STOCK PURCHASE AGREEMENT By and among ELS HUMAN RESOURCE SOLUTIONS, INC., BARBARA L. HEINEMAN YEAR 2002 REVOCABLE TRUST ORIGINALLY DATED AUGUST 16, 2002 and WILLIAM J. WALTON As of October 1, 2006
By
and among
ELS
HUMAN RESOURCE SOLUTIONS, INC.,
XXXXXXX
X. XXXXXXXX YEAR 2002 REVOCABLE TRUST
ORIGINALLY
DATED AUGUST 16, 2002
and
XXXXXXX
X. XXXXXX
As
of October 1, 2006
TABLE
OF
CONTENTS
Section
1.01 Sale
and Purchase of Stock.
Section
2.01 Closing
Section
3.01 Corporate
Existence and Qualification: Corporate Documents.
Section
4.01 Corporate
Existence and Qualification; Corporate Documents
ARTICLE
V. SURVIVAL
Section
5.01 Survival
of Representations and Warranties
ARTICLE
VI. INDEMNIFICATION
Section
6.01 Obligation
of the Shareholders to Indemnify
Section
8.01 Brokers
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ARTICLE
IX. DEFINITIONS
Section
9.01 Affiliate
This
STOCK PURCHASE AGREEMENT (the “Agreement”)
is
made and entered into as of October 1, 2006, by and among ELS Human Resource
Solutions, Inc., an Ohio corporation (the “Purchaser”),
Xxxxxxx X. Xxxxxxxx Year 2002 Revocable Trust Originally Dated August 16, 2002
(“Xxxxxxxx”)
and
Xxxxxxx X. Xxxxxx (“Xxxxxx”
and
together with Xxxxxxxx, collectively, the “Shareholders”).
A. Thee
Shareholders have agreed to sell, and the Purchaser has agreed to purchase,
all
of the issued and outstanding capital stock owned by them (collectively
“Stock”)
of the
following companies (each a “Company”
and
collectively, the “Companies”),
subject to the conditions hereinafter set forth:
1. Employee
Leasing Services, Inc., an Ohio corporation (“ELS”);
2. ELS,
Inc., an Ohio corporation;
3. ELS
Outsource Services, Inc., a Michigan corporation;
4. ELS
Payroll Solutions, Inc., an Ohio corporation;
5. Premier
HR Services, Inc., a California corporation;
6. ELS
Human
Resources, Inc., an Ohio corporation;
7. Foxstar,
Inc., a Michigan corporation;
8. Integrated
Payroll Solutions, Inc., a Michigan corporation;
9. ELS
Personnel Services, Inc., an Ohio corporation;
10. Rio
Services, Inc., a Michigan corporation;
11. Imperial
Human Resources, Inc., a Michigan corporation;
12. ELS
Payroll Managers, Inc., an Ohio corporation;
13. ELS
HR,
Inc., an Ohio corporation;
14. ELS
Temporary Solutions, Inc., an Ohio corporation;
15. Resolve
HR Solutions, Inc., an Ohio corporation;
16. Fidelity
Capital, Inc., an Ohio corporation; and
17. Streamline
Management, Inc., a Michigan corporation.
B. Capitalized
terms used herein but not defined herein shall have the respective meanings
given such terms in Article IX hereof.
C. Agreement
In
consideration of the premises, mutual covenants and agreements contained herein
and the benefits to accrue to the parties hereto, and subject to the
satisfaction or waiver of the conditions contained herein, the parties hereto
hereby agree as follows:
ARTICLE
I.
SALE
AND PURCHASE OF STOCK
Section
1.01 Sale
and Purchase of Stock.
(a) On
the
terms and subject to the conditions of this Agreement, at the Closing referred
to in Section 2.01 hereof, each Shareholder shall sell, transfer, convey and
deliver to Purchaser, and Purchaser shall purchase, acquire and accept from
each
Shareholder, the number and type of shares of Stock set forth opposite the
name
of each such Shareholder on Exhibit
A
hereto,
collectively constituting all of the issued and outstanding shares of Stock
of
the Companies. The sale and purchase of the Stock pursuant to this Agreement
is
sometimes hereinafter referred to as the “Stock
Purchase.”
(b) To
effect
the transfers contemplated by Section 1.01(a), at the Closing, each Shareholder
shall deliver, or cause to be delivered, to Purchaser stock certificates
representing the Stock being sold by such Shareholder hereunder, together with
stock powers duly executed in blank or otherwise in proper form reasonably
acceptable to Purchaser for transfer to Purchaser on the books of the Company,
against payment therefor in accordance with Section 1.02 hereof.
Section
1.02 Purchase
Price and Payment for Stock.
(a) Purchase
Price.
The
purchase price for the issued and outstanding shares of Stock to be purchased
hereunder shall be an aggregate amount equal to Sixteen Million Six Hundred
Sixty-Three Thousand Eight Hundred Fifty-Six and 18/100 Dollars ($16,663,856.18)
(the “Purchase
Price”),
as
adjusted as set forth herein. The Purchase Price shall be allocated among and
delivered to the Shareholders as set forth on Exhibit
B
hereto.
(b) The
Purchase Price shall be paid upon the surrender pursuant to Section 1.01(b)
of
certificates representing all of the issued and outstanding shares of Stock
owned by the Shareholders, by delivery of promissory notes (collectively, the
“Notes”)
in the
amounts set forth for such Shareholder on Exhibit
B.
(c) After
the
Closing,
the
Purchase
Price shall
be
adjusted further as follows:
(i) “Purchase
Price Adjustment”
shall
mean an amount equal to difference between the Closing
ELS
Assets and the August ELS Assets.
(ii) “Closing
ELS
Assets”
shall
mean, with respect to ELS, the amount calculated by adding
the following as of the Closing Date: (A)
reserve workers’ compensation insurance with Providence; (B) investment in
Providence; (C) deposits set forth on the balance
(iii) sheet;
(D) retained earnings; and (E) principal amount and accrued interest on the
promissory note from Resolve Staffing, Inc. (“Resolve”)
to
ELS.
(iv) “August
ELS Assets”
shall
mean, with respect to ELS, the amount calculated by adding the following as
of
August 31, 2006: (A) reserve workers’ compensation insurance with Providence;
(B) investment in Providence; (C) deposits set forth on the balance sheet;
(D)
retained earnings; and (E) principal amount and accrued interest on the
promissory note from Resolve to ELS.
(v) Shareholders
shall
calculate the Closing ELS Assets and the August ELS Assets on the same basis
and
applying the same accounting principles, policies and practices that were used
in preparing the Financials
(as
defined in Section 3.06). Shareholders
shall
then determine the Purchase Price Adjustment based on such
calculations
and
shall
deliver all
such
calculations to Purchaser within
sixty (60) days following the Closing
Date.
Shareholders
shall
furnish or cause to be furnished to Purchaser
such
work
papers, records, and other documents relating to such calculations, and access
thereto, as may be necessary or reasonably appropriate for such
calculations.
(vi) If
within
thirty (30) days following delivery of such
calculations, Purchaser
has not given Shareholders
written
notice of its objection as to such
calculations (which
notice shall state the basis of Purchaser’s objection), then the Purchase
Price Adjustment calculated
by Shareholders
shall
be
binding and conclusive on the parties.
(vii) If
Purchaser
timely
gives Shareholders
such
notice of objection, and if Shareholders
and
Purchaser
fail
to
resolve the issues outstanding with respect to the
calculations within
thirty (30) days of Shareholders’ receipt of Purchaser’s
objection notice, Shareholders
and
Purchaser
shall
submit the issues remaining in dispute to mutually agreed upon independent
public accountants (the “Independent
Accountants”)
for
resolution applying the principles, policies and practices referred to in
subsection (iii)
above.
If
issues are submitted to the Independent
Accountants for
resolution, (A)
Shareholders
and
Purchaser
shall
furnish or cause to be furnished to the Independent
Accountants such
work
papers and other documents and information relating to the disputed issues
as
the Independent
Accountants may
request and are available to that party or its agents and shall be afforded
the
opportunity to present to the Independent
Accountants any
material relating to the disputed issues and to discuss the issues with the
Independent
Accountants;
(B)
the
determination by the Independent
Accountants,
as set
forth in a notice to be delivered to both Shareholders
and
Purchaser
within
sixty (60) days of the submission to the Independent
Accountants of
the
issues remaining in dispute, shall be final, binding and conclusive on the
parties and shall be used in the calculation of the Purchase
Price Adjustment;
and
(C)
Shareholders
and
Purchaser
will
each
bear fifty percent (50%) of the fees and costs of the Independent
Accountants for
such
determination.
(viii) If
the
Purchase
Price Adjustment is
a
positive number, then Purchaser
shall
deliver to Shareholders additional promissory notes, in equal principal amounts,
representing the aggregate Purchase Price Adjustment. If the Purchase
Price Adjustment is
a
negative number, Shareholders
and
Purchaser shall execute an amendment to the Notes adjusting the principal
amounts of the Notes to account for the Purchase Price Adjustment.
(ix)
CLOSING
Section
1.03 Closing
.
The
closing of the transactions contemplated hereby (the “Closing”)
shall
be held as of 12:01 a.m., as of October 1, 2006 at the offices of Xxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxx
00000, unless another date or place is agreed to in writing by the parties
hereto. The date upon which the Closing occurs is hereinafter referred to as
the
“Closing
Date.”
Section
1.04 Deliveries
by Shareholders to Purchaser
.
At the
Closing, the Shareholders shall deliver to Purchaser:
(a) certificates
representing all of the issued and outstanding shares of Stock, together with
stock powers duly executed for transfer to Purchaser;
(b) the
resignations of all officers and members of the board of directors of the
Companies;
(c) the
stock
books, stock ledgers, minute books and corporate seals, if any of the
Companies;
(d) a
certificate of the Secretary of each Company certifying, as complete and
accurate as of the Closing, as to attached copies of the Articles of
Incorporation and Code of Regulations or Bylaws of such Company;
(e) a
certificate of good standing of each Company issued by the Secretary of State
of
such Company’s jurisdiction of incorporation; and
(f) an
employment agreement between Xxxxxxxx and Resolve Staffing, Inc., a Nevada
corporation (“Resolve”),
executed by Xxxxxxxx (the “Employment
Agreement”).
Section
1.05 Deliveries
by Purchaser
.
At
the
Closing, Purchaser shall deliver to the Shareholders:
(a) the
Notes, duly executed by Purchaser;
(b) a
certificate of the Secretary of Purchaser certifying, as complete and accurate
as of the Closing, as to attached copies of the Articles of Incorporation and
Bylaws of Purchaser and all necessary corporate action on behalf of Purchaser
approving its execution, delivery and
performance of this Agreement and the other agreements being delivered pursuant
to this Agreement;
(c) a
guaranty duly executed by Resolve Staffing, Inc.;
(d) a
security agreement duly executed by Purchaser and Resolve;
(e) a
stock
pledge agreement in substantially the form of Exhibit
E
attached
hereto, executed by Resolve;
(f) a
certificate of good standing of Purchaser issued by the Secretary of State
of
Ohio;
(g) a
certificate of good standing of Resolve issued by the Secretary of State of
Nevada; and
(h) the
Employment Agreement, executed by Resolve.
Section
1.06 Waivers
.
Each
of
the Shareholders and each applicable Company hereby waives compliance with
any
requirements or restrictions with respect to the sale or transfer of any Stock
contained in each such Company’s Articles of Incorporation, By-Laws, Code of
Regulations or in any agreement disclosed in Schedule 3.02.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF THE SHAREHOLDERS
Subject
to the limitations of Section 6.04 hereof, each Shareholder severally represents
and warrants to Purchaser as of the Closing Date as set forth in this
Article:
Section
2.01 Corporate
Existence and Qualification: Corporate Documents.
(a) Each
Company is duly organized, validly existing and in good standing under the
laws
of its state of incorporation and is not required to be qualified to do business
as a foreign corporation in any other jurisdiction where the failure to so
qualify would have a material adverse effect on such Company. Each Company
has
all requisite corporate power and authority to own its Properties and carry
on
its business as presently conducted. The copies of the Articles of Incorporation
and Bylaws or Code of Regulations of each Company attached to the Secretary’s
Certificate for such Company delivered pursuant to Section 2.02(d) are complete
and reflect all amendments thereto through the date hereof.
(b) The
stock
and minute books of each Company have been made available to Purchaser for
review and contain a complete and accurate record of all shareholders of such
Company and all material actions of the shareholders and directors (and any
committees thereof) taken at meetings of shareholders or directors of the
Company or by written consent.
(c) No
Company has any subsidiaries, participates in any partnership or joint venture,
or owns any outstanding capital stock of any other entity.
Section
2.02 Capitalization
and Ownership
.
As of
the date of this Agreement, all issued and outstanding shares of Stock are
owned
of record and beneficially by the Shareholders as shown on Exhibit
A
hereto.
Exhibit
A
also
lists the entire authorized capital stock of each of the Companies. All of
the
presently outstanding shares of Stock have been validly authorized and issued
and are fully paid and non-assessable. Except as set forth on Schedule 3.02,
no
Company has issued any other shares of its capital stock and there are no
outstanding options, warrants, subscriptions or other rights or obligations
to
purchase or acquire any of such shares, nor any outstanding securities
convertible into or exchangeable for such shares. Except as contemplated under
this Agreement, or as set forth in Schedule 3.02 with respect to the
Articles
of
Incorporation, By-Laws and certain agreements, there are no agreements to which
any Company or any Shareholder is a party regarding the issuance, registration,
voting or transfer of its outstanding shares of its capital stock. No dividends
are accrued but unpaid on any capital stock of any Company.
Section
2.03 Preemptive
Rights; Registration Rights
.
Except
for ELS, no Company’s Articles of Incorporation afford pre-emptive rights to any
shareholder. There have been no shares of any Company issued, other than to
the
Shareholders, to which preemptive rights accrued or are outstanding. There
are
no registration rights affecting the issuance or sale of the Stock.
Section
2.04 No
Company Defaults or Consents
.
Except
as set forth on Schedule
3.04,
neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will:
(i) violate
or conflict with any of the terms, conditions or provisions of the Articles
of
Incorporation or Code of Regulations or Bylaws of any Company;
(ii) violate
in any material respect any Legal Requirements applicable to any
Company;
(iii) result
in
the creation of any lien, charge or other encumbrance on the shares of capital
stock or any Property of any Company; or
(iv) require
any of the Shareholders or any Company to obtain or make any waiver, consent,
action, approval or authorization of, or registration, declaration, notice
or
filing with, any private non-governmental third party or any Governmental
Authority except where the failure to so obtain or make would not have a
Material Adverse Effect.
Section
2.05 No
Proceedings
.
No
suit, action or other proceeding is pending or, to the Knowledge of the
Shareholders, threatened before any Governmental Authority seeking to restrain
any of the Shareholders or prohibit their entry into this Agreement or prohibit
the Closing, or seeking damages against any Company or its Properties, as a
result of the consummation of the transactions contemplated by this
Agreement.
Section
2.06 Financial
Statements
.
The
Shareholders previously have delivered to Purchaser true, correct, and complete
copies of (i) the audited income statement and balance sheet for the fiscal
year
ended December 31, 2005 of ELS, (ii) unaudited balance sheet of ELS as of August
31 2006 (collectively the “Financials”)
and
(iii) unaudited income statement of ELS as of and for the eight months ended
August 31, 2006 (the “Balance
Sheet Date”).
All
of such statements (collectively the “Financial
Statements”)
(i)
have been prepared consistently with past practices and from the books and
records of ELS, and (ii) present fairly the financial condition of ELS and
its
results of operations as at and for the respective periods then
ended.
Section
2.07 Liabilities
and Obligations
.
The
Financial Statements reflect all material liabilities of ELS arising out of
transactions effected or events occurring on or prior to the
Balance
Sheet Date, except for liabilities not exceeding $10,000 in the aggregate.
All
reserves shown in the Financial Statements are appropriate and reasonable to
provide for losses thereby contemplated.
Section
2.08 Employee
Matters.
(a) The
Shareholders previously have delivered to Purchaser a complete and accurate
list
of the names, titles and compensation of all employees of each Company (other
than the Shareholders and the temporary employees who are hired to be assigned
to work for customers) (collectively, the “Section
3.08 Employees”)
and
copies of each written employment agreement entered into between any Company
and
its Section 3.08 Employees (the “Employment
Agreements”).
(b) The
Shareholders previously have provided Purchaser with a complete and accurate
list of all written employee policies and procedures in effect for each
Company.
(c) To
the
Knowledge of the Shareholders, no unwritten material amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with respect
to
the Employment Agreements or employee policies and procedures in
effect.
(d) Each
Company (i) has been and is in material compliance with all applicable laws,
rules, regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and hours, and (ii)
is
not liable in any material amount for any arrears of wages or penalties for
failure to comply with any of the foregoing.
No
Company has engaged in any unfair labor practice or discriminated on the basis
of race, color, religion, sex, national origin, age or handicap in its
employment conditions or practices. There are no (A) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, race
or
handicap discrimination charges or complaints pending or, to the Knowledge
of
the Shareholders, threatened against any Company before the National Labor
Relations Board or any similar state or foreign commission or agency or (B)
existing or threatened material labor strikes, disputes, grievances or
controversies against any Company or any of its respective
employees.
(e) No
Company is, nor has it been, a party to any agreement with any union, labor
organization or collective bargaining unit.
No
employee of any Company is represented by any union, labor organization or
collective bargaining unit. To the Knowledge of the Shareholders, no remaining
employees of any Company have threatened to organize or join a union, labor
organization or collective bargaining unit.
Section
2.09 Employee
Benefit Matters.
(a) The
Shareholders previously have delivered to Purchaser a complete and accurate
list
of all Employee Benefit Plans sponsored by any Company or an ERISA Affiliate
or
to which any Company or an ERISA Affiliate contributes on behalf of its
employees. No unwritten amendment exists with respect to any Employee Benefit
Plan. For purposes of this Agreement an “Employee
Benefit Plan”
means
each employee benefit plan, as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
maintained by any Company or an ERISA Affiliate; provided, however, that
with
(b) respect
to the representations and warranties set forth in subsection (b) of this
Section, “Employee
Benefit Plan”
shall
exclude any and all “multiemployer plans” within the meaning of Section 3(37) of
ERISA. For purposes of this Agreement, an “ERISA
Affiliate”
means
any corporation who is a member of a controlled group of corporations (as
defined in Code §414(b)) that includes any Company, any trades or businesses
(whether or not incorporated) which are under common control (as defined in
Code
§414(c)) with any Company, any entity that is a member of an affiliated service
group (as defined in Code §414(m)) that includes any Company, or any other
entity that is an arrangement described in Code §414(o) that include any
Company.
(c) Except
as
set forth on Schedule 3.09(b),
to the Knowledge of the Shareholders, each Employee Benefit Plan has been
administered and maintained in material compliance with all applicable laws,
rules and regulations. To the Knowledge of the Shareholders, no Employee Benefit
Plan is currently the subject of an audit, investigation, enforcement action
or
other similar proceeding conducted by any state or federal agency. To the
Knowledge of the Shareholders, no prohibited transaction (within the meaning
of
Section 4975 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (the “Code”))
has
occurred with respect to any Employee Benefit Plan. No pending or, to the
Knowledge of the Shareholders, threatened, claims, suits or other proceedings
exist with respect to any Employee Benefit Plan other than normal benefit claims
filed by participants or beneficiaries. All contractual obligations relating
to
the Employee Benefit Plans are terminable by the applicable Company with no
more
than 30 days notice and without cause or penalty. All required contributions
to,
and premium payments on account of, each Employee Benefit Plan have been made
on
a timely basis. The consummation of the transactions contemplated under this
Agreement will not, by itself or together with any other event, increase the
amount of or accelerate the vesting or payment of any benefit under any Employee
Benefit Plan or Employment Agreement.
(d) Neither
any Company nor any ERISA Affiliate has maintained, contributed to or otherwise
participated in, or has any liability or obligation with respect to, any
multiemployer plan within the meaning of Section 3(37) of ERISA.
Section
2.10 Absence
of Certain Changes
.
From
the Balance Sheet Date to the date of this Agreement, no Company
has:
(a) suffered
any Material Adverse Change;
(b) contracted
for the purchase of any capital assets having a cost in excess of $10,000 or
paid any capital expenditures in excess of $10,000, except in the ordinary
course of business consistent with past practice;
(c) incurred
any indebtedness for borrowed money or issued or sold any debt securities,
except in the ordinary course of business consistent with past
practice;
(d) incurred
or discharged any material liabilities or obligations except in the ordinary
course of business consistent with past practice;
(e) paid
any
amount on any indebtedness prior to the due date, forgiven or canceled any
material debts or claims or released or waived any material rights or claims,
except in the ordinary course of business consistent with past
practice;
(f) mortgaged,
pledged or subjected to any security interest, lien, lease or other charge
or
encumbrance any of its Properties or Company Assets;
(g) suffered
any damage or destruction to or loss of any Company Assets (whether or not
covered by insurance) that has materially adversely affected its
business;
(h) acquired
or disposed of any material Company Assets except in the ordinary course of
business consistent with past practice;
(i) increased
the compensation of any Section 3.08 Employee except in the ordinary course
of
business;
(j) made
any
payments to any person or entity except in the ordinary course of business
consistent with past practice or loaned any money to any person or entity that
is not reflected in the Financial Statements;
(k) formed
or
acquired or disposed of any interest in any corporation, partnership, joint
venture or other entity;
(l) redeemed,
purchased or otherwise acquired, or sold, granted or otherwise disposed of,
directly or indirectly, any of its capital stock or securities or any rights
to
acquire such capital stock or securities, or agreed to change the terms and
conditions of any such rights or paid any dividends or made any distribution
to
the holders of such Company’s capital stock;
(m) entered
into or terminated any material agreement with any person or group, or modified
or amended in any material respect the terms of any existing agreement except
in
the ordinary course of business consistent with past practice;
(n) entered
into, adopted or amended any Employee Benefit Plan in any material
respect;
(o) received
any indication from any customer or supplier that it intends to discontinue
or
change the terms of its relationship with such Company;
(p) materially
changed its accounting methods; or
(q) entered
into any agreement (written or oral) to do any of the foregoing.
Section
2.11 Insurance
.
The
Shareholders have previously made available to Purchaser a list of all insurance
policies (including self insurance arrangements) with respect to the property,
assets and operations of each Company’s business and a summary of the loss
experience of each Company. All such insurance policies and arrangements are
in
full force and effect. There are no pending claims by any Company relating
to
its business under such insurance policies as to which the insurers listed
thereon have denied liability.
(a) Each
Company owns all material patents, trademarks, service marks and copyrights
(collectively “Proprietary
Rights”),
if
any, necessary to conduct its business, or possesses adequate licenses or other
rights (except for licenses for the use of non-customized software), if any,
therefor, without conflict with the rights of others.
(b) To
the
Knowledge of the Shareholders, each Company has the sole and exclusive right
to
use the Proprietary Rights without infringing or violating the rights of any
third parties.
To the
Knowledge of the Shareholders, use of the Proprietary Rights does not require
the consent of any other person and the Proprietary Rights are freely
transferable. No claim has been asserted by any person to the ownership of
or
right to use any material Proprietary Right or challenging or questioning the
validity or effectiveness of any license or agreement constituting a part of
any
material Proprietary Right. To the Knowledge of the Shareholders, each of the
Proprietary Rights is valid and subsisting, has not been canceled, abandoned
or
otherwise terminated and, if applicable, has been duly issued or
filed.
Section
2.12 Title
to Assets; Condition of Assets.
(a) No
Company owns any real property.
(b) Each
Company has good and marketable title to its Company Assets (other than those
disposed of in the ordinary course of business), free and clear of all security
interests, liens, charges and other encumbrances, except for liens for taxes
not
yet due and payable or being contested in good faith in appropriate proceedings.
All material facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by such Company are in good operating condition
and repair, normal wear and tear excepted, are adequate and sufficient for
the
business of such Company and conform in all material respects with all
applicable ordinances, regulations and laws relating to their use and
operation.
(c) No
Shareholder has any interest in any of the Company Assets except for salary,
and
no Shareholder has any financial interest in any transaction of any
Company.
Section
2.13 Compliance
with Laws
.
Each
Company has all material franchises, Permits, licenses and other rights and
privileges necessary to permit it to own its Properties and to conduct its
businesses as presently conducted. The business and operations of each Company
have been and are being conducted in all material respects in accordance with
all applicable laws, rules and regulations, and such Company is not in violation
of any judgment, law or regulation except where any such violation would not
have a Material Adverse Effect. No Company has received any written notice
from
any Governmental Authority or any other person or entity regarding any actual,
alleged or potential violation or failure to comply in any material respect
with
any Legal Requirement.
Section
2.14 Litigation;
Default
.
Except
as disclosed in Schedule 3.15, there are no claims, actions, suits,
investigations or proceedings against any Company pending or, to the Knowledge
of the Shareholders, threatened in any court or before or by any Governmental
Authority, or before any arbitrator, other than worker’s compensation claims
that are covered by a Company’s self insurance arrangement.
.
Since
the Balance Sheet Date, there has been no material adverse change in the
business relationship of any Company with any customer. No customer has
terminated or materially altered, or notified any Company in writing of any
intention to terminate or materially alter, its relationship with such
Company.
Section
2.15 Other
Transactions
.
Except
as contemplated by this Agreement, neither any Company nor any Shareholder
has
entered into any agreements or arrangements and there are no pending offers
or
discussions concerning or providing for the merger or consolidation of any
Company, the sale of all or any substantial portion of its assets, the sale
by
any Shareholder of any securities of any Company or any similar transaction
affecting any Company or the Shareholders.
Section
2.16 Tax
Matters.
(a) Except
as
set forth in Schedule 3.18 hereto:
(i) each
Company has timely filed all federal income Tax Returns, and all other material
Tax Returns which it is required to file under applicable laws and regulations,
except where the failure to so file would not have a Material Adverse Effect
on
the Companies, taken as a whole;
(ii) all
such
Tax Returns are true and accurate in all material respects;
(iii) each
Company has withheld and paid over to the appropriate taxing authority all
Taxes
which it is required to withhold from amounts paid or owing to any employee,
shareholder, creditor or other third party; and
(iv) no
Company currently is the beneficiary of any extension of time within which
to
file any Tax Return.
(b) To
the
Knowledge of the Shareholders, no Company has received notice of a claim by
a
taxing authority in a jurisdiction where such Company does not file Tax Returns
that such Company is or may be subject to taxation by that
jurisdiction.
(c)
(i) there
are
no foreign, federal, state or local Tax audits or administrative or judicial
proceedings pending with respect to any Company;
(ii) no
information related to Tax matters has been requested by any foreign, federal,
state or local taxing authority and no written notice indicating an intent
to
open an audit or other review has been received by any Company from any foreign,
federal, state or local taxing authority; and
(iii) there
are
no material unresolved claims concerning any Company’s Tax
liability.
Section
2.17 Title
to the Shares
.
As of
the Closing Date, each Shareholder shall own beneficially and of record, free
and clear of any lien, option or other encumbrance, the shares of Stock set
forth opposite such Shareholder’s name on Exhibit
A
hereto,
and, upon consummation of the Stock Purchase, Purchaser will acquire good and
valid title thereto, free and clear of any lien or other
encumbrance.
Section
2.18 Authority
to Execute and Perform Agreement
.
Each
Shareholder has the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and each other
agreement to which such Shareholder is a party and to perform fully such
Shareholder’s obligations hereunder and thereunder. This Agreement and each
other agreement to which such Shareholder is a party has been duly executed
and
delivered by each Shareholder and is a valid and binding obligation of such
Shareholder enforceable in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless
of
whether such equitable principles are applied in a proceeding at law or in
equity). The execution and delivery by each Shareholder of this Agreement and
each other agreement to which such Shareholder is a party and the performance
by
such Shareholder of this Agreement and each other agreement to which such
Shareholder is a party in accordance with their terms and conditions will not
(i) require the approval or consent of any foreign, federal, state, county,
local or other governmental or regulatory body or the approval or consent of
any
other person; or (ii) conflict with or result in any breach or violation of
any
of the terms and conditions of, or constitute (or with notice or lapse of time
or both constitute) a default under, any statute, regulation, order, judgment
or
decree applicable to such Shareholder or to the shares of Stock held by such
Shareholder, or any instrument, contract or other agreement to which such
Shareholder is a party or by or to which such Shareholder is or the shares
of
Stock held by such Shareholder are bound or subject.
Section
2.19 No
Shareholder Defaults or Consents
.
The
execution and delivery of this Agreement by each Shareholder and the performance
by such Shareholder of his obligations hereunder will not violate any provision
of law or any judgment, award or decree or any indenture, agreement or other
instrument to which such Shareholder is a party.
Section
2.20 Books
and Records
.
The
books and records of each Company are complete and correct in all material
respects, represent bona fide, actual transactions, and have been maintained
in
accordance with sound business practices.
Section
2.21 Contracts
.
Except
as set forth in Schedule 3.02, no Shareholder has or may acquire any rights
under any contract or agreement that relates to any Company’s business or any
Company Assets. Each contract and agreement to which any Company is a party
(“Contract”)
is in
full force and effect, valid and enforceable in accordance with its terms.
To
the Knowledge of the Shareholders, each Company is in compliance in all material
respects with the terms of all Contracts and no event has occurred that (with
or
without notice or lapse of time) may contravene, conflict with or result in
a
breach of any Contract.
Purchaser
represents and warrants to each of the Shareholders as of the Closing Date
that:
.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio, and is not required to be qualified to
do
business as a foreign corporation in any other jurisdiction where the failure
to
so qualify would have a material adverse effect on Purchaser. Purchaser has
all
required corporate power and authority to own its properties and to carry on
its
business as presently conducted.
Section
2.23 Authority,
Approval and Enforceability
.
This
Agreement and each other agreement to which Purchaser is a party have been
duly
executed and delivered by Purchaser, and Purchaser has all requisite corporate
power and legal authority to execute and deliver this Agreement and each other
agreement to which Purchaser is a party, to consummate the transactions
contemplated hereby and thereby, and to perform its obligations hereunder and
thereunder. This Agreement and each other agreement to which Purchaser is a
party will constitute the legal, valid and binding obligations of Purchaser,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless
of
whether such equitable principles are applied in a proceeding at law or in
equity).
Section
2.24 No
Defaults or Consents
.
Neither
the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will:
(a) violate
or conflict with any of the terms, conditions or provisions of the Articles
of
Incorporation or Code of Regulations of Purchaser;
(b) violate
any Legal Requirements applicable to Purchaser;
(c) result
in
the creation of any lien, charge or other encumbrance on the shares of capital
stock or any Property of Purchaser; or
(d) require
Purchaser to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority.
Section
2.25 No
Proceedings
.
No
suit, action or other proceeding is pending or, to the Knowledge of the
Purchaser, threatened before any Governmental Authority seeking to restrain
Purchaser or prohibit its entry into this Agreement or prohibit the Closing,
or
seeking damages against Purchaser or its Properties, as a result of the
consummation of the transaction contemplated by this Agreement.
SURVIVAL
Section
2.26 Survival
of Representations and Warranties
.
Notwithstanding any right of any party hereto fully to investigate the affairs
of any other party hereto and notwithstanding any knowledge of facts determined
or determinable by any party hereto pursuant to such investigation or right
of
investigation, each of Purchaser, on the one hand, and the Shareholders, on
the
other hand, has the right to rely fully upon the representations, warranties,
covenants and agreements of Purchaser and the Shareholders, as the case may
be,
contained in this Agreement, or in any certificate delivered pursuant to any
of
the foregoing; provided, that no party hereto shall be entitled to rely on
any
representation or warranty made by any other party hereto herein to the extent
that such party has actual knowledge that such representation or warranty is
untrue or incorrect in any material respect. All such representations and
warranties shall survive the execution and delivery of this Agreement and the
Closing hereunder, and, except as otherwise specifically provided in this
Agreement, shall thereafter terminate and expire at the end of the twenty fourth
(24th) month following the Closing Date, subject to the limitations on
indemnification set forth in Section 6.04 hereof. Notwithstanding the foregoing,
(a) the representations and warranties set forth in Sections 3.01, 3.02,
3.13(b), 3.19, 3.20, 4.01 and 4.02, and all covenants and agreements, shall
survive indefinitely and shall not terminate or expire, and (b) the
representations and warranties set forth in Section 3.07 shall terminate and
expire at the end of the thirty sixth (36th) month following the Closing Date.
ARTICLE
III.
Section
3.01 Obligation
of the Shareholders to Indemnify
.
Subject
to the limitations contained in Article V and Section 6.04 hereof, each
Shareholder severally agrees to indemnify, defend and hold harmless Purchaser
(and its Affiliates, successors and assigns and their respective officers and
directors) from and against all losses, liabilities, damages, deficiencies,
costs or expenses (including interest, penalties and reasonable attorneys’ fees
and disbursements, but offset by any proceeds from insurance and taking into
account the present value of any tax savings to Purchaser or any Company
resulting from such losses, liabilities, damages, deficiencies, costs or
expenses) (“Losses”)
based
upon, arising out of or otherwise in respect of any material inaccuracy in
or
any breach of any representation, warranty, covenant or agreement of such
Shareholder contained in this Agreement.
Section
3.02 Obligation
of Purchaser to Indemnify
.
Purchaser agrees to indemnify, defend and hold harmless each Shareholder from
and against any Losses based upon, arising out of or otherwise in respect of
any
material inaccuracy in or any breach of any representation, warranty, covenant
or agreement of Purchaser contained in this Agreement.
Section
3.03 Notice
and Opportunity to Defend.
(a) Notice
of Asserted Liability.
Promptly after receipt by any party hereto (the “Indemnitee”)
of
notice of any demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement (or threatened
commencement)
(b) of
any
action, proceeding or investigation (an “Asserted
Liability”)
that
may result in a Loss, the Indemnitee shall give notice thereof (the
“Claims
Notice”)
to any
other party (or parties) obligated to provide indemnification pursuant to
Section 6.01 or 6.02 (the “Indemnifying Party”). The Claims Notice shall
describe the Asserted Liability in reasonable detail and shall indicate the
amount (estimated, if necessary and to the extent feasible) of the Loss that
has
been or may be suffered by the Indemnitee.
(c) Opportunity
to Defend.
The
Indemnifying Party may elect to compromise or defend, at its own expense and
by
its own counsel, any Asserted Liability. If the Indemnifying Party elects to
compromise or defend such Asserted Liability, it shall within thirty (30) days
(or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability at the sole cost of the Indemnifying Party. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise
any
claim over the objection of the other, provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event,
the
Indemnitee and the Indemnifying Party may participate (but not control), at
their own expense, in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend the claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
Section
3.04 Limitations
on Indemnification
.
The
indemnification provided for in Sections 6.01 and 6.02 shall be subject to
the
following limitations:
(a) The
Shareholders shall not be obligated to pay any amounts for indemnification
under
this Article VI arising out of any Losses based upon, arising out of or
otherwise in respect of any inaccuracy or breach disclosed to Purchaser prior
to
the Closing.
(b) Neither
Purchaser nor the Shareholders shall be obligated to pay any amounts for
indemnification for breach of a representation or warranty under this Article
VI, except those based upon, arising out of or otherwise in respect of Sections
3.01, 3.02, 3.07, 3.13(b), 3.19, 3.20 and 3.21 hereof (which shall be
indemnifiable from the first dollar), until the aggregate indemnification
payments, exclusive of those payable with respect to Sections 3.01, 3.02, 3.07,
3.13(b), 3.19, 3.20 and 3.22, equals $1,000,000 (the “Deductible”),
whereupon Purchaser, or the Shareholders, as the case may be, shall be obligated
to pay any indemnification payments, in excess of the Deductible, in full.
This
Section 6.04(b) will not apply to any breach of any representation and warranty
of which the breaching party had Knowledge at any time prior to the date on
which such representation and warranty is made or any intentional breach by
any
party of any covenant or obligation. Notwithstanding anything to contrary
contained herein, Shareholders shall not be obligated to pay any amounts for
indemnification in excess of the Purchase Price.
(c) After
the
Closing, the indemnification rights set forth in this Article VI shall be each
party's sole and exclusive remedy against the other party for any breach of
any
(d) representation,
warranty or covenant contained in this Agreement. Notwithstanding the foregoing,
nothing herein shall prevent any party from bringing an action based upon
allegations of fraud in connection with this Agreement.
ARTICLE
IV.
Section
4.01 Further
Assurances
.
Following the Closing, the Shareholders and Purchaser shall execute and deliver
such documents, and take such other action, as shall be reasonably requested
by
any other party hereto to carry out the transactions contemplated by this
Agreement.
Section
4.02 Access
to Records
.
From
and after the Closing, (i) each of the Shareholders shall (A) deliver to
Purchaser with all books, records, files, agreements and other information
solely in the possession of the Shareholder relating to the Company, and (B)
use
his or her best efforts to permit Purchaser and its authorized employees,
agents, accountants, legal counsel and other representatives to have access
to
the employees, counsel, accountants and other representatives of the
Shareholders, in each case, to the extent and at all times reasonably requested
by Purchaser for the purpose of investigating or defending any claim made
against the Company in connection with periods ending on or before the Closing
Date and (ii) Purchaser shall (A) permit the Shareholders and their authorized
employees, agents, accountants, legal counsel and other representatives to
have
access to the books, records, files, agreements and other information of or
regarding the Company in the possession of Purchaser or its affiliates, and
(B)
use its best efforts to permit the Shareholders and their respective authorized
employees, agents, accountants, legal counsel and other representatives to
have
access to the employees, counsel, accountants and other representatives of
Purchaser, the Company and their Affiliates, in each case, to the extent and
at
all times reasonably requested by the Shareholders, or any of them, for the
purpose of (I) investigating or defending any claim made against the
Shareholders in connection with Article VI, (II) securing information on matters
or disputes with respect to Sections 1.02(b)(iii) through (v) and 6.05 hereof,
or (III) with respect to any pre-Closing Date tax matters affecting the Company
or the Shareholders.
Section
4.03 Tax
Returns
.
Each of
the Shareholders will be responsible for preparing and filing the Companies’ Tax
Returns for all periods through the Effective Date, including, without
limitation, the filing of an S-corporation Tax Return; provided, however, that
Purchaser shall prepare and file Tax Returns for Tax periods that straddle
the
Effective Date. All Taxes payable for all periods through the Effective Date,
regardless of which party prepares the relevant Tax Returns, shall be the
responsibility of the Shareholders.
ARTICLE
V.
Section
5.01 Brokers
.
Regardless of whether the Closing shall occur, (i) each Shareholder shall
severally indemnify and hold harmless Purchaser and the Company from and against
any and all liability for any brokers or finders' fees arising with respect
to
brokers or
finders
retained or engaged by such Shareholder in respect of the transactions
contemplated by this Agreement, and (ii) Purchaser shall indemnify and hold
harmless the Shareholders from and against any and all liability for any
brokers' or finders' fees arising with respect to brokers or finders retained
or
engaged by Purchaser in respect of the transactions contemplated by this
Agreement.
Section
5.02 Costs
and Expenses
.
Each of
the parties to this Agreement shall bear its own expenses incurred in connection
with the negotiation, preparation, execution and closing of this Agreement
and
the transactions contemplated hereby.
Section
5.03 Notices
.
Any
notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another (herein collectively called
“Notice”)
shall
be in writing and delivered personally or mailed by registered or certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
PURCHASER: ELS
Human
Resource Solutions, Inc.
0000
Xxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Telecopy
No.: (000) 000-0000
With
a
copy to: Xxxx
Xxxxxx, Esq.
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Telecopy
No.: (000) 000-0000
THE
SHAREHOLDERS: To
such
Shareholder at the address
specified
on Exhibit
A
hereof.
With
a
copy to: Xxxxxx
X.
Xxxxxxx, Esq.
Xxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000-0000
Telecopy
No.: 000-000-0000
Each
of
the above addresses for notice purposes may be changed by providing appropriate
notice hereunder. Notice given by personal delivery or registered mail shall
be
effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours,
or
at the beginning of the recipient's next normal business day after receipt
if
not received during the recipient's normal business hours. All Notices by
telecopier shall be confirmed by the sender thereof promptly after transmission
in writing by registered mail or personal delivery. Anything to the contrary
contained herein notwithstanding, Notices to any party hereto shall not be
deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons
to
whom copies are provided above to be given.
Section
5.04 Governing
Law
.
The
provisions of this Agreement and the documents delivered pursuant hereto shall
be governed by and construed in accordance with the laws of the
State
of
Ohio (excluding any conflict of law rule or principle that would refer to the
laws of another jurisdiction).
Section
5.05 Entire
Agreement, Amendments and Waivers
.
This
Agreement, together with all exhibits and schedules attached hereto, constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
Section
5.06 Binding
Effect and Assignment
.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, legal representatives, permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any party hereto without the prior written consent of the other
party. Nothing in this Agreement, express or implied, is intended to confer
upon
any person or entity, other than the parties hereto and their respective heirs,
executors, legal representatives, permitted successors and assigns, any rights,
benefits or obligations hereunder.
Section
5.07 Remedies
.
The
rights and remedies provided by this Agreement are cumulative, and the use
of
any one right or remedy by any party hereto shall not preclude or constitute
a
waiver of its right to use any or all other remedies provided by this
Agreement.
Section
5.08 Exhibits
and Schedules
.
The
exhibits and schedules referred to herein are attached hereto and incorporated
herein by this reference.
Section
5.09 Multiple
Counterparts
.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
Section
5.10 References
.
Whenever required by the context, and as used in this Agreement, the singular
number shall include the plural and pronouns and any variations thereof shall
be
deemed to refer to the masculine, feminine, neuter, singular or plural, as
the
identification of the person may require. References to monetary amounts and
specific named statutes are intended to be and shall be construed as references
to United States dollars and statutes of the United States, respectively, unless
the context otherwise requires.
Section
5.11 Survival
.
Any
provision of this Agreement which contemplates performance or the existence
of
obligations after the Closing Date, and any and all representations and
warranties set forth in this Agreement, shall not be deemed to be merged into
or
waived by the execution and delivery of the instruments executed at the Closing,
but shall expressly survive Closing for the time period set forth in Section
6.01 hereof and shall be
binding
upon the party or parties obligated thereby in accordance with the terms of
this
Agreement, subject to any limitations expressly set forth in this
Agreement.
ARTICLE
VI.
Capitalized
terms used in this Agreement shall have the respective meanings ascribed to
such
terms in this Article IX, unless otherwise defined in this
Agreement.
Section
6.01 Affiliate
.
The
term “Affiliate”
shall
mean, with respect to any person, any other person controlling, controlled
by or
under common control with such person. The term “control” as used in the
preceding sentence means, with respect to a corporation, the right to exercise,
directly or indirectly, more than fifty percent (50%) of the voting rights
attributable to the shares of the controlled corporation and, with respect
to
any person other than a corporation, the possession, directly or indirectly,
of
the power to direct or cause the direction of the management or policies of
such
person.
Section
6.02 Company
Assets
.
The
term “Company
Assets”
shall
mean, with respect to any Company, all of the Properties, Contracts, and Permits
that were Used by the Company as of the Balance Sheet Date, and those Used
by
such Company at any time after such dates until the Closing Date.
Section
6.03 Governmental
Authorities
.
The
term “Governmental
Authorities”
shall
mean any nation or country (including but not limited to the United States)
and
any commonwealth, territory or possession thereof and any political subdivision
of any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
Section
6.04 Knowledge
.
The
term “Knowledge”
shall
mean the actual knowledge of a party and, in the case of the Company, of any
of
its directors or executive officers with respect to the representation being
made, and, in the case of the Shareholders, such knowledge as reasonably should
have been obtained upon due investigation and inquiry into the representation
being made.
Section
6.05 Legal
Requirements
.
The
term “Legal
Requirements”,
when
described as being applicable to any person, shall mean any and all laws
(statutory, judicial or otherwise), ordinances, regulations, judgments, orders,
directives, injunctions, writs, decrees or awards of, and any contracts with,
any Governmental Authority, in each case as and to the extent applicable to
such
person or such person's business, operations or Properties.
Section
6.06 Material
Adverse Change
.
The
term “Material
Adverse Change”
shall
mean a material adverse change in a Company’s condition (financial or
otherwise), operations, results of operations, business, Properties or
liabilities.
Section
6.07 Material
Adverse Effect
.
The
term “Material
Adverse Effect”
shall
mean a material adverse effect on a Company’s operations, business, Properties,
financial condition or results of operations.
.
The
term “Permits”
shall
mean any and all permits or orders under any Legal Requirement or otherwise
granted by any Governmental Authority.
Section
6.08 Properties
.
The
term “Properties”
shall
mean any and all properties and assets (real, personal or mixed, tangible or
intangible).
Section
6.09 Regulations
.
The
term “Regulations”
shall
mean any and all regulations promulgated by the Department of the Treasury
pursuant to the Code.
Section
6.10 Taxes
or Tax
.
The
term “Taxes”
or
“Tax”
means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, gift, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code §59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
Section
6.11 Tax
Returns
.
The
term “Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
Section
6.12 Used
.
The
term “Used”
shall
mean, with respect to the Properties, Contracts or Permits of a Company, those
owned, leased, licensed or otherwise held by a Company which were acquired
for
use or held for use by a Company in connection with a Company’s business and
operations, whether or not reflected on the books of account.
EXECUTED
as of the date first written above.
ELS
HUMAN
RESOURCE SOLUTIONS, INC.
By:
/s/ Xxxxxx Xxxxxxxxxx
Xxxxxx
X.
Xxxxxxxxxx
President
SHAREHOLDERS:
XXXXXXX
X. XXXXXXXX YEAR 2002 REVOCABLE TRUST ORIGINALLY DATED AUGUST 16,
2002
/s/
Xxxxxxx Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx, Trustee
/s/
Xxxxxxx Xxxxxx
Xxxxxxx
X. Xxxxxx
Signature
Page
FOR
PURPOSES OF SECTION 2.04 ONLY
EMPLOYEE
LEASING SERVICES, INC.
By:_/s/
Xxxxxx Heineman_____________
Xxxxxx
X.
Xxxxxxxx
President
ELS,
INC.
By:
/s/ Xxxxxx Heineman_____________
Xxxxxx
X.
Xxxxxxxx
President
ELS
OUTSOURCE SERVICES, INC.
By:/s/
Xxxxx Horne____________________
Xxxxx
X.
Xxxxx
Vice
President
ELS
PAYROLL SOLUTIONS, INC.
By:
/s/ Xxxxxx Heineman_____________
Xxxxxx
X.
Xxxxxxxx
President
Signature
Page
PREMIER
HR SERVICES, INC.
By:
/s/ Xxxxxx Heineman_____________
Xxxxxx
X.
Xxxxxxxx
President
ELS
HUMAN
RESOURCES, INC.
By:
/s/ Xxxxxx Heineman____________
Xxxxxx
X.
Xxxxxxxx
President
FOXSTAR,
INC.
By:/s/
Xxxxxxx Walton____________
Xxxxxxx
X. Xxxxxx
President
INTEGRATED
PAYROLL SOLUTIONS, INC.
By:
/s/ Xxxxxx Heineman___________
Xxxxxx
X.
Xxxxxxxx
President
Signature
Page
ELS
PERSONNEL SERVICES, INC.
By:
/s/ Xxxxxx Heineman______________
Xxxxxx
X.
Xxxxxxxx
President
RIO
SERVICES, INC.
By:
/s/ Xxxxxx Heineman__________
Xxxxxx
X.
Xxxxxxxx
President
IMPERIAL
HUMAN RESOURCES, INC.
By:/s/
Xxxxxxx Roux_____________
Xxxxxxx
X. Xxxx
Vice
President
ELS
PAYROLL MANAGERS, INC.
By:
/s/ Xxxxxx Heineman___________
Xxxxxx
X.
Xxxxxxxx
President
Signature
Page
ELS
HR,
INC.
By:/s/
Xxxxxx Heineman__________
Xxxxxx
X.
Xxxxxxxx
President
ELS
TEMPORARY SOLUTIONS, INC.
By:/s/
Xxxxxx Heineman___________
Xxxxxx
X.
Xxxxxxxx
President
RESOLVE
HR SOLUTIONS, INC.
By:
/s/ Xxxxxx Heineman_______________
Xxxxxx
X.
Xxxxxxxx
President
FIDELITY
CAPITAL, INC.
By:_
/s/ Xxxxxx Heineman___________
Xxxxxx
X.
Xxxxxxxx
President
STREAMLINE
MANAGEMENT, INC.
By:
/s/ Xxxxxx Heineman__________
Xxxxxx
X.
Xxxxxxxx
President
Signature
Page
EXHIBIT
A
Shareholders
1.
Employee Leasing Services, Inc.
Authorized
Capital Stock = 750 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 80
Xxxxxxx
X. Xxxxxx 80
2.
ELS,
Inc.
Authorized
Capital Stock = 850 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 40
Xxxxxxx
X. Xxxxxx 40
3.
ELS
Outsource Services, Inc.
Authorized
Capital Stock = 60,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxx 390
X-
0.
ELS
Payroll Solutions, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
5.
Premier HR Services, Inc.
Authorized
Capital Stock = 1,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
6.
ELS
Human Resources, Inc.
Authorized
Capital Stock = 850 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 40
Xxxxxxx
X. Xxxxxx 40
X-
0.
Foxstar, Inc.
Authorized
Capital Stock = 60,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxx 900
8.
Integrated Payroll Solutions, Inc.
Authorized
Capital Stock = 60,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 790
9.
ELS
Personnel Services, Inc.
Authorized
Capital Stock = 850 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 40
Xxxxxxx
X. Xxxxxx 40
X-
00.
Rio
Services, Inc.
Authorized
Capital Stock = 60,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 790
11.
Imperial Human Resources, Inc.
Authorized
Capital Stock = 60,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxx 720
12.
ELS
Payroll Managers, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
X-
00.
ELS
HR, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
14.
ELS
Temporary Solutions, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
15.
Resolve HR Solutions, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
Xxxxxxx
X. Xxxxxx 100
X-
00.
Fidelity Capital, Inc.
Authorized
Capital Stock = 1,500 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 100
17.
Streamline Management, Inc.
Authorized
Capital Stock = 5,000 shares of common stock
No.
of
Shares Owned
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 500
A-
EXHIBIT
B
Purchase
Price
Note
Xxxxxxx
X. Xxxxxxxx Year 2002 Revocable Trust
Originally
Dated August 16, 2002 $8,425,027.59
Xxxxxxx
X. Xxxxxx $8,238,828.59
B-
Schedule
3.02
Agreements
1. |
Shareholder
Agreement dated as of January 1, 2001, by and among ELS, Xxxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxxx and
Xxxxxx X. XxXxxxxx.
|
2. |
Shareholder
Agreement dated as of January 1, 2001, by and among ELS Human Resources,
Inc., Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X.
XxXxxxxx.
|
3. |
Shareholder
Agreement dated as of January 1, 2001, by and among ELS, Inc., Xxxxxxx
X.
Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X.
XxXxxxxx.
|
4. |
Shareholder
Agreement dated as of January 1, 2001, by and among ELS Personnel
Services, Inc., Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X.
XxXxxxxx.
|
5. |
Management
Agreement dated as of December 31, 2002, between ELS Outsource Services,
Inc. and ELS Administrative Services,
LLC.
|
6. |
Management
Agreement dated as of December 31, 2002, between Integrated Payroll
Solutions, Inc. and ELS Administrative Services,
LLC.
|
7. |
Management
Agreement dated as of December 31, 2002, between Rio Services, Inc.
and
ELS Administrative Services, LLC.
|
8. |
Management
Agreement dated as of December 31, 2002, between Imperial Human Resources,
Inc. and ELS Administrative Services,
LLC.
|
9. |
Management
Agreement dated as of December 31, 2002, between Foxstar, Inc. and
ELS
Administrative Services, LLC.
|
10. |
Management
Agreement dated as of December 31, 2002, between Streamline Management,
Inc. and ELS Administrative Services,
LLC.
|
11. |
Agreement
dated as of December 31, 2002, by and between ELS Administrative Services,
LLC, Rockmor Group, Inc., Foxstar, Inc., Luxor Solutions, Inc., Mandalay
Services, Inc., Streamline Management, Inc., Imperial Human Resources,
Inc., Rio Services, Inc., Integrated Payroll Solutions, Inc., ELS
Advantage, Inc., ELS Outsource Services, Inc., and ELS Employee Services,
Inc.
|
Other
Owners of Companies
1. |
Xxxxx
Xxxxx and Xxxxx Xxxx own, respectively, 390 and 220 shares of common
stock
of ELS Outsource Services, Inc., which shares are being sold to Purchaser
separately.
|
2. |
Xxxxx
Xxxxx owns 210 shares of Integrated Payroll Solutions, Inc., which
shares
are being sold to Purchaser separately.
|
3. |
Xxxxx
Xxxx owns 210 shares of Rio Services, Inc., which shares are being
sold to
Purchaser separately.
|
4. |
Xxxxx
Xxxx owns 280 shares of Imperial Human Resources, Inc., which shares
are
being sold to Purchaser separately.
|
Schedule
3.04
Consents
1. [Loan
agreements with 5/3]
2. [Form
PEO
contract]
3. [Providence
contract]
4. [Shelby
Township, MI lease]
Schedule
3.09(b)
The
U.S.
Department of Labor is conducting an audit of ELS’ health plan, and the
Government has indicated that it is likely to issue a notice claiming ERISA
violations.
Schedule
3.15
Litigation
1. |
In
Professions,
Inc. v. Xxxxx Xxxxx,
Case No. A0601813 (Xxxxxxxx County, Ohio Court of Common Pleas), the
former employer claims that Xx. Xxxxx'x employment with ELS violates
a
noncompetition agreement that she allegedly entered with
Professions.
|
2. |
ELS has
been informed of demand letters sent to ELS employee Xxxxx Xxxxxx by
his former employer, CBS Personnel, concerning a noncompetition agreement
that he allegedly entered with CBS. No lawsuit has been filed by
CBS at this time.
|
3. |
Employers
Security Insurance Co. made a disputed attempt to draw against a
letter of credit issued by Fifth Third Bank at the request of ELS.
To prevent a draw against the letter of credit, ELS filed the case
titled
Employee Leasing Services, et al. v. Employers Security Insurance Co.,
et
al. in December, 2005, in the Xxxxxxxx County Court of Common
Pleas. In February, 2006 this case was settled without a
draw on the letter of credit being made.
|
Schedule
3.18
During
2005, the Ohio Department of Taxation began conducting a sales and use tax
audit
of ELS for the years 1999-2004. The use tax portion of the audit was completed
in February 2006 and ELS recently paid an agreed amount of $40,934.95, including
interest and penalty. The sales tax portion of the audit is not
completed.