<PAGE>
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): June 19, 1996
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ACCUSTAFF INCORPORATED
----------------------
(Exact name of registrant
as specified in its charter)
Florida 0-24484 59-3116655
- ----------------- ----------- ------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
6440 Atlantic Boulevard, Jacksonville, FL 32211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 725-5574
--------------
N/A
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 19, 1996, pursuant to an Agreement and Plan of Merger dated
the same date (the "Agreement") AccuStaff Incorporated ("AccuStaff") acquired by
merger all of the issued and outstanding stock of The McKinley Group, Inc. and
MGI Services, Inc. (collectively, "McKinley") from James J. Wayland, Jr., Gary
B. Wayland and Edward D. Wayland in exchange for 1,857,150 shares of AccuStaff
common stock (the "Acquisition"). The Acquisition will be accounted for as a
pooling of interests.
McKinley provides information technology staffing services from two
offices located in Front Royal, Virginia and Atlanta, Georgia. McKinley had
revenues in excess of $15.9 million for the eight months ended May 31, 1996,
based on McKinley's unaudited internally prepared financial information. As of
May 31, 1996 based on McKinley's internally prepared unaudited financial
information, total assets were approximately $6.7 million (predominantly cash of
approximately $1.7 million and accounts receivable of approximately $4.2
million) and total liabilities were approximately $983,000 (predominantly
accrued wages payable of approximately $744,000). McKinley will continue to
operate as a wholly owned subsidiary of AccuStaff as part of the Professional
Services division.
James J. Wayland will remain with McKinley as President and has
entered into an Employment Agreement with McKinley under which he will remain
employed by McKinley through June 19, 1998, unless terminated earlier in
accordance with the terms of the Employment Agreement. Also pursuant to the
Agreement, Gary B. Wayland, Edward D. Wayland and James J. Wayland each entered
into Non-Competition Agreements with McKinley under which they are prohibited
from, among other things, competing with McKinley until June 19, 1999.
None of the shareholders of McKinley owned any shares of AccuStaff
common stock as of the date of the Agreement. None of the directors and
executive officers of AccuStaff owned any McKinley stock as of the date of the
Agreement.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impractical to provide the required financial statements for
McKinley at the date of the filing of this Form 8-K. The required financial
statements will be provided as soon as practicable but not later than sixty days
after the date on which this Form 8-K must be filed.
(B) PRO FORMA FINANCIAL INFORMATION.
It is impractical to provide the required pro forma financial
information at the date of the filing of this Form 8-K. The required pro forma
financial information will be provided as soon as practicable but not later than
sixty days after the date on which this Form 8-K must be filed.
(C) EXHIBITS.
2.1 Agreement and Plan of Merger by and among AccuStaff Incorporated,
AccuStaff Merger Corp., AccuStaff Merger Subsidiary, Inc., The
McKinley Group, Inc., MGI Services, Inc. and the shareholders of
The McKinley Group, Inc. and MGI Services, Inc. dated as of June
19, 1996 (without schedules)/1/.
99.1 Press Release dated June 18, 1996.
99.2 Press Release dated June 20, 1996.
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/1/ AccuStaff shall supplementally furnish a copy of any omitted schedule
to the Securities and Exchange Commission upon request.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACCUSTAFF INCORPORATED
By: /s/ Derek E. Dewan
------------------------------
Derek E. Dewan
President and Chief
Executive Officer
Dated: July 2, 1996
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EXHIBIT INDEX
PAGE
----
2.1. Agreement and Plan of Merger among AccuStaff Incorporated,
AccuStaff Merger Corp., AccuStaff Merger Subsidiary, Inc.,
The McKinley Group, Inc., MGI Services, Inc. and the shareholders
of The McKinley Group, Inc. and MGI Services, Inc. dated as of
June 19, 1996( without schedules).....................................
99.1 Press Release dated June 18, 1996.....................................
99.2 Press Release dated June 20,1996......................................
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<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ACCUSTAFF INCORPORATED,
ACCUSTAFF MERGER CORP.,
ACCUSTAFF MERGER SUBSIDIARY, INC.,
THE MCKINLEY GROUP, INC.,
MGI SERVICES, INC.
AND
THE SHAREHOLDERS OF THE MCKINLEY GROUP, INC.
AND MGI SERVICES, INC.
DATED AS OF JUNE 19, 1996
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TABLE OF CONTENTS
Page
----
Parties........................................................ 1
Preamble....................................................... 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGERS.................. 1
1.1 Company Merger........................................... 1
1.2 MGI Merger............................................... 2
1.3 Time and Place of Closing................................ 2
1.4 Effective Time........................................... 2
ARTICLE 2 - TERMS OF MERGERS................................... 2
2.1 Charter.................................................. 2
2.2 Bylaws................................................... 3
2.3 Directors and Officers................................... 3
2.4 Certain Closing Deliveries............................... 3
ARTICLE 3 - MANNER OF CONVERTING SHARES........................ 4
3.1 Conversion of Shares..................................... 4
3.2 Anti-Dilution Provisions................................. 5
3.3 Shares Held by Company or Parent......................... 5
3.4 Dissenting Shareholders.................................. 5
3.5 Fractional Shares........................................ 6
ARTICLE 4 - EXCHANGE OF SHARES................................. 6
4.1 Exchange Procedures...................................... 6
4.2 Rights of Former Shareholders............................ 7
4.3 Escrow Shares............................................ 7
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF COMPANY AND MGI.. 7
5.1 Organization, Standing, and Power........................ 7
5.2 Authority; No Breach By Agreement........................ 8
5.3 Capital Stock............................................ 8
5.4 Financial Statements..................................... 9
5.5 Absence of Certain Changes or Events..................... 9
5.6 Tax Matters.............................................. 11
5.7 Assets................................................... 12
5.8 Intellectual Property.................................... 12
5.9 Environmental Matters.................................... 13
5.10 Compliance With Laws..................................... 13
5.11 Labor Relations.......................................... 14
5.12 Employee Benefit Plans................................... 14
5.13 Material Contracts....................................... 16
5.14 Legal Proceedings........................................ 16
5.15 Reports.................................................. 17
5.16 Statements True and Correct.............................. 17
5.17 Accounting, Tax and Regulatory Matters................... 17
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5.18 Charter Provisions...................................... 17
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.... 17
6.1 Ownership of Shares..................................... 17
6.2 Authority and Approval; No Breach By Agreement.......... 18
6.3 Purchase for Investment; Accredited Investor Status..... 18
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF Parent.......... 18
7.1 Organization, Standing, and Power....................... 18
7.2 Authority; No Breach By Agreement....................... 19
7.3 Capital Stock........................................... 19
7.4 SEC Filings; Financial Statements....................... 20
7.5 Absence of Certain Changes or Events.................... 20
7.6 Tax Matters............................................. 20
7.7 Compliance With Laws.................................... 21
7.8 Legal Proceedings....................................... 21
7.9 Statements True and Correct............................. 21
7.10 Authority of Sub and Sub II............................. 22
7.11 Accounting, Tax and Regulatory Matters.................. 22
ARTICLE 8 - CONDUCT OF BUSINESS PENDING CONSUMMATION.......... 22
8.1 Affirmative Covenants of Company and MGI................ 22
8.2 Negative Covenants of Company and MGI................... 23
8.3 Covenants of Parent..................................... 24
8.4 Adverse Changes in Condition............................ 25
ARTICLE 9 - ADDITIONAL AGREEMENTS............................. 25
9.1 Exchange Listing........................................ 25
9.2 Applications; Antitrust Notification.................... 25
9.3 Filings with State Offices.............................. 26
9.4 Agreement as to Efforts to Consummate................... 26
9.5 Investigation and Confidentiality....................... 26
9.6 Press Releases.......................................... 27
9.7 Certain Actions......................................... 27
9.8 Shareholder Releases.................................... 27
9.9 Accounting and Tax Treatment............................ 27
9.10 Charter Provisions...................................... 28
9.11 Certain Payments........................................ 28
9.12 Operations After the Effective Time..................... 28
9.13 Certain Tax Returns of Company and MGI.................. 29
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 30
10.1 Conditions to Obligations of Each Party................. 30
10.2 Conditions to Obligations of Parent..................... 31
10.3 Conditions to Obligations of Company and MGI............ 32
ARTICLE 11 - INDEMNIFICATION.................................. 33
11.1 Agreement of Indemnitors to Indemnify................... 33
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11.2 Procedures for Indemnification........................ 34
11.3 Third Party Claims.................................... 34
11.4 Other Rights and Remedies Not Affected................ 36
11.5 Survival.............................................. 36
11.6 Time Limitations...................................... 36
11.7 Limitations as to Amount.............................. 36
11.8 Tax Effect and Insurance.............................. 36
11.9 Escrow................................................ 37
11.10 Subrogation........................................... 37
11.11 Appointment of Indemnitor Representative.............. 37
11.12 Arbitration........................................... 38
ARTICLE 12 - TERMINATION..................................... 38
12.1 Termination........................................... 38
12.2 Effect of Termination................................. 39
ARTICLE 13 - MISCELLANEOUS................................... 39
13.1 Definitions........................................... 39
13.2 Expenses.............................................. 47
13.3 Brokers and Finders................................... 48
13.4 Entire Agreement...................................... 48
13.5 Amendments............................................ 48
13.6 Waivers............................................... 48
13.7 Assignment............................................ 49
13.8 Notices............................................... 49
13.9 Governing Law......................................... 50
13.10 Counterparts.......................................... 50
13.11 Captions; Articles and Sections....................... 50
13.12 Interpretations....................................... 50
13.13 Enforcement of Agreement.............................. 50
13.14 Severability.......................................... 50
Signatures................................................... 51
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LIST OF EXHIBITS
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EXHIBIT NUMBER DESCRIPTION
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1. Form of Company Plan of Merger. ((S) 1.1).
2. Form of MGI Plan of Merger. ((S) 1.2).
3. Form of Escrow Agreement. ((S)(S) 2.4(a), 4.3).
4. Form of ASI Escrow Agreement. ((S)(S) 2.4(b), 4.3).
5. Form of Stock Restriction and Registration Rights Agreement.
((S) 2.4(c)).
6. Form of Employment Agreement. ((S) 2.4(d)).
7. Form of Noncompetition Agreement. ((S) 2.4(e)).
8. Opinion of Hunton & Williams. ((S) 10.2(d)).
9. Opinion of Alston & Bird. ((S) 10.3(d)).
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 19, 1996, by and among ACCUSTAFF INCORPORATED
("Parent"), a Florida corporation having its principal office located in
Jacksonville, Florida; ACCUSTAFF MERGER CORP. ("Sub"), a Virginia corporation
having its principal office located in Jacksonville, Florida; ACCUSTAFF MERGER
SUBSIDIARY, INC. ("Sub II"), a Virginia corporation having its principal office
located in Jacksonville, Florida; THE MCKINLEY GROUP, INC. ("Company"), a
Virginia corporation having its principal office located in Front Royal,
Virginia; MGI SERVICES, INC. ("MGI"), a Virginia corporation having its
principal office located in Front Royal, Virginia; and the shareholders of
Company and MGI identified on Schedule I hereto (each a "Shareholder" and
collectively the "Shareholders").
PREAMBLE
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The Boards of Directors of Company, MGI, Sub, Sub II and Parent are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective shareholders. This Agreement
provides for the acquisition of Company and MGI by Parent pursuant to the merger
of Sub with and into Company and the merger of Sub II with and into MGI. At the
effective time of such mergers, the outstanding shares of the capital stock of
Company and MGI shall be converted into the right to receive shares of the
common stock of Parent (except as provided herein). As a result, shareholders
of Company and MGI shall become shareholders of Parent and Company and MGI shall
continue to conduct their respective businesses and operations as wholly owned
subsidiaries of Parent. The transactions described in this Agreement are
subject to receipt of required regulatory consents and approvals and the
satisfaction of certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the mergers for federal income
tax purposes shall qualify as "reorganizations" within the meaning of Section
368(a) of the Internal Revenue Code, and for accounting purposes shall qualify
for treatment as a pooling of interests.
Certain terms used in this Agreement are defined in Section 13.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGERS
---------------------------------
1.1 COMPANY MERGER. Subject to the terms and conditions of this Agreement and
--------------
the provisions of the Company Plan of Merger attached as Exhibit 1, at the
Effective Time, Sub shall be merged with and into Company in accordance with the
provisions of Article 12 of the VSCA and with the effect provided in Section
13.1-721B of the VSCA (the "Company Merger").
<PAGE>
Company shall be the surviving corporation resulting from the Company Merger and
shall become a wholly-owned Subsidiary of Parent and shall continue to be
governed by the Laws of the Commonwealth of Virginia. The Company Merger shall
be consummated pursuant to the terms of this Agreement and the Company Plan of
Merger, which have been approved and adopted by the respective Boards of
Directors of Company, Sub and Parent, by the Shareholders as the sole
shareholders of Company, and by Parent, as the sole shareholder of Sub.
1.2 MGI MERGER. Subject to the terms and conditions of this Agreement and
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the provisions of the MGI Plan of Merger attached as Exhibit 2, at the
Effective Time, Sub II shall be merged with and into MGI in accordance with the
provisions of Article 12 of the VSCA and with the effect provided in Section
13.1-721B of the VSCA (the "MGI Merger"). MGI shall be the surviving corporation
resulting from the MGI Merger and shall become a wholly-owned Subsidiary of
Parent and shall continue to be governed by the Laws of the Commonwealth of
Virginia. The MGI Merger shall be consummated pursuant to the terms of this
Agreement and the MGI Plan of Merger, which have been approved and adopted by
the respective Boards of Directors of MGI, Sub II and Parent, by the
Shareholders as the sole shareholders of MGI, and by Parent, as the sole
shareholder of Sub II.
1.3 TIME AND PLACE OF CLOSING. The closing of the transactions
-------------------------
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.4 EFFECTIVE TIME. The Mergers and other transactions contemplated by this
--------------
Agreement shall become effective on the date and at the time the Company
Articles of Merger reflecting the Company Merger and the MGI Articles of Merger
reflecting the MGI Merger shall become effective with the Secretary of State of
the Commonwealth of Virginia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the first business day following
the last to occur of the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Mergers; or such later date within
30 days thereof as may be specified by Parent.
ARTICLE 2
TERMS OF MERGERS
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2.1 CHARTER.
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(a) The Articles of Incorporation of Company in effect immediately prior
to the Effective Time shall be the Articles of Incorporation of the surviving
corporation resulting from the Company Merger until otherwise amended or
repealed.
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(b) The Articles of Incorporation of MGI in effect immediately prior to
the Effective Time shall be the Articles of Incorporation of the surviving
corporation resulting from the MGI Merger until otherwise amended or repealed.
2.2 BYLAWS.
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(a) The Bylaws of Company in effect immediately prior to the Effective
Time shall be the Bylaws of the surviving corporation resulting from the Company
Merger until otherwise amended or repealed.
(b) The Bylaws of MGI in effect immediately prior to the Effective Time
shall be the Bylaws of the surviving corporation resulting from the MGI Merger
until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS.
----------------------
(a) The directors of Sub in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the directors of the surviving corporation resulting from the Company
Merger from and after the Effective Time in accordance with the Bylaws of such
corporation. The officers of Sub in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the surviving corporation resulting from the Company
Merger from and after the Effective Time in accordance with the Bylaws of such
corporation.
(b) The directors of Sub II in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the directors of the surviving corporation resulting from the MGI
Merger from and after the Effective Time in accordance with the Bylaws of such
corporation. The officers of Sub II in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the surviving corporation resulting from
the MGI Merger from and after the Effective Time in accordance with the Bylaws
of such corporation.
2.4 CERTAIN CLOSING DELIVERIES. In connection with the Closing, each
--------------------------
of Parent, Company and the Shareholders agrees to execute and deliver to each
other party the following:
(a) Parent and each Shareholder shall have executed and delivered to
the other a General Escrow Agreement, which shall be in the form of
Exhibit 3.
(b) Parent and each Shareholder shall have executed and delivered to
the other an ASI Escrow Agreement, which shall be in the form of Exhibit 4.
(c) Parent and each Shareholder shall have executed and delivered to
the other a Stock Restriction and Registration Rights Agreement, which shall
be in the form of Exhibit 5.
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(d) Company and James J. Wayland, Jr. shall have executed and delivered
to the other an Employment Agreement, which shall be in the form of
Exhibit 6.
(e) Parent, Company and each of the Shareholders shall have executed
and delivered to the other a Noncompetition Agreement, which shall be in the
form of Exhibit 7.
ARTICLE 3
MANNER OF CONVERTING SHARES
---------------------------
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
--------------------
the Effective Time, by virtue of the Mergers and without any action on the part
of Parent, Company, MGI, Sub, Sub II or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Parent Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall be
converted into one share of Company Common Stock.
(c) Each share of Sub II Common Stock issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and
shall be converted into one share of MGI Common Stock.
(d) Each share of Company Common Stock (excluding shares held by
Company, MGI or Parent or any of its Subsidiaries, in each case other than as
a result of debts previously contracted, and excluding shares held by
shareholders who perfect their statutory dissenters' rights as provided in
Section 3.4) issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for
(i) the right to receive 348.23 shares of Parent Common Stock (the "Firm
Exchange Ratio"), (ii) the right (subject to the provisions of Section 4.3)
to receive 37.14 shares of Parent Common Stock (the "General Escrow Exchange
Ratio"), and (iii) the right (subject to the provisions of Section 4.3) to
receive 23.81 shares of Parent Common Stock (the "ASI Escrow Exchange Ratio"
and, together with the Firm Exchange Ratio and the General Escrow Exchange
Ratio, the "Exchange Ratio").
(e) Each share of MGI Common Stock (excluding shares held by Company,
MGI or Parent or any of its Subsidiaries, in each case other than as a result
of debts previously contracted, and excluding shares held by shareholders who
perfect their statutory dissenters' rights as provided in Section 3.4) issued
and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive 3.52 shares of Parent Common Stock (the "MGI Exchange Ratio").
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3.2 ANTI-DILUTION PROVISIONS. In the event Parent changes the number of
shares of Parent Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Firm Exchange Ratio, the General Escrow Exchange Ratio,
the ASI Escrow Exchange Ratio and the MGI Exchange Ratio shall be
proportionately adjusted.
3.3 SHARES HELD BY COMPANY OR PARENT. Each of the shares of Company
--------------------------------
Common Stock or MGI Common Stock held by Company, MGI or by Parent or any of its
Subsidiaries shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS.
-----------------------
(a) Any holder of shares of Company Common Stock who perfects his
dissenters' rights in accordance with and as contemplated by Article 15 of the
VSCA shall be entitled to receive the value of such shares in cash as determined
pursuant to such provision of Law; provided, that no such payment shall be made
to any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the VSCA and surrendered to Company
the certificate or certificates representing the shares for which payment is
being made. In the event that after the Effective Time a dissenting shareholder
of Company fails to perfect, or effectively withdraws or loses, his right to
appraisal and of payment for his shares, Parent shall issue and deliver the
consideration to which such holder of shares of Company Common Stock is entitled
under this Article 3 (without interest) upon surrender by such holder of the
certificate or certificates representing shares of Company Common Stock held by
him. If and to the extent required by applicable Law, Company will establish
(or cause to be established) an escrow account with an amount sufficient to
satisfy the maximum aggregate payment that may be required to be paid to
dissenting shareholders. Upon satisfaction of all claims of dissenting
shareholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to Company.
(b) Any holder of shares of MGI Common Stock who perfects his
dissenters' rights in accordance with and as contemplated by Article 15 of the
VSCA shall be entitled to receive the value of such shares in cash as determined
pursuant to such provision of Law; provided, that no such payment shall be made
to any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the VSCA and surrendered to MGI the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of MGI
fails to perfect, or effectively withdraws or loses, his right to appraisal and
of payment for his shares, Parent shall issue and deliver the consideration to
which such holder of shares of MGI Common Stock is entitled under this Article 3
(without interest) upon surrender by such holder of the certificate or
certificates representing shares of MGI Common Stock held by him. If and to the
extent required by applicable Law, MGI will establish (or cause to be
established) an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be returned to MGI.
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(c) Each of the Shareholders agrees that it will not seek to assert
dissenters' rights to which such Shareholder otherwise would be entitled.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this Agreement,
-----------------
each holder of shares of Company Common Stock or MGI Common Stock exchanged
pursuant to the Mergers who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Parent Common Stock multiplied by the market value of one share of Parent Common
Stock at the Effective Time. The market value of one share of Parent Common
Stock at the Effective Time shall be the last sale price of such common stock on
the Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Parent) on the last
trading day preceding the Effective Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of any
fractional shares.
ARTICLE 4
EXCHANGE OF SHARES
------------------
4.1 EXCHANGE PROCEDURES. At the Closing (or as soon as reasonably
-------------------
practicable thereafter), each holder of shares of Company Common Stock or MGI
Common Stock (other than shares to be canceled pursuant to Section 3.3 or as to
which statutory dissenters' rights have been perfected as provided in Section
3.4) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to Parent and shall
promptly upon surrender thereof receive in exchange therefor the consideration
provided in Section 3.1, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2. To the extent required by Section 3.5, each holder of shares of
Company Common Stock or MGI Common Stock issued and outstanding at the Effective
Time also shall receive, upon surrender of the certificate or certificates
representing such shares, cash in lieu of any fractional share of Parent Common
Stock to which such holder may be otherwise entitled (without interest). Parent
shall not be obligated to deliver the consideration to which any former holder
of Company Common Stock or MGI Common Stock is entitled as a result of the
Mergers until such holder surrenders such holder's certificate or certificates
representing the shares of Company Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of Company Common Stock or MGI
Common Stock so surrendered shall be duly endorsed as Parent may require. Any
other provision of this Agreement notwithstanding, neither Parent, Company nor
MGI shall be liable to a holder of Company Common Stock or MGI Common Stock for
any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property Law.
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4.2 RIGHTS OF FORMER SHAREHOLDERS. At the Effective Time,
-----------------------------
the stock transfer books of Company and MGI shall be closed as to holders of
Company Common Stock and MGI Common Stock immediately prior to the Effective
Time and no transfer of Company Common Stock or MGI Common Stock by any such
holder shall thereafter be made or recognized. Until surrendered for exchange
in accordance with the provisions of Section 4.1, each certificate theretofore
representing shares of Company Common Stock or MGI Common Stock (other than
shares to be canceled pursuant to Sections 3.3 and 3.4) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.5 in exchange therefor, subject,
however, to Company's and MGI's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which have
been declared or made by Company or MGI, respectively, in respect of such shares
of Company Common Stock or MGI Common Stock, respectively, in accordance with
the terms of this Agreement and which remain unpaid at the Effective Time.
Whenever a dividend or other distribution is declared by Parent on the Parent
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares of
Parent Common Stock issuable pursuant to this Agreement, but no dividend or
other distribution payable to the holders of record of Parent Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing shares of Company Common Stock or MGI Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1. However, upon surrender of
such Company Common Stock or MGI Common Stock certificate, both the Parent
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
4.3 ESCROW SHARES. The General Escrow Shares shall be issued and held by
-------------
the Escrow Agent pursuant to the terms of the General Escrow Agreement. The ASI
Escrow Shares shall be issued and held by the Escrow Agent pursuant to the terms
of the ASI Escrow Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY AND MGI
-------------------------------------------------
Company and MGI, jointly and severally, hereby represent and warrant to
Parent as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Each of Company and MGI is a
---------------------------------
corporation duly organized, validly existing, and in good standing under the
Laws of the Commonwealth of Virginia, and has the corporate power and authority
to carry on its business as now conducted and to own, lease and operate its
Assets. Each of Company and MGI is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in
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which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Company. Neither Company nor MGI has any Subsidiaries.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Each of Company and MGI has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Mergers, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Company and MGI and their respective shareholders. This Agreement
represents a legal, valid, and binding obligation of each of Company and MGI,
enforceable against Company and MGI in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Company or
MGI, nor the consummation by Company or MGI of the transactions contemplated
hereby, nor compliance by Company or MGI with any of the provisions hereof, will
(i) conflict with or result in a breach of any provision of Company's or MGI's
respective Articles of Incorporation or Bylaws, or (ii) except as disclosed in
Section 5.2 of the Company Disclosure Memorandum, constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of Company or MGI under, any Contract or Permit of Company
or MGI or, (iii) subject to receipt of the requisite Consents referred to in
Section 10.1(a), violate any Law or Order applicable to Company, MGI or any of
their respective Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and other than
Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by Company or MGI of the Mergers and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK.
-------------
(a) The authorized capital stock of Company consists of 25,000 shares of
Company Common Stock, of which 4,500 shares are issued and outstanding. All of
the issued and outstanding shares of capital stock of Company are duly and
validly issued and outstanding and are fully paid and nonassessable under the
VSCA. None of the outstanding shares of capital stock of Company has been
issued in violation of any preemptive rights of the current or past
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shareholders of Company. There are no shares of capital stock or other equity
securities of Company outstanding and no outstanding Rights relating to the
capital stock of Company.
(b) The authorized capital stock of MGI consists of 50,000 shares of MGI
Common Stock, of which 4,500 shares are issued and outstanding. All of the
issued and outstanding shares of capital stock of MGI are duly and validly
issued and outstanding and are fully paid and nonassessable under the VSCA.
None of the outstanding shares of capital stock of MGI has been issued in
violation of any preemptive rights of the current or past shareholders of MGI.
There are no shares of capital stock or other equity securities of MGI
outstanding and no outstanding Rights relating to the capital stock of MGI.
5.4 FINANCIAL STATEMENTS. Set forth in Section 5.4 of the Company
--------------------
Disclosure Memorandum are true and correct copies of the Company Financial
Statements (including, in each case, any related notes) prepared as of the date
of this Agreement. Each of the Company Financial Statements have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements),
and fairly present (or will fairly present) in all material respects the
financial position of Company as at the respective dates and the consolidated
results of operations and cash flows for the periods indicated, except that the
unaudited interim financial statements are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect. Company's shareholders' equity is not be less than Company's
shareholders' equity as of May 31, 1996, excluding for purposes of the
calculation of such shareholders' equity the effects of (i) all costs, fees and
charges, including fees and charges of Company's accountants, counsel and
financial advisors, whether or not accrued or paid, that are related to the
transactions contemplated by this Agreement, (ii) distributions to the
Shareholders in amounts which do not exceed those described in Section 5.4 of
the Company Disclosure Memorandum, and (iii) any reductions in Company's
shareholders' equity resulting from any actions or changes in policies of
Company taken at the request of Parent.
5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
except as disclosed in Section 5.5 of the Company Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Company, and (ii) neither Company nor MGI has:
(a) incurred any additional debt obligation or other obligation for
borrowed money; or
(b) repurchased, redeemed, or otherwise acquired or exchanged, directly
or indirectly, any shares, or any securities convertible into any shares, of
the capital stock of Company or MGI, or declared or paid any dividend or made
any other distribution in respect of Company's or MGI's capital stock; or
(c) except for this Agreement, issued, sold, pledged, encumbered,
authorized the issuance of, entered into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permitted to become
outstanding, any additional shares of
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Company Common Stock or MGI Common Stock or any other capital stock of
Company or MGI, or any stock appreciation rights, or any option, warrant, or
other Right with respect to any capital stock of Company or MGI; or
(d) sold, leased, mortgaged or otherwise disposed of or otherwise
encumbered any Asset other than in the ordinary course of business for
reasonable and adequate consideration; or
(e) granted any increase in compensation or benefits to the employees
or officers of Company or MGI, except as required by Law or pursuant to the
express terms of Contracts or policies which are described in Section 5.5(g)
of the Company Disclosure Memorandum and other than ordinary and customary
increases in employee salaries in connection with periodic employee
evaluations; paid any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of
this Agreement and disclosed in Section 5.5(g) of the Company Disclosure
Memorandum; or entered into or amended any severance agreements with officers
of Company or MGI; granted any increase in fees or other increases in
compensation or other benefits to directors of Company or MGI; or
(f) entered into any employment Contract between Company or MGI and any
Person that Company or MGI does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at
any time on or after the Effective Time; or
(g) adopted any new employee benefit plan of Company or MGI or
terminated or withdrawn from, or made any material change in or to, any
existing employee benefit plans of Company or MGI other than any such change
that was required by Law or that, in the opinion of counsel, was necessary or
advisable to maintain the tax qualified status of any such plan, or made any
distributions from such employee benefit plans, except as required by Law,
the terms of such plans or consistent with past practice; or
(h) made any change in any Tax or accounting methods or systems of
internal accounting controls; or
(i) commenced any Litigation other than in accordance with past
practice, settled any Litigation involving any Liability of Company or MGI
for money damages or restrictions upon the operations of Company or MGI; or
(j) entered into, modified, amended or terminated any material Contract
(including any loan Contract) or waived, released, compromised or assigned
any material rights or claims.
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<PAGE>
5.6 TAX MATTERS.
-----------
(a) All Tax Returns required to be filed by or on behalf of Company or
MGI have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before September 30, 1995,
and on or before the date of the most recent fiscal year end immediately
preceding the Effective Time, and all Tax Returns filed are complete and
accurate. All Taxes shown on filed Tax Returns have been paid. To the
Knowledge of Company, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes, except as disclosed in Section 5.6 of the
Company Disclosure Memorandum. Each of Company and MGI has made a valid
election to be governed by the provisions of Subchapter S of the Internal
Revenue Code and has never been subject to Subchapter C of the Internal Revenue
Code. All Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no Liens with
respect to Taxes upon any of the Assets of Company or MGI.
(b) Neither Company nor MGI has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) The provision for any Taxes due or to become due for Company and MGI
for the period or periods through and including the date of the respective
Company Financial Statements that has been made and is reflected on such Company
Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of Company and MGI have been provided for in
accordance with GAAP.
(e) Neither Company nor MGI is a party to any Tax allocation or sharing
agreement and neither Company nor MGI has been a member of an affiliated group
filing a consolidated federal income Tax Return, nor do Company or MGI have has
any Liability for Taxes of any Person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign Law) as a transferee or
successor or by Contract or otherwise.
(f) Each of Company and MGI is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms W-
9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
(g) Except as disclosed in Section 5.6 of the Company Disclosure
Memorandum, neither Company nor MGI has made any payments, is not obligated to
make any payments, and is not a party to any Contract that could obligate it to
make any payments that would be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code.
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5.7 ASSETS. Except as disclosed in Section 5.7 of the Company Disclosure
------
Memorandum, each of Company and MGI has good and marketable title, free and
clear of all Liens, to all of its Assets. All tangible properties used in the
businesses of Company and MGI are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
Company's and MGI's past practices. The accounts receivable of Company and MGI
as set forth on the most recent balance sheet included in the Company Financial
Statements delivered prior to the date of this Agreement or arising since the
date thereof are valid and genuine; have arisen solely out of bona fide sales
and deliveries of goods, performance of services and other business transactions
in the ordinary course of business consistent with past practice; are not
subject to valid defenses, set-offs or counterclaims; and are collectible within
120 days after billing at the full recorded amount thereof less, in the case of
accounts receivable appearing on the most recent balance sheet included in the
Company Financial Statements delivered prior to the date of this Agreement, the
recorded allowance for collection losses on such balance sheet. The allowance
for collection losses on the such balance sheet has been determined in
accordance with GAAP. All Assets which are material to Company's or MGI's
business on a consolidated basis, held under leases or subleases by Company or
MGI, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. Neither Company nor MGI has
received notice from any insurance carrier that (i) any policy of insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims for amounts exceeding in any individual
case $1,000 pending under such policies of insurance and no notices of claims in
excess of such amounts have been given by Company or MGI under such policies.
The Assets of Company and MGI include all Assets required to operate the
businesses of Company and MGI as presently conducted, and there are no Assets
that are required to operate the businesses of Company and MGI which are owned
by any Affiliate of Company or MGI (other than MGI and Company, respectively).
5.8 INTELLECTUAL PROPERTY. Company or MGI owns or has a license to
---------------------
use all of the Intellectual Property used by Company or MGI in their respective
businesses. Company or MGI is the owner of or has a license to any Intellectual
Property sold or licensed to a third party by Company or MGI in connection with
Company's and MGI's business operations, and Company or MGI has the right to
convey by sale or license any Intellectual Property so conveyed. Except as
disclosed in Section 5.8 of the Company Disclosure Memorandum, neither Company
nor MGI is in Default under any of its Intellectual Property licenses. No
proceedings have been instituted, or are pending or to the Knowledge of Company
threatened, which challenge the rights of Company or MGI with respect to
Intellectual Property used, sold or licensed by Company or MGI in the course of
its business, nor has any Person claimed or alleged any rights to such
Intellectual Property. To the Knowledge of Company, the conduct of the
businesses of Company and MGI does not infringe any Intellectual Property of any
other Person. Except as disclosed in Section 5.8 of the Company Disclosure
Memorandum, neither Company nor MGI is obligated to pay any recurring royalties
to any Person with respect to any such Intellectual Property. Except as
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disclosed in Section 5.8 of the Company Disclosure Memorandum, no officer or
director of Company or MGI is party to any Contract which restricts or prohibits
such officer or director from engaging in activities competitive with any
Person, including Company and MGI.
5.9 ENVIRONMENTAL MATTERS.
---------------------
(a) To the Knowledge of Company, Company, MGI, and their respective
Participation Facilities and Operating Properties are, and have been, in
compliance in all material respects with all Environmental Laws.
(b) There is no Litigation pending or, to the Knowledge of Company,
threatened before any court, governmental agency, or authority or other forum in
which Company or MGI or any of their respective Operating Properties or
Participation Facilities (or Company or MGI in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by Company or MGI or
any of their respective Operating Properties or Participation Facilities, nor is
there any reasonable basis for any Litigation of a type described in this
sentence.
(c) To the Knowledge of Company, there have been no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, adjacent to, or
affecting (or potentially affecting) such properties.
5.10 COMPLIANCE WITH LAWS. Each of Company and MGI has in effect all
--------------------
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit. Except as disclosed in Section 5.10 of the Company Disclosure
Memorandum, neither Company nor MGI is:
(a) in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
(b) in Default under any Orders, or Permits applicable to its business
or employees conducting its business; or
(c) to the Knowledge of Company, in Default under any Laws applicable
to its business or employees conducting its business; or
(d) since January 1, 1993, in receipt of any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that Company or MGI is not in compliance with any of the Laws or Orders which
such governmental authority or Regulatory Authority enforces, (ii)
threatening to revoke any Permits, or (iii) requiring Company or MGI to enter
into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding.
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<PAGE>
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Parent.
5.11 LABOR RELATIONS. Neither Company nor MGI is the subject of any
---------------
Litigation asserting that Company or MGI has committed an unfair labor practice
(within the meaning of the National Labor Relations Act or comparable state law)
or seeking to compel Company or MGI to bargain with any labor organization as to
wages or conditions of employment, nor is Company or MGI party to any collective
bargaining agreement, nor is there any strike or other labor dispute involving
Company or MGI, pending or threatened, or to the Knowledge of Company, is there
any activity involving Company's or MGI's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.1 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Company has disclosed in Section 5.12 of the Company Disclosure
Memorandum, and has delivered or made available to Parent prior to the execution
of this Agreement copies in each case of, all pension, retirement, profit-
sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by Company, MGI or any ERISA Affiliate
thereof for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "Company Benefit
Plans"). Any of the Company Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to herein
as a "Company ERISA Plan." No Company ERISA Plan is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code), and neither
Company nor has never maintained or contributed to (or been required to
contribute to) such a defined benefit plan. Neither Company nor MGI nor any of
their ERISA Affiliates have had an "obligation to contribute" (as defined in
ERISA Section 4212) to a "multiemployer plan" (as defined in ERISA Sections
4001(a)(3) and 3(37)(A)).
(b) To the Knowledge of Company, all Company Benefit Plans and any
related trusts (to the extent applicable) have been administered in accordance
with their written terms, and are in compliance with the applicable terms of
ERISA, the Internal Revenue Code, and any other applicable Laws the breach or
violation of which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Company. Each Company ERISA Plan which
is intended to be qualified under Section 401(a) of the Internal Revenue Code
has received a favorable determination letter from the Internal Revenue Service,
and Company is not aware
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(after due inquiry of the Plan Administrator, Trustee, Company officers and plan
service providers) of any circumstances likely to result in revocation of any
such favorable determination letter, disqualification of any such Plan, loss of
intended tax consequences under the Internal Revenue Code, any Tax under Section
511 of the Internal Revenue Code or any penalty or liability to any Company
Plan, the Company or an ERISA Affiliate of Company. To the Knowledge of Company,
neither Company nor MGI has engaged in a transaction with respect to any Company
Benefit Plan that, assuming the taxable period of such transaction has not
expired as of the date hereof, would subject Company or MGI to a Tax imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA,
other than such transactions that are not reasonably likely to have a Material
Adverse Effect on Company.
(c) Except as disclosed in Section 5.12 of the Company Disclosure
Memorandum, neither Company nor MGI has any Liability for retiree health and
life benefits under any of the Company Benefit Plans and there are no
restrictions on the rights of Company or MGI to amend or terminate any such
retiree health or benefit Plan without incurring any Liability thereunder.
(d) Except as disclosed in Section 5.12 of the Company Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of Company or MGI from
Company or MGI under any Company Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Company Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(e) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Company and MGI and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Company Financial Statements to the extent
required by and in accordance with GAAP.
(f) There are no unresolved claims or disputes under the terms of, or in
connection with, the Company Plans other than claims for benefits which are
payable in the ordinary course of business and no action, proceeding,
prosecution, inquiry, hearing or investigation has been commenced with respect
to any Company Plan.
(g) Neither the Company nor MGI nor any of their ERISA Affiliates has
entered into any Contract under which either Company, MGI or their ERISA
Affiliates have assumed any liability relating to their clients' retirement
plans, nor have either Company, MGI and/or their ERISA Affiliates made any
verbal representations that the use of any employees of Company, MGI or their
ERISA Affiliates would have no adverse consequence on such retirement plans.
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(h) Participation in Company Plans has been limited to individuals who
constitute common-law employees of Company and MGI as determined under the
analysis set forth in Rev. Rul. 87-41, 1987-1 C.B. 296.
5.13 MATERIAL CONTRACTS. Except as disclosed in Section 5.13 of the
------------------
Company Disclosure Memorandum, neither Company, MGI nor any of their respective
Assets, businesses, or operations is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract, (ii) any Contract relating to the borrowing of money by
Company or MGI or the guarantee by Company or MGI of any such obligation (other
than Contracts evidencing trade payables), (iii) any Contract which prohibits or
restricts Company or MGI or any Affiliate thereof from engaging in any business
activities in any geographic area, line of business or otherwise in competition
with any other Person, (iv) any Contract involving Intellectual Property (other
than Contracts entered into in the ordinary course with customers and "shrink-
wrap" software licenses), (v) any Contract relating to the provision of data
processing, network communication, or other technical services to or by Company
or MGI and involving payments by Company or MGI (other than payments between
Company and MGI) in excess of $25,000 or payments to Company or MGI (other than
payments between Company and MGI) in excess of $100,000, (vi) any Contract with
any Affiliate of Company or MGI (other than MGI or Company, respectively), or
(vii) any Contract relating to the purchase or sale of any goods or services
(other than Contracts entered into in the ordinary course of business and
involving payments under any individual Contract not in excess of $100,000)
(together with all Contracts referred to in Sections 5.7 and 5.12(a), the
"Company Contracts"). With respect to each Company Contract and except as
disclosed in Section 5.13 of the Company Disclosure Memorandum: (i) the Contract
is in full force and effect; (ii) neither Company nor MGI is in Default
thereunder; (iii) neither Company nor MGI has repudiated or waived any material
provision of any such Contract; (iv) no other party to any such Contract is, to
the Knowledge of Company, in Default in any respect or has repudiated or waived
any material provision thereunder; and (v) in the case of any Contracts between
Company or MGI and any of its Affiliates (other than MGI or Company,
respectively), such Contracts are on terms that Company or MGI would, in good
faith, offer to any unaffiliated third party and are terminable at any time
after the Effective Time by Company or MGI without Liability. All of the
indebtedness of Company or MGI for money borrowed is prepayable at any time by
Company or MGI without penalty or premium.
5.14 LEGAL PROCEEDINGS. Except as disclosed in Section 5.14 of the Company
-----------------
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of Company, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against Company or MGI, or against any director,
employee or employee benefit plan of Company or MGI, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Company, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against Company or MGI. Section 5.14 of the Company
Disclosure Memorandum contains a summary of all Litigation as of the date of
this Agreement to which Company or MGI is a party and which names Company or MGI
as a defendant or cross-defendant or for which Company or MGI has any potential
Liability.
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5.15 REPORTS. Since January 1, 1993, or the date of organization if later,
-------
each of Company and MGI has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with Regulatory Authorities. As of their respective dates, each
of such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
5.16 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
---------------------------
or other writing furnished or to be furnished by Company, MGI or any Affiliate
thereof to Parent pursuant to this Agreement or any other document, agreement,
or instrument referred to herein contains or will contain any untrue statement
of material fact.
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS. Neither Company, MGI nor any
--------------------------------------
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the Merger
from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 10.1(a) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section. Neither McKinley nor MGI is engaged in manufacturing and, as reflected
on their most recent regularly prepared combined balance sheet, do not have
total combined assets of $10,000,000 or more.
5.18 CHARTER PROVISIONS. Each of Company and MGI has taken all
------------------
action so that the entering into of this Agreement and the consummation of the
Mergers and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of Company or MGI or
restrict or impair the ability of Parent or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of
Company and MGI that may be directly or indirectly acquired or controlled by
them.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
----------------------------------------------
Each of the Shareholders represents and warrants to Parent as follows:
6.16 OWNERSHIP OF SHARES. Such Shareholder is the owner of all right,
-------------------
title and interest (legal and beneficial) in and to that number of shares of
Company Common Stock and MGI Common Stock listed opposite the name of such
Shareholder in Schedule I, free and clear of any and all Liens of any nature
whatsoever. Except as specifically contemplated by this Agreement, no person
or entity has any Contract or Right (whether preemptive or contractual)
capable of becoming a Contract or Right for the purchase of any of shares of
Company Common Stock or MGI Common Stock from such Shareholder. None of the
Shareholders will have assets of $10,000,000 or more at the Effective Time.
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6.2 AUTHORITY AND APPROVAL; NO BREACH BY AGREEMENT. Such Shareholder
----------------------------------------------
has the full power, authority and capacity necessary to enter into and perform
its respective obligations under this Agreement, to assign, transfer, convey and
deliver the shares of Company Common Stock and MGI Common Stock so owned by such
Shareholder pursuant to this Agreement, and to consummate the transactions
contemplated hereby. As of the date hereof, this Agreement has been duly
executed and delivered by such Shareholder, and constitutes a legal, valid, and
binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). No notice to, filing with, or Consent of, any public
body or authority or other Person is necessary for the consummation by such
Shareholder of the transactions contemplated in this Agreement. Execution of
this Agreement by such Shareholder shall constitute such Shareholder's written
consent to approval of this Agreement and the Company Plan of Merger in such
Shareholder's capacity as a holder of shares of Company Common Stock, and such
Shareholder hereby waives receipt of any further notice of the Company Merger,
including notice of the availability of dissenters' rights. Execution of this
Agreement by such Shareholder shall constitute such Shareholder's written
consent to approval of this Agreement and the MGI Plan of Merger in such
Shareholder's capacity as a holder of shares of MGI Common Stock, and such
Shareholder hereby waives receipt of any further notice of the MGI Merger,
including notice of the availability of dissenters' rights.
6.3 PURCHASE FOR INVESTMENT; ACCREDITED INVESTOR STATUS. Such Shareholder
---------------------------------------------------
is acquiring shares of Parent Common Stock for investment and not with a present
view toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling the shares of Parent Common
Stock so acquired, other than in accordance with the terms and conditions of the
Stock Restriction and Registration Rights Agreement. Such Shareholder is an
"accredited investor" within the meaning of Rule 501(a) promulgated under the
1933 Act.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent hereby represents and warrants to Company as follows:
7.1 ORGANIZATION, STANDING, AND POWER. Parent is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Florida, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. Parent is duly
qualified or licensed to transact business as a foreign
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corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
7.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Parent has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Mergers, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Parent. This Agreement
represents a legal, valid, and binding obligation of Parent, enforceable against
Parent in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Parent, nor
the consummation by Parent of the transactions contemplated hereby, nor
compliance by Parent with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Parent's Articles of Incorporation or
Bylaws, or (ii) except as disclosed in Section 7.2(b) of the Parent Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of Parent or any
of its Subsidiaries under, any Contract or Permit of Parent or any of its
Subsidiaries, or, (iii) subject to receipt of the requisite Consents referred to
in Section 10.1(a), violate any Law or Order applicable to Parent or any of its
Subsidiaries or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and other than
Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Parent of the
Mergers and the other transactions contemplated in this Agreement.
7.3 CAPITAL STOCK. The authorized capital stock of Parent consists of
-------------
(i) 150,000,000 shares of Parent Common Stock, of which 63,362,145 shares were
issued and outstanding as of June 17, 1996, and (ii) 10,000,000 shares of Parent
Preferred Stock, none of which are issued and outstanding as of the date of this
Agreement. All of the issued and outstanding shares of Parent Capital Stock are,
and all of the shares of Parent Common Stock to be issued in exchange for shares
of Company Common Stock upon consummation of the Merger,
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when issued in accordance with the terms of this Agreement, will be, duly and
validly issued and outstanding and fully paid and nonassessable under the FBCA.
None of the outstanding shares of Parent Capital Stock has been, and none of the
shares of Parent Common Stock to be issued in exchange for shares of Company
Common Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Parent.
7.4 SEC FILINGS; FINANCIAL STATEMENTS.
---------------------------------
(a) Parent has timely filed and made available to Company all SEC
Documents required to be filed by Parent since December 31, 1992 (the "Parent
SEC Reports"). The Parent SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Parent SEC Reports or
necessary in order to make the statements in such Parent SEC Reports, in light
of the circumstances under which they were made, not misleading.
(b) Each of the Parent Financial Statements (including, in each case, any
related notes) contained in the Parent SEC Reports, including any Parent SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Parent
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or are not expected to be material in amount or
effect.
7.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1996, except as
------------------------------------
disclosed in the Parent Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 7.5 of the Parent Disclosure Memorandum,
there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
7.6 TAX MATTERS.
-----------
(a) All Tax Returns required to be filed by or on behalf of any of the
Parent Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
January 1, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all Tax Returns filed are complete
and accurate in all material respects. All Taxes shown on filed Tax Returns
have been paid. As of the date of this Agreement, there is no audit
examination, deficiency, or refund
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Litigation with respect to any Taxes. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) The provision for any Taxes due or to become due for any of the
Parent Companies for the period or periods through and including the date of the
respective Parent Financial Statements that has been made and is reflected on
such Parent Financial Statements is sufficient to cover all such Taxes.
(c) Deferred Taxes of the Parent Companies have been provided for in
accordance with GAAP.
7.7 COMPLIANCE WITH LAWS. Each Parent Company has in effect all Permits
--------------------
necessary for it to own, lease or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as disclosed in Section 7.7 of the Parent Disclosure Memorandum,
none of the Parent Companies is:
(a) in Default under its Articles of Incorporation or Bylaws (or other
governing instruments); or
(b) in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for Defaults which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Parent; or
(c) since January 1, 1993, is in receipt of any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that Parent or any of its Subsidiaries is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory Authority
enforces, (ii) threatening to revoke any Permits, or (iii) requiring Parent
or any of its Subsidiaries to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum
of understanding.
7.8 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
-----------------
or, to the Knowledge of Parent, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against Parent or any of its
Subsidiaries, or against any director, employee or employee benefit plan of
Parent or any of its Subsidiaries, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against Parent or any of its Subsidiaries.
7.9 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
---------------------------
or other writing furnished or to be furnished by Parent or any of its
Subsidiaries or any Affiliate thereof to Company pursuant to this Agreement or
any other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact.
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7.10 AUTHORITY OF SUB AND SUB II. Each of Sub and Sub II is a
---------------------------
corporation duly organized, validly existing and in good standing under the Laws
of the Commonwealth of Virginia as a wholly owned Subsidiary of Parent. The
authorized capital stock of Sub shall consist of 1,000 shares of Sub Common
Stock, all of which is validly issued and outstanding, fully paid and
nonassessable and is owned by Parent free and clear of any Lien. The authorized
capital stock of Sub II shall consist of 1,000 shares of Sub II Common Stock,
all of which is validly issued and outstanding, fully paid and nonassessable and
is owned by Parent free and clear of any Lien. Each of Sub and Sub II has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Sub and Sub II. This Agreement represents a legal, valid,
and binding obligation of each of Sub and Sub II, enforceable against Sub and
Sub II in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). Parent, as the sole shareholder of Sub, has voted
prior to the Effective Time the shares of Sub Common Stock in favor of approval
of this Agreement and the Company Plan of Merger, as and to the extent required
by applicable Law. Parent, as the sole shareholder of Sub II, has voted prior to
the Effective Time the shares of Sub II Common Stock in favor of approval of
this Agreement and the MGI Plan of Merger, as and to the extent required by
applicable Law.
7.11 ACCOUNTING, TAX AND REGULATORY MATTERS. No Parent Company or any
--------------------------------------
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the Merger
from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 10.1(a) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
ARTICLE 8
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
8.1 AFFIRMATIVE COVENANTS OF COMPANY AND MGI. From the date of this Agreement
----------------------------------------
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Parent shall have been obtained, and except
as otherwise expressly contemplated herein, each of Company and MGI shall (a)
operate its business only in the usual, regular, and ordinary course, (b)
preserve intact its business organization and Assets and maintain its rights and
franchises, and (c) take no action which would (i) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of
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Section 10.1(a) or 10.1(b), or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement.
8.2 NEGATIVE COVENANTS OF COMPANY AND MGI. From the date of this Agreement
-------------------------------------
until the earlier of the Effective Time or the termination of this Agreement,
each of Company and MGI covenants and agrees that it will not do or agree or
commit to do any of the following without the prior written consent of the chief
executive officer or chief financial officer of Parent, which consent shall not
be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of Company or MGI, or
(b) incur any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $100,000 except in the ordinary
course of the business of Company consistent with past practices or as
disclosed in Section 8.2 of the Company Disclosure Memorandum, or impose, or
suffer the imposition, on any Asset of Company or MGI of any Lien or permit
any such Lien to exist (other than in connection with Liens in effect as of
the date hereof that are disclosed in the Company Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of Company or MGI, or declare or pay any dividend or make any
other distribution in respect of Company's or MGI's capital stock, provided
that Company may (to the extent legally and contractually permitted to do
so), but shall not be obligated to, declare and pay cash dividends on the
shares of Company Common Stock as described in Section 8.2 of the Company
Disclosure Memorandum; or
(d) except for this Agreement, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Company Common Stock or MGI Common Stock or any other
capital stock of Company or MGI, or any stock appreciation rights, or any
option, warrant, or other Right with respect to any capital stock of Company
or MGI; or
(e) adjust, split, combine or reclassify any capital stock of Company
or MGI or issue or authorize the issuance of any other securities in respect
of or in substitution for shares of Company Common Stock or MGI Common Stock,
or sell, lease, mortgage or otherwise dispose of or otherwise encumber (x)
any shares of capital stock of any Subsidiary (unless any such shares of
stock are sold or otherwise transferred to another Subsidiary) or (y) any
Asset other than in the ordinary course of business for reasonable and
adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or
less, purchase any
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securities or make any material investment, either by purchase of stock of
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Subsidiary, or otherwise
acquire direct or indirect control over any Person; or
(g) grant any increase in compensation or benefits to the employees or
officers of Company or MGI, except as required by Law or pursuant to the
express terms of Contracts or policies which are described in Section 8.2(g)
of the Company Disclosure Memorandum and other than ordinary and customary
increases in employee salaries in connection with periodic employee
evaluations; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of
this Agreement and disclosed in Section 8.2(g) of the Company Disclosure
Memorandum; and enter into or amend any severance agreements with officers of
Company or MGI; grant any increase in fees or other increases in compensation
or other benefits to directors of Company or MGI; or voluntarily accelerate
the vesting of any stock options or other stock-based compensation or
employee benefits or other Rights; or
(h) enter into or amend any employment Contract between Company or MGI
and any Person (unless such amendment is required by Law) that Company or MGI
does not have the unconditional right to terminate without Liability (other
than Liability for services already rendered), at any time on or after the
Effective Time; or
(i) adopt any new employee benefit plan of Company or MGI or terminate
or withdraw from, or make any material change in or to, any existing employee
benefit plans of Company or MGI other than any such change that is required
by Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any distributions
from such employee benefit plans, except as required by Law, the terms of
such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of Company or MGI for
money damages or restrictions upon the operations of Company or MGI; or
(l) enter into, modify, amend or terminate any material Contract
(including any loan Contract with an unpaid balance exceeding $50,000) or
waive, release, compromise or assign any material rights or claims.
8.3 COVENANTS OF PARENT. From the date of this Agreement until the
-------------------
earlier of the Effective Time or the termination of this Agreement, Parent
covenants and agrees that it shall (a) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the Parent Common Stock and the
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business prospects of the Parent Companies and to the extent consistent
therewith use all reasonable efforts to preserve intact the Parent Companies'
core businesses and goodwill with their respective employees and the communities
they serve, and (b) take no action which would (i) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of Section 10.1(a) or 10.1(b), or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent Parent or any of its Subsidiaries from acquiring any Assets or other
businesses or from discontinuing or disposing of any of its Assets or business
if such action is, in the reasonable judgment of Parent, desirable in the
conduct of the business of Parent.
8.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
----------------------------
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
ARTICLE 9
ADDITIONAL AGREEMENTS
---------------------
9.1 EXCHANGE LISTING. Parent shall use its reasonable efforts to list,
----------------
prior to or as soon as practicable after the Effective Time, on the Nasdaq
National Market the shares of Parent Common Stock to be issued to the holders of
Company Common Stock and MGI Common Stock pursuant to the Mergers, and Parent
shall give all notices and make all filings with the NASD required in connection
with the transactions contemplated herein.
9.2 APPLICATIONS; ANTITRUST NOTIFICATION. Parent shall promptly prepare
------------------------------------
and file, and Company, MGI and the Shareholders shall cooperate in the
preparation and, where appropriate, filing of, applications with all Regulatory
Authorities having jurisdiction over the transactions contemplated by this
Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. To the extent required by the HSR
Act, each of the Parties will promptly file with the United States Federal Trade
Commission and the United States Department of Justice the notification and
report form required for the transactions contemplated hereby and any
supplemental or additional information which may reasonably be requested in
connection therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act. All documents that either Party
or any Affiliate thereof is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law. The Parties
shall deliver to each other copies of all filings, correspondence and orders to
and from all Regulatory Authorities in connection with the transactions
contemplated hereby.
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9.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
--------------------------
conditions of this Agreement, Company shall execute and file the Company
Articles of Merger with the Virginia State Corporation Commission in connection
with the Closing. Upon the terms and subject to the conditions of this
Agreement, MGI shall execute and file the MGI Articles of Merger with the
Virginia State Corporation Commission in connection with the Closing.
9.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
-------------------------------------
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 10; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
9.5 INVESTIGATION AND CONFIDENTIALITY.
---------------------------------
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Company shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering an
Acquisition Proposal with respect to Company to preserve the confidentiality of
the information relating to Company provided to such Persons and their
Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has
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discovered through the course of its investigation and which represents, or is
reasonably likely to represent, either a material breach of any representation,
warranty, covenant or agreement of the other Party or which has had or is
reasonably likely to have a Material Adverse Effect on the other Party.
9.6 PRESS RELEASES. Prior to the Effective Time, Company and Parent shall
--------------
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 9.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
9.7 CERTAIN ACTIONS. Except with respect to this Agreement and the
---------------
transactions contemplated hereby, neither Company, MGI nor any Shareholder, nor
any Affiliate thereof or any Representatives thereof retained by Company, MGI or
any Shareholder, shall directly or indirectly solicit any Acquisition Proposal
by any Person. Neither Company, MGI nor any Shareholder, nor any Affiliate or
Representative thereof, shall furnish any non-public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal. Company shall promptly
advise Parent following the receipt of any Acquisition Proposal and the details
thereof, and advise Parent of any developments with respect to such Acquisition
Proposal promptly upon the occurrence thereof. Company, MGI and the Shareholders
shall (i) immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to cause
all of their Affiliates and Representatives not to engage in any of the
foregoing.
9.8 SHAREHOLDER RELEASES. Except as set forth in Section 9.8 of the
--------------------
Company Disclosure Memorandum, each Shareholder hereby releases, remises, and
forever discharges Company, MGI and their respective Representatives,
Affiliates, and insurers, and their respective successors and assigns, and each
of them (hereinafter individually and collectively, the "Releasees") of and from
any and all claims, demands, debts, accounts, covenants, agreements,
obligations, costs, expenses, actions or causes of action of every nature,
character or description, now accrued or which may hereafter accrue, without
limitation of law, equity or otherwise, based in whole or in part on any facts,
conduct, activities, transactions, events or occurrences known or unknown, which
have or allegedly have existed, occurred, happened, arisen or transpired from
the beginning of time to the Effective Time (the "Released Claims"). Each
Shareholder represents and warrants that no Released Claim released herein has
been assigned, expressly, impliedly, or by operation of Law, and that all
Released Claims of such Shareholder released herein are owned by such
Shareholder, who has the sole authority to release them. Each Shareholder
agrees that such holder shall forever refrain and forebear from commencing,
instituting or prosecuting any lawsuit action or proceeding, judicial,
administrative, or otherwise, or otherwise attempting to collect or enforce any
Released Claims which are released and discharged herein.
9.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes and
----------------------------
agrees to use its reasonable efforts to cause the
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Merger, and to take no action which would cause the Merger not, to qualify for
treatment as a pooling of interests for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code for federal income tax purposes. Company and the Shareholders represent and
warrant that no distributions by Company to the Shareholders were made in
contemplation of any merger transaction and that distributions for the fiscal
year ended September 30, 1995, and for the fiscal year ending September 30, 1996
(including the distributions contemplated by Section 9.11), identified by them
as having been made for the purpose of enabling the individual Shareholders to
pay their individual Tax liabilities, agree to amounts paid by the Shareholders
on their respective federal and state Tax Returns, extensions or estimated Tax
filings. The Shareholders agree that, in the event distributions have been made
in excess of amounts necessary to pay Tax liabilities of the individual
Shareholders and it is determined that such distributions would preclude the
Mergers from being accounted for by the pooling-of-interests method of
accounting, the Shareholders agree to repay to Company such amounts of such
distributions as may be necessary to permit the Mergers to be accounted for by
the pooling-of-interests method of accounting.
9.10 CHARTER PROVISIONS. Each of Company and MGI shall take all
------------------
necessary action to ensure that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws or other governing instruments of Company or
MGI or restrict or impair the ability of Parent or any of its Subsidiaries to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Company or MGI that may be directly or indirectly acquired or
controlled by them.
9.11 CERTAIN PAYMENTS. Parent agrees that, promptly after the Effective
----------------
Time, it will contribute to Company sufficient funds to permit Company to pay,
or will pay directly, the following: (i) expenses relating to the transactions
contemplated hereby (including the fees of the Persons identified in Section
13.3 and fees and expenses of counsel and accountants for Company) and (ii) a
distribution by Company of $1,469,792 which represents a distribution made by
Company for the purpose of enabling the individual Shareholders to pay their
individual Tax liabilities.
9.12 OPERATIONS AFTER THE EFFECTIVE TIME. Parent agrees that, after the
-----------------------------------
Effective Time, it will cause Company to fund an annual bonus pool for key
employees of Company , which pool will equal 1% of Company's earnings before
interest and taxes ("EBIT") up to $750,000 and 2% of EBIT over $750,000;
provided that the total bonus pool in any year may not exceed $300,000.
Distributions from the pool will be made at times which are consistent with
other bonus pools maintained by other Parent Subsidiaries. In addition, Parent
agrees that, after the Effective Time, it will grant to key employees of Company
options to purchase an aggregate of 45,000 shares of Parent Common Stock at an
exercise price equal to the last sale price of Parent Common Stock on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Parent) on June 18, 1996,
which shares shall vest over a five year period, with 20% of such shares vesting
on each anniversary of the date of grant of such options.
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9.13 CERTAIN TAX RETURNS OF COMPANY AND MGI.
--------------------------------------
(a) For income tax purposes, (i) the status of Company as an "S
Corporation" will be terminated by the Company Merger, (ii) Company's final S
corporation Tax year will end at the close of the day before the day on which
occurs the Effective Time, and (iii) a new Tax year for Company will begin on
the day on which the Effective Time occurs. The Shareholders shall prepare and
cause to be filed all income Tax Returns of Company (including IRS Form 1120S
and Schedule K-1(1120S) and similar state Tax Returns) for the Tax year ending
the day before the day on which the Effective Time occurs, as well as for the
Tax year ended September 30, 1995 (if not filed before the Effective Time).
Parent and Company (and not the Shareholders) shall be responsible for the
preparation and filing of all income Tax Returns and the payment of all income
Taxes of Company for its Tax year beginning on the day on which the Effective
Time occurs and all subsequent periods. Parent agrees to cooperate (and to
cause Company to cooperate) with the Shareholders to the extent reasonably
required after the Effective Time in connection with (i) the preparation,
execution, and filing of all such Tax Returns and other Tax documents with
respect to Company's final Tax year as an S corporation and any prior Tax year
of Company, (ii) contests concerning the application of any Tax or the amount of
Tax due for any such Tax year, and (iii) audits and other proceedings conducted
by any taxing authority with respect to any such Tax period. All income Tax
Returns of Company filed after the Effective Time for Tax years beginning before
the Effective Time shall be based on the same accounting methods and elections
as used for Company's Tax year immediately preceding the period of such Tax
Return, except as otherwise agreed upon by Parent and the Shareholders. After
the Effective Time, except as required by Law, neither Company nor Parent shall,
without the prior written consent of the Shareholders, (i) file or permit to be
filed any amended Tax Return by or on behalf of Company with respect to tax
period prior to the Effective Time, or (ii) take any other action affecting
Company's income Taxes or taxable income for any such period. Notwithstanding
any other provision of this Agreement, the Shareholders shall have no liability
under this Agreement with respect to (and Parent shall hold the Shareholders
harmless from any liability for) income Taxes or any other Liability to the
extent such Taxes or other Liability result form any breach by Parent or Company
of their respective obligations under this Section 9.13(a).
(b) For income tax purposes, (i) the status of MGI as an "S Corporation"
will be terminated by the MGI Merger, (ii) MGI's final S corporation Tax year
will end at the close of the day before the day on which occurs the Effective
Time, and (iii) a new Tax year for MGI will begin on the day on which the
Effective Time occurs. The Shareholders shall prepare and cause to be filed all
income Tax Returns of MGI (including IRS Form 1120S and Schedule K-1(1120S) and
similar state Tax Returns) for the Tax year ending the day before the day on
which the Effective Time occurs, as well as for the Tax year ended September 30,
1995 (if not filed before the Effective Time). Parent and MGI (and not the
Shareholders) shall be responsible for the preparation and filing of all income
Tax Returns and the payment of all income Taxes of MGI for its Tax year
beginning on the day on which the Effective Time occurs and all subsequent
periods. Parent agrees to cooperate (and to cause MGI to cooperate) with the
Shareholders to the extent reasonably required after the Effective Time in
connection with (i) the preparation, execution, and filing of all such Tax
Returns and other Tax documents with respect to MGI's final Tax year as an S
corporation and any prior Tax year of MGI, (ii) contests concerning the
application of any
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Tax or the amount of Tax due for any such Tax year, and (iii) audits and other
proceedings conducted by any taxing authority with respect to any such Tax
period. All income Tax Returns of MGI filed after the Effective Time for Tax
years beginning before the Effective Time shall be based on the same accounting
methods and elections as used for MGI's Tax year immediately preceding the
period of such Tax Return, except as otherwise agreed upon by Parent and the
Shareholders. After the Effective Time, except as required by Law, neither MGI
nor Parent shall, without the prior written consent of the Shareholders, (i)
file or permit to be filed any amended Tax Return by or on behalf of MGI with
respect to tax period prior to the Effective Time, or (ii) take any other action
affecting MGI's income Taxes or taxable income for any such period.
Notwithstanding any other provision of this Agreement, the Shareholders shall
have no liability under this Agreement with respect to (and Parent shall hold
the Shareholders harmless from any liability for) income Taxes or any other
Liability to the extent such Taxes or other Liability result form any breach by
Parent or MGI of their respective obligations under this Section 9.13(b).
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
10.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
---------------------------------------
of each Party to perform this Agreement and consummate the Mergers and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 13.6:
(A) REGULATORY APPROVALS. All Consents of, filings and registrations
--------------------
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to the
raising of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of Parent would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such Party would not, in its reasonable judgment, have entered into
this Agreement.
(B) CONSENTS AND APPROVALS. Each Party shall have obtained any and all
----------------------
Consents required for consummation of the Merger (other than those referred
to in Section 10.1(a) and those set forth in the Company Disclosure
Memorandum) or for the preventing of any Default under any Contract or Permit
of such Party which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such Party.
No Consent so obtained which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner which in
the reasonable judgment of the Board of Directors of Parent would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable judgment,
have entered into this Agreement.
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<PAGE>
(C) LEGAL PROCEEDINGS. No court or governmental or regulatory
-----------------
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes
illegal consummation of the transactions contemplated by this Agreement.
(D) TAX MATTERS. Each Party shall have received a written opinion of
-----------
counsel from Alston & Bird, in form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Mergers will constitute
reorganizations within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Mergers of Company Common Stock and MGI Common
Stock for Parent Common Stock will not give rise to gain or loss to the
shareholders of Company or MGI with respect to such exchange (except with
respect to any cash received), and (iii) none of Company, MGI, Sub, Sub II or
Parent will recognize gain or loss as a consequence of the Mergers (except
for amounts resulting from any required change in accounting methods). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Company, MGI, the Shareholders and Parent
reasonably satisfactory in form and substance to such counsel.
10.2 CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of Parent to
-----------------------------------
perform this Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Parent pursuant to Section 13.6(a):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
------------------------------
10.2(a), the accuracy of the representations and warranties of Company, MGI
and the Shareholders set forth in this Agreement shall be assessed as of the
date of this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of Company and MGI set forth in Section 5.3
shall be true and correct (except for inaccuracies which are de minimus in
amount). The representations and warranties of Company and MGI set forth in
Sections 5.17 and 5.18 shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
Company and MGI set forth in this Agreement (including the representations
and warranties set forth in Sections 5.3, 5.17, and 5.18) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Company; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge"
of any Person shall be deemed not to include such qualifications. The
representations and warranties of the Shareholders shall be true and correct
in all material respects.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of Company, MGI and the Shareholders to be performed
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and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all material respects.
(C) CERTIFICATES. Company shall have delivered to Parent (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 10.1 as relates to Company and in Section
10.2(a) and 10.2(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Company's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
Parent and its counsel shall request. MGI shall have delivered to Parent (i)
a certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 10.1 as relates to MGI and in Section
10.2(a) and 10.2(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by MGI's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, all in such reasonable detail as
Parent and its counsel shall request.
(D) OPINION OF COUNSEL. Parent shall have received an opinion of
------------------
Hunton & Williams, counsel to Company, MGI and the Shareholders, dated as of
the Closing, in the form attached as Exhibit 8 88"8.
10.3 CONDITIONS TO OBLIGATIONS OF COMPANY AND MGI. The obligations of
--------------------------------------------
Company and MGI to perform this Agreement and consummate the Mergers and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Company pursuant to Section 13.6(b):
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
------------------------------
10.3(a), the accuracy of the representations and warranties of Parent set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Parent set forth in Section 7.3 shall be true and correct
(except for inaccuracies which are de minimus in amount). The
representations and warranties of Parent set forth in Section 7.11 shall be
true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Parent set forth in
this Agreement (including the representations and warranties set forth in
Sections 7.3 and 7.11) such that the aggregate effect of such inaccuracies
has, or is reasonably likely to have, a Material Adverse Effect on Parent;
provided that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of any Person shall be deemed not to
include such qualifications.
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(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
---------------------------------------
agreements and covenants of Parent to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. Parent shall have delivered to Company (i) a
------------
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions set forth in Section 10.1 as relates to Parent and in Section
10.3(a) and 10.3(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by Parent's Board of Directors and Sub's Board of
Directors and sole shareholder evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all
in such reasonable detail as Company and its counsel shall request.
(D) OPINION OF COUNSEL. Company shall have received an opinion of
------------------
Alston & Bird, counsel to Parent, dated as of the Effective Time, in the form
attached as Exhibit 9 9"9.
ARTICLE 11
INDEMNIFICATION
---------------
11.1 AGREEMENT OF INDEMNITORS TO INDEMNIFY. Subject to the terms and
-------------------------------------
conditions of this Article 11, Indemnitors jointly and severally agree to
indemnify, defend, and hold harmless Indemnitees, and each of them, from,
against, for and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(a) the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of any Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Exhibit or Disclosure Schedule
furnished by Company, MGI or Indemnitors in connection herewith and for
purposes of this Section 11.1(a) any qualification of such representations
and warranties by reference to "material" or "Material Adverse Effect" or to
the "Knowledge" of any Person shall be deemed not to include such
qualifications, in determining any inaccuracy, untruth, incompleteness or
breach thereof; and
(b) a breach of or failure to perform any covenant or agreement of
Company, MGI or Indemnitors made in this Agreement; and
(c) that certain Litigation involving American Software, Inc. described
in Section 5.14 of the Company Disclosure Memorandum ("ASI Litigation").
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11.2 PROCEDURES FOR INDEMNIFICATION.
------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by delivery
of a written notice to the Indemnitor Representative requesting indemnification
and specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 11.3 hereof shall be observed by the Indemnitee
and the Indemnitor Representative.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, the Indemnitor Representative shall have 30 days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by the Indemnitor Representative on behalf of all
Indemnitors, and the Indemnification Claim shall be paid in accordance with
subsection (d) hereof. If an objection is timely interposed by the Indemnitor
Representative and the dispute is not resolved by such Indemnitee and the
Indemnitor Representative within 15 days from the date the Indemnitee receives
such objection, such dispute shall be resolved by arbitration as provided in
Section 11.12.
(d) Upon determination of the amount of an Indemnification Claim, whether
by agreement between the Indemnitor Representative and the Indemnitee or by an
arbitration award or by any other final adjudication, subject to Section 11.9,
the Indemnitors shall pay the amount of such Indemnification Claim within ten
days of the date such amount is determined.
11.3 THIRD PARTY CLAIMS. The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) The Indemnitee shall give the Indemnitor Representative written
notice of a Third Party Claim promptly after receipt by the Indemnitee of
notice thereof, and the Indemnitor Representative, on behalf of the
Indemnitors, may undertake the defense, compromise and settlement thereof by
representatives of its own choosing reasonably acceptable to the Indemnitee.
The failure of the Indemnitee to notify the Indemnitor Representative of such
claim shall not relieve the Indemnitors of any Liability that they may have
with respect to such claim except to the extent the Indemnitor Representative
demonstrates that the defense of such claim is prejudiced by such failure.
The assumption of the defense, compromise and settlement of any such Third
Party Claim by the Indemnitor Representative shall be an acknowledgment of
the obligation of the Indemnitors to indemnify the Indemnitee with respect to
such claim hereunder. If the Indemnitee desires to participate in, but not
control, any such defense, compromise and settlement, it may do so at its
sole cost and expense. If, however, the Indemnitor Representative fails or
refuses to undertake the defense of such Third Party Claim within ten days
after written notice of such
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claim has been given to the Indemnitor Representative by the Indemnitee, the
Indemnitee shall have the right to undertake the defense, compromise and
settlement of such claim with counsel of its own choosing. In the
circumstances described in the preceding sentence, the Indemnitee shall,
promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 11.2 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) Except in the case of the ASI Litigation, over which the Indemnitor
Representative shall have the exclusive right to control the defense,
compromise and settlement, if, in the reasonable opinion of the Indemnitee,
any Third Party Claim or the litigation or resolution thereof involves an
issue or matter which could have a material adverse effect on the business,
operations, assets, properties or prospects of the Indemnitee (including,
without limitation, the administration of the tax returns and
responsibilities under the tax laws of the Indemnitee), the Indemnitee shall
have the right to control the defense, compromise and settlement of such
Third Party Claim undertaken by the Indemnitor Representative, and the costs
and expenses of the Indemnitee in connection therewith shall be included as
part of the indemnification obligations of the Indemnitors hereunder. If the
Indemnitee shall elect to exercise such right, the Indemnitor Representative
shall have the right to participate in, but not control, the defense,
compromise and settlement of such Third Party Claim at its sole cost and
expense.
(c) No settlement of a Third Party Claim, other than the ASI
Litigation, involving the asserted Liability of the Indemnitors under this
Article shall be made without the prior written consent by or on behalf of
the Indemnitor Representative, which consent shall not be unreasonably
withheld or delayed. Consent shall be presumed in the case of settlements of
$20,000 or less where the Indemnitor Representative has not responded within
five business days of notice of a proposed settlement. If the Indemnitor
Representative assumes the defense of such a Third Party Claim, (x) no
compromise or settlement thereof may be effected by the Indemnitor
Representative without the Indemnitee's consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights
of any person and no effect on any other claim that may be made against the
Indemnitee, (ii) the sole relief provided is monetary damages that are paid
in full by the Indemnitors, and (iii) the compromise or settlement includes,
as an unconditional term thereof, the giving by the claimant or the plaintiff
to the Indemnitee of a release, in form and substance satisfactory to the
Indemnitee, from all Liability in respect of such Third Party Claim, and (y)
the Indemnitee shall have no Liability with respect to any compromise or
settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably
be related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business
hours to all properties, personnel, books, tax records, contracts,
commitments and
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all other business records of such other party and will furnish to such other
party copies of all such documents as may reasonably be requested (certified,
if requested).
11.4 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The rights of the
--------------------------------------
Indemnitees under this Article 11 are independent of and in addition to such
rights and remedies as the Indemnitees may have at law or in equity or otherwise
based upon any inaccuracy, untruth, incompleteness or breach of any
representation or warranty of any Indemnitor contained herein or in any
certificate, schedule or exhibit furnished by such party in connection herewith,
or based upon the failure of an Indemnitor to perform any covenant, agreement or
undertaking required by the terms hereof to be performed by such Indemnitor,
including without limitation the right to seek specific performance, recession
or restitution, none of which rights or remedies shall be affected or diminished
hereby.
11.5 SURVIVAL. All representations, warranties and agreements
--------
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Closing for a period of 12 months notwithstanding
any investigation conducted with respect thereto or any knowledge acquired as to
the accuracy or inaccuracy of any such representation or warranty.
11.6 TIME LIMITATIONS. The Indemnitors will have no Liability to the
----------------
Indemnitees under or in connection with a breach of any of the representations,
warranties, covenants or agreements made or to be performed by the Indemnitors
contained in this Agreement (other than the covenant set forth in Section
11.1(c)) unless written notice asserting an indemnification claim based thereon
is given to the Indemnitor Representative prior to the earlier of (i) one (1)
year from the Effective Time, or (ii) the date of issuance of the first
independent accountants report on the consolidated financial statements of
Parent which reflect at least 30 days of combined results of Parent and Company
subsequent to the Effective Time.
11.7 LIMITATIONS AS TO AMOUNT.
------------------------
(a) Indemnitors shall have no Liability with respect to the matters
described in clauses (a) and (b) of Section 11.1 until the total of all Losses
with respect thereto exceeds $500,000 and then only for the amount by which such
Losses exceed $300,000. Indemnitors shall have no Liability with respect to the
matters described in clause (c) of Section 11.1 until the total of all Losses
with respect thereto exceeds $150,000 in which event Indemnitors shall be
obligated to indemnify the Indemnitees as provided in this Article for all such
Losses in excess of $150,000. The limitations set forth in this Section 11.7
shall not apply to any intentional misrepresentation or breach of warranty of
any Indemnitor or any intentional failure to perform or comply with any covenant
or agreement of any Indemnitor, and the Indemnitors shall be liable for all
Losses with respect thereto.
(b) In no event shall the aggregate Liability of the Indemnitors under
Section 11.1(a) and 11.1(b) exceed $4,680,000.
11.8 TAX EFFECT AND INSURANCE. The Liability of the Indemnitors with
------------------------
respect to any Indemnification Claim shall be reduced by the tax benefit
actually realized and any insurance
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proceeds received by the Indemnitees as a result of any Losses upon which such
Indemnification Claim is based, and shall include any tax detriment actually
suffered by the Indemnitees as a result of such Losses. The amount of any such
tax benefit or detriment shall be determined by taking into account the effect,
if any and to the extent determinable, of timing differences resulting from the
acceleration or deferral of items of gain or loss resulting from such Losses and
shall otherwise be determined so that payment by the Indemnitors of the
Indemnification Claim, as adjusted to give effect to any such tax benefit or
detriment, will make the Indemnitee as economically whole as is reasonably
practical with respect to the Losses upon which the Indemnification Claim is
based. Any dispute as to the amount of such tax benefit or detriment shall be
resolved by arbitration as provided in Section 11.12 of this Agreement.
11.9 ESCROW. Upon notice to the Indemnitor Representative specifying in
------
reasonable detail the basis therefor, the Indemnitee may give notice of a Claim
in any amount to which it may be entitled under this Article 11 under the Escrow
Agreements. Neither the exercise of nor the failure to give a notice of a Claim
under the Escrow Agreements shall constitute an election of remedies nor limit
Indemnitee in any manner in the enforcement of any other remedies that may be
available to it. To the extent shares of Parent Common Stock remain available
to Parent under the relevant Escrow Agreement, Parent shall satisfy any
Indemnificiation Claim out of such shares in accordance with the provisions of
the relevant Escrow Agreement before pursuing other remedies for an
Indemnificaiton Claim against the Indemnitors.
11.10 SUBROGATION. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, the Indemnitors
shall be subrogated to the extent of such payment to the rights of the
Indemnitee against any person or entity with respect to the subject matter of
such Indemnification Claim or Third Party Claim.
11.11 APPOINTMENT OF INDEMNITOR REPRESENTATIVE. Each Indemnitor constitutes
----------------------------------------
and appoints the Indemnitor Representative as his or her true and lawful
attorney-in-fact to act for and on behalf of such Indemnitor in all matters
relating to or arising out of this Article 11 and the Liability or asserted
Liability of such Indemnitor hereunder, including specifically, but without
limitation, accepting and agreeing to the Liability of such Indemnitor with
respect to any Indemnification Claim, objecting to any Indemnification Claim,
disputing the Liability of such Indemnitor, or the amount of such Liability,
with respect to any Indemnification Claim and prosecuting and resolving such
dispute as herein provided, accepting the defense, compromise and settlement of
any Third Party Claim on behalf of such Indemnitor or refusing to accept the
same, settling and compromising the Liability of such Indemnitor hereunder,
instituting and prosecuting such actions (including arbitration proceedings) as
the Indemnitor Representative shall deem appropriate in connection with any of
the foregoing, retaining counsel, accountants, appraisers and other advisers in
connection with any of the foregoing, all for the account of the Indemnitor,
such Indemnitor agreeing to be fully bound by the acts, decisions and agreements
of the Indemnitor Representative taken and done pursuant to the authority herein
granted. Each Indemnitor hereby agrees to indemnify and to save and hold
harmless the Indemnitor Representative from any Liability incurred by the
Indemnitor Representative based upon or arising out of any act, whether of
omission or commission, of the Indemnitor Representative pursuant to
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the authority herein granted, other than acts, whether of omission or
commission, of the Indemnitor Representative that constitute gross negligence or
willful misconduct in the exercise by the Indemnitor Representative of the
authority herein granted.
11.12 ARBITRATION. All disputes arising under this Article 11 shall be
-----------
resolved by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. Arbitration shall be by a single
arbitrator experienced in the matters at issue and selected by the Indemnitor
Representative and Parent in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The arbitration shall be held in such
place in Jacksonville, Florida as may be specified by the arbitrator (or any
place agreed to by the Indemnitor Representative, Parent and the arbitrator).
The decision of the arbitrator shall be final and binding as to any matters
submitted under this Article 11; provided, that, if necessary, such decision and
satisfaction procedure may be enforced by either the Indemnitor Representative
or the Parent in any court of record having jurisdiction over the subject matter
or over any of the parties to this Agreement. All costs and expenses incurred in
connection with any such arbitration proceeding (including reasonable attorneys
fees) shall be borne by the party against which the decision is rendered, or, if
no decision is rendered, such costs and expenses shall be borne equally by the
Indemnitors as one party and the Indemnitees as the other party. If the
arbitrator's decision is a compromise, the determination of which party or
parties bears the costs and expenses incurred in connection with any such
arbitration proceeding shall be made by the arbitrator on the basis of the
arbitrator's assessment of the relative merits of the parties' positions.
ARTICLE 12
TERMINATION
-----------
12.1 TERMINATION. Notwithstanding any other provision of this Agreement,
-----------
and notwithstanding the approval of this Agreement by the shareholders of
Company, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Parent and the Board
of Directors of Company; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such breach
and which breach is reasonably likely, in the opinion of the non-breaching
Party, to have, individually or in the aggregate, a Material Adverse Effect
on the breaching Party; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been
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<PAGE>
cured within 30 days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event any Consent of any Regulatory Authority required for consummation of
the Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action taken
by such authority is not appealed within the time limit for appeal; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by September 30, 1996, if the failure
to consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 12.1(e).
12.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 12.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
12.2 and Article 13 and Section 9.5(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 12.1(b) or 12.1(c)
shall not relieve the breaching Party from Liability for an uncured willful
breach of a representation, warranty, covenant, or agreement giving rise to such
termination.
ARTICLE 13
MISCELLANEOUS
-------------
13.1 DEFINITIONS.
-----------
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party or
any of its Subsidiaries or the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity
or voting interest of such Person; or (iii) any other Person for which a
Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
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<PAGE>
"ASI ESCROW AGREEMENT" shall mean the ASI Escrow Agreement to be
entered into in connection with the Closing, substantially in the form of
Exhibit 4.
"ASI ESCROW SHARES" shall mean the shares of Parent Common Stock to be
issued to the Shareholders pursuant to Section 3.1(d)(iii).
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"COMPANY ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Company and filed with the Virginia State Corporation Commission
relating to the Company Merger as contemplated by Section 1.1.
"COMPANY COMMON STOCK" shall mean the no par value common stock of
Company.
"COMPANY DISCLOSURE MEMORANDUM" shall mean the written information
entitled "The McKinley Group, Inc. Disclosure Memorandum" delivered prior to
the date of this Agreement to Parent describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"COMPANY FINANCIAL STATEMENTS" shall mean (i) the combined balance
sheets (including related notes and schedules, if any) of Company and MGI as
of May 31, 1996, and as of September 30, 1995 and 1994, and the related
combined statements of operations, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the eight months
ended May 31, 1996, and for each of the two fiscal years ended September 30,
1995 and 1994, and (ii) the combined balance sheets of Company and MGI
(including related notes and schedules, if any) and related combined
statements of operations, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) with respect to periods ended
subsequent to May 31, 1996.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement, dated March 1996, between Parent and Gateway Partners, Inc., on
behalf of Company.
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"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Law, Order, or Permit, (ii) any occurrence of any event that
with the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Law, Order, or Permit,
or (iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Law, Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENTS" shall mean the General Escrow Agreement and the ASI
Escrow Agreement.
"EXHIBITS" 1 through 9, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"FBCA" shall mean the Florida Business Corporation Act.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
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<PAGE>
"GENERAL ESCROW AGREEMENT" shall mean the General Escrow Agreement to
be entered into in connection with the Closing, substantially in the form of
Exhibit 3.
"GENERAL ESCROW SHARES" shall mean the shares of Parent Common Stock to
be issued to the Shareholders pursuant to Section 3.1(d)(ii).
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INDEMNIFICATION CLAIM" shall mean a claim for indemnification
hereunder.
"INDEMNITEES" shall mean the Parent, the Company and their respective
Representatives, shareholders, and Affiliates.
"INDEMNITORS" shall mean the Shareholders.
"INDEMNITOR REPRESENTATIVE" shall mean James J. Wayland, Jr.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, technology
rights and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises, know-
how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer,
general counsel, any assistant or deputy general counsel, director of any
business unit or division, or any senior, executive or other vice president
of such Person (and in the case of Company, shall include the Knowledge of
MGI).
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its
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<PAGE>
Assets, Liabilities, or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) Liens which do not materially impair
the use of or title to the Assets subject to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement.
"LOSS" shall mean any direct or indirect demand, claim, payment,
obligation, action or cause of action, assessment, loss, liability, cost or
expense, including without limitation, penalties, interest on any amount
payable to a third party as a result of the foregoing, and any legal or other
expense reasonably incurred in connection with investigating or defending any
claim or action, whether or not resulting in any liability, and any amount
paid in settlement of any claim or action; provided, however, that for the
purposes of this Agreement, "Loss" shall not include any of the foregoing
insofar as they relate to the inaccuracy of the representation contained in
Section 5.17(i).
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality
in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken
as a whole, or (ii) the ability of such Party to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in GAAP, (b) actions and
omissions of a Party (or any of its Subsidiaries) taken with the prior
informed written Consent of the other Party in contemplation of the
transactions contemplated hereby, (c) in the case of Company, the
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<PAGE>
payment of expenses relating to the transactions contemplated hereby provided
such expenses do not exceed $3,000,000 in the aggregate and distributions to
the Shareholders in amounts which do not exceed those amounts described in
the Company Disclosure Memorandum, and (d) the direct effects of compliance
with this Agreement on the operating performance of the Parties, including
expenses incurred by the Parties in consummating the transactions
contemplated by this Agreement.
"MGI ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by MGI and filed with the Virginia State Corporation Commission
relating to the MGI Merger as contemplated by Section 1.1.
"MGI COMMON STOCK" shall mean the $1.00 par value common stock of MGI.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of the
National Association of Securities Dealers Automated Quotations System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"OPERATING PROPERTY" shall mean any property owned, leased, or operated
by the Party in question or by any of its Subsidiaries or in which such Party
or Subsidiary holds a security interest or other interest (including an
interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARENT CAPITAL STOCK" shall mean, collectively, the Parent Common
Stock, the Parent Preferred Stock and any other class or series of capital
stock of Parent.
"PARENT COMMON STOCK" shall mean the $.01 par value common stock of
Parent.
"PARENT COMPANIES" shall mean, collectively, Parent and all Parent
Subsidiaries.
"PARENT DISCLOSURE MEMORANDUM" shall mean the written information
entitled "AccuStaff Incorporated Disclosure Memorandum" delivered prior to
the date of this Agreement to Company describing in reasonable detail the
matters contained therein and,
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with respect to each disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced with
respect thereto.
"PARENT FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Parent as of March
31, 1996, and as of December 31, 1995 and January 1, 1995, and the related
statements of income, stockholders' equity, and cash flows (including related
notes and schedules, if any) for the three months ended March 31, 1996, and
for each of the three fiscal years ended December 31, 1995, January 1, 1995
and January 2, 1994, as filed by Parent in SEC Documents, and (ii) the
consolidated balance sheets of Parent (including related notes and schedules,
if any) and related statements of income, stockholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to March 31, 1996.
"PARENT PREFERRED STOCK" shall mean the $.01 par value preferred stock
of Parent.
"PARENT SUBSIDIARIES" shall mean the Subsidiaries of Parent.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility
or property.
"PARTY" shall mean either Company or Parent, and "PARTIES" shall mean
both Company and Parent.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets,
or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the NASD,
the Federal Trade Commission, the United States Department of Justice, and
all other federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
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"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of
its capital stock or other Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"SUB COMMON STOCK" shall mean the $1.00 par value common stock of Sub.
"SUB II COMMON STOCK" shall mean the $1.00 par value common stock of
Sub II.
"SUBSIDIARIES" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities
of which are owned or controlled in a fiduciary capacity), or (ii) in the
case of partnerships, serves as a general partner.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by the United States or any state, county, local
or foreign government or subdivision or agency thereof, including any
interest, penalties, and additions imposed thereon or with respect thereto.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes,
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including any return of an affiliated or combined or unitary group that
includes a Party or its Subsidiaries.
"THIRD PARTY CLAIM" shall mean any Litigation that is instituted
against an Indemnitee by a person or entity other than an Indemnitor and
which, if prosecuted successfully, would result in a Loss for which such
Indemnitee is entitled to indemnification under Article 11 (and shall
specifically include the ASI Litigation).
"VSCA" shall mean the Virginia Stock Corporation Act.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<CAPTION>
<S> <C>
ASI Escrow Exchange Ratio Section 3.1(d)
ASI Litigation Section 11.1(c)
Closing Section 1.3
Company Benefit Plans Section 5.12
Company Contracts Section 5.13
Company ERISA Plan Section 5.12
Company Merger Section 1.1
Effective Time Section 1.4
Exchange Ratio Section 3.1(d)
Fixed Exchange Ratio Section 3.1(d)
General Escrow Exchange Ratio Section 3.1(d)
Mergers Section 1.3
MGI Exchange Ratio Section 3.1(e)
MGI Merger Section 1.2
Tax Opinion Section 10.1(h)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
13.2 EXPENSES.
--------
(a) Except as otherwise provided in this Section 13.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel.
(b) Nothing contained in this Section 13.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
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13.3 BROKERS AND FINDERS. Except for Gateway Partners, Inc. and Desrosier
-------------------
& Company, Incorporated as to Company, each of the Parties represents and
warrants that neither it nor any of its officers, directors, employees, or
Affiliates has employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage fees, commissions,
or finders' fees in connection with this Agreement or the transactions
contemplated hereby. In the event of a claim by any broker or finder based upon
his or its representing or being retained by or allegedly representing or being
retained by Company or Parent, each of Company and Parent, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
13.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
----------------
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
9.5(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement.
13.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
----------
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of Company Common Stock and MGI Common Stock,
there shall be made no amendment that reduces or modified in any material
respect the consideration to be received by holders of Company Common Stock or
MGI Common Stock without the further approval of the Shareholders.
13.6 WAIVERS.
-------
(a) Prior to or at the Effective Time, Parent, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Company, to waive or extend the time for the compliance or fulfillment by
Company of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Parent under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Parent.
(b) Prior to or at the Effective Time, Company, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Parent, to waive or extend the time for the compliance or fulfillment by
Parent of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Company under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Company.
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(c) The failure of any Party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
13.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
13.8 NOTICES. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Company: The McKinley Group, Inc.
115 Chester Street
Front Royal, Virginia _____
Attention: James J. Wayland, Jr., President
Copy to Counsel: Hunton & Williams
Suite 1700
1751 Pinnacle Drive
McLean, Virginia 22102
Telecopy Number: (703) 714-7410
Attention: Joseph W. Conroy
Parent: AccuStaff Incorporated
6440 Atlantic Boulevard
Jacksonville, Florida 32211
Telecopy Number: (904) 724-6464
Attention: Derek E. Dewan, President
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Copy to Counsel: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: Timothy Mann, Jr.
13.9 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the Laws of the State of Florida, without regard to any
applicable conflicts of Laws, except to the extent that the Laws of the
Commonwealth of Virginia govern the provisions of Articles 1, 2, 3 and 4.
13.10 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
13.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this
-------------------------------
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
13.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
---------------
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
13.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
13.14 SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
-50-
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: ACCUSTAFF INCORPORATED
/s/ Michael D. Abney By: /s/ Derek E. Dewan
- --------------------------- ---------------------------
Assistant Secretary President
CORPORATE SEAL
ATTEST: ACCUSTAFF MERGER CORP.
By: /s/ Derek E. Dewan
- --------------------------- ---------------------------
Secretary President
CORPORATE SEAL
ATTEST: ACCUSTAFF MERGER SUBSIDIARY, INC.
By: /s/ Derek E. Dewan
- --------------------------- -----------------------------
Secretary President
CORPORATE SEAL
ATTEST: THE MCKINLEY GROUP, INC.
By: /s/ James J. Wayland, Jr.
- --------------------------- ----------------------------
Secretary President
CORPORATE SEAL
-51-
<PAGE>
ATTEST: MGI SERVICES, INC.
By: /s/ Guy B. Wayland
- --------------------------- --------------------------
Secretary President
CORPORATE SEAL
SHAREHOLDERS:
/s/ James J. Wayland, Jr.
-----------------------------
James J. Wayland, Jr.
/s/ Edward D. Wayland
-----------------------------
Edward D. Wayland
/s/ Gary S. Wayland
-----------------------------
Gary S. Wayland
-52-
<PAGE>
[LETTERHEAD OF ACCUSTAFF GOES HERE]
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contact: Michael D. Abney Derek E. Dewan
Chief Financial Officer President and CEO
(904) 725-5574 (904) 725-5574
ACCUSTAFF REACHES AGREEMENT TO ACQUIRE THE MCKINLEY GROUP, INC.,
AN INFORMATION TECHNOLOGY SERVICES CONSULTING COMPANY
JACKSONVILLE, Florida (June 18, 1966) - AccuStaff Incorporated (Nasdaq/NM:ASTF),
a national provider of strategic staffing and outsourcing services, today
announced that it has an agreement to acquire 100% of the stock of The McKinley
Group, Inc. in a transaction that will be accounted for as a pooling of
interests. The McKinley Group provides a full range of technology services,
including project management and temporary technical and consulting personnel to
corporate users of large and complex computer systems. There include expert
services to improve systems used for manufacturing, distribution, warehousing,
transportation, logistics planning and other supply chain functions. Terms of
the agreement were not disclosed.
Headquartered in Front Royal, Virginia, near Washington, D.C., with an
office in Atlanta, The McKinley Group was formed in 1987. The company has a very
high-quality customer base of generally large, growing companies, including
GTE, United Parcel Service, Ericsson, Kaiser Permanente, and Celanese Candada,
among others. James Wayland, current president, will continue in his present
capacity and report to AccuStaff's Information Technology Group. Revenues are
estimated to be in excess of $28 million for calendar year 1996.
Commenting on the announcement, Wayland said, "Today's clients are seeking
technology service providers that can apply technology to benefit the business
process. Their focus has shifted to improving their utilization of capital,
creating significant demand for the expert services and systems in which we
specialize. Teaming with AccuStaff will enable us to increase market share,
expand the range of services we offer, and increase operating efficiencies."
Derek E. Dewan, President and Chief Executive Officer of AccuStaff, said,
"We are excited about the acquisition of The McKinley Group. The Information
Technology sector of our industry is rapidly expanding due to the proliferation
and complexity of computer hardware and software technologies. Our goal is to
become the market leader in offering total staffing solutions to these
corporations. We now have a network of 26 information technology service offices
and a national staffing center as well. This makes us a comprehensive
information technology services provider for our growing customer base."
Dewan also said he expects the momentum of AccuStaff's acquisition pace
would continue to be strong. "We have several negotiations in process, and
expect to report on additional acquisitions in the near future," he said.
AccuStaff is a leading national provider of strategic staffing and
outsourcing services to businesses, professional and service organizations and
governmental agencies. After giving effect to this and other recent
acquisitions, the Company will operate 164 branch offices in 26 states and the
District of Columbia. AccuStaff is organized into three divisions: the
Commercial division, the Professional Services division, and the
Telecommunications division.
<PAGE>
[LETTERHEAD OF ACCUSTAFF GOES HERE]
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contact: Michael D. Abney Derek E. Dewan
Chief Financial Officer President and CEO
(904) 725-5574 (904) 725-5574
ACCUSTAFF COMPLETES $28 MILLION MCKINLEY GROUP ACQUISITION
JACKSONVILLE, Florida (June 20, 1996) - AccuStaff Incorporated (Nasdaq/NM:ASTF),
a national provider of strategic staffing and outsourcing services, today
announced that it has completed the previously announced acquisition of 100% of
the stock of The McKinley Group, Inc. in a transaction that will be accounted
for as a pooling of interests. The McKinley Group provides a full range of
technology services, including project management and temporary technical and
consulting personnel to corporate users of large and complex computer systems.
These include expert services to improve systems used for manufacturing,
distribution, warehousing, transportation, logistics planning and other supply
chain functions. Terms of the agreement were not disclosed.
Headquartered in Front Royal, Virginia, near Washington, D.C., with an
office in Atlanta, The McKinley Group was formed in 1987. The company has a
very high-quality customer base of generally large, growing companies, including
GTE, United Parcel Service, Ericsson, Kaiser Permanente, and Celanese Canada,
among others. James Wayland, current president, will continue in his present
capacity and report to AccuStaff's Information Technology Group. Revenues are
estimated to be in excess of $28 million for calendar year 1996.
Commenting on the announcement, Wayland said, "Today's clients are
seeking technology service providers that can apply technology to benefit the
business process. Their focus has shifted to improving their utilization of
capital, creating significant demand for the expert services and systems in
which we specialize. Teaming with AccuStaff will enable us to increase market
share, expand the range of services we offer, and increase operating
efficiencies."
Derek E. Dewan, President and Chief Executive Officer of AccuStaff,
said, "We are excited about the acquisition of The McKinley Group. The
Information Technology sector of our industry is rapidly expanding due to the
proliferation and complexity of computer hardware and software technologies.
Our goal is to become the market leader in offering total staffing solutions to
these corporations. We now have a network of 26 information technology service
offices and a national staffing center as well. This makes us a comprehensive
information technology services provider for our growing customer base."
Dewan also said he expects the momentum of AccuStaff's acquisition pace
would continue to be strong. "We have several negotiations in process, and
expect to report on additional acquisitions in the near future," he said.
AccuStaff is a leading national provider of strategic staffing and
outsourcing services to businesses, professional and service organizations and
governmental agencies. After giving effect to this and other recent
acquisitions, the Company will operate 164 branch offices in 26 states and the
District of Columbia. AccuStaff is organized into three divisions: the
Commercial division, the Professional Services division, and the
Telecommunications division.
-END-
