complete, accurate, and up
to date; and set forth all meetings and actions heretofore held and/or taken by
the stockholders and/or directors of the Seller.
4.24 Improper Payments. Neither the Seller (including any present or
-----------------
former officers, directors, employees or agents or other third party acting on
behalf of the Seller) have: (i) directly or indirectly, made or authorized to be
made, any bribes, kickbacks or other payments
15.
<PAGE>
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, to obtain special
concessions to pay for favorable treatment for business secured or for special
concessions already obtained or to otherwise attempt to influence any such
person or entity to take or refrain from taking any action relating to the
Seller; (ii) paid, donated, leased or made available funds or property of any
kind, 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) made any loans, donations, or other
disbursements, directly or indirectly, to officers or employees of the Seller,
so that contributions, donations, loans or payment could 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; or (iv) maintained 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 Seller.
4.25 Use of Independent Contractors. The Seller has not retained the
------------------------------
services of any independent contractor or consultant for assignment to customers
within the past two (2) years except as described on Section 4.25 of the
-------------------
Disclosure Schedule.
- -------------------
4.26 Other Information. None of the information and documents furnished
-----------------
or to be furnished by the Seller to the Buyer or any of its representatives in
connection with the execution, delivery and closing of this Agreement is or will
be false or misleading, or contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to make
the statements therein fair and accurate.
V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer represents and warrants to the Seller as follows:
5.1 Organization; Good Standing; Power. The Buyer is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties, to carry on its business as now being conducted and to
enter into this Agreement and perform its obligations hereunder. The copies of
the Articles of Incorporation and Bylaws of the Buyer, which have been delivered
to the Seller are complete and correct. The Buyer is duly qualified to do
business as a foreign corporation and is in good standing in each of the
jurisdictions in which the property owned, leased or operated by it or the
nature of the business conducted by it after the consummation of the transaction
contemplated hereunder makes such qualification necessary.
5.2 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance of this Agreement, and the transactions contemplated hereby by the
Buyer, have been duly and
16.
<PAGE>
effectively authorized and ratified by all necessary corporate action. This
Agreement has been duly executed by Buyer and is a valid, legally binding and
enforceable obligation of Buyer.
5.3 Effect of Agreement. The execution, delivery and performance of
-------------------
this Agreement and the consummation of the transactions contemplated hereby do
not (i) require the consent, approval or authorization of any person,
corporation, partnership, joint venture or other business association or other
public authority; (ii) violate, with or without the giving of notice or the
passage of time, or both, any provisions of law applicable to the Buyer; or
(iii) conflict with or result in a breach or termination of any provision of, or
constitute a default under, or result in the creation of any Lien upon any of
the properties or assets of the Buyer pursuant to any indenture, corporate
charter, bylaw, indenture mortgage, deed of trust, lease, contract, agreement or
other instrument or any order, judgment, award, decree, statute, ordinance,
regulation or any other restriction of any kind or character, to which the Buyer
is a party, or by which the Buyer or any of its assets or properties may be
bound.
VI. TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
6.1 Access to Information. The Seller shall give to the Buyer, its
---------------------
employees, counsel, accountants, engineers and other consultants and
representatives, full access during normal business hours throughout the period
prior to the Closing Date to the assets, books, contracts, commitments and
records of the Seller for such purposes as Buyer deems appropriate, including
but not limited to testing of the assets provided the same does not unreasonably
interfere with the Seller's business, and will furnish to the Buyer during such
period all such information concerning the affairs of the Seller as the Buyer or
its representatives may reasonably request. The Buyer shall use its best efforts
to cause its representatives to hold in strict confidence all information so
obtained from the Seller and, if the transactions herein provided for are not
consummated as contemplated herein, the Buyer will return all such data as the
Seller may reasonably request.
6.2 Conduct of the Seller's Business Pending the Closing Date. The
---------------------------------------------------------
Seller hereby agrees that prior to the Closing Date it will:
(a) operate its business only in the usual, regular and
ordinary manner and, to the extent consistent with such operation, use its best
efforts to preserve its present business organization and reputation intact,
keep available the services of its present officers and employees and preserve
its present relationships and good will with persons having business dealings
with it;
(b) maintain all of the Assets in customary repair, order and
condition, reasonable wear and use excepted, and maintain insurance upon all of
its properties and with respect to the conduct of its business in such amounts
and of such kinds comparable to that in effect on the date hereof; and, in the
event of a casualty, loss or damage to any of such properties
17.
<PAGE>
prior to the Closing Date for which the Seller is insured, the Seller shall, at
Buyer's option, either repair or replace such damaged property or transfer the
proceeds of such insurance to the Buyer;
(c) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years; endeavor to
comply with all laws and contractual obligations applicable to it and to the
conduct of its business; and perform all of its obligations without default;
(d) use its best efforts to comply duly with all laws applicable
to it and the conduct of its business;
(e) conduct its operations so as to comply with all
Environmental Laws;
(f) make no amendment in its Articles of Incorporation or
Bylaws; and enter or agree to enter into no merger or consolidation with, or
sale of a significant amount of its assets to, any corporation or change the
character of its business in any manner;
(g) make or grant no general wage or salary increase or
increase in compensation payable or to become payable to any employee, officer,
director or agent; pay or provide for no bonus, stock option, stock purchase,
profit sharing, deferred compensation, pension, multi-employer pension,
retirement or other similar payment or arrangement except in the ordinary course
of administering existing plans referred to in Section 4.10 of the Disclosure
------------------------------
Schedule; pay or provide for no unfunded pensions, not covered by any pension
- --------
plan, other than the unfunded pensions, if any, referred to in Section 4.10 of
---------------
the Disclosure Schedule and enter into no employment or consulting agreement or
- -----------------------
sales agency with respect to the performance of personal services which is not
terminable without liability by Seller on thirty days notice or less.
(h) (i) incur or become subject to, or agree to incur or
become subject to, no obligation or liability (contingent or otherwise), subject
to the exceptions enumerated in Section 4.7(a) hereof; (ii) discharge or satisfy
no lien or encumbrance and pay no obligation or liability (contingent or
otherwise), subject to the exceptions enumerated in Section 4.7(b) hereof; (iii)
mortgage, pledge or subject to lien, charge, security interest or any other
encumbrance none of its assets or properties; (iv) sell, assign, transfer,
convey, lease or otherwise dispose of, or agree to sell, assign, transfer,
convey, lease or otherwise dispose of, none of its assets or properties, except
for fair consideration in the ordinary course of business; (v) acquire or lease
(other than a renewal of an existing lease in the ordinary course of business),
or agree to acquire or lease (other than a renewal of an existing lease in the
ordinary course of business, no material assets of property; (vi) cancel or
compromise no debt or claim, except for adjustments or settlements made in the
ordinary course of business; (vii) waive or release no rights; (viii) transfer
or grant no rights under any concessions, leases, licenses, agreements, patents,
inventions, trade names, trademarks, copyrights, or with respect to any know-how
or Intellectual Property Rights; (ix) modify, change or terminate no existing
license, lease, contract or other document referred to in
18.
<PAGE>
Section 4.10 of the Disclosure Schedule; (x) make no capital expenditures and
- ---------------------------------------
enter into no commitments therefor which, individually exceed $5,000; (xi) enter
into no collective bargaining agreement and, through negotiation or otherwise,
make no commitment or incur any liability to any labor organization;
and (xii) enter into no transaction and make or enter into no contract or
commitment which by reason of its size or otherwise is not in the ordinary
course of business or perform its obligation other than in the ordinary course
of business;
(i) make no renovation of property involving any obligation on
the part of the Seller in excess of $15,000 in the aggregate;
(j) make no change in its accounting procedures;
(k) use its best efforts not to permit any event to occur
which would result in any of the Seller's or the Shareholders' representations
and warranties contained in this Agreement not being true and correct at and as
of the time immediately after the occurrence of such transaction or event.
VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
----------------------------------------------
SELLER AND THE SHAREHOLDERS.
---------------------------
The obligations of the Seller and the Shareholders under this Agreement
are subject to the satisfaction at or prior to the Closing Date of each of the
following conditions:
7.1 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of the Buyer herein contained shall be true and correct on and as of
the Closing Date, with the same force and effect as though made on and as of
such date, except as affected by the transactions contemplated hereby.
7.2 Performance of Agreements. The Buyer shall have performed all
-------------------------
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
7.3 Officers' Certificate. Buyer shall have furnished the Seller with a
---------------------
certificate, dated as of the Closing Date, of the Buyer's President or Vice
President, to the effect that the Buyer has fulfilled the conditions specified
in Sections 7.1 and 7.2 hereof.
7.4 Resolutions of Board of Directors. The Seller shall have received
---------------------------------
from the Buyer a certified copy of the Resolutions of the Board of Directors of
the Buyer approving this Agreement and authorizing the consummation of the
transactions contemplated hereby.
19.
<PAGE>
7.5 Opinion of Counsel for the Buyer. The Seller shall have received an
--------------------------------
opinion of counsel for the Buyer, dated the Closing Date, satisfactory in form
and substance to the Seller and its counsel, to the effect that:
(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
property, to carry on its business and to enter into this Agreement and perform
its obligations hereunder.
(b) The execution, delivery and performance of this Agreement
and the Contingent Payment Certificate by the Buyer and the consummation of the
transactions contemplated hereby have been duly and effectively authorized and
ratified by all necessary corporate action on the part of the Buyer and do not
require the consent, approval or authorization of any person or public
authority, do not violate, with or without the giving of notice and/or the
passage of time, any provision of law now applicable to the Buyer and do not
conflict with or result in a breach or termination of any provision of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Buyer pursuant to, any
indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument known to such counsel, to which the Buyer is a party or by which the
Buyer or any of its assets and properties may be bound and will not result in a
violation of the Articles of Incorporation or Bylaws of the Buyer.
(c) This Agreement has been duly executed by the Buyer and is
the valid, legally binding and enforceable obligation of the Buyer, except as
the same may be limited or otherwise affected by applicable bankruptcy,
insolvency or other laws affecting creditors' rights or contractual obligations
generally.
7.6 Employment Agreements. The Buyer shall have executed and delivered
---------------------
Employment Agreements (the "Employment Agreements") with M. Hill and B. Hill in
the forms attached hereto as Exhibits 7.6(a) and Exhibit 7.6(b)
--------------- --------------
7.7 R. Hill Consulting Agreement. The Buyer shall have executed and
----------------------------
delivered a Consulting Agreement (the "Consulting Agreement") with R. Hill in
the form attached hereto as Exhibit 7.7.
-----------
7.8 Stockholders Agreement. COMFORCE shall have executed and delivered
----------------------
a Stockholders Agreement (the "Stockholders Agreement") in the form attached on
Exhibit 7.8.
- -----------
7.9 Escrow Agreement. The Buyer and Escrow Agent shall have executed
----------------
and delivered the Escrow Agreement.
20.
<PAGE>
7.10 Closing of Progressive Transaction. The transactions contemplated
----------------------------------
by the Progressive Agreement shall have closed concurrently with the closing of
the transactions contemplated hereby.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
------------------------------------------------
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions.
8.1 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of the Seller herein contained shall be true and correct on and as of
the Closing Date with the same force and effect as though made on and as of such
date, except as affected by transactions contemplated hereby.
8.2 Performance of Agreements. The Seller shall have performed all
-------------------------
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
8.3 Officers' Certificate. The Seller shall have furnished the Buyer
---------------------
with a certificate dated as of the Closing Date, of the President or Vice
President of the Seller, to the effect that the Seller has fulfilled the
conditions specified in Sections 8.1 and 8.2 hereof.
8.4 Resolutions of Board of Directors and Sole Shareholder. The Buyer
------------------------------------------------------
shall have received from the Seller a certified copy of the Resolutions of the
Board of Directors and shareholders of the Seller approving this Agreement and
authorizing the consummation of the transactions contemplated hereby.
8.5 Opinion of Counsel for the Seller. The Buyer shall have received an
---------------------------------
opinion of counsel for the Seller and the Shareholders, dated the Closing Date,
in form and substance satisfactory to the Buyer and its counsel, to the effect
that:
(a) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; the
Seller has all requisite corporate power to enter into this Agreement and to
perform its obligations hereunder; and the Seller has all requisite corporate
power and authority to own, lease and operate its properties as now owned,
leased and operated, to carry on its business as now being conducted.
(b) The execution, delivery and performance by the Seller of
this Agreement and the other documents as required hereby to be executed by the
Seller and the consummation of the transactions contemplated hereby and thereby
have been duly and effectively authorized by all necessary corporate action on
the part of the Seller.
21.
<PAGE>
(c) The execution, delivery and performance of this Agreement
by the Seller and the Shareholders and the consummation of the transactions
contemplated hereby do not require the consent, approval, authorization,
license, order or permit of any person or public authority (except those
consents, approvals, authorizations, licenses, orders and permits which have
been duly obtained, specifying the same), do not violate, with or without the
giving of notice or the passage of time, or both, any provision of law now
applicable to the Seller and do not conflict with or result in a breach or
termination of any provision of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance upon any of the properties or
assets of the Seller or the Shareholders pursuant to, any corporate charter,
bylaws, indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument, or any order, judgment, award, decree, statute, ordinance,
regulation or any other restrictions of any kind or character, known to such
counsel, to which the Seller or either Shareholder is a party or by which the
Seller or either Shareholder or any of their respective assets or properties may
be bound and will not result in a violation of the Seller's Articles of
Incorporation or Bylaws.
(d) This Agreement and the other documents the Seller is
required to execute hereunder have been duly executed by the Seller and are the
valid, legally binding and enforceable obligations of the Seller, except as the
same may be limited or otherwise affected by applicable bankruptcy, insolvency
or other laws affecting creditors' rights or contractual obligations generally.
(e) Each of the Shareholders has the legal capacity to execute
and deliver this Agreement and any other documents required to be executed and
delivered by the Shareholders hereunder, to perform their obligations hereunder
and thereunder and to consummate the transactions contemplated thereby. This
Agreement and the other documents required to be delivered by the Shareholders
hereunder constitute the valid and legally binding obligations of each
Shareholder, enforceable against each such Shareholder in accordance with the
respective terms of said agreements, except as the same may be limited or
otherwise affected by applicable bankruptcy, insolvency or other laws affecting
creditors' rights or contractual obligations generally or the exercise of
judicial discretion in the application of principles of equity in appropriate
cases.
(f) Except as disclosed in Section 4.11 of the Disclosure
Schedule, to the best knowledge of such counsel there are no actions, suits or
proceedings pending or, threatened against or affecting the Seller at law or in
equity or in admiralty, or before or by any United States, state, municipal or
other governmental or non-governmental department, commission, board, bureau,
agency, or instrumentality, nor does such counsel know of any facts which would
provide a basis for any such action, suit or proceeding.
8.6 Actual or Threatened Actions. There shall not be any actual or, in
----------------------------
the opinion of the Buyer, threatened action or proceeding by or before any court
or other governmental body
22.
<PAGE>
or agency which shall seek to restrain, prohibit or invalidate the transactions
contemplated by this Agreement or which might affect the right of the Buyer to
own, operate or control the Seller or affect the right of the Seller to own,
operate or control its assets and business after the Closing Date.
8.7 Material Changes. Prior to the Closing Date there shall be no
----------------
material adverse change in the Seller's condition (financial or otherwise),
assets, liabilities, or business, including, without limitation, a loss of any
material amount of its business or any material customers or reasonable cause to
believe that such a loss is probable within one (1) year after the Closing.
8.8 Consulting Agreement. R. Hill shall have executed and delivered the
--------------------
Consulting Agreement.
8.9 Employment Agreements. M. Hill and B. Hill shall have executed and
---------------------
delivered the Employment Agreements.
8.10 Employment Agreements with Other Key Personnel. Such key employees
----------------------------------------------
of the Seller as are designated by Buyer in writing to the Seller shall have
executed and delivered to the Seller Employment Agreements in form and substance
substantially the same as Exhibit 8.10 hereto.
------------
8.11 Stockholders Agreement. Seller and the Shareholders shall have
----------------------
executed and delivered the Stockholders Agreement.
8.12 Escrow Agreement. The Buyer and Escrow Agent shall have executed
----------------
and delivered the Escrow Agreement.
8.13 Transitional Agreement. Seller shall have executed and delivered
----------------------
to Buyer a Transitional Agreement in the form attached hereto as Exhibit 8.14.
------------
IX. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-----------------------------------------------------
INDEMNIFICATION
---------------
9.1 Events of Default. A breach of any representation or warranty by
-----------------
the Seller, the Shareholders or the Buyer, or a breach as a result of the
failure of the Seller, the Shareholders or the Buyer to perform any of their
covenants and obligations under this Agreement, shall be considered a default
hereunder giving rise to the indemnification set forth in Section 9.3 and
Section 9.4 hereof.
9.2 Survival of Representations, Etc. All representations, warranties
--------------------------------
and agreements made by the Seller, the Shareholders and the Buyer in this
Agreement or in any exhibit,
23.
<PAGE>
certificate, document or instrument delivered pursuant to the provisions hereof
or in connection with the transactions contemplated hereby, and the remedies of
the Buyer and the Shareholders with respect
24.
<PAGE>
thereto, shall survive the Closing hereunder for the following periods:
(a) With respect to the representations and warranties of the
Seller and the Shareholders as contained in this Agreement and all related
documents, any claim arising thereunder must be brought within a period of three
(3) years following the Closing Date.
(b) With respect to the representations and warranties of the
Seller and the Shareholders as to federal, state and other taxes and the
Environmental Laws any claim arising thereunder must be brought within thirty
(30) days after the expiration of the period of the applicable statutes of
limitation, including any extensions thereof.
(c) With respect to the representations, warranties and
agreements of the Buyer as contained herein, any claim arising thereunder must
be brought by the Seller within a period of three (3) years following the
Closing Date.
9.3 Indemnification to the Buyer. The Shareholders agree, jointly and
----------------------------
severally, to indemnify and hold the Buyer harmless against and in respect of:
(a) except to the extent expressly assumed by Buyer, all
obligations and liabilities of the Seller, whether accrued, absolute, fixed,
contingent or otherwise, in existence on or relating to events occurring prior
to the Closing, including without limitation any such obligations or liabilities
that Buyer satisfies in good faith as the result of Buyer's belief that such
satisfaction is necessary to continue to do business with a customer or vendor
of Seller's business prior to the Closing;
(b) any loss, liability or damage suffered or incurred by the
Buyer net of any tax effects realized by the Buyer as a result thereof because
of a breach of any obligation of the Seller or the Shareholders incurred under
this Agreement, the Escrow Agreement, the Stockholders Agreement or Contingent
Payment Certificate, or because any representation or warranty by the Seller or
the Shareholders contained herein or therein, in any document furnished or
required to be furnished pursuant to this Agreement by the Seller or the
Shareholders or any of their representatives to the Buyer or any of its
representatives, or any documents furnished to the Buyer in connection with the
closing hereunder, shall be false as of the Closing Date; and
(c) all reasonable costs and expenses (including accounting
and attorneys' fees) incurred by the Buyer in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against it in this Section 9.3.
(d) The Shareholders shall not have any liability under this
Section to the extent aggregate losses under this Section and under Section 9.3
of the Progressive Agreement are less than Fifty Thousand Dollars ($50,000). In
addition, the aggregate amount of the Shareholders' obligations under Section
9.3 of this Agreement and the Progressive Agreement shall not exceed
25.
<PAGE>
the aggregate amount of the consideration paid under such agreements, including
without limitation, any amounts paid to Seller under the Contingent Payment
Certificate or distributed to Seller under the Escrow Agreement. For purposes of
this subsection (d), COMFORCE Stock distributed to Seller shall in all cases be
valued at the price established on the Closing Date for purposes of Section 2.1
hereof.
9.4 Indemnification to the Shareholders. The Buyer agrees to indemnify
-----------------------------------
and hold the Shareholders harmless against and in respect of:
(a) any loss, liability or damage suffered or incurred by the
Shareholders, net of any tax effects realized by them or as a result thereof,
because of a breach of any obligation of the Buyer incurred under this
Agreement, the Escrow Agreement, Stockholders Agreement or Contingent Payment
Certificate, or because any representation or warranty by the Buyer contained
herein or therein, in any document furnished or required to be furnished
pursuant to this Agreement by the Buyer or any of its representatives to the
Shareholders or any of their representatives, or any documents furnished to the
Buyer in connection with the closing hereunder, shall be false as of the Closing
Date; and
(b) all reasonable costs and expenses (including accounting
and attorneys' fees) incurred by the Shareholders in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of the matters
indemnified against it in this Section 9.4.
9.5 Representation, Cooperation and Settlement.
------------------------------------------
(a) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give prompt written notice to the party from
which the indemnification is sought (the "Indemnifying Party") of any claim
against the Indemnified Party which might give rise to a claim by the
Indemnified Party against the Indemnifying Party based on the indemnity
agreement contained in Section 9.3 or Section 9.4 hereof, stating the nature and
basis of the first-mentioned claim and the amount thereof. No failure to give
such notice shall excuse any Indemnifying Party from any obligation hereunder
except to the extent the Indemnifying Party is prejudiced by such failure.
(b) The Indemnified Party shall have full responsibility and
authority with respect to the disposition of any action, suit or proceeding
brought against it. In the event any action, suit or proceeding is brought
against the Indemnified Party with respect to which the Indemnifying Party may
have liability under the indemnity agreements contained in Section 9.3 or 9.4
hereof, however, the Indemnifying Party shall have the right, without prejudice
to the Indemnified Party's rights under this Agreement, at the Indemnifying
Party's sole expense, to be represented by counsel of its own choosing and with
whom counsel for the Indemnified Party shall confer in connection with the
defense of any such action, suit, or proceeding. The Indemnified
26.
<PAGE>
Party shall make available to the Indemnifying Party and its counsel and
accountants, all books and records of the Indemnified Party relating to such
action, suit or proceeding and the parties agree to render to each other such
assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such action, suit or proceeding.
X. TRANSACTIONS SUBSEQUENT TO THE CLOSING DATE
-------------------------------------------
10.1 Further Assurances. From time to time after the Closing Date, upon
------------------
the reasonable request of Buyer, Seller shall execute, deliver and acknowledge
all such further instruments of transfer and conveyance as Buyer may reasonably
require to more effectively transfer the Assets to Buyer and to put Buyer in
possession of the Assets.
10.2 Change of Name. From and after the Closing Date, neither the
--------------
Seller nor the Shareholders shall use the name Continental Field Service
Corporation or any similar name without the prior written consent of Buyer.
10.3 Receipt of Certain Remittances by Seller and Buyer.
--------------------------------------------------
(a) If, on or after the Closing Date, Seller shall receive any
remittance from any account debtors with respect to any accounts receivable of
Buyer arising after the Closing Date, Seller shall endorse such remittance to
the order of Buyer and forward it to Buyer immediately upon receipt thereof.
(b) If, on or after the Closing Date, Buyer shall receive any
remittance from any account debtors with respect to any accounts receivable
retained by Seller in accordance herewith, Buyer shall endorse such remittance
to the order of Buyer and forward it to Buyer immediately upon receipt thereof.
10.4 Assistance with Audit. Seller and the Shareholders understand and
---------------------
acknowledge that, after the Closing, Buyer intends to prepare and have its
independent accountants audit the financial statements of Seller for the
one-year period ended December 31, 1995 and for the nine-month period ended
September 30, 1996 in connection with the preparation of COMFORCE's audited
financial statements. Seller and the Shareholders shall cooperate fully with
said audit and shall provide such documents and other information as is in their
respective control as Seller, COMFORCE or Comforce's independent accountant's
may from time to time reasonably request in connection with the preparation and
audit of such financial statements.
10.5 Access to Books and Records. Buyer shall keep and maintain any
---------------------------
financial and tax books and records it receives from Seller as part of the
Assets for a period of at least six (6) years after the Closing and shall during
such time upon reasonable notice permit Seller and the Shareholders or their
representatives access to such books and records for any legitimate purpose,
27.
<PAGE>
including the preparation and verification of tax returns and documents related
to tax matters and the preparation for and response to any audits or inquiries
with respect to such matters.
XI. MISCELLANEOUS
-------------
11.1 Brokerage. The Seller and the Shareholders represent and warrant
---------
to the Buyer that neither the Seller nor the Shareholders have incurred any
obligations or liabilities, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other like payments in connection with this
Agreement or the transactions contemplated hereby except to Duff & Phelps
("Seller's Broker"). The Seller and the Shareholders shall be jointly and
severally liable for, and shall indemnify, defend and hold Buyer from and
against, any and all commissions, fees or other payments payable to or claimed
by Seller's Broker as a result of the transactions contemplated hereby or the
negotiations relating hereto. The Buyer represents and warrants to the Seller
and the Shareholders that the Buyer has not incurred any obligations or
liabilities, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other like payments in connection with this Agreement or the
transactions contemplated hereby. The Seller and the Shareholders on the one
hand and the Buyer on the other agree to indemnify and hold the other harmless
against and in respect of any such obligations or liabilities based in any way
on agreements, arrangements or understandings claimed to have been made by it or
them with any third party and not disclosed herein.
11.2 Waivers and Amendment.
---------------------
(a) The Seller and the Shareholders, on the one hand, or the
Buyer, on the other hand may, by written notice to the other, (i) extend the
time for the performance of any of the obligations or other actions of the
other; (ii) waive any inaccuracies in the representations or warranties of the
other contained in this Agreement; (iii) waive compliance with any of the
covenants of the other contained in this Agreement; and (iv) waive or modify
performance of any of the obligations of the other.
(b) This Agreement may be amended, modified or supplemented
only by a written instrument executed by all the parties hereto. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
11.3 Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, the Buyer shall pay the fees and expenses of its
counsel, accountants, other experts and all other expenses incurred by it
incident to the negotiation, preparation and execution of this Agreement, and
the Shareholders shall pay any and all such fees and expenses incurred by the
28.
<PAGE>
Seller or the Shareholders incident to the negotiation, preparation and
execution of this Agreement and the performance by the Seller and the
Shareholders of their obligations hereunder. Notwithstanding the foregoing,
Buyer agrees that unless Buyer terminates this Agreement because the Closing
does not occur due to a default by the Seller or either Shareholder of their
respective obligations hereunder, Buyer shall be responsible for and pay the
fees paid or payable to the firm of independent public accountants in connection
with the work done relating to issuance of the Nine Month Statements.
11.4 Occurrences of Conditions Precedent. Each of the parties hereto
-----------------------------------
agrees to use its best efforts to cause all conditions precedent to its
obligations under this Agreement to be satisfied.
11.5 Notices. All notices, requests, demands and other communications
-------
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid:
(a) If to the Seller or the Shareholders, to:
Continental Field Service Corporation
27 East Main Street
Elmsford, NY 10523
Michael Hill
389 Hardscrabble Road
Briarcliff, NY 10510
Roy Hill
5 Whitewood Road
White Plains, NY 10603
with a copy to:
McCarthy, Fingar, Donovan,
Drazen & Smith, L.L.P.
11 Martine Avenue
White Plains, NY 10606
Attention: John J. Parker, Esq.
29.
<PAGE>
(b) If to the Buyer, to:
COMFORCE Global, Inc.
2001 Marcus Avenue
Lake Success, NY 11042
with a copy to:
Doepken Keevican & Weiss
37th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
Attention: David J. Hirsch, Esq.
or to such other address as any party shall have specified by notice in writing
to the other.
11.6 Integration Clause. This Agreement and the Exhibits hereto
------------------
constitute the entire agreement between Buyer, the Shareholders and Seller with
respect to the subject matter hereof .
11.7 Binding Effect; Benefits. This Agreement shall inure to the
------------------------
benefit of and be binding upon the parties hereto and their successors; nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, or their successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.8 Non-assignability. This Agreement and any rights pursuant hereto
-----------------
shall not be assignable by either party without the prior written consent of the
other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to
another corporation that is directly or indirectly controlled by COMFORCE and
may assign its rights hereunder to secure its obligations to parties providing
loans or other credit facilities to Buyer or its affiliates.
11.9 Bulk Sales Law Waiver. Buyer and Seller each agree to waive
---------------------
compliance by the other with the provisions of the bulk sales laws or comparable
laws of any jurisdiction to the extent that the same may be applicable to the
transactions contemplated by this Agreement. Seller and the Shareholders agree
to indemnify and hold harmless Buyer from and against any and all claims that
may be asserted against Buyer under any such provisions.
11.10 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and in accordance with the laws of the
State of New York.
11.11 Section and Other Headings. The section and other headings
--------------------------
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
30.
<PAGE>
11.12 Counterparts. This agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
31.
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed and delivered this Agreement as of the date first
above written.
COMFORCE GLOBAL, INC.
By: /s/ Christopher P. Franco
-------------------------------------------
Name: Christopher P. Franco
-----------------------------------------
Title: Executive Vice President
----------------------------------------
CONTINENTAL FIELD SERVICE
CORPORATION
By: /s/ Michael Hill
-------------------------------------------
Name: Michael Hill
-----------------------------------------
Title: Vice President
----------------------------------------
/s/ Michael Hill
----------------------------------------------
Michael Hill
/s/ Roy Hill
----------------------------------------------
Roy Hill
COMFORCE Corporation hereby guaranties all obligations and liabilities of
COMFORCE Global, Inc. arising out of or in connection with this Agreement or the
Contingent Payment Certificate.
COMFORCE CORPORATION
By: /s/ Christopher P. Franco
-------------------------------------------
Name: Christopher P. Franco
-----------------------------------------
32.
<PAGE>
Title: Executive Vice President
----------------------------------------
33.
<PAGE>
EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, made and entered into on October 25,
1996 and effective as of the 1st day of November, 1996, by and between
PROGRESSIVE TELECOM, INC. a New York corporation having its principal office at
37 East Main Street, Elmsford, NY 10523 (the "Seller"), and BETH WILSON HILL
("B. Hill"), an individual residing at 389 Hardscrabble Road, Briarcliff, NY
10510 (sometimes referred to as the "Shareholder");
A
N
D
COMFORCE GLOBAL, INC., a Delaware corporation having its principal office at
2001 Marcus Avenue, Lake Success, NY 11042 (the "Buyer").
WHEREAS, the Seller desires to sell, and the Buyer desires to acquire,
substantially all of the assets, properties and business of the Seller, all in
consideration for cash and the assumption of certain liabilities of Seller as
set forth herein; and
WHEREAS, B. Hill is the sole shareholder of Seller; and
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:
I. SALE OF ASSETS AND RELATED TRANSACTIONS
---------------------------------------
1.1 Sale of Assets. On the terms and subject to the conditions of this
--------------
Agreement, on the Closing Date (as that term is defined in Section 3.1 hereof),
Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, all of the assets, properties, rights
and business of every kind and description, wherever located (collectively, the
"Assets"), other than the Excluded Assets described in Section 1.4 hereof,
belonging to the Seller including, without limitation, the good will and name of
the Seller and all property, tangible and intangible, real, personal or mixed,
prepayments, deposits and advances under agreements assumed by Buyer pursuant to
Section 2.1 hereof, supplies, leaseholds, leasehold improvements, machinery,
vehicles, furniture, office furnishings and fixtures, rights under contracts to
the extent not fully performed as of the Closing Date, purchase orders, trade
names, trademarks, trademark registrations, trademark applications, copyrights,
copyright registrations, copyright applications, patents, patent applications,
inventions, trade secrets, technical know-how, licenses, processes,
1.
<PAGE>
formula, royalties, computer programs, tapes, disks, computer hardware and
software, technical information, blueprints, drawings and other technical
papers, procedures and processes and the like, customer lists and files, and all
books and records pertaining to any of the aforementioned assets. Simultaneously
with such delivery, Seller shall take all additional steps as may be reasonably
necessary to put Buyer in possession and operating control of the Assets.
1.2 Instruments of Conveyance and Transfer. On the Closing Date, the
--------------------------------------
Seller shall deliver to Buyer such bills of sale, endorsements, assignments, and
other good and sufficient instruments of conveyance and assignment, satisfactory
in form and substance to Buyer and its counsel, as shall be effective to vest in
the Buyer, upon the Closing Date, full and complete right, title and interest in
and to the Assets, free and clear of all liens, taxes, charges and encumbrances.
1.3 Assignment of Contracts and Rights. Anything in this Agreement to
----------------------------------
the contrary notwithstanding, this Agreement shall not constitute an Agreement
to assign any claim, contract, license, lease, commitment, sale or purchase
order or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted transfer or assignment thereof, without the consent of
a third party thereto, would constitute a breach thereof or in any way affect
the rights of Buyer or of Seller thereunder. If such consent is not obtained, or
if an attempted transfer, sublease or assignment thereof would be ineffective or
would affect the rights of Seller thereunder so that Buyer would not in fact
receive all such rights, Seller will cooperate with Buyer to the extent
reasonably practicable to provide for Buyer the benefits under any such claims,
contracts, licenses, leases, commitments, sales or purchase orders or any claim
or right or any benefit arising thereunder or resulting therefrom, including
enforcement for the benefit of Buyer of any and all rights of Seller against a
third party thereto arising out of the breach or cancellation by such third
party or otherwise, with costs of litigation, if any, borne solely by Buyer;
Buyer shall cooperate fully with Seller to obtain such releases of Seller as
Seller reasonably requests (it being understood that a failure to obtain any
such release shall not be required hereby and shall not excuse Seller from its
obligations hereunder); and any transfer, sublease or assignment to Buyer by
Seller of any property or property rights or any contract or Agreement which
shall require the consent or approval of any third party, shall be made subject
to such consent or approval being obtained.
1.4 Excluded Assets.
---------------
(a) The Assets shall not include cash, cash equivalents,
receivables, rights under contracts to the payment of money for services
rendered prior to the Closing Date, or other current assets of Seller in
existence on the Closing Date and shall not include the other assets of Seller
described in Exhibit 1.4 hereto (collectively, the "Excluded Assets").
-----------
(b) Seller and Buyer agree that to the extent projects or contracts
are performed before and after the Closing Date, but are invoiced by Buyer after
the Closing Date, Buyer will pay over to Seller on collection of said invoices
an amount equal to the percentage of the invoices as shall equal the percentage
of completion of such projects and contracts (as determined in accordance
2.
<PAGE>
with past practices of the Company by Seller as at the Closing Date. In the case
of certain projects or contracts with respect to which, because of special
circumstances, such formula is unfair to Seller or Buyer, such allocation shall
be as set forth on Exhibit 1.4(b).
--------------
1.5 Consents. Seller shall use its best reasonable efforts to
--------
obtain all material consents to assignments of contracts in a timely manner.
II. CONSIDERATION FOR TRANSFER OF ASSETS.
------------------------------------
2.1 Consideration to be Paid.
------------------------
(a) In full consideration for the Assets, and subject to the
terms and conditions of this Agreement, the Buyer shall, on the Closing Date:
(i) pay to or upon the order of the Seller the amount of
Two Million Four Hundred Twenty-Five Thousand Dollars ($2,425,000) in
immediately available funds (U.S. Dollars) by wire transfer to such account as
the Seller may designate; and
(ii) deliver an undertaking, satisfactory in form and
substance to the Seller and its counsel (the "Assumption Agreement"), whereby
the Buyer (A) assumes any contracts or disclosed in Schedule 4.10 hereto or are
entered into subsequent to the date hereof in the ordinary course of business
agreements between Seller and customers of or vendors to the Seller for services
that have not been fully provided as of the Closing Date, to the extent, and
only to the extent, that (1) the services under the assumed contracts and
agreements are to be provided after the Closing Date and (2) neither the Seller
nor the other parties thereto are in default thereunder as of the Closing Date.
2.2 Allocation of Consideration. The consideration payable
---------------------------
hereunder shall be allocated among the Assets as described in Exhibit 2.2
-----------
hereof.
III. CLOSING DATE
------------
3.1 Closing Date. The closing with respect to the transactions provided
------------
for in this Agreement (the "Closing") shall take place at 2001 Marcus Avenue,
Lake Success, New York at 10 o'clock a.m. local time on November 1, 1996, or at
such other place, on such other date or at such other time as the parties hereto
may mutually agree (the "Closing Date"). Notwithstanding the foregoing, Seller
shall receive the economic benefits and be responsible for the liabilities and
obligations of Seller's business until November 3, 1996.
3.
<PAGE>
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDER.
------------------------------------------------------------
The Seller and Shareholder hereby jointly and severally represent and
warrant to the Buyer as follows:
4.1 Organization; Power; Good Standing. The Seller is a corporation
----------------------------------
duly organized, validly existing and in good standing under the laws of the
State of New York. The Seller has all requisite corporate power and authority to
own, operate and lease its properties, to carry on its business as now being
conducted and to enter into this Agreement and perform its obligations
hereunder. The copies of the Articles of Incorporation and Bylaws of the Seller,
as amended as of the date hereof, which have been delivered by the Seller to the
Buyer, are complete and correct. The Seller is duly qualified to do business as
a foreign corporation and is in good standing in each of the jurisdictions
listed in Section 4.1 of the Disclosure Schedule (the "Disclosure Schedule")
--------------------------------------
that has been executed and delivered by the parties concurrently with the
execution and delivery of this Agreement and the Seller has not failed to
qualify in any other jurisdiction in which property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary except where such failure would materially and adversely affect its
business and operations. Seller is currently performing services in the
jurisdictions identified as jurisdictions in which it is performing services in
Section 4.1 of the Disclosure Schedule.
- --------------------------------------
4.2 Subsidiaries; Names; Capital Stock; Fictitious Names.
----------------------------------------------------
(a) Except as disclosed in Section 4.2(a) of the Disclosure
--------------------------------
Schedule, Seller has no subsidiaries.
- --------
(b) Neither the Seller nor any of its subsidiaries has not
used any name for itself or its operations since January 1, 1991 other than
Continental Field Service Corporation and the other names set forth in Section
-------
4.2(b) of the Disclosure Schedule.
- ---------------------------------
4.3 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance by the Seller of this Agreement and the other agreements
contemplated hereby to which the Seller is a party have been duly and
effectively authorized by all necessary corporate action by the Seller. This
Agreement and the other agreements contemplated hereby to which they are parties
have been duly executed by the Seller and the Shareholder and are valid, legally
binding and enforceable obligations of the Seller and the Shareholder.
4.4 Effect of Agreement. Except as set forth in Section 4.4 of the
------------------- ------------------
Disclosure Schedule, the execution, delivery and performance of this Agreement
- -------------------
by the Seller and the Shareholder and the consummation of the transactions
contemplated hereby will not (i) require the consent, approval or authorization
of any person, corporation, partnership, joint venture or other business
association or public authority; (ii) violate, with or without the giving of
notice or the
4.
<PAGE>
passage of time, or both, any provisions of law or statute or any rule,
regulation, order, award, judgment or decree of any court or governmental
authority applicable to the Seller or the Shareholder; or (iii) with or without
the giving of notice, the passage of time, or both conflict with or result in a
breach or termination of any provision of, accelerate the performance or
maturity of, constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any of the assets of the Seller pursuant to any
corporate charter, bylaw, indenture, note, bond, mortgage, deed of trust, lease,
contract, permit, agreement or other instrument, or any order judgment, award,
decree, statute, ordinance, regulation or any other restriction of any kind or
character, to which the Seller or any Shareholder is a party, or by which the
Seller or any Shareholder or any of their respective assets may be bound.
4.5 Financial Statements. The balance sheet of the Seller, as of
--------------------
December 31, 1993, 1994 and 1995, and related statements of income and retained
earnings and statement of changes in financial position for each of the three
years then ended, compiled by the independent certified public accountants for
Seller, and the unaudited balance sheet of the Seller (the "Balance Sheet") as
of September 30, 1996 (the "Balance Sheet Date"), and related statement of
income and retained earnings for the same period, all as set forth in Section
-------
4.5 of the Disclosure Schedule, are in accordance with the books and records of
- ------------------------------
the Seller, are complete and correct in all material respects, fairly present in
all material respects the financial position and results of operations of the
Seller as of the dates and for the periods indicated and have been prepared in
conformity with generally accepted accounting principles applied on a basis
consistent with prior years. The audited balance sheets for the years ended
1993, 1994 and 1995 and the statements of income and retained earnings for the
same periods and the unaudited balance sheet and statement of income and
retained earnings for the nine (9) months ended on the Balance Sheet Date,
described above, are collectively referred to herein as the "Financial
Statements."
4.6 Undisclosed Liabilities. Except as and to the extent disclosed
-----------------------
therein, the Seller had, at the date of the Financial Statements, no material
liabilities or obligations of any kind, whether accrued, absolute, contingent or
otherwise, whether or not such liabilities or obligations would have been
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles. Neither the Seller nor the Shareholder
knows or has any reasonable grounds to know of any basis, as of the date of the
Financial Statements, for assertion against the Seller of any material claim or
liability of any nature in any amount not fully disclosed in the Financial
Statements.
4.7 Absence of Certain Changes or Events. Since the Balance Sheet
------------------------------------
Date, in conducting its business and affairs, including but not limited to use
and operation of the Seller's assets, the Seller has not:
(a) incurred any obligation or liability (contingent or otherwise)
except (i) normal trade or business obligations incurred in the ordinary course
of business, the performance of which will not, individually or in the
aggregate, have a material adverse effect on the Seller's financial condition or
results of operations and (ii) obligations under contracts, agreements, leases
5.
<PAGE>
and easements described in Section 4.7(a) of the Disclosure Schedule, the
-----------------------------------------
performance of which will not, individually or in the aggregate, have a material
adverse effect on the Seller's financial condition or results of operations;
(b) mortgaged, pledged or subjected to any lien, charge, security
interest or to any other encumbrance any of the assets of the Seller (whether
tangible or intangible);
(c) made any material additions to, sold, assigned, transferred,
conveyed, leased or otherwise disposed of, or agreed to sell, assign, transfer,
convey, lease or otherwise dispose of any of its assets or properties, except
for fair consideration in the ordinary course of business;
(d) canceled or compromised any debt or claim, except for
adjustments made in the ordinary course of business which, in the aggregate, are
not material;
(e) waived or released any rights, whether or not in the ordinary
course of business;
(f) transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, trade names, copyrights,
or with respect to any know-how;
(g) made or granted any general wage or salary increase or entered
into any written employment contract with any officer or employee involving an
annual basic rate of compensation in excess of $80,000 or a period of employment
of more than thirty days;
(h) entered into any transaction, contract or commitment performed
its obligations under any contract or commitment, modified or amended any
contract or commitment other than in the ordinary course of business;
(i) made any capital expenditure or entered into any commitment
therefor which, individually, exceeds $50,000;
(j) suffered any material casualty loss or damage, whether or not
such loss or damage shall have been covered by insurance;
(k) suffered any material adverse change in its operations,
earnings, assets, liabilities, properties, business or prospects or in its
condition, financial or otherwise;
(l) lost any supplier or suppliers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Seller;
6.
<PAGE>
(m) lost any customer or customers which loss or losses,
individually or in the aggregate, has or may have a material adverse effect on
the results of operations of the Seller; or
(n) introduced any material change with respect to the operation
of its business, including its method of accounting, whether by act or by lapse
of time or attention.
4.8 Tax Matters. The Seller has duly filed with the appropriate United
-----------
States, state and local governmental agencies, and with the appropriate foreign
countries and political subdivisions thereof, all tax returns and reports
required to be filed; such returns and reports are accurate and complete; and
the Seller has paid in full or made adequate provisions for all taxes, interest,
penalties, assessments or deficiencies shown to be due on such tax returns and
reports or claimed to be due by any taxing authority or otherwise due and owing.
The Seller has made all withholdings of tax required to be made under all
applicable United States, state and local tax regulations and such withholdings
have either been paid to the appropriate governmental agencies or set aside in
accounts for such purpose or accrued, reserved against and entered upon the
books of the Seller. The provisions for income taxes payable reflected in the
Financial Statements are adequate. The United States income tax liabilities of
the Seller have been examined and reported on by the Internal Revenue Service
(or closed by applicable statutes of limitations) and finally determined and
fully paid for all fiscal years prior to and including the fiscal year ended
December 31, 199[2]. Except as described in Section 4.8 of the Disclosure
-----------------------------
Schedule, the Seller has not executed or filed with the Internal Revenue Service
- --------
or any other taxing authority, domestic or foreign, any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any taxes. Except as described in Section 4.8 of the Disclosure
-----------------------------
Schedule, the Seller is not a party to any pending action or proceeding, nor is
- --------
any action or proceeding threatened, by any governmental authority for
assessment or collection of taxes and no claim for assessment or collection of
taxes has been asserted against the Seller.
4.9 Title to Properties; Absence of Liens and Encumbrances.
------------------------------------------------------
(a) The Seller owns no real property.
(b) Schedule 4.9 of the Disclosure Schedule is a correct and
---------------------------------------
complete listing of all personal property owned of record or beneficially by the
Seller included in the Assets requiring specific documents of transfer other
than patent assignments, trademark assignments and bills of sale in order to
effectively transfer title of thereto from the Seller to the Buyer, together
with a brief description of the documents required.
(c) Seller has good title to all of the Assets, tangible and
intangible (including all property reflected in the Financial Statements or in
Schedule 4.9 of the Disclosure Schedule), free and clear of claims, liens and
- ---------------------------------------
encumbrances of any sort whatsoever and will on the Closing Date, convey such
title in the Assets to Buyer.
7.
<PAGE>
4.10 List of Properties, Contracts and Other Data. Section 4.10 of the
-------------------------------------------- -------------------
Disclosure Schedule is a correct and complete list setting forth the following
- -------------------
information with respect to the assets of the Seller (indicating in each case,
where appropriate, whether or not the consent by a third party is required in
connection with the sale of the Assets to the Buyer):
(a) all leases and easements of real property to which the Seller
is a party and belonging to or used in its business, and a brief description of
the principal buildings and structures located thereon and the equipment located
therein, with the annual rental rate of each lease and easement, the termination
date of each lease and easement and the conditions of renewal thereof being
given in each case;
(b) all rights, licenses, leases of personal property, permits,
franchises, concessions, certificates of public convenience and the like to
which the Seller is a party and belonging to or used in its business, together
with a brief description of the terms thereof;
(c) (i) all United States and foreign patents, trademarks and
trade names, trademark and trade name registrations, copyrights and copyright
registrations, unexpired as of the date hereof, all United States and foreign
applications pending for patents, for trademark or trade name registrations, or
for copyright registrations, and all trademarks, trade names, labels and other
trade rights in use by the Seller, all of the foregoing belonging to or used in
its business and being owned in whole or in part as noted thereon by the Seller
and (ii) all licenses granted by or to the Seller and all other agreements to
which the Seller is a party, which relate in whole or in part to any items of
the categories mentioned in clause (i) above or to any other proprietary rights
belonging to or used in its business, whether owned by the Seller or otherwise;
(d) all policies of insurance in force (with a notation as to the
status of premiums paid thereon) with respect to the Seller, including without
limitation those covering its properties, buildings, machinery, equipment,
fixtures, public liability and operations;
(e) all existing contracts and commitments belonging to or
used in the Seller's business (including loan agreements, credit agreements and
security agreements) to which the Seller is a party or by which the Seller or
any of its properties or assets is bound, except (i) contracts or commitments
involving the payment by or to the Seller of less than $5,000 with respect to
any one contract or commitment or $20,000 with respect to any related group of
contracts or commitments, (ii) contracts or commitments terminable by the Seller
without liability or expense on thirty days' notice or less, and (iii) contracts
or commitments for the purchase or sale of merchandise or services entered into
in the ordinary course of business, the performance of which by the Seller will
extend over a period of less than three months and which will not individually
or in the aggregate, have any material adverse effect on the financial condition
or results of operations of the Seller; provided, however, that a list of
customers with 1996 billings shall satisfy the requirements in this subsection
(e);
8.
<PAGE>
(f) all collective bargaining agreements, pension plans,
employment and consulting agreements, executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans and hospitalization insurance or other plans or
arrangements providing for benefits for employees or former employees of the
Seller (indicating, with respect to each of the individuals named pursuant to
subparagraph (h) below, the amount received in the year ended December 31, 1995
under each such agreement, plan or arrangement);
(g) the names and current salary rates of all administrative
employees of the Seller;
(h) the names and current hourly rates of all billable
employees of the Seller;
(i) the names and percentage rates of all employees of the
Seller who perform fixed price work;
(j) the names of all retired employees of the Seller who are
receiving or are entitled to receive any unfunded pensions not covered by any
pension plan to which the Seller is a party, their ages and their current annual
unfunded pension rates; and
(k) the name of each bank or other financial institution from
which credit commitments of the Seller are outstanding, together with a brief
description of such commitments.
True and complete copies of all documents, including all amendments
thereto, referred to in such list have been delivered to the Buyer. All
documents, rights, obligations and commitments referred to in such list are
valid and enforceable in accordance with their terms for the periods stated
therein and there is not under any of them any existing breach, default, event
of default or event which with the giving of notice or lapse of time, or both,
would constitute a default nor had any party thereto given notice of or made a
claim with respect to any breach or default. To the best knowledge of the Seller
and the Shareholder, there are no existing laws, regulations or decrees, which
adversely affect any of such documents, rights, obligations or commitments. None
of the contracts referenced or listed in Section 4.10 of the Disclosure Schedule
-------------------------------
was obtained or executed based in whole or in part on the fact or representation
that the Seller 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.
4.11 Litigation. Except as disclosed in Section 4.11 of the Disclosure
---------- ------------------------------
Schedule, there are no claims, actions, suits, proceedings or investigations
- --------
pending or threatened against or affecting the Seller at law or in equity or in
admiralty, or before or by any federal, state, municipal or governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, United States or foreign, nor does the Seller or either
Shareholder know of any facts which would provide a basis for any such claim,
action, suit, proceeding or investigation.
9.
<PAGE>
No claim, action, suit, proceeding or investigation described in Disclosure
----------
Schedule 4.11 could, if adversely decided, have a material adverse effect on the
- -------------
condition (financial or otherwise), assets, liabilities, earnings or business of
the Seller.
4.12 Labor Matters. Except as disclosed in Section 4.12 of the
------------- -------------------
Disclosure Schedule, there are no controversies pending or threatened between
- -------------------
the Seller and any of its employees and the Seller has not taken or failed to
take any action which would provide a reasonable basis for any such controversy.
There are no proceedings now pending nor, to Seller's or Shareholder's knowledge
or belief, threatened against the Seller before the National Labor Relations
Board, any state department of labor, any state commission on human rights, the
Equal Employment Opportunity Commission or any other local, state or federal
agencies having jurisdiction over employee rights with respect to hiring, tenure
or conditions of employment, nor have there been any such proceedings since
January 1, 1993. The Seller has complied with respect to all employees,
including without limitation staff employees and those chargeable to others,
with all laws relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining and the payment of
social security and similar taxes, and is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing. All non-
exempt employees have been paid appropriate and correct premium wages where
applicable. Except as set forth in Section 4.25 of the Disclosure Schedules,
----------------------------------------
there have been no payments 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 employees or employees chargeable to others as consultants or
independent contractors within the past three (3) years with the exception of
those listed on Section 4.25 of the Disclosure Schedule. To the best of Seller's
---------------------------------------
knowledge, there are no present employees of the Seller who will not be
available for employment by the Buyer on substantially the same terms and
conditions as they are presently employed by the Seller. There are no
organizational efforts presently being made or threatened by or on behalf of any
labor union with respect to employees of the Seller.
4.13 Patents; Trademarks; Intellectual Property Rights. The Seller has
-------------------------------------------------
protected by way of trademark, trade name or otherwise to the fullest extent
permitted by the law the names set forth in Section 4.13 of the Disclosure
------------------------------
Schedule. Sections 4.10 and 4.13 of the Disclosure Schedule list all patents,
- -------- -------------------------------------------------
trademarks, trade names, copyrights, trade secrets, registrations, applications,
technical information, data, formulae, blueprints, drawings, computer hardware
and software, proprietary know-how, manufacturing procedures, process and the
like ("Intellectual Property Rights") necessary for the conduct of the Seller's
business as now conducted. Except as described in Sections 4.10 or 4.13 of the
----------------------------
Disclosure Schedule, all such Intellectual Property Rights owned by the Seller
- -------------------
are in good standing, are valid and enforceable and are free from any default on
the part of the Seller. The Seller is not a licensor of any Intellectual
Property Rights, nor is the Seller violating the Intellectual Property Rights of
others. No director, officer or employee of the Seller owns, directly or
indirectly, in whole or in part, any of the Intellectual Property Rights or
interests therein which the Seller has used, is presently using, or the use of
which is necessary for the Seller's business as now conducted.
10.
<PAGE>
4.14 Assets.
------
The tangible personal property of the Seller is in good operating
condition, normal wear and tear excepted, and is for its intended purpose. There
are no actions pending or threatened or consent decrees, orders or agreements
entered by the United States, any state or local regulatory agency or court with
respect to the compliance of such property with applicable laws, statutes,
ordinances or regulations, including, without limitation, the Environmental Laws
(as that term is defined in Section 4.23 hereto).
4.15 Insurance.
---------
(a) All insurable properties of the Seller belonging to or
used in its business are adequately insured for the Seller's benefit against all
risks usually insured against by persons owning or operating similar properties
in the localities where such properties are located, all under valid and
enforceable policies insured by insurers of recognized responsibility, and (b)
the Seller is adequately insured, for its benefit, against all product liability
claims relating to products manufactured, fabricated, sold or delivered by it to
the same extent that the risks of such claims are insured against by persons
manufacturing, fabricating, selling or delivering similar products, all under
valid and enforceable policies insured by insurers of recognized responsibility.
4.16 Licenses; Permits; Authorizations. Section 4.16 of the Disclosure
--------------------------------- ------------------------------
Schedule is a schedule of all approvals, authorizations, consents, licenses,
- --------
orders and permits (except for sales and use tax permits and franchise tax
regulations) of all governmental agencies, whether United States, state or
local, or foreign, required by the nature of the business conducted by the
Seller to permit the continued operation of such business in the manner in which
it was conducted as of the date hereof (indicating in each case, where
appropriate, whether or not the consent by a third party to the transfer to the
Buyer is required and the expiration date of any governmental approvals). The
Seller has all material approvals, authorizations, consents, licenses, orders
and other permits of all governmental agencies, whether United States, state,
local or foreign, required to permit the operation of the Seller's business as
presently conducted and the Seller's business is and has been operated in all
material respects in compliance therewith.
4.17 Compliance with Applicable Law. The conduct of the Seller's
------------------------------
business does not violate or infringe any domestic or foreign laws, statutes,
ordinances or regulations or any right or patent, trademark, trade name,
copyright, know-how or other proprietary right of third parties, the enforcement
of which would adversely affect the Seller's business or the value of its
properties and assets.
4.18 Pension and Employee Benefit Plans.
----------------------------------
(a) The Seller is not a party to and has not contributed to
any employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974,
11.
<PAGE>
as amended ("ERISA")) or employee welfare benefit plans (as defined in Section
3(1) of ERISA and including, in each case, multi-employer plans) or any
incentive, bonus, profit sharing, deferred compensation, stock option, stock
purchase plan or agreement, severance, termination or other compensation plan or
arrangement, or any other material employee fringe benefit plans presently
maintained by, or contributed to by the Seller or any current Affiliate, as
defined below, except those described on Section 4.10 of the Disclosure
------------------------------
Schedule. The Seller's pension plans (the "Plans") are duly qualified under
- --------
Section 401 of the Internal Revenue Code (the "Code"), all reports and actions
required to be taken in connection with such Plans have been so taken, there
have been no reportable events or prohibited transactions in connection with
such Plans nor any termination or partial termination with respect thereto or to
any other plan maintained by the Seller or by an entity controlling, controlled
by or under common control with, the Seller.
(b) A true and complete copy of (1) each Benefit Plan and any
related agreement, and (2) all summary plan descriptions, (3) the most recent
annual report, (4) the most recent actuarial valuation (if applicable), (5) any
other financial statements or disclosures, and (6) the most recent determination
letter received from the Internal Revenue Service (if applicable), with respect
to any Benefit Plan, has been furnished to the Buyer.
(c) The Seller, each current Affiliate and each of the Benefit
Plans, are in compliance in all material respects with the applicable provisions
of ERISA, and those provisions of the Code applicable to Benefit Plans.
(d) Except as may be disclosed on the Balance Sheet, neither
the Seller nor any current Affiliate has any liability with respect to any
Benefit Plan that is not fully reflected in the materials delivered to Buyers
pursuant to subsection (b), nor is any asset of the Seller or any current
Affiliate subject to any lien under Code Section 401(a)(29), ERISA Section
302(f) or Code Section 412(n), ERISA Section 4068 or arising out of any action
filed under ERISA Section 4301(b).
(e) Neither the Seller or any other employer (an "Affiliate")
that is, or was at any time after September 2, 1974, together with the Seller,
treated as a "single employer" under section 414(b), 414(c) or 414(m) of the
Code incurred any liability which could subject any of the parties to this
Agreement to material liability under Section 4062, 4063 or 4064 of ERISA.
(f) Neither the Seller nor any current Affiliate is required
to contribute to any multiemployer plan, within the meaning of Section
4001(a)(3) or ERISA. Neither the Seller nor any Affiliate, while an Affiliate,
has incurred any withdrawal liability, within the meaning of Section 4201 of
ERISA to any multiemployer pension plan, which liability has not been fully paid
as of the date hereof.
4.19 Certain Relationships; Transactions with Management.
---------------------------------------------------
12.
<PAGE>
(a) Section 4.19 of the Disclosure Schedule accurately describes
---------------------------------------
all relationships among the directors, the officers and the shareholders of the
Seller.
(b) Except as described in Section 4.19 of the Disclosure
------------------------------
Schedule, the Seller is not a party to any contract, lease or commitment with
- --------
any officer, director or shareholder (or any affiliate of any such officer,
director or shareholder) of the Seller, nor are there any loans outstanding to
any of such persons (or any affiliate of any such person) from the Seller.
(c) Neither the Seller nor the Shareholder (and/or any member
of their respective immediate families) has a financial interest (direct or
indirect) in any competitor, supplier or customer of the Seller.
4.20 Adverse Agreements; No Adverse Change.
-------------------------------------
(a) Except as disclosed in Section 4.20 of the Disclosure
------------------------------
Schedule, the Seller is not a party to or subject to any agreement or instrument
- --------
or subject to any charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule or regulation which adversely affects or, insofar
as the Seller can now foresee, may in the future adversely affect its business
operations, prospects, properties, assets or conditions, financial or otherwise.
(b) Except as disclosed in Section 4.20 of the Disclosure
------------------------------
Schedule, there has not been any adverse change in, or development adversely
- --------
affecting, the business, assets, financial position or results of operations of
the Seller (including, without limitation, any fire or other casualty loss to
any of the assets of the Seller) nor is the Seller aware of any such adverse
change or development which may occur in the future.
4.21 Assets Relationship to Business of the Seller. The Assets,
---------------------------------------------
together with the assets (the "Continental Assets") that Buyer is acquiring from
Continental, constitute all of the properties and assets used or useful in or
necessary to the conduct of the business and affairs of the Seller other than
the accounts receivable, cash and cash equivalents of Seller, which are required
for working capital purposes, and, as such, constitute, together with the
Continental Assets and accounts receivable, cash and cash equivalents of Seller,
all of the properties and assets necessary in order for the Buyer to conduct
business operations subsequent to the Closing in the manner in which the same
are presently conducted by the Seller.
4.22 Environmental Matters.
---------------------
(a) Seller has been issued and is in compliance with all
federal, state and local permits, certificates, licenses, approvals and other
authorizations and has filed all notifications, relating to air emissions,
effluent discharges and solid and hazardous waste storage, treatment and
disposal required in connection with the operation of the business of the
Seller.
13.
<PAGE>
(b) There are no outstanding notices of violation, orders,
claims, citations, complaints, penalty assessments, suits or other proceedings,
administrative, civil, criminal, at law or in equity pending against Seller and,
to the best knowledge of the Seller and the Shareholder, no investigation or
review is pending or threatened against Seller by any governmental entity with
respect to any alleged violation of any federal, state or local environmental
law, regulation, ordinance, standard, permit or order in connection with the
conduct of the business of the Seller.
(c) Except as otherwise disclosed on Section 4.23 of the
-------------------
Disclosure Schedule, the Seller is not in violation of The Comprehensive
- -------------------
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), The
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), The Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, The Clean Water Act, the Toxic Substances Control Act
and The Clean Air Act or any rule or regulation promulgated pursuant to any of
the foregoing statutes, or any other applicable environmental law, statute,
rule, regulation or ordinance (all of the foregoing are hereinafter sometimes
collectively referred to as the "Environmental Laws").
(d) Except as otherwise disclosed in Section 4.23 of the
-------------------
Disclosure Schedule, neither the Seller, nor any of its officers, employees,
- -------------------
agents or independent contractors has arranged, by contract, agreement or
otherwise, (i) for the disposal or treatment of, or (ii) with a transporter for
the transport or disposal or treatment of, any hazardous substance (as defined
by CERCLA, as amended);
(e) To the best knowledge of the Seller, no predecessor of the
Seller has arranged by contract, agreement or otherwise, (i) for the disposal or
treatment of, or (ii) with a transporter for transport for the disposal or
treatment of, any hazardous substances (as defined by CERCLA, as amended);
(f) The Seller is neither an "owner" or "operator" of a
"facility" as defined by CERCLA, as amended; and
(g) Except as otherwise set forth in Section 4.23 of the
-------------------
Disclosure Schedule, the Seller did not "own" or "operate" any "facility" at the
- -------------------
time any hazardous substances were disposed of within the meaning of CERCLA, as
amended.
(h) To the best of Seller's knowledge, no hazardous, toxic or
polluting substances have been released, discharged or disposed of on property
now or formerly owned or operated by Seller. To the best of Seller's knowledge,
no PCBs, asbestos or urea formaldehyde insulation is present at any such
property. There are no underground storage tanks at the property of the Seller.
The Seller has not received from any federal, state or local environmental
regulatory entity or third party requests for information, notice of claim,
demand letters, or other notification that in connection with the conduct of the
business, it is or may be potentially responsible with respect to any
investigation or clean-up of hazardous substance releases at any sites.
14.
<PAGE>
(i) To the best of Seller's knowledge, no wastes generated by
Seller have ever been sent directly or indirectly to any site listed or formally
proposed for listing on the National Priority List promulgated pursuant to
CERCLA or to any site listed on any state list of hazardous substance sites
requiring investigation or clean-up.
4.23 Books and Records. The books, records and work papers of the
-----------------
Seller are complete and correct, have been maintained in accordance with good
business practices and accurately reflect the basis for the financial condition
and results of operations of the Seller set forth in the Financial Statements
referred to in Section 4.5 hereof. The corporate record books of the Seller have
been duly and properly maintained, are in good order; complete, accurate, and up
to date; and set forth all meetings and actions heretofore held and/or taken by
the stockholders and/or directors of the Seller.
4.24 Improper Payments. Neither the Seller (including any present or
-----------------
former officers, directors, employees or agents or other third party acting on
behalf of the Seller) 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, to obtain special concessions to pay for
favorable treatment for business secured or for special concessions already
obtained or to otherwise attempt to influence any such person or entity to take
or refrain from taking any action relating to the Seller; (ii) paid, donated,
leased or made available funds or property of any kind, 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) made any loans, donations, or other disbursements, directly or
indirectly, to officers or employees of the Seller, so that contributions,
donations, loans or payment could 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; or
(iv) maintained 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 Seller.
4.25 Use of Independent Contractors. The Seller has not retained the
------------------------------
services of any independent contractor or consultant for assignment to customers
within the past two (2) years except as described on Section 4.25 of the
-------------------
Disclosure Schedule.
- -------------------
4.26 Other Information. None of the information and documents
-----------------
furnished or to be furnished by the Seller to the Buyer or any of its
representatives in connection with the execution, delivery and closing of this
Agreement is or will be false or misleading, or contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact required to make the statements therein fair and accurate.
V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
15.
<PAGE>
The Buyer represents and warrants to the Seller as follows:
5.1 Organization; Good Standing; Power. The Buyer is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties, to carry on its business as now being conducted and to
enter into this Agreement and perform its obligations hereunder. The copies of
the Articles of Incorporation and Bylaws of the Buyer, which have been delivered
to the Seller are complete and correct. The Buyer is duly qualified to do
business as a foreign corporation and is in good standing in each of the
jurisdictions in which the property owned, leased or operated by it or the
nature of the business conducted by it after the consummation of the transaction
contemplated hereunder makes such qualification necessary.
5.2 Authority Relative to Agreement. The execution, delivery and
-------------------------------
performance of this Agreement, and the transactions contemplated hereby by the
Buyer, have been duly and effectively authorized and ratified by all necessary
corporate action. This Agreement has been duly executed by Buyer and is a valid,
legally binding and enforceable obligation of Buyer.
5.3 Effect of Agreement. The execution, delivery and performance of
-------------------
this Agreement and the consummation of the transactions contemplated hereby do
not (i) require the consent, approval or authorization of any person,
corporation, partnership, joint venture or other business association or other
public authority; (ii) violate, with or without the giving of notice or the
passage of time, or both, any provisions of law applicable to the Buyer; or
(iii) conflict with or result in a breach or termination of any provision of, or
constitute a default under, or result in the creation of any Lien upon any of
the properties or assets of the Buyer pursuant to any indenture, corporate
charter, bylaw, indenture mortgage, deed of trust, lease, contract, agreement or
other instrument or any order, judgment, award, decree, statute, ordinance,
regulation or any other restriction of any kind or character, to which the Buyer
is a party, or by which the Buyer or any of its assets or properties may be
bound.
VI. TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
6.1 Access to Information. The Seller shall give to the Buyer, its
---------------------
employees, counsel, accountants, engineers and other consultants and
representatives, full access during normal business hours throughout the period
prior to the Closing Date to the assets, books, contracts, commitments and
records of the Seller for such purposes as Buyer deems appropriate, including
but not limited to testing of the assets provided the same does not unreasonably
interfere with the Seller's business, and will furnish to the Buyer during such
period all such information concerning the affairs of the Seller as the Buyer or
its representatives may reasonably request. The Buyer shall use its best efforts
to cause its representatives to hold in strict confidence all information so
obtained from the Seller and, if the transactions herein provided for are not
consummated as contemplated herein, the Buyer will return all such data as the
Seller may reasonably request.
16.
<PAGE>
6.2 Conduct of the Seller's Business Pending the Closing Date. The
---------------------------------------------------------
Seller hereby agrees that prior to the Closing Date it will:
(a) operate its business only in the usual, regular and
ordinary manner and, to the extent consistent with such operation, use its best
efforts to preserve its present business organization and reputation intact,
keep available the services of its present officers and employees and preserve
its present relationships and good will with persons having business dealings
with it;
(b) maintain all of the Assets in customary repair, order and
condition, reasonable wear and use excepted, and maintain insurance upon all of
its properties and with respect to the conduct of its business in such amounts
and of such kinds comparable to that in effect on the date hereof; and, in the
event of a casualty, loss or damage to any of such properties prior to the
Closing Date for which the Seller is insured, the Seller shall, at Buyer's
option, either repair or replace such damaged property or transfer the proceeds
of such insurance to the Buyer;
(c) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years; endeavor to
comply with all laws and contractual obligations applicable to it and to the
conduct of its business; and perform all of its obligations without default;
(d) use its best efforts to comply duly with all laws
applicable to it and the conduct of its business;
(e) conduct its operations so as to comply with all
Environmental Laws;
(f) make no amendment in its Articles of Incorporation or
Bylaws; and enter or agree to enter into no merger or consolidation with, or
sale of a significant amount of its assets to, any corporation or change the
character of its business in any manner;
(g) make or grant no general wage or salary increase or
increase in compensation payable or to become payable to any employee, officer,
director or agent; pay or provide for no bonus, stock option, stock purchase,
profit sharing, deferred compensation, pension, multi-employer pension,
retirement or other similar payment or arrangement except in the ordinary course
of administering existing plans referred to in Section 4.10 of the Disclosure
------------------------------
Schedule; pay or provide for no unfunded pensions, not covered by any pension
- --------
plan, other than the unfunded pensions, if any, referred to in Section 4.10 of
---------------
the Disclosure Schedule and enter into no employment or consulting agreement or
- -----------------------
sales agency with respect to the performance of personal services which is not
terminable without liability by Seller on thirty days notice or less.
(h) (i) incur or become subject to, or agree to incur or
become subject to, no obligation or liability (contingent or otherwise), subject
to the exceptions enumerated in Section 4.7(a) hereof; (ii) discharge or satisfy
no lien or encumbrance and pay no obligation or liability
17.
<PAGE>
(contingent or otherwise), subject to the exceptions enumerated in Section
4.7(b) hereof; (iii) mortgage, pledge or subject to lien, charge, security
interest or any other encumbrance none of its assets or properties; (iv) sell,
assign, transfer, convey, lease or otherwise dispose of, or agree to sell,
assign, transfer, convey, lease or otherwise dispose of, none of its assets or
properties, except for fair consideration in the ordinary course of business;
(v) acquire or lease (other than a renewal of an existing lease in the ordinary
course of business), or agree to acquire or lease (other than a renewal of an
existing lease in the ordinary course of business, no material assets of
property; (vi) cancel or compromise no debt or claim, except for adjustments or
settlements made in the ordinary course of business; (vii) waive or release no
rights; (viii) transfer or grant no rights under any concessions, leases,
licenses, agreements, patents, inventions, trade names, trademarks, copyrights,
or with respect to any know-how or Intellectual Property Rights; (ix) modify,
change or terminate no existing license, lease, contract or other document
referred to in Section 4.10 of the Disclosure Schedule; (x) make no capital
---------------------------------------
expenditures and enter into no commitments therefor which, individually exceed
$5,000; (xi) enter into no collective bargaining agreement and, through
negotiation or otherwise, make no commitment or incur any liability to any labor
organization; and (xii) enter into no transaction and make or enter into no
contract or commitment which by reason of its size or otherwise is not in the
ordinary course of business or perform its obligation other than in the ordinary
course of business;
(i) make no renovation of property involving any obligation on
the part of the Seller in excess of $15,000 in the aggregate;
(j) make no change in its accounting procedures;
(k) enter into no transaction, nor any agreement or
understanding with respect to such transaction; and
(l) use its best efforts not to permit any event to occur
which would result in any of the Seller's or the Shareholder's representations
and warranties contained in this Agreement not being true and correct at and as
of the time immediately after the occurrence of such transaction or event.
6.3 Consents. The Seller and the Shareholder agree that they shall use
--------
their best efforts to obtain prior to the Closing Date all such consents,
assignments, and approvals as may be required in order to enable them to perform
their obligations hereunder, including, but not limited to, all consents and
approvals required so that the Seller may continue to enjoy after the Closing
Date all rights and benefits presently enjoyed by it. It is expressly
acknowledged and agreed by the Seller and the Shareholder that Buyer is
negotiating with Seller's bank lenders to obtain their consent to the
transactions contemplated hereby. The Seller and the Shareholder agree that to
the extent necessary that they shall cooperate in such negotiations and
otherwise authorizes Buyer to negotiate with such lenders for their consent to
the transaction and such additional borrowings by Buyer as it deems appropriate
to consummate this transaction.
18.
<PAGE>
VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDER
----------------------------------------------------------
The obligations of the Seller under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
7.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Buyer herein contained shall be true and correct on and as
of the Closing Date, with the same force and effect as though made on and as of
such date, except as affected by the transactions contemplated hereby.
7.2 Performance of Agreements. The Buyer shall have performed all
-------------------------
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
7.3 Officers' Certificate. Buyer shall have furnished the Seller with
---------------------
a certificate, dated as of the Closing Date, of the Buyer's President or Vice
President, to the effect that the Buyer has fulfilled the conditions specified
in Sections 7.1 and 7.2 hereof.
7.4 Resolutions of Board of Directors. The Seller shall have received
---------------------------------
from the Buyer a certified copy of the Resolutions of the Board of Directors of
the Buyer approving this Agreement and authorizing the consummation of the
transactions contemplated hereby.
7.5 Opinion of Counsel for the Buyer. The Seller shall have received
--------------------------------
an opinion of counsel for the Buyer, dated the Closing Date, satisfactory in
form and substance to the Seller and its counsel, to the effect that:
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its property,
to carry on its business and to enter into this Agreement and perform its
obligations hereunder.
(b) The execution, delivery and performance of this Agreement
and the Contingent Payment Certificate by the Buyer and the consummation of the
transactions contemplated hereby have been duly and effectively authorized and
ratified by all necessary corporate action on the part of the Buyer and do not
require the consent, approval or authorization of any person or public
authority, do not violate, with or without the giving of notice and/or the
passage of time, any provision of law now applicable to the Buyer and do not
conflict with or result in a breach or termination of any provision of, or
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Buyer pursuant to, any
indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument known to such counsel, to which the Buyer is a party or by which the
Buyer or any of its assets and properties may be bound and will not result in a
violation of the Articles of Incorporation or Bylaws of the Buyer.
19.
<PAGE>
(c) This Agreement has been duly executed by the Buyer and is
the valid, legally binding and enforceable obligation of the Buyer, except as
the same may be limited or otherwise affected by applicable bankruptcy,
insolvency or other laws affecting creditors' rights or contractual obligations
generally.
7.6 Closing of Continental Transaction. The transactions contemplated
----------------------------------
by the Continental Agreement shall have closed concurrently with the closing of
the transactions contemplated hereby.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
------------------------------------------------
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions.
8.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Seller herein contained shall be true and correct on and
as of the Closing Date with the same force and effect as though made on and as
of such date, except as affected by transactions contemplated hereby.
8.2 Performance of Agreements. The Seller shall have performed all
-------------------------
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it at or prior
to the Closing Date.
8.3 Officers' Certificate. The Seller shall have furnished the Buyer
---------------------
with a certificate dated as of the Closing Date, of the President or Vice
President of the Seller, to the effect that the Seller has fulfilled the
conditions specified in Sections 8.1 and 8.2 hereof.
8.4 Resolutions of Board of Directors and Sole Shareholder. The Buyer
------------------------------------------------------
shall have received from the Seller a certified copy of the Resolutions of the
Board of Directors and of the sole shareholder of Seller approving this
Agreement and authorizing the consummation of the transactions contemplated
hereby.
8.5 Opinion of Counsel for the Seller. The Buyer shall have received
---------------------------------
an opinion of counsel for the Seller and the Shareholder, dated the Closing
Date, in form and substance satisfactory to the Buyer and its counsel, to the
effect that:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; the Seller has all requisite corporate power to enter into this
Agreement and to perform its obligations hereunder; and the Seller has all
requisite corporate power and authority to own, lease and operate its properties
as now owned, leased and operated, to carry on its business as now being
conducted.
20.
<PAGE>
(b) The execution, delivery and performance by the Seller of
this Agreement and the other documents as required hereby to be executed by the
Seller and the consummation of the transactions contemplated hereby and thereby
have been duly and effectively authorized by all necessary corporate action on
the part of the Seller.
(c) The execution, delivery and performance of this Agreement
by the Seller and the Shareholder and the consummation of the transactions
contemplated hereby do not require the consent, approval, authorization,
license, order or permit of any person or public authority (except those
consents, approvals, authorizations, licenses, orders and permits which have
been duly obtained, specifying the same), do not violate, with or without the
giving of notice or the passage of time, or both, any provision of law now
applicable to the Seller and do not conflict with or result in a breach or
termination of any provision of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance upon any of the properties or
assets of the Seller or the Shareholder pursuant to, any corporate charter,
bylaws, indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument, or any order, judgment, award, decree, statute, ordinance,
regulation or any other restrictions of any kind or character, known to such
counsel, to which the Seller or the Shareholder is a party or by which the
Seller or the Shareholder or any of their respective assets or properties may be
bound and will not result in a violation of the Seller's Articles of
Incorporation or Bylaws.
(d) This Agreement and the other documents the Seller is
required to execute hereunder have been duly executed by the Seller and are the
valid, legally binding and enforceable obligations of the Seller, except as the
same may be limited or otherwise affected by applicable bankruptcy, insolvency
or other laws affecting creditors' rights or contractual obligations generally
or the exercise of judicial discretion in the application of principles of
equity in appropriate cases.
(e) The Shareholder has the legal capacity to execute and
deliver this Agreement and any other documents required to be executed and
delivered by the Shareholder hereunder, to perform her obligations hereunder and
thereunder and to consummate the transactions contemplated thereby. This
Agreement and the other documents required to be delivered by the Shareholder
hereunder constitute the valid and legally binding obligations of the
Shareholder, enforceable against the Shareholder in accordance with the
respective terms of said agreements, except as the same may be limited or
otherwise affected by applicable bankruptcy, insolvency or other laws affecting
creditors' rights or contractual obligations generally.
(f) Except as disclosed in Section 4.11 of the Disclosure
------------------------------
Schedule, to the best knowledge of such counsel, there are no actions, suits or
- --------
proceedings pending or, threatened against or affecting the Seller at law or in
equity or in admiralty, or before or by any United States, state, municipal or
other governmental or non-governmental department, commission, board, bureau,
agency, or instrumentality, nor does such counsel know of any facts which would
provide a basis for any such action, suit or proceeding.
21.
<PAGE>
8.6 Actual or Threatened Actions. There shall not be any actual or,
----------------------------
in the opinion of the Buyer, threatened action or proceeding by or before any
court or other governmental body or agency which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of the Buyer to own, operate or control the Seller or
affect the right of the Seller to own, operate or control its assets and
business after the Closing Date.
8.7 Material Changes. Prior to the Closing Date there shall be no
----------------
material adverse change in the Seller's condition (financial or otherwise),
assets, liabilities, or business, including, without limitation, a loss of any
material amount of its business or any material customers or reasonable cause to
believe that such a loss is probable within one (1) year after the Closing.
8.8 Consents. All required consents shall have been received by the
--------
Buyer including, but not limited to, all consents and approvals required to
permit the Seller to enjoy after the Closing Date all rights and benefits
presently enjoyed by the Seller, including without limitation, such consents and
approvals as are required to avoid a default or event that, with the passage of
time or giving of notice, will be a default under any agreement between the
Seller and its customers.
8.9 Employment Agreements with Other Key Personnel. Such key employees
----------------------------------------------
of the Seller as are designated by Buyer in writing to the Seller shall have
executed and delivered to the Seller Employment Agreements in form and substance
substantially the same as Exhibit 8.9 hereto.
-----------
IX. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
------------------------------------------------------
INDEMNIFICATION
---------------
9.1 Events of Default. A breach of any representation or warranty by
-----------------
the Seller, the Shareholder or the Buyer, or a breach as a result of the failure
of the Seller, the Shareholder or the Buyer to perform any of their covenants
and obligations under this Agreement, shall be considered a default hereunder
giving rise to the indemnification set forth in Section 9.3 and Section 9.4
hereof.
9.2 Survival of Representations, Etc. All representations, warranties
--------------------------------
and agreements made by the Seller, the Shareholder and the Buyer in this
Agreement or in any exhibit, certificate, document or instrument delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby, and the remedies of the Buyer and the Shareholder with
respect thereto, shall survive the Closing hereunder for the following periods:
(a) With respect to the representations and warranties of the
Seller and the Shareholder as contained in this Agreement and all related
documents, any claim arising thereunder must be brought within a period of three
(3) years following the Closing Date.
22.
<PAGE>
(b) With respect to the representations and warranties of the
Seller and the Shareholder as to federal, state and other taxes and the
Environmental Laws any claim arising thereunder must be brought within thirty
(30) days after the expiration of the period of the applicable statutes of
limitation, including any extensions thereof.
(c) With respect to the representations, warranties and
agreements of the Buyer as contained herein, any claim arising thereunder must
be brought by the Seller within a period of three (3) years following the
Closing Date.
9.3 Indemnification to the Buyer. The Shareholder agrees to indemnify
----------------------------
and hold the Buyer harmless against and in respect of:
(a) except to the extent expressly assumed by Buyer, all
obligations and liabilities of the Seller, whether accrued, absolute, fixed,
contingent or otherwise, in existence on or relating to events occurring prior
to the Closing, including without limitation any such obligations or liabilities
that Buyer satisfies in good faith as the result of Buyer's belief that such
satisfaction is necessary to continue to do business with a customer or vendor
of Seller's business prior to the Closing;
(b) any loss, liability or damage suffered or incurred by the
Buyer, net of any tax effects realized by the Buyer as a result thereof, because
of a breach of any obligation of the Seller or the Shareholder incurred under
this Agreement, or because any representation or warranty by the Seller or the
Shareholder contained herein, in any document furnished or required to be
furnished pursuant to this Agreement by the Seller or the Shareholder or any of
their representatives to the Buyer or any of its representatives, or any
documents furnished to the Buyer in connection with the closing hereunder, shall
be false as of the Closing Date; and
(c) all reasonable costs and expenses (including accounting
and attorneys' fees) incurred by the Buyer in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against it in this Section 9.3.
(d) The Shareholder shall not have any liability under this
Section to the extent aggregate losses under this Section and under Section 9.3
of the Continental Agreement are less than Fifty Thousand Dollars ($50,000). In
addition, the aggregate amount of the Shareholder's obligations under Section
9.3 of this Agreement and the Continental Agreement shall not exceed the
aggregate amount of the consideration paid under such agreements, including
without limitation, any amounts paid to Seller under the Contingent Payment
Certificate or distributed to Seller under the Escrow Agreement (both as defined
in the Continental Agreement). For purposes of this subsection (d), COMFORCE
Stock distributed to Seller shall in all cases be valued at the price
established on the Closing Date for purposes of Section 2.1 of the Continental
Agreement.
9.4 Indemnification to the Shareholder. The Buyer agrees to indemnify
----------------------------------
and hold the
23.
<PAGE>
Shareholder harmless against and in respect of:
(a) any loss, liability or damage suffered or incurred by the
Shareholder, net of any tax effects realized by the Seller as a result thereof,
because of a breach of any obligation of the Buyer incurred under this
Agreement, or because any representation or warranty by the Buyer contained
herein, in any document furnished or required to be furnished pursuant to this
Agreement by the Buyer or any of its representatives to the Shareholder or any
of her representatives, or any documents furnished to the Buyer in connection
with the closing hereunder, shall be false as of the Closing Date; and
(b) all reasonable costs and expenses (including accounting
and attorneys' fees) incurred by the Shareholder in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of the matters
indemnified against it in this Section 9.4.
9.5 Representation, Cooperation and Settlement.
------------------------------------------
(a) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give prompt written notice to the party from
which the indemnification is sought (the "Indemnifying Party") of any claim
against the Indemnified Party which might give rise to a claim by the
Indemnified Party against the Indemnifying Party based on the indemnity
agreement contained in Section 9.3 or Section 9.4 hereof, stating the nature and
basis of the first-mentioned claim and the amount thereof. No failure to give
such notice shall excuse any Indemnifying Party from any obligation hereunder
except to the extent the Indemnifying Party is prejudiced by such failure.
(b) The Indemnified Party shall have full responsibility and
authority with respect to the disposition of any action, suit or proceeding
brought against it. In the event any action, suit or proceeding is brought
against the Indemnified Party with respect to which the Indemnifying Party may
have liability under the indemnity agreements contained in Section 9.3 or 9.4
hereof, however, the Indemnifying Party shall have the right, without prejudice
to the Indemnified Party's rights under this Agreement, at the Indemnifying
Party's sole expense, to be represented by counsel of its own choosing and with
whom counsel for the Indemnified Party shall confer in connection with the
defense of any such action, suit, or proceeding. The Indemnified Party shall
make available to the Indemnifying Party and its counsel and accountants, all
books and records of the Indemnified Party relating to such action, suit or
proceeding and the parties agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such action, suit or proceeding.
X. TRANSACTIONS SUBSEQUENT TO THE CLOSING DATE
-------------------------------------------
10.1 Further Assurances. From time to time after the Closing Date,
-------------------
upon the reasonable request of Buyer, Seller shall execute, deliver and
acknowledge all such further instruments of transfer and conveyance as Buyer may
reasonably require to more effectively
24.
<PAGE>
transfer the Assets to Buyer and to put Buyer in possession of the Assets.
10.2 Change of Name. From and after the Closing Date, neither the
--------------
Seller nor the Shareholder shall use the name Progressive Telecom, Inc. or any
similar name without the prior written consent of Buyer.
10.3 Receipt of Certain Remittances by Seller and Buyer.
---------------------------------------------------
(a) If, on or after the Closing Date, Seller shall receive any
remittance from any account debtors with respect to any accounts of Buyer
arising after the Closing Date, Seller shall endorse such remittance to the
order of Buyer and forward it to Buyer immediately upon receipt thereof.
(b) If, on or after the Closing Date, Buyer shall receive any
remittance from any account debtors with respect to any accounts retained by
Seller in accordance herewith, Buyer shall endorse such remittance to the order
of Buyer and forward it to Buyer immediately upon receipt thereof.
10.4 Assistance with Audit. Seller and the Shareholder understand and
---------------------
acknowledge that, after the Closing, Buyer intends to prepare and have its
independent accountants audit the financial statements of Seller for the
one-year period ended December 31, 1995 and for the nine-month period ended
September 30, 1996 in connection with the preparation of COMFORCE's audited
financial statements. Seller and the Shareholder shall cooperate fully with said
audit and shall provide such documents and other information as is in their
respective control as Seller, COMFORCE or Comforce's independent accountant's
may from time to time reasonably request in connection with the preparation and
audit of such financial statements.
10.5 Access to Books and Records. Buyer shall keep and maintain any
---------------------------
financial and tax books and records it receives from Seller as part of the
Assets for a period of at least six (6) years after the Closing and shall during
such time upon reasonable notice permit Seller and the Shareholder or their
representatives access to such books and records for any legitimate purpose,
including the preparation and verification of tax returns and documents related
to tax matters and the preparation for and response to any audits or inquiries
with respect to such matters.
XI. MISCELLANEOUS
-------------
11.1 Brokerage. The Seller and the Shareholder represent and warrant to
---------
the Buyer that neither the Seller nor the Shareholder have incurred any
obligations or liabilities, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other like payments in connection with this
Agreement or the transactions contemplated hereby except to ____________
("Seller's Broker"). The Seller and the Shareholder shall be jointly and
severally liable for, and shall indemnify, defend and hold Buyer from and
against, any and all commissions, fees or other payments payable to or claimed
by Seller's Broker as a result of the transactions contemplated
25.
<PAGE>
hereby or the negotiations relating hereto. The Buyer represents and warrants to
the Seller and the Shareholder that the Buyer has not incurred any obligations
or liabilities, contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other like payments in connection with this Agreement or
the transactions contemplated hereby. The Seller and the Shareholder on the one
hand and the Buyer on the other agree to indemnify and hold the other harmless
against and in respect of any such obligations or liabilities based in any way
on agreements, arrangements or understandings claimed to have been made by it or
them with any third party and not disclosed herein.
11.2 Waivers and Amendment.
---------------------
(a) The Seller and the Shareholder, on the one hand, or the
Buyer, on the other hand may, by written notice to the other, (i) extend the
time for the performance of any of the obligations or other actions of the
other; (ii) waive any inaccuracies in the representations or warranties of the
other contained in this Agreement; (iii) waive compliance with any of the
covenants of the other contained in this Agreement; and (iv) waive or modify
performance of any of the obligations of the other.
(b) This Agreement may be amended, modified or supplemented
only by a written instrument executed by all the parties hereto. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
11.3 Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, the Buyer shall pay the fees and expenses of its
counsel, accountants, other experts and all other expenses incurred by it
incident to the negotiation, preparation and execution of this Agreement, and
the Shareholder shall pay any and all such fees and expenses incurred by the
Seller or the Shareholder incident to the negotiation, preparation and execution
of this Agreement and the performance by the Seller and the Shareholder of their
obligations hereunder. Notwithstanding the foregoing, Buyer agrees that unless
Buyer terminates this Agreement because the Closing does not occur due to a
default by the Seller or the Shareholder of their respective obligations
hereunder, Buyer shall be responsible for and pay the fees paid or payable to
the firm of independent public accountants in connection with the work done
relating to issuance of the Nine Month Statements.
11.4 Occurrences of Conditions Precedent. Each of the parties hereto
-----------------------------------
agrees to use its best efforts to cause all conditions precedent to its
obligations under this Agreement to be satisfied.
11.5 Notices. All notices, requests, demands and other communications
-------
which are
26.
<PAGE>
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid:
(a) If to the Seller or the Shareholder, to:
Progressive Telecom, Inc.
27 East Main Street
Elmsford, NY 10523
Beth Wilson Hill
389 Hardscrabble Road
Briarcliff, NY 10510
with a copy to:
McCarthy, Fingar, Donovan,
Drazen & Smith, L.L.P.
11 Martine Avenue
White Plains, NY 10606
Attention: John J. Parker, Esq.
(b) If to the Buyer, to:
COMFORCE Global, Inc.
2001 Marcus Avenue
Lake Success, NY 11042
27.
<PAGE>
with a copy to:
Doepken Keevican & Weiss
37th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
Attention: David J. Hirsch, Esq.
or to such other address as any party shall have specified by notice in writing
to the other.
11.6 Integration Clause. This Agreement and the Exhibits hereto
------------------
constitute the entire agreement between Buyer, the Shareholder and Seller with
respect to the subject matter hereof.
11.7 Binding Effect; Benefits. This Agreement shall inure to the
------------------------
benefit of and be binding upon the parties hereto and their successors; nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, or their successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.8 Non-assignability. This Agreement and any rights pursuant hereto
-----------------
shall not be assignable by either party without the prior written consent of the
other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to
another corporation that is directly or indirectly controlled by COMFORCE and
may assign its rights hereunder to secure its obligations to parties providing
loans or other credit facilities to Buyer or its affiliates.
11.9 Bulk Sales Law Waiver. Buyer and Seller each agree to waive
---------------------
compliance by the other with the provisions of the bulk sales laws or comparable
laws of any jurisdiction to the extent that the same may be applicable to the
transactions contemplated by this Agreement. Seller and the Shareholder agree to
indemnify and hold harmless Buyer from and against any and all claims that may
be asserted against Buyer under any such provisions.
11.10 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and in accordance with the laws of the
Commonwealth of Pennsylvania.
11.11 Section and Other Headings. The section and other headings
--------------------------
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
11.12 Counterparts. This agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
28.
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed and delivered this Agreement as of the date first
above written.
COMFORCE GLOBAL, INC.
By: /s/ Christopher P. Franco
----------------------------------------
Name: Christopher P. Franco
--------------------------------------
Title: Executive Vice President
-------------------------------------
PROGRESSIVE TELECOM, INC.
By: /s/ Beth Wilson Hill
----------------------------------------
Name: Beth Wilson Hill
--------------------------------------
Title: President
-------------------------------------
/s/ Beth Wilson Hill
-------------------------------------------
Beth Wilson Hill
COMFORCE Corporation hereby guarantees all obligations and liabilities of
COMFORCE Global, Inc. arising out of or in connection with this Agreement.
COMFORCE CORPORATION
By: /s/ Christopher P. Franco
-----------------------------------------
Name: Christopher P. Franco
---------------------------------------
Title: Executive Vice President
--------------------------------------
<PAGE>
EXHIBIT 2.6
AMENDMENT TO ESCROW AGREEMENT AND PURCHASE AGREEMENTS
This Amendment to Escrow Agreement and Purchase Agreements is
entered into as of the 8th day of November, 1996 by and among Continental Field
Service Corporation ("Continental"), Progressive Telecom, Inc. ("Progressive"),
COMFORCE Global, Inc. ("COMFORCE"), Beth Wilson Hill, Michael Hill, Roy Hill and
McCarthy, Fingar, Donovan, Drazen & Smith, L.L.P. (the "Escrow Agent").
WITNESSETH:
----------
WHEREAS, Progressive, Continental, COMFORCE and the Escrow
Agent entered into an Escrow Agreement dated as the 25th of October, 1996 (the
"Escrow Agreement") pursuant to which, among other things, the Escrow Agent
agreed to hold certain closing documents in escrow; and
WHEREAS, Progressive, COMFORCE and Beth Wilson Hill entered
into an Asset Purchase Agreement on October 25, 1996 (the "Progressive Purchase
Agreement") and Continental, COMFORCE, Michael Hill and Roy Hill entered into an
Asset Purchase Agreement on October 25, 1996 (the "Continental Purchase
Agreement"), and
WHEREAS, the parties hereto desire to amend the Escrow
Agreement, the Progressive Purchase Agreement and the Continental Purchase
Agreement (collectively, the "Purchase Agreements") as set forth below; and
NOW, THEREFORE, in consideration of the premises and
agreements hereinafter made, and intending to be legally bound, the parties
hereto agree as follows:
1. Defined Terms. Capitalized terms used herein shall
-------------
unless otherwise defined herein have the definitions ascribed to such terms in
the Escrow Agreement.
2. Amendment to Escrow Agreement. Clauses (i), (ii) and
-----------------------------
(iii) of Section 4 in the Escrow Agreement are hereby deleted in their entirety.
The remaining portion of Section 4 shall be amended to state in its entirety as
follows:
If the consideration is not paid as provided in the
Purchase Agreements, on or before the close of
business on November 8, 1996, the Documents shall be
null and void and of no further force or effect and
the Escrow Agent shall return one set of fully
executed Documents to COMFORCE and one set of fully
executed Documents to Continental and Progressive.
<PAGE>
3. Amendment to Purchase Agreements.
--------------------------------
a. Amendment to Progressive Purchase Agreement.
-------------------------------------------
Section 3.1 of the Progressive Purchase Agreement is hereby revised in its
entirety to read as follows:
3.1 Closing Date. The payment of
------------
consideration and exchange of
documents contemplated hereby (the
"Closing") shall be done on November
8, 1996. The Seller shall receive
the economic benefits and be
responsible for the liabilities and
obligations of the Seller's business
until November 10, 1996.
b. Amendment to Continental Purchase Agreement.
-------------------------------------------
(i) Section 3.1 of the Continental
Purchase Agreement is hereby revised in its entirety
to read as follows:
3.1 Closing Date. The payment of
-------------
consideration and exchange of
documents contemplated hereby (the
"Closing") shall be done on November
8, 1996. The Seller shall receive
the economic benefits and be
responsible for the liabilities and
obligations of the Seller's business
until November 10, 1996.
(ii) Section 2.1(a)(iii) of the Continental
Purchase Agreement is hereby revised in its entirety
to read as follows:
(iii) cause to be delivered to
Escrow Agent an aggregate number of
shares of COMFORCE Stock registered
in the name of Seller that is the
highest whole number of shares of
COMFORCE Stock that has an aggregate
value not greater than Five Hundred
Seventy-Five Thousand Dollars
($575,000), said value to be
determined based on the average
closing price of said stock as
quoted on the American Stock
Exchange on each of the ten (10)
business days commencing on October
24, 1996 and ending on November 6,
1996, all of which shall be
Restricted Shares, as that term is
defined in the Stockholders
Agreement attached hereto as
Exhibit 7.8;
-----------
4. Amendment to Escrow Agreement and Stockholders
----------------------------------------------
Agreement. The Escrow Agreement relating to the consideration paid pursuant to
- ---------
the Continental Purchase Agreement (the "Payment Escrow Agreement") and the
Stockholders Agreement relating to the Continental stock to be paid into escrow
pursuant to the Continental Purchase Agreement are hereby revised to substitute
"36,800 shares" (the "Shares") for "33,973 shares" in all instances.
2
<PAGE>
5. Delivery of Stock Certificate. The parties agree that a
-----------------------------
Certificate evidencing 33,973 shares shall be delivered to the Escrow Agent
pursuant to the Payment Escrow Agreement on November 8, 1996. A Certificate
evidencing 2,827 shares shall be delivered to the Escrow Agent pursuant to the
Payment Escrow Agreement on or before November 13, 1996.
6. Letters of Credit. Continental shall retain in place all
-----------------
existing letters of credit to secure performance under all outstanding contracts
between Continental and the New York State Department of Corrections (the
"Existing Letters of Credit") until such time as COMFORCE shall have arranged
for the release of the Existing Letters of Credit. COMFORCE shall arrange for
the release of the Existing Letters of Credit and all liens to secure related
obligations prior to November 30, 1996. Prior to the release of the Existing
Letters of Credit, COMFORCE shall promptly reimburse Continental for all out of
pocket expenses in maintaining such Existing Letters of Credit beyond November
1, 1996. In the event that the Existing Letters of Credit are not released by
November 1, 1996, then COMFORCE shall continue to reimburse Continental for all
out of pocket expenses in maintaining such Existing Letters of Credit. If
COMFORCE fails to pay Continental actual out of pocket expenses as required
hereby and Continental successfully brings an action for such expenses, COMFORCE
shall be required to pay Continental's reasonable expenses (including attorney's
fees) in collecting such expenses.
7. Escrow Account Pending Payroll. COMFORCE shall wire into
------------------------------
the account of the Escrow Agent $150,000 (the "Payroll Escrow Funds") which
amount shall decrease the amount being paid to Continental pursuant to Section
2.1(a)(i) of the Continental Agreement by $150,000. Upon receipt of evidence of
the payment by COMFORCE of payroll for periods prior to November 10, 1996, the
Escrow Agreement shall release on a dollar for dollar basis the Payroll Escrow
Account to COMFORCE. Notwithstanding the foregoing, it is understood that Seller
shall remain liable for any expenses for periods prior to November 10 in excess
of the Payroll Escrow Amount.
8. Temporary Arrangement. Notwithstanding any other
provision in any other Agreement, it is hereby agreed that Continental shall pay
$995,031 (the "Temporary Funds") to a cash collateral account for Marine Midland
upon receipt from Marine Midland of UCC-3 termination statements terminating all
existing liens on assets of Continental and/or Progressive. Upon release of
Existing Letters of Credit, the Temporary Funds shall be returned to
Continental.
9. Effect of Amendment. Except as expressly amended hereby,
-------------------
the Escrow Agreement and the Purchase Agreements remain in full force and
effect.
10. Counterparts. This Amendment may be executed in several
------------
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. Facsimile. The Escrow Agent may rely upon facsimile
---------
signatures for any purpose under this Amendment.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the day and year first written above.
CONTINENTAL FIELD SERVICE
CORPORATION
By: /s/ Michael Hill
-------------------------------------
Title: Vice President
----------------------------------
PROGRESSIVE TELECOM, INC.
By: /s/ Beth Wilson Hill
-------------------------------------
Title: President
----------------------------------
COMFORCE Global, Inc.
By: /s/ Andrew Reiben
-------------------------------------
Title: Assistant Secretary
----------------------------------
MCCARTHY, FINGAR, DONOVAN,
DRAZEN & SMITH
By: /s/ Thomas Curtin
-------------------------------------
Title: Attorney
----------------------------------
/s/ Beth Wilson Hill
----------------------------------------
BETH WILSON HILL
/s/ Michael Hill
----------------------------------------
MICHAEL HILL
/s/ Roy Hill
----------------------------------------
ROY HILL
4
