ASSET PURCHASE AGREEMENT
DATED MAY 14, 1998
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER,
MID-WEST TEMPS, INC.
AS SELLER
AND
XXXXXX XXXXX AND XXXXXXX XXXXX
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 15th
day of May, 1998 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation ("Buyer"), Mid-West Temps, Inc., an Illinois
corporation ("Seller") and Xxxxxx Xxxxx and Xxxxxxx Xxxxx ("Xxxxx and Xxxxx").
RECITALS:
WHEREAS, Seller operates temporary and permanent staffing businesses in
the State of Illinois with two (2) offices in the locations set forth on
SCHEDULE 1 hereto (the "Business").
WHEREAS, Xxxxx and Xxxxx are the principal shareholders of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of Seller, which together constitute substantially all of the assets
that are used in connection with, necessary for, or beneficial to, the operation
of the Business;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 SALE OF ASSETS OF SELLER. Subject to the terms and conditions
hereof, Seller will sell, convey, assign, transfer and deliver to Buyer at the
Closing (as hereafter defined), and Buyer will purchase and accept at the
Closing, all assets, properties, privileges, rights, interests, business and
goodwill owned by Seller or in which Seller has an interest (except the Excluded
Assets, as hereinafter defined), and used or held for use in connection with the
operation of the Business, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (such assets, properties,
privileges, rights, interests, business and goodwill being transferred hereunder
are hereinafter referred to collectively as the "Assets"). Without limiting the
generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following (except to the extent any of the
following constitute Excluded Assets):
(a) All supplies, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements and other tangible property owned by Seller or used by
Seller in connection with the Business, including, without limitation, the
tangible assets listed on SCHEDULE 1.1 hereto.
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(b) All of Seller's right, title and interest under all agreements or
contracts to which it is a party or by which it or the Assets are bound or which
otherwise relate to the Business, including, without limitation, the documents
listed on SCHEDULE 3.7 hereto;
(c) All of Seller's right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business;
(d) All proprietary knowledge, trade secrets, technical information,
quality control data, processes (whether secret or not), methods, and other
similar know-how or rights used in the Business;
(e) All rights of Seller in and to its trade names and trademarks used
in the Business, and variants thereof and all goodwill associated therewith;
(f) The Business as a going concern and, to the extent assignable, its
Permits (as hereinafter defined), licenses, telephone numbers, customer lists,
vendor lists, advertising material and data, restrictive covenants, lists of
temporary employees, choses in action, rights of recovery, rights of recoupment,
together with all books, computer software, files, papers, records and other
data of Seller relating to its respective assets, properties, business and
operations;
(g) All other property and rights of every kind or nature owned by
Seller or used in the Business, including but not limited to the employment
applications of temporary staff (the "Applications").
(h) All of Seller's utility deposits, security deposits and prepaid
expenses.
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following (collectively, the "Excluded
Assets"):
(a) All of Seller's cash, cash equivalents and accounts receivable,
including accounts from xxxxxxxx to customers for temporary labor services
during the week ending Sunday, May 17, 1998.
(b) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Seller as a corporation; and
(c) Any of the rights of Seller under this Agreement (or under any
agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement).
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(d) Such choses in action, rights of recovery, rights of recoupment,
rights of refund (including refunds under canceled insurance policies) or other
claims arising from, in connection with or related to the Excluded Assets or
arising from, in connection with or related to liabilities not assumed or
indemnified by Buyer.
(e) Rights under any tax returns, to any tax refunds and claims for
refund;
(f) Employee advances (excluding advances for salary, commission and
draws);
(g) The personal automobile used by Xxxxx;
(h) Fax machines currently located in the homes of Xxxxx and Xxxxx,
respectively;
(i) Stairmaster and exercise bike;
(j) Any other personal property used at home of Xxxxx or Xxxxx.
1.3 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume, and
shall agree to satisfy and discharge as the same become due only those
liabilities and obligations of Seller specifically listed on SCHEDULE 1.3 hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume, agree to perform
or discharge, indemnify the Seller against, otherwise be responsible at any time
for any liability, obligation, debt or commitment of Seller, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise, that is
not expressly listed on SCHEDULE 1.3 hereto. Without limiting the generality of
the foregoing sentence, Buyer shall not assume or be responsible for any of the
following: any amounts due to any of Seller's creditors listed on SCHEDULE 1.3
hereto in excess of the amounts expressly listed thereon; any matured
obligations under leases, licenses, contracts or agreements in excess of the
amounts expressly listed on SCHEDULE 1.3 hereto; any liabilities, obligations,
debts or commitments of Seller incident to, arising out of, or incurred with
respect to, this Agreement and the transactions contemplated hereby; any and all
sales, use, franchise, income, gross receipts, excise, payroll, personal
property (tangible or intangible), real property, ad-valorem, value added,
leasing, leasing use, or other taxes, levies, imposts, duties, charges or
withholdings of any nature arising out of the transactions contemplated hereby.
Seller further agrees to satisfy and discharge as the same shall become due all
of its obligations and liabilities not specifically assumed by Buyer hereunder,
provided, that Seller may contest any such liability to a third party in good
faith. Buyer's assumption of the Assumed Obligations shall in no way expand the
rights and remedies of third parties against Buyer as compared to the rights and
remedies which such parties would have had against Seller had this Agreement not
been consummated. Effective as of the Closing Date, all of Seller's employees
shall be terminated by Seller, and at the option of Buyer, shall be employed by
Buyer at compensation levels set forth on Schedule 3.17 attached hereto. Buyer
will indemnify Seller, Xxxxx and Xxxxx and defend and hold Seller, Xxxxx and
Xxxxx harmless from loss related to such termination, only with respect to any
employee who accepts employment and completes all applicable
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employment forms including a noncompetition agreement with Buyer upon the
consummation of the transaction contemplated by this Agreement.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of Seller with respect to
any lease or leasehold interest (the "Assumed Leases") shall be subject to the
terms of the Lease Assignment and Assumption Agreements to be delivered pursuant
to Sections 2.2(i) and 2.3(e) of the Agreement. SCHEDULE 1.4 hereto contains a
complete list of all Assumed Leases. Seller shall use its best efforts to cause
the landlords of each of the properties listed on SCHEDULE 1.4 to execute the
Estoppel Certificate and Consent to Assignment of Lease attached hereto as
EXHIBIT A, but such best efforts shall not require Seller to expend more than
$350.00 in payment to any such landlord to obtain the Estoppel Certificate.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a purchase
price (the "Purchase Price") of Four Million Nine Hundred Forty Six Thousand,
Eight Hundred and 00/100 Dollars ($4,946,800.00), payable in accordance with
Section 1.6 hereto, and the Earnout specified below.
1.6 PAYMENT OF PURCHASE PRICE. At Closing, Buyer shall pay the Purchase
Price to Seller as follows:
(a) Cash in the amount of Four Million and 00/100 Dollars
($4,000,000.00) via bank wire transfer of immediately available funds to an
account designated by Seller in writing;
(b) Cash in the amount of $946,800.00 shall be paid by Buyer to Seller
via bank wire transfer of immediately available funds to an account at Chicago
Title and Trust Company in Chicago, Illinois which shall serve as an indemnity
reserve account to protect Buyer against loss resulting from any breach of this
Agreement by Seller, including the breach of any of Seller's warranties or
representations hereunder. Such account shall be governed by the terms of an
Escrow Agreement in the form attached hereto as Exhibit B to be executed by the
Escrow Agent, Buyer and Seller at the Closing. All costs, fees or charges of the
Escrow Agent shall be divided equally between Seller and Buyer.
(c) On or before September 1, 1999, Seller will be paid an Earnout
("Earnout") equal to the Incremental Gross Profit (defined below) for the period
commencing with the opening of business on June 1, 1998 and ending at the close
of business on May 31, 1999 (the "Earnout Period") less consulting payments, if
any, paid to Xxxxx and Xxxxx. Incremental Gross Profit is defined as the
difference between the Adjusted GP of the Business (calculated by Buyer in
accordance with EXHIBIT C) for the Earnout Period following the Closing Date and
the greater of $1,725,000 or the Adjusted GP of the Business for the period
ending on March 31, 1998. Seller and its representatives may review all books,
records and work papers of Buyer, and make copies or extracts thereof, only as
related to the calculation of the Earnout and may object to the calculation made
by Buyer of the amount of Earnout. During the Earnout Period following the
closing, Buyer will operate the Business in Buyers usual
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manner of doing business, and Buyer will not delay billing, customers, nor
advance the payment of bills for the purpose of adversely affecting the Earnout.
1.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT D hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") and applicable Treasury regulations. Buyer
and Seller shall: (i) be bound by the Allocation for purposes of determining any
Taxes (as hereafter defined); (ii) prepare and file tax returns on a basis
consistent with the Allocation; and (iii) take no position inconsistent with the
Allocation in any proceeding before any taxing authority or otherwise. In the
event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice. Seller and Buyer each shall timely after the
Closing file form 8594 with the Internal Revenue Service detailing this
allocation. In the event that Buyer determines that any adjustments to such
allocation are necessary, and Seller consents to such adjustments, Seller shall
make such modifications as are necessary in Seller's form 8594 or any tax report
or return filed or to be filed by Seller in order to conform to Buyer's
allocation as adjusted.
1.8 ENCUMBRANCES. The Assets shall be sold and conveyed to Buyer free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, title defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 1.8 hereto (the "Permitted Liens").
1.9 PRORATION. Seller shall pay at Closing all applicable transfer,
sales, use, bulk sales and other taxes, and all documentary, filing, recording
and vehicle registration fees payable as a result of the transfer of the Assets.
All ad valorem and property taxes, and any similar assessment based upon or
measured by Seller's ownership interest in the Assets, shall be prorated between
Seller and Buyer as of the Closing Date based upon such taxes assessed against
the Assets for the tax period in question, or if there is insufficient
information for such tax period, based upon taxes assessed for the immediately
preceding tax period. All such taxes shall be prorated on the basis of a 365-day
year. Seller shall be charged for all such taxes and assessments based upon or
measured by Seller's ownership prior to the Closing Date and Buyer shall be
charged for all such taxes and assessments based upon or measured by Buyer's
ownership on or after the Closing Date. All such prorations and payments shall
be made 30 days after the Closing.
2. CLOSING DATE.
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase of
the Assets (the "Closing") will take place at Xxxxxxx & Xxxxx, Suite 1800, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx commencing at 8:30 A.M. Central Daylight
Time, on May 14, 1998 or at such other time and place as the parties may
establish (the date of the Closing being hereinafter referred to as the "Closing
Date"). The transactions contemplated hereby shall be deemed to be effective as
of 12:01 a.m., Eastern Daylight Time, on May 18, 1998.
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2.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
execute and deliver or cause to be executed and delivered to Buyer the
following:
(a) A Xxxx of Sale, in substantially the form attached as EXHIBIT E
hereto;
(b) An Assumption Agreement, in substantially the form attached as
EXHIBIT F hereto, and which shall be executed by Buyer as provided;
(c) A Noncompetition Agreement in substantially the form attached as
EXHIBIT G hereto executed by Mid-West Temps, Inc., Xxxxxx Xxxxx and Xxxxxxx
Xxxxx pursuant to which they shall agree not to compete with Buyer for a period
from the date of this Agreement and up to and including May 11, 2003;
(d) An Employment Agreement, in substantially the form attached as
EXHIBIT H hereto, executed by Xxxx Xxxxxxxxx.
(e) An Assignment of Applications, in substantially the form attached
as EXHIBIT I hereto;
(f) An Assignment of Trademarks substantially in the form attached
hereto as EXHIBIT J;
(g) A Certificate executed as of the Closing Date by a duly authorized
officer of Seller certifying: (i) the resolutions of the Board of Directors and
Shareholders of Seller approving the transactions contemplated hereby, and (ii)
as to the accuracy of Seller's representations and warranties and as to the
performance and compliance of all of the terms, provisions and conditions to be
performed or complied with by Seller at or before Closing;
(h) The documents required pursuant to Sections 6 of this Agreement;
and
(i) Assignments of Leases in form attached as EXHIBIT N;
(j) Such other instruments of sale, transfer, conveyance and assignment
as Buyer and its counsel may reasonably request.
2.3 DELIVERIES BY BUYER. At or prior to Closing, Buyer shall execute
and deliver or cause to be executed and delivered to Seller the following:
(a) The Assumption Agreement, in substantially the form attached as
EXHIBIT F hereto;
(b) A Certificate executed as of the Closing Date by a duly authorized
officer of Buyer
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certifying: (i) the resolutions of the Board of Directors of Buyer approving the
transactions contemplated hereby, and (ii) as to the accuracy of Buyer's
representations and warranties and as to the performance and compliance of all
of the terms, provisions and conditions to be performed or complied with by
Buyer at or before Closing;
(c) Escrow Agreement in substantially the form attached as EXHIBIT B
hereto; and
(d) The portion of the Purchase Price identified in paragraph 1.6 (a)
and (b) above;
(e) Such other instruments of assumption as Seller and its counsel may
reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER, XXXXX AND XXXXX. Seller,
Xxxxx and Xxxxx, jointly and severally, as a material inducement to Buyer to
enter into this Agreement and consummate the transactions contemplated hereby,
make the following representations and warranties to Buyer. The term "knowledge"
or similar language used in this Section 3 shall, in each case, mean the actual
knowledge of Seller, Xxxxx or Xxxxx, as the case may be, after reasonable
investigation.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 1.8 hereto, Seller
has good, marketable and unencumbered title to the Assets (or, with respect to
any real or personal property leases included in the Assets, a valid leasehold
interest therein), free and clear of all mortgages, security interests, liens,
claims, encumbrances, title defects, pledges, charges, assessments, covenants,
encroachments and burdens of any kind or nature whatsoever, and have full right
and authority to transfer and deliver all the Assets. Except as described in
SCHEDULE 1.8 hereto, upon consummation of the transactions contemplated hereby,
Seller will have transferred to Buyer good, marketable and unencumbered title to
the Assets (or with respect to any real or personal property leases included in
the Assets, a valid leasehold interest therein), free and clear of all
mortgages, security interests, liens, claims, encumbrances, title defects,
pledges, charges, assessments, covenants, encroachments and burdens of any kind
or nature whatsoever except for liens, claims or encumbrances created or allowed
by Buyer. The Assets constitute all of the assets that are used in connection
with, necessary for, or beneficial to the operation of the Business, except for
Excluded Assets.
3.2 CORPORATE STATUS OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Seller is qualified to do business and in good standing in each jurisdiction
where the operation of its business requires that it be so qualified. Seller has
all requisite corporate power and authority to own, operate and lease its
properties and assets, to conduct its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. An accurate and complete copy
of the Articles of Incorporation and Bylaws of Seller, as presently in effect,
are included as an attachment to SCHEDULE 3.2 hereto.
3.3 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by
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Seller of this Agreement and of each agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized and
approved by all necessary corporate action of Seller. This Agreement is (and,
when executed and delivered, each agreement, document or instrument to be
executed and delivered in connection with the transactions contemplated hereby
will be) valid and binding upon Seller, and enforceable against Seller in
accordance with their respective terms except to the extent that enforcement
thereof may be limited by applicable bankruptcy, reorganization, insolvency or
moratorium laws, or other laws affecting the enforcement of creditors' rights or
by the principles governing the availability of equitable remedies.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. Seller does not
own any real property. Except as disclosed in SCHEDULE 3.4, and to the knowledge
of Seller without independent investigation, all real property leased by Seller
and used in the operation of the Business is listed and described in SCHEDULE
3.4 hereto and is in good condition and repair, subject only to normal wear and
tear. To Seller's knowledge, without independent investigation, all buildings
and improvements located thereon are in good condition and repair, subject only
to normal wear and tear. Seller has delivered to Buyer accurate and complete
copies of all leases relating to real and personal property leased by Seller and
used in the operation of the Business and, except as described in SCHEDULE 3.4,
all such leases are in full force and effect, no event of default has been
declared thereunder and, to the Seller's knowledge, no basis for any default
exists. No such lease of real or personal property is subject to termination or
modification as a result of the transactions contemplated hereby. All material
items of tangible personal property and assets owned or leased by Seller and
used in the operation of the Business are described in SCHEDULE 1.1 hereto. All
machinery and equipment listed in SCHEDULE 1.1 conforms to all applicable
ordinances, regulations, and other laws. Except as described in SCHEDULE 1.1,
all items listed on SCHEDULE 1.1 are in good operating condition and repair,
subject only to normal wear and tear, and are adequate to conduct the Business
as it is now being conducted.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's financial statements for the years ended
December 31, 1995, 1996 and 1997 (the "Financial Statements") and the interim
monthly financial statement as of March 31, 1998. The Financial Statements: (a)
present fairly the financial position and results of operations of the Seller
for the dates or periods indicated thereon; (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period indicated except for normal year end adjustments and the
omission for footnotes; and (c) fairly presents the transactions, assets and
liabilities of Seller as of the dates and for the periods presented. Except as
set forth in the Financial Statements or on SCHEDULE 3.5 hereto, Seller has no
debts, liabilities or obligations, whether direct or indirect, accrued,
absolute, contingent, matured, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance sheet in
accordance with generally accepted accounting principles. To the knowledge of
Seller, Xxxxx or Xxxxx there is no basis for the assertion of any claims or
liabilities of any nature which are not fully
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reflected or reserved against in the Financial Statements or otherwise disclosed
in SCHEDULE 3.5 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 23, 1998, Seller
has conducted the Business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and has used all
reasonable efforts consistent with normal business practices to preserve and
promote the Business and to avoid any act that might have a material adverse
effect upon the value of the Business as a going concern or upon the Assets. To
Seller's knowledge, no event has occurred to prevent the Business from operating
in a normal and usual manner and in substantially the same manner as heretofore
operated. Except as expressly set forth in SCHEDULE 3.6 hereto, since March 23,
1998:
(a) there has not been any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the Business or the
Assets;
(b) there has not been any increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (i) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents; (ii) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any of such officers, employees or agents; or (iii) other material change
in the employment terms of any officer, employee or agent of Seller;
(c) there has not been any sale, transfer or other disposition of any
tangible or intangible asset, or real or personal property or interest therein,
or any mortgage, lien or encumbrance placed thereon except in the ordinary
course of business and consistent with past practice;
(d) there have not been any capital expenditures, capital additions,
capital improvements or charitable contributions made, or committed to be made,
involving, individually or in the aggregate, Two Thousand Five Hundred Dollars
($2,500.00) or more;
(e) there has not been any failure to maintain any of Seller's books,
accounts and records in the usual, regular and ordinary manner and in accordance
with good business practices and consistent with past practice;
(f) there has not been any action taken or omitted to be taken by
Seller which could cause (with or without the giving of notice or the passage of
time, or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement (as hereinafter defined) or the
imposition of any lien, encumbrance, mortgage or other claim or charge against
the Assets;
(g) there has not been any liability, obligation or commitment incurred
by Seller involving, individually or in the aggregate, more than Two Thousand
Five Hundred Dollars ($2,500.00), other than in the normal course of business;
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(h) there are no pending claims for worker's compensation submitted by
any employee of Seller with respect to services performed on behalf of Seller,
or to Seller's knowledge, facts or state of facts existing which could give rise
to claims for workers' compensation by any employee of Seller with respect to
services performed on behalf of Seller which are not listed on Schedule 3.19 and
which exceed individually or in the aggregate Five Thousand Dollars ($5,000.00).
(i) Seller has not entered into, nor has Seller or the Assets become
subject to, any contracts, agreements, commitments, indentures, mortgages,
notes, bonds, license, real or personal property leases or other obligations of
the type required to be disclosed in SCHEDULE 3.7 hereto that are not otherwise
disclosed herein;
(j) Seller has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(k) there has been no change made or authorized in the charter or
bylaws of Seller;
(l) Seller has not issued, sold or otherwise disposed of any of its
capital stock or granted any options, warrants or other rights to purchase or
obtain any of its capital stock;
(m) Seller has not declared, set aside or paid any dividend nor made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(o) To Seller's knowledge, there has not been any other event or
condition of any character which, individually or in the aggregate, has had or
could reasonably be expected to have a material adverse effect on the Assets,
the Business, or on the financial condition or operations of Seller; and
(p) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. SCHEDULE 3.7 hereto includes a true,
correct and complete list of all material contracts, agreements, commitments,
indentures, mortgages, notes, bonds, licenses, real and personal property leases
and other obligations to which Seller is a party, by which Seller or its assets
or properties are bound or may be affected or which otherwise relate to the
Business (the "Material Agreements"). Without limiting the generality of the
foregoing, the term Material Agreement includes: (a) any lease or license with
respect to any Assets, whether Seller is tenant, landlord, licensor or licensee
thereunder; (b) any agreement, contract, indenture or other instrument relating
to the borrowing of money or the guarantee of any obligation or the deferred
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payment of the purchase price of any Assets; (c) any agreement concerning a
partnership or joint venture; (d) any agreements between Seller on the one hand
and any of its shareholders, officers, directors or employees on the other; (e)
any agreement relating to confidentiality or noncompetition; (f) any
preferential purchase right, right of first refusal or similar agreement; (g)
any agreement entered into outside of the ordinary course of business which
obligates Seller to make any payment in excess of $2,000.00; or (h) any other
agreement (or group of related agreements) which could involve expenditures (in
cash or in kind) by Seller in excess of $2,500.00 per year other than in the
normal course of business. True and complete copies of all of the Material
Agreements are included as part of SCHEDULE 3.7 hereto. Each of the Material
Agreements listed in SCHEDULE 3.7 are valid, binding and enforceable in
accordance with their respective terms and are in full force and effect and were
entered into in the ordinary course of business on an "arms length" basis. No
part of Seller's rights or benefits under any Material Agreement has been
assigned, transferred, or in any way encumbered. Seller is not in breach of nor
has Seller defaulted under any of the Material Agreements and no occurrence or
circumstance exists which constitutes (with or without the giving of notice or
the passage of time or both) a breach or default by Seller under any Material
Agreement. To Seller's knowledge, the other parties to the Material Agreements
are not in default thereunder and no occurrence or circumstance exists which
constitutes or would constitute (with or without the giving of notice or the
passage of time or both) a breach or default by the other party thereunder.
Except as set forth on SCHEDULE 3.7 hereto, neither Seller nor any of the Assets
are bound by or subject to any contract, agreement, commitment, indenture,
mortgage, note, bond, license, real or personal property lease or other
obligation which on the Closing Date cannot be terminated upon thirty (30) days'
written notice by Seller or Buyer without penalty or other obligation being
incurred upon such termination.
3.8 ASSISTANCE. Xxxxx and Xxxxx shall assist Buyer with the transition
of ownership for a period not to exceed twelve (12) months following the Closing
Date by entering into a one (1) year Consulting Agreement with Buyer in
substantially the form attached hereto as EXHIBIT M .
3.9 INTELLECTUAL PROPERTY. Seller owns or is licensed to use all
patents, trademarks, copyrights, trade names, service marks and other trade
designations, including common law rights, registrations, applications for
registration, technology, know-how or processes (the "Intellectual Property")
necessary to conduct the Business, free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by Seller
immediately prior to the Closing shall be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing. To
Seller's knowledge, Seller has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that Seller owns or uses
and to consummate the transfer and assignment thereof to Buyer. Seller has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of third parties, and Seller has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation. To the knowledge of
Seller, Xxxxx and Xxxxx, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Seller. SCHEDULE 3.9 hereto contains a true and
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correct description of the following:
(a) All Intellectual Property currently owned, in whole or in part, by
Seller, and all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which Seller is a party; and
(b) All agreements relating to Intellectual Property that Seller is
licensed or authorized to use from others or which Seller licenses or authorizes
others to use.
3.10 TAXES. All federal, state, local and foreign tax returns
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state, local or foreign
agency, authority or body to be filed have been duly filed by such Seller.
Seller, Xxxxx and Xxxxx have either: (i) paid all federal, state, county, local,
foreign and other taxes (hereinafter "Taxes" or individually a "Tax") required
to be paid by it through the Closing Date and all deficiencies or other
additions to Tax, including interest or penalties owed in connection with any
such Taxes; or (ii) included adequate provision for all such Taxes and
deficiencies or other additions to Tax applicable to Seller in the Seller's
Financial Statements. All Taxes and other assessments and levies required to be
collected or withheld by Seller with respect to the operation of its business
from customers with respect to sales of products or from employees for income
taxes, social security taxes and unemployment insurance taxes have been
collected or withheld, and either paid to the respective governmental agencies,
or set aside in an account owned by Seller and established for that purpose.
Seller is not a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. To Seller's
knowledge, no action or proceeding regarding assessment or collection of Taxes
is threatened against Seller. To Seller's knowledge, there are no facts or state
of facts existing that (with or without the giving of notice or the passage of
time or both) could form the basis for any such action or proceeding. Seller has
not executed or filed any agreement with the Internal Revenue Service or any
other taxing authority extending the period for the assessment or collection of
any Taxes.
3.11 LITIGATION. Except as set forth on Schedule 3.11 attached hereto;
there is no suit, proceeding, action, claim or investigation, at law or in
equity, pending or, to Seller's, Xxxxx'x or Xxxxx' knowledge, threatened against
or affecting in any way the assets, properties or property interests of Seller.
There are no facts or state of facts existing that (with or without the giving
or notice or the passage of time or both) could form the basis for any such
suit, proceeding, action, claim or investigation. Neither Seller nor any of its
assets, property or property interests is subject to any judgement, order, writ,
injunction or decree of any court or any federal, state, municipal, foreign or
other governmental authority, department, commission, board, bureau, agency or
other instrumentality.
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
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(a) There are no pension plans, retirement, profit sharing, deferred
compensation, stock option, stock purchase, bonus, disability, severance or
termination pay, insurance or incentive plan, and each other employee benefit
plan, program, agreement or arrangement, whether funded or unfunded, sponsored,
maintained or contributed to or required to be contributed to by Seller or by
any trade or business, whether or not incorporated, that together with Seller
would be deemed a "single employer" within the meaning of Section 4001 of ERISA
(a "Company ERISA Affiliate"), for the benefit of any employee or terminated
employee of Seller or any Seller ERISA Affiliate, except Seller's medical or
health plan. Seller has complied with and is in compliance with any and all
laws, regulations, rules or ordinances regarding its medical plan or health plan
administered by Seller, and with respect to such plan (the "Plan").
(b) Seller does not participate currently and has never participated in
and is not required currently and has never been required to contribute to or
otherwise participate in any "multi employer plan," as defined in Sections
3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the Code.
(c) True and complete copies of the Plan has been furnished to Buyer.
Seller has delivered to Buyer the most recent financial statement and the most
recent actuarial report prepared with respect to such Plan that is funded, the
most recent Internal Revenue Service ("Service") determination letter, the most
recent Summary Plan Description and the most recent Annual Report together with
a statement setting forth any such documents which cannot be furnished; and any
such documents furnished and the nature of the documents which cannot be
furnished shall be reasonably satisfactory to Buyer.
(d) If the Plan is required to be "qualified" within the meaning of
Section 401(a) of the Code, a determination letter from the Service has been
received to the effect that the Plan is qualified under Section 401 of the Code
and any trust maintained pursuant thereto is exempt from federal income taxation
under Section 501 of the Code, and nothing has occurred or will occur through
the Closing Date (including without limitation the transactions contemplated by
this Agreement) which would cause the loss of such qualification or exemption or
the imposition of any penalty or tax liability.
(e) All contributions required by the Plan or by law with respect to
all periods through the Closing Date shall have been made by such date (or
provided for by Seller by adequate reserves on its financial statements) and no
excise or other taxes have been incurred or are due and owing with respect to
the Plan because of any failure to comply with the minimum funding standards of
ERISA and the Code.
(f) No "accumulated funding deficiency", as defined in Section 302 of
ERISA, has been incurred with respect to the Plan, whether or not waived. No
"reportable event" of the type set forth in Section 4043 of ERISA has occurred
and is continuing with respect to the Plan. There are no violations of ERISA or
the Code with respect to the filing of applicable reports, documents, and
notices regarding the Plan with the Secretary of Labor, Secretary of the
Treasury, or the Pension Benefit Guaranty Corporation (the "PBGC") or furnishing
such documents to participants or
14
beneficiaries, as the case may be. The Plan is not under audit by the Service or
the Department of Labor. No claim, lawsuit, arbitration, or other action has
been threatened, asserted, or instituted against the Plan, any trustee or
fiduciaries thereof, Seller, or any of the assets of any trust maintained under
the Plan. Seller has not incurred nor reasonably expects to incur, any liability
to the PBGC.
(g) All amendments required to bring the Plan into conformity with any
of the applicable provisions of ERISA and the Code have been duly adopted.
(h) The Plan has been operated and administered in accordance with its
terms and the terms and the provisions of ERISA and the Code (including rules
and regulations thereunder) applicable thereto and in practice is tax qualified
under Sections 401(a) and 501 of the Code. If the Plan is intended to be
"qualified" within the meaning of Section 401(a) of the Code, it is so qualified
and the trusts maintained under such Plan is exempt from taxation under section
501(a) of the Code.
(i) No "prohibited transaction," as such term is defined in Section
4975 of the Code and Section 406 of ERISA, has occurred with respect to the Plan
(and the transactions contemplated by this Agreement will not constitute or
directly or indirectly result in such a "prohibited transaction") which could
subject Seller, Buyer, or any officer, director or employee of any of the
foregoing, or any trustee, administrator or other fiduciary, to a tax or penalty
on prohibited transactions imposed by either Section 502 of ERISA or Section
4975 of the Code.
(j) The present value, determined on a termination basis, of all
accrued benefits, vested and unvested, under the Plan, determined using the
actuarial valuation assumptions and methods (including interest rates) contained
in the most recent actuarial report for the Plan, does not exceed the assets
thereof allocable to such benefits.
(k) No welfare benefit plan (within the meaning of Section 3(1) of
ERISA) provides for continuing benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment,
except as may be required by COBRA at the expense of the participant or the
beneficiary of the participant. Seller will continue health insurance coverage
for participants through May 31, 1998.
(l) Seller does not currently maintain or contribute to any severance
pay plan. No individual shall accrue or receive any additional benefits,
service, or accelerated rights to payment of benefits under the Plan as a result
of the actions contemplated by this Agreement.
(m) Seller has complied with all of the requirements of COBRA. Seller
has complied with and is in compliance with any and all laws, regulations, rules
or ordinances regarding any medical plan or medical reimbursement plan
administered by Seller.
3.13 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in
Schedule 3.13 attached hereto, neither the execution nor delivery by Seller of
this Agreement, or any agreement, document or instrument executed and delivered
or to be executed and delivered in connection with the
15
transactions contemplated hereby, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
of the provisions hereof or thereof, will: (a) conflict with or result in a
breach of any provision of Seller's Articles of Incorporation or Bylaws; (b)
result in the breach of, or conflict with, any of the terms and conditions of,
or constitute a default (with or without the giving of notice or the passage of
time or both) with respect to, or result in the cancellation or termination of,
or the acceleration of the performance of any obligations or of any indebtedness
under, any Material Agreement; (c) result in the creation of a lien, security
interest, charge or encumbrance upon any of the Assets; or (d) violate any law
or any rule or regulation of any administrative agency or governmental body, or
any order, writ, injunction or decree of any court, administrative agency or
governmental body to which any Seller or its properties or assets may be
subject. No approval, authorization, consent or other action of, or filing with,
or notice to any court, administrative agency or other governmental authority or
any other person or entity is required for the execution and delivery by any
Seller of this Agreement or any agreement, document or instrument executed and
delivered or to be executed and delivered in connection with the transactions
contemplated hereby or thereby, or the consummation of the transactions
contemplated hereby or thereby.
3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy, approvals or other authorizations from and
registrations with federal, state, municipal and foreign governmental agencies
and private associations necessary to operate its business (collectively the
"Permits") and all such Permits are in full force and effect and, to the
knowledge of Seller, no suspension or cancellation of any such Permit is
threatened. All such Permits that are assignable shall continue in full force
and effect on behalf of Buyer following consummation of the transactions
contemplated by this Agreement. A list of the Permits is included in SCHEDULE
3.14 hereto.
3.15 INSURANCE. SCHEDULE 3.15 hereto contains a complete list of all
insurance policies maintained by Seller with respect to the Business or the
Assets. Such insurance: (i) is in full force and effect and will remain so
through the Closing Date; and (ii) is sufficient for compliance with all
requirements of law and any agreements to which Seller is a party or by which
the Assets are bound.
3.16 GUARANTEES. Except as set forth in SCHEDULE 3.16 attached hereto,
neither the Business nor any of the Assets is nor will be at the Closing,
directly or indirectly: (i) liable, by guarantee or otherwise, upon or with
respect to, (ii) obligated, by discount or repurchase agreement or in any other
way, to provide funds in respect of; or (iii) obligated to guarantee or assume,
any debt, dividend or other obligation of, any person, corporation, association,
partnership or other entity including, without limitation, Seller or any of its
affiliates.
3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Seller is in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Seller, including
those relating to terms and conditions of employment and wages. There are no
complaints pending, or to Seller's, Xxxxx'x or Xxxxx' knowledge threatened,
against Seller in connection with any employment related matters. SCHEDULE 3.17
hereto contains a list of the names,
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office locations, compensation, and years of credited service for vacation and
pension plan purposes of all full- and part-time employees of Seller as of May
11, 1998 and a description of all employee "perks" or other benefit practices.
To the knowledge of Seller, Xxxxx and Xxxxx, within the twenty four (24) months
preceding the date hereof, no strike or labor dispute involving Seller has
occurred or was threatened. None of Seller's employees are covered by any union
or collective bargaining agreement. No key employee of Seller has indicated to
Seller that he or she is considering terminating his or her employment except as
noted on SCHEDULE 3.17. The consummation of the transactions contemplated by
this Agreement will not give rise to any liability of Seller for severance pay
or termination pay. SCHEDULE 3.17 includes a monthly report for April, 1998,
which accurately reflects Seller's entire current monthly payroll obligations to
its employees. SCHEDULE 3.17 also includes a list of the names and compensation
levels of any consultants, independent contractors or temporary employees
regularly utilized by Seller in core functions of the Business (excluding
employees supplied to clients for revenue generation purposes). If notice is
received by Buyer of any matter referred to in this paragraph which is
inconsistent with the representations made herein, Buyer will promptly inform
Seller and Seller will cooperate with Buyer and assist Buyer in the resolution
of such matter.
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted its business and the Assets have
been held in compliance with all applicable laws, regulations, ordinances,
orders and other requirements of governmental authorities having jurisdiction
over Seller. Seller has not received any formal or informal notice, advice,
claim or complaint alleging that Seller has violated or may have violated any
law, regulation, ordinance or order and, to Seller's, Xxxxx'x or Xxxxx'
knowledge, no such notice, advice, claim or complaint of any type is threatened.
Seller has at all times complied and presently comply with all applicable
federal, state, local and foreign laws, rules and regulations respecting
occupational safety and health standards and Seller has not received complaints
from any employee or any federal, state, local or foreign agency alleging any
violation of any federal, state, local or foreign laws respecting occupational
safety and health standards.
(b) Without limiting the generality of the foregoing, to Seller's
knowledge without independent investigation (i) all real property owned or
leased by Seller and all buildings, fixtures, equipment and other improvements
located thereon and the present use thereof comply in all respects with
applicable fire codes, building codes, health codes, ordinances and regulations;
(ii) the business operations of Seller (including without limitation its leased
and owned real property) are in compliance with all applicable statutes,
regulations, ordinances, decrees or orders of governmental authorities relating
to the environment (collectively the "Environmental Laws") including without
limitation those relating to Hazardous Materials (as hereinafter defined); (iii)
no Hazardous Material has been spilled, released, deposited or discharged on any
of Seller's owned or leased real property, no such real property has been used
as a landfill or waste disposal site, and such real property is free from
pollution; (iv) no notice, information, request, citation, summons or order has
been received by Seller and no complaint has been filed and no penalty has been
assessed or threatened by any
17
governmental authority with respect to (x) any alleged violation by Seller of
any Environmental Law; (y) any alleged failure by Seller to have any
environmental permit required in connection with the operation of their
business; or (z) any generation, treatment, storage, recycling, transportation
of disposal of any Hazardous Material; and (v) there have not previously been
and are not presently any claims of any nature pursuant to any Environmental Law
on any properties owned or leased by Seller. As used in this Agreement, the term
Hazardous Material means any hazardous or toxic substance, material or waste or
pollutants, contaminants or asbestos containing material which is regulated by
any authority in any jurisdiction in which Seller does business.
3.19 WORKER'S COMPENSATION CLAIMS. SCHEDULE 3.19 contains a true,
correct and complete list of all claims or pending claims for workers'
compensation submitted or expected to be submitted by any employee of Seller
from January 1, 1995 to the closing with respect to services performed on behalf
of Seller (the "Worker's Compensation Claims"). Each claim listed shall include
the total reserve amount established for such claim by the Seller's workers'
compensation carrier (the "Carrier"). Except as set forth on SCHEDULE 3.19,
there are no facts or state of facts known to Seller and existing which could
give rise to Workers' Compensation Claims by any employee of Seller with respect
to services performed on behalf of Seller.
3.20 CUSTOMER LIST. Attached hereto as SCHEDULE 3.20 is a true, correct
and current list of all customers, clients and businesses which are now, or have
within the last year, received temporary or permanent staffing from the Company,
including the address, and for each such customer, client or business, and to
Seller's knowledge, the telephone number, fax number and principal contact
person for each such customer, client or business.
3.21 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement or any Exhibit or Schedule attached hereto, and no statement contained
in any certificate or other instrument or document furnished by or on behalf of
Seller pursuant to this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact that is
necessary to make the statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement for
Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer represents and warrants to Seller, Xxxxx and Xxxxx as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, and
qualified to do business in the State of Illinois. Buyer has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now being conducted and to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by
18
Buyer of this Agreement and of each agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by all necessary corporate action of Buyer, and do not violate or
contravene Buyers Articles of Incorporation, By Laws, or any agreement, order,
judgment or decree to which Buyer is a party or by which Buyer is bound. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Buyer, and enforceable
against Buyer in accordance with their respective terms except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or the principles governing the availability of
equity remedies.
4.3 NO PROHIBITION. No Agreement or Contract has been entered by Buyer
which would prohibit Buyer from entering or performing this Agreement.
4.4 PERMISSION. No permission of any person, individual, group,
committee, body or entity outside the Board of Directors of the Buyer is or will
be required in order for Buyer to lawfully enter or perform this Agreement or
any Agreement referenced herein, however this transaction was previously
approved by BankBoston, Triumph Capital Group and Bachow and Associates.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLER, XXXXX AND XXXXX. Seller,
Xxxxx and Xxxxx, jointly and severally, hereby agree to defend, indemnify and
hold harmless Buyer from, against and in respect of any loss, cost, damage or
expense, including but not limited to, reasonable legal and accounting fees and
expenses (and sales taxes thereon, if any) asserted against, imposed upon or
paid, incurred or suffered (a "Loss"):
(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller, Xxxxx or Xxxxx in
this Agreement or in any agreement, document or instrument executed and
delivered in connection with the transactions contemplated hereby; or
(b) any misrepresentation or inaccuracy in, or omission from any
certificate, schedule, exhibit, written statement, document or instrument
furnished by Seller, Xxxxx or Xxxxx to Buyer in connection with the transactions
contemplated by this Agreement.
(c) the obligation to indemnify hereunder shall expire six (6) years
following the Closing Date.
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5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller, Xxxxx and Xxxxx from, against and in respect
of any Loss as a result of, arising from or in connection with any breach of any
representation, warranty, covenant or agreement of Buyer in this Agreement or in
any agreement, document or instrument executed and delivered in connection with
the transactions contemplated hereby. The obligation to indemnify hereunder
shall expire six (6) years following the Closing Date.
5.3 INDEMNITY PROCEDURE.
(a) A party hereto agreeing to be responsible for or to indemnify
against any matter pursuant to this Agreement is referred to herein as the
"Indemnifying Party" and the other party claiming indemnity is referred to as
the "Indemnified Party." The Indemnified Party under this Agreement shall give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim of indemnity under this Agreement; provided, however, that
any failure to give such notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are actually
prejudiced. As to any claim, action, suit or proceeding by a third party, the
Indemnifying Party shall be entitled to assume defense thereof (at its expense)
provided that counsel for the Indemnifying Party who shall conduct the defense
of such claim shall be approved by the Indemnified Party, such approval not to
be unreasonably withheld. The Indemnified Party shall provide such cooperation
and such access to its books, records and properties as the Indemnifying Party
shall reasonably request with respect to such matter; and the parties hereto
agree to cooperate with each other in order to ensure the proper and adequate
defense thereof. If, in the Indemnified Party's reasonable judgment, a conflict
of interest between the Indemnified Party and the Indemnifying Party exists in
respect of a claim, or, if the Indemnifying Party, after written notice from the
Indemnified Party, fails to take timely action to defend a claim, the
Indemnified Party may assume defense of such claim or action with counsel of its
choosing at the Indemnifying Party's cost.
(b) An Indemnifying Party shall not make any settlement of any claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a settlement: (i)
involving injunctive or other equitable relief against the Indemnified Party or
its assets, employees or business; or (ii) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
5.4 PAYMENT. The Indemnifying Party shall pay to the Indemnified Party
any amounts owed to the Indemnified Party pursuant to this Section 5 within
twenty (20) days after written request from the Indemnified Party to the
Indemnifying Party to make such payment accompanied by appropriate
substantiating documentation. In determining the amount owed hereunder, the
parties shall make appropriate adjustments for tax benefits, insurance proceeds,
and reimbursement or indemnification from other sources. Upon the payment in
full of any claim, the Indemnifying Party shall be subrogated to the rights of
the Indemnified Party against any person, firm or entity with
20
respect to the subject matter of the claim or litigation.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to Closing, of each of the following conditions
precedent (any or all of which may be waived in writing, in whole or in part, by
Buyer):
6.1 PERFORMANCE OF OBLIGATIONS. Seller, Xxxxx and Xxxxx shall have
performed all of the obligations and complied with all of the covenants required
to be performed or to be complied with by them under this Agreement on or prior
to the Closing Date.
6.2 APPROVALS. Seller shall have delivered to Buyer any and all
approvals, consents or assignments necessary for the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required: (i) by any governmental or administrative body; (ii) under any
Material Agreement; (iii) under any insurance policies that Buyer has determined
should continue in force after the Closing; or (iv) under any Permit.
6.3 ACCESS. Buyer shall have had full and complete access during normal
business hours to the properties, assets, books, agreements, files and records
of Seller for the purpose of verifying the information set forth herein. Buyer's
due diligence investigation shall not relieve Seller from any liability in
connection with its representations and warranties set forth in this Agreement.
6.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements and the Seller's most recent compiled financial statements.
6.5 PROPERTY. Except as previously noted, all of Seller's real and
personal property shall be in good operating condition, structurally sound and
in good repair.
6.6 APPROVAL. The board of directors of Seller shall have approved
Seller entering into this Agreement and the consummation of the transactions
contemplated hereby. The board of directors of Buyer shall have approved Buyer
entering into this Agreement and consummation of the transactions contemplated
hereby.
6.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller, any suit, action or other proceeding by any private
party or governmental agency, commission, bureau or body seeking to restrain or
prohibit any of the transactions contemplated by this Agreement.
6.8 ACCRUED EXPENSES AND CONTINGENT LIABILITIES. Seller shall have
resolved, in a manner satisfactory to Buyer in its sole and absolute discretion,
any issues relating to the accrued expenses and contingent liabilities of
Seller.
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6.9 NONCOMPETITION AGREEMENT. (a) Buyer, Seller, Xxxxx and Xxxxx shall
have entered into Noncompetition Agreements prohibiting the Seller, Xxxxx and
Xxxxx from competing with Buyer, for a period from the date of this Agreement
and up to and including May 18, 2003. (b) Buyer and Xxxx Xxxxxxxxx shall have
entered into Noncompetition Agreement prohibiting Xxxx Xxxxxxxxx from competing
with Buyer, for a period of one year following from Completion of Employment.
6.10 DELIVERIES. Seller, Xxxxx and Xxxxx shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
6.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller, Xxxxx and Xxxxx contained in this Agreement shall be true and correct
both at the date on which this Agreement is signed and at and as of the Closing
Date as if made anew at and as of such time. A disclosure in a schedule to this
Agreement shall be deemed a disclosure regarding all matters to which it
relates.
6.12 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion
from counsel of Seller dated as of the Closing Date and in substantially the
form attached as EXHIBIT K hereto.
6.13 EMPLOYMENT AGREEMENTS. Buyer shall have received an employment
agreement from Xxxx Xxxxxxxxx detailing her salary commission and bonus plan,
substantially in the form attached hereto as EXHIBIT H.
6.14 PREPARATION OF FILINGS AND REPORTS. Seller, Xxxxx and Xxxxx shall
have assisted Buyer with the preparation of financial statements, tax filings,
SEC filings and other required reports.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's
obligation to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to Closing, of each of the following
conditions precedent (any or all of which may be waived in writing, in whole or
in part, by Seller):
7.1 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all of its
obligations and complied with all of its covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement shall be true and correct both at the date on
which this Agreement is signed and at and as of the Closing Date as if made at
and as of such time.
7.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in
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Section 2.3 of this Agreement.
8. CERTAIN ADDITIONAL COVENANTS OF SELLER. Seller, Xxxxx and Xxxxx
covenant and agree with Buyer as follows:
8.1 CONDUCT AND TRANSACTIONS PRIOR TO CLOSING. From and after the date
of this Agreement until the Closing Date, except to the extent contemplated by
this Agreement or otherwise consented to in writing by Buyer:
(a) Seller shall operate its business in the same manner as presently
conducted and only in the ordinary and usual course and consistent with past
practice, and will use all reasonable efforts to preserve intact its present
business organization and to keep available the services of all employees,
representatives and agents. Seller shall use all reasonable efforts, consistent
with its past practices, to promote its business and shall not take or omit to
take any action which causes, or which is likely to cause, any deterioration of
their present business or relationships with suppliers or customers.
(b) Seller will maintain all of its properties and assets, tangible or
intangible, in substantially the same condition and repair as such properties
and assets are maintained as of the date hereof, ordinary wear and tear
excepted, and shall take all reasonable steps necessary to maintain and protect
its intangible assets. Seller shall not sell, lease or otherwise dispose of any
of its assets except in the ordinary course of business consistent with past
practice.
(c) Without the prior written consent of Buyer, Seller shall not grant
any salary increase to any employee, or enter into any new or amend or alter any
existing employment agreement or bonus, incentive compensation, medical
reimbursement, life insurance, deferred compensation, profit sharing,
retirement, pension, stock option, group insurance, death benefit or other
fringe benefit plans or other arrangements for its employees.
(d) Seller shall keep its properties and business insured to the same
extent as insured on the date hereof.
(e) Seller shall not take any action or omit to take any action that
could cause (with or without the giving of notice or the passage of time or
both) the breach, default, acceleration, amendment, termination or waiver of or
under any Material Agreement or the imposition of any lien, encumbrance,
mortgage or other claim or charge against the Assets.
(f) Seller will maintain its books, accounts and records in accordance
with good business practice and generally accepted accounting principles
consistently applied.
(g) Seller shall not take any action that would cause its
representations and warranties set
23
forth herein not to be true and correct at and as of the Closing Date as if made
at and as of such time.
(h) Seller shall not declare, set aside or pay any dividend or make any
distribution with respect its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock.
(i) Seller will use its best efforts to obtain the approvals referred
to in Section 6.2 hereto.
(j) At least five (5) days prior to the Closing, Buyer may notify
Seller of those insurance policies referred to in Section 3.15 that Buyer wants
Seller to assign to Buyer, if any, and, upon such notice, Seller shall arrange
for such insurance policies to be assigned to Buyer as of the Closing Date and
for Buyer to be named as the insured thereunder.
(k) Seller shall assume responsibility for the payment of all Federal
and State income tax liabilities incurred through the Closing Date.
(l) In the event that Buyer desires to use and retain the benefit of
Seller's unemployment insurance rating with respect to any employees of Seller
whom Buyer desires to employ, Seller shall cooperate with Buyer with respect to
the taking of any actions which may reasonably be necessary to effectuate or
facilitate the transfer of such rating and to allow Buyer to retain the full
benefit thereof.
(m) Seller shall not otherwise engage in any practice, take any action
or enter into any transaction of the sort described in Section 3.6 of this
Agreement.
8.2 POST-CLOSING COVENANTS.
(a) For a period of Two (2) Years subsequent to the Closing, Seller,
Xxxxx and Xxxxx covenant and agree to provide to Buyer or Buyer's auditors
prompt access to Seller's books, files, records, and financial information; to
cause any of Seller's accountants, attorneys, agents, employees, or
representatives to provide to Buyer or Buyer's auditors prompt access to
records, books, files, and financial information of Seller; and to provide such
other prompt cooperation as may be necessary for Buyer or Buyer's auditors to
prepare, at Buyer's cost, such financial statements of Seller as may be
necessary or desirable in the conduct of Buyer's business, including but not
limited to such financial statements or opinions as may be necessary in any
required filings with the Securities and Exchange Commission.
(b) Seller, Xxxxx and Xxxxx covenant and agree, at their sole cost and
expense, to notify Buyer, for a period of twelve (12) months after the Closing
Date, of any Workers' Compensation Claims reported to Seller or carrier, of
which they have or obtain knowledge, and which relate to work performed prior to
the Closing Date.
(c) Seller, Xxxxx and Xxxxx covenant and agree with Buyer, its
successors and assigns,
24
that they will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, any and all such further acts,
instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of this Agreement.
9. POST-CLOSING COVENANTS OF BUYER.
9.1 BUSINESS LOCATION. (a) Buyer covenants and agrees that it will keep
the two (2) offices constituting the Business in place for the immediate full
twelve (12) months following the Closing Date; (b) For twelve (12) months
following the Closing and the Earnout Period, Buyer agrees that it will allow
Mid-West to use office in Buyer=s leased office at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, for the purpose of recruiting, filling and servicing
Seller=s existing clients and soliciting future clients and may continue to use
the tradename "Mid-West Temps" for the Earnout Period.
9.2 SALES FORCE AND CUSTOMER SERVICE. Buyer covenants and agrees that
until expiration of the Earnout Period the number of sales associates and
customer service representatives will be kept constant with the number employed
on the Closing Date and the sales force commission plans and the customer
service compensation plans will be as described on Schedule 3.17 attached
hereto. The sales territory for Xxxx Xxxxxxxxx will not be reduced for two (2)
years, and the sales territory for others will not be reduced for one (1) year
following Closing.
9.3 TERRITORY; CLOSED ACCOUNTS. Schedule 3.17 defines the territory for
the sales force mentioned above. For four (4) months following the Closing Date,
the accounts, clients or customers outside such territory may be closed and the
person entitled to compensation for such accounts, etc. may receive such amounts
that are due to the time of termination of the account.
10. MISCELLANEOUS.
10.1 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules to
this Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings, agreements, arrangements and understandings, both oral and
written, between the parties hereto with respect to such subject matter. The
Exhibits and Schedules to this Agreement are incorporated into and constitute
part of this Agreement.
10.2 AMENDMENT. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
10.3 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
25
10.4 SURVIVABILITY. Notwithstanding any investigation made by or on
behalf of any party to this Agreement, the representations and warranties made
under and in connection with this Agreement shall be true and correct on and as
of the Closing Date with the same effect as if made on and as of such date and
shall survive the Closing and consummation of all the transactions contemplated
hereby for a period of six (6) years following the Closing Date.
10.5 WAIVERS AND REMEDIES. The waiver by any of the parties hereto of
any other party's prompt and complete performance, or breach or violation, of
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or violation, and the waiver by any of the parties
hereto to exercise any right or remedy which it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
10.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part hereof, all of which are inserted conditionally on their being valid
in law, and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
10.7 DESCRIPTIVE HEADINGS/RECITALS. Descriptive headings contained
herein are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. The recitals are incorporated
into and made a part of this Agreement.
10.8 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts by the separate parties hereto, all of which shall be
deemed to be one and the same instrument. Facsimile signatures shall have the
same effect as original signatures.
10.9 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given: (i) when
delivered by hand; (ii) when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
(iii) five (5) days after being deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
on the second business day after being sent (prepaid for next day delivery), via
Federal Express, United Parcel Service, DHL or other nationally recognized
delivery service, as follows:
If to Seller or Xxxxx and Xxxxx:
26
Xxxxxx Xxxxx
0000 Xxxxx Xxxxxxxx #000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Xxxxxxx Xxxxx
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxxx & Xxxxx
Suite 1800
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
If to Buyer:
OutSource International of America, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx, Esquire
Vice President and General Counsel
OutSource International, Inc.
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
and
Xxxx X. Xxxxxx, Esquire
Katz, Kutter, Haigler, Alderman, et al.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
27
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the parties hereto shall assign any of its rights
or obligations hereunder without the express written consent of the other party
hereto.
10.11 APPLICABLE LAW. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in Accordance with, the laws of the State of
Illinois.
10.12 BROKERS AND AGENTS. Except as stated below, neither Buyer or
Seller has retained any agent or broker with respect to the transaction
contemplated pursuant to this Agreement. Seller has engaged the services of Mr.
Xxxxxxx Xxxxx in connection with this Agreement and Seller shall pay any fee,
charge or commission owing as a result of such engagement. Seller and Buyer
agree to indemnify each other with respect to any claims made by any third party
claiming a brokerage fee or commission arising out of the transaction
contemplated by this Agreement, except for the fee charge or commission to be
paid to Westgate Financial Group, LLC by Seller.
10.13 EXPENSES. Except as otherwise provided herein, each of the
parties hereto agrees to pay all of the respective expenses incurred by it in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including accountants' and attorneys' fees.
10.14 CONFIDENTIALITY. No party hereto shall divulge the existence of
the terms of this Agreement, the transactions contemplated hereby or any
information about another party that such party may have acquired in connection
with the transaction, without the prior written approval of all of the parties
hereto, except and as to the extent: (i) obligated by law, or (ii) necessary for
such party to defend or prosecute any litigation in connection with the
transactions contemplated hereby. The parties hereto acknowledge that any breach
of the foregoing will give rise to irreparable injury that is not compensable in
damages and agree that any party may seek and obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary or
permanent injunction, or any other equitable remedy that may then be available
to such party against the breach or threatened breach of such covenants, in
addition to any other legal remedies which may be available.
10.15 CERTAIN INTERPRETATIONS. Words such as "herein," "hereof,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular Section or subsection of this Agreement. The word
"material" as used in this Agreement shall mean a deviation of more than five
(5%) percent.
10.16 EQUITABLE RELIEF. The parties hereto acknowledge and agree that
any party's remedy
28
at law for any breach or threatened breach of this Agreement which relates to
requiring that the breaching party take any action or refrain from taking any
action, would be inadequate and such breach or threatened breach shall be per se
deemed as causing irreparable harm to such party. Therefore, in the event of
such breach or threatened breach, the parties hereto agree that in absence of an
adequate remedy at law, an aggrieved party shall be entitled to seek and obtain
equitable relief in the form of specific enforcement, temporary restraining
order, temporary permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
10.17 PRESS RELEASE. Except for a release giving notice that the
transaction contemplated hereby has been closed, neither Buyer nor Seller shall
make any public announcement or press release disclosing the terms and
conditions of the transaction contemplated hereby without the written approval
of the other.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
BUYER:
Witness:
OutSource International
of America, Inc.
/S/ XXXXXXX XXXXXXXX By: /S/ XXXXX XXXXXXXX
------------------------- ----------------------
Name: XXXXX XXXXXXXX
--------------------
Title: ZONE VICE-PRESIDENT
-------------------
SELLER:
Witness:
Mid-West Temps, Inc.
By: /S/ XXXXXX X. XXXXX
----------------------
Name: /S/ XXXXXXX XXXXX
--------------------------------
Title: PRESIDENT
29
XXXXX AND XXXXX:
/S/ XXXXXX X. XXXXX
--------------------------
Xxxxxx Xxxxx, individually
/S/ XXXXXXX XXXXX
--------------------------
Xxxxxxx Xxxxx, individually
30
EXHIBIT B
ESCROW AGREEMENT
This Escrow Agreement, dated as of May 18, 1998 (the "Closing Date") by
and among OutSource International of America, Inc., a Florida corporation (the
"Buyer"), Mid-West Temps, Inc., an Illinois corporation (the "Seller"), and The
Chicago Trust Company, an Illinois corporation, as escrow agent ("Escrow
Agent").
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated May
14, 1998, by and among Buyer, Seller, Xxxxxx Xxxxx and Xxxxxxx Xxxxx, Buyer will
purchase substantially all of the assets of Seller (the "Purchase Agreement");
WHEREAS, Buyer is unwilling to consummate the acquisition pursuant to
the Purchase Agreement unless Seller agrees to place nine hundred forty-six
thousand eight hundred dollars ($946,800) in escrow for a term of fourteen (14)
months as security for its indemnification obligations under the Purchase
Agreement; and
WHEREAS, to induce Buyer to enter into the Purchase Agreement and to
consummate the transactions contemplated thereby, Buyer and Seller desire to
execute this Escrow Agreement and to be bound by the terms hereof.
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties do hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent an amount equal to nine
hundred forty-six thousand eight hundred dollars ($946,800.00) in immediately
available funds (as increased by any earnings thereon and as reduced by any
disbursements, amounts withdrawn under Section 5(j), or losses on investments,
the "Escrow Fund"). Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.
2. INVESTMENT OF FUNDS; DISBURSEMENTS OF EARNINGS
(a) The Seller shall have sole discretion to instruct the Escrow Agent
to invest the Escrow Fund in readily marketable securities of any type rated "A"
or better by Standard & Poor's Rating Group or an equivalent rating by any other
nationally recognized rating service (with a maturity date
not greater than twelve (12) months from the date of investment), with any
remainder being deposited and maintained in a money market deposit account with
Escrow Agent, until disbursement of the entire Escrow Fund. Escrow Agent is
authorized to liquidate in accordance with its customary procedures any portion
of the Escrow Fund consisting of investments to provide for payments required to
be made under this Agreement.
(b) Escrow Agent shall make quarterly disbursements to Seller of all
earnings from the investments made pursuant to this Section 2 commencing October
1, 1998 and on each January 1, April 1 and July 1 thereafter.
3. CLAIMS
(a) From time to time on or before July 18, 1999, Buyer shall give
notice (a "Notice") to Seller and Escrow Agent specifying in reasonable detail
the nature and dollar amount of any claim (a "Claim") Buyer is asserting under
Section 1.6(b) of the Purchase Agreement; Buyer may make more than one Claim
with respect to any underlying state of facts. If Seller gives notice to Buyer
and Escrow Agent disputing any Claim (a "Counter Notice") within 30 days
following receipt by Seller of the Notice regarding such Claim, such Claim shall
be resolved as provided in Section 3(b) hereof. If no Counter Notice is received
by Escrow Agent within such 30-day period, then the dollar amount of damages
claimed by Buyer as set forth in its Notice shall be deemed established for
purposes of this Escrow Agreement and the Purchase Agreement and, at the end of
such 30-day period, Escrow Agent shall pay to Buyer the dollar amount claimed in
the Notice from (and only to the extent of) the Escrow Fund. Escrow Agent shall
not inquire into or consider whether a Claim complies with the requirements of
the Purchase Agreement.
(b) If a Counter Notice is given with respect to a Claim, Escrow Agent
shall make payment with respect thereto only in accordance with (i) joint
written instructions of Buyer and Seller or (ii) a final non-appealable order of
a court of competent jurisdiction. Any court order shall be accompanied by a
legal opinion by counsel for the presenting party satisfactory to Escrow Agent
to the effect that the order is final and non-appealable. Escrow Agent shall act
on such court order and legal opinion without further question.
4. TERMINATION OF ESCROW
On July 18, 1999, Escrow Agent shall pay and distribute the then amount
of Escrow Fund to Seller unless any Claims are then pending, in which case an
amount equal to the aggregate dollar amount of such Claims (as shown in the
Notices of such Claims) shall be retained by Escrow Agent in the Escrow Fund and
the balance shall be paid to Seller. If there shall be multiple Claims pending,
and any such Claim shall be resolved by settlement, litigation or otherwise, the
Escrow Agent shall pay and distribute the portion of the Escrow Fund relating to
such resolved Claim in the manner provided for in Section 3(b) above.
2
5. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Fund
held by it hereunder any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Agreement. Uninvested funds held hereunder shall not earn or
accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out of
and in connection with this Agreement. Without limiting the foregoing, Escrow
Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including, without limitation, any liability for any delays
(not resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund, or any loss of interest or
principal incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from this Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number certification, or
non-resident alien certifications. This Section 5(e) and Section 5(b) shall
survive notwithstanding any termination of this Agreement or the resignation of
Escrow Agent.
3
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrow Fund to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or (b)
the day which is 30 days after the date of delivery of its written notice of
resignation to the other parties hereto. If at that time Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow Agent's sole
responsibility after that time shall be to retain and safeguard the Escrow Fund
until receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final non-appealable
order of a court of competent jurisdiction.
(i) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Fund or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until
Escrow Agent shall have received (i) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Escrow Fund in accordance
with such order or agreement. Any court order shall be accompanied by a legal
opinion by counsel for the presenting party satisfactory to Escrow Agent to the
effect that the order is final and non-appealable. Escrow Agent shall act on
such court order and legal opinion without further question.
(j) Buyer and Seller shall pay Escrow Agent compensation (as payment in
full) for the services to be rendered by Escrow Agent hereunder in the amount of
$2,792.00 at the time of execution of this Agreement and agree to reimburse
Escrow Agent for all reasonable expenses, disbursements and advances incurred or
made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of its counsel). Any such
compensation and reimbursement to which Escrow Agent is entitled shall be borne
equally by Buyer and Seller.
4
(k) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers, or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities
depository it reasonably deems appropriate, including, without limitation, the
Depositary Trust Company and the Federal Reserve Book Entry System.
6. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this agreement against Escrow Agent. Escrow Agent
shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
7. OWNERSHIP FOR TAX PURPOSES
Seller agrees that, for purposes of federal and other taxes based on
income, Seller will be treated as the owner of the Escrow Fund, respectively,
and that Seller will report all income, if any, that is earned on, or derived
from, the Escrow Fund as its income, in such proportions, in the taxable year or
years in which such income is properly includible and pay any taxes attributable
thereto.
8. NOTICES
Every notice or other communication required, contemplated or permitted
by this Agreement by any party shall be in writing and shall be delivered either
by personal delivery, telegram, telecopy (provided receipt thereof is confirmed
in writing on the date of receipt by the recipient thereof), private carrier
service or postage prepaid, return receipt requested certified or registered
mail, addressed to the party to whom intended at the following address:
(a) If to Seller:
Mid-West Temps, Inc.
0000 Xxxxx Xxxxxxxx, Xx. 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxx
Fax No. 000.000.0000
5
With a copy to:
Xxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No. 000.000.0000
(b) If to Buyer:
OutSource International of America, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax No. 000.000.0000
With a Copy to:
OutSource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Vice President and General Counsel
Fax No. 000.000.0000
and
Katz, Kutter, Haigler, Alderman, et al.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax No. 000.000.0000
(c) If to Escrow Agent:
Chicago Title and Trust Company
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxxxxx/Xxx Xxxxxxx
Fax No. 000.000.0000
6
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Illinois, Xxxx County and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
11. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
12. WAIVER OF PROVISIONS
The terms, covenants, representations, warranties and conditions of
this Agreement may be waived only by a written instrument executed by the party
waiving compliance. The failure of any party at any time to require performance
of any provision hereof shall, in no manner, affect the right at a later date to
enforce the same. No waiver by any party of any condition, or breach of any
provision, term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any other
provision, term or covenant of this Agreement.
13. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Buyer, the
Seller and the Escrow Agent.
7
14. GOVERNING LAW
The validity, construction and enforceability of this Agreement shall
be governed in all respects by the laws of the State of Illinois, without regard
to its conflict of laws rules.
8
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
OUTSOURCE INTERNATIONAL MID-WEST TEMPS, INC.
OF AMERICA, INC.
By: /S/ XXXXX XXXXXXXX By: /S/ XXXXXX X. XXXXX
---------------------- ---------------------
Name: XXXXX XXXXXXXX Name: XXXXXX X. XXXXX
-------------------- -------------------
Title: ZONE VICE-PRESIDENT Title: PRESIDENT
------------------- ------------------
THE CHICAGO TRUST COMPANY
By:/S/ XXXXXX X. XXXXX
----------------------------
Name: XXXXXX X. XXXXX
-------------------------
Title: SENIOR VICE PRESIDENT
------------------------
9
EXHIBIT C
ADJUSTED GP OF THE BUSINESS
For purposes of Section 1.6 of the Agreement, the Adjusted GP of the Business
will be calculated as:
REVENUE less COST OF SALES
REVENUE: total invoices for services rendered by the Business including, without
limitation, permanent placement fees, during the period commencing at
the opening of business on June 1, 1998 and terminating at the close of
business on May 31, 1999 (the "Earnout Period") that are attributable
to: (i) the accounts of Seller at the Closing Date that are being
purchased pursuant to the Agreement and retained by Buyer (the
"Purchased Accounts"); (ii) all incremental business attributed to the
Purchased Accounts; and (iii) any new accounts secured after the
Closing Date by employees of Buyer who were employees of Seller as of
the Closing Date or any replacements thereof of substitutions therefor
((i) (ii) and (iii) are collectively referred to herrein as the
"Business Accounts"). Revenue, as determined above, shall be adjusted
for credit or debit memos received with respect to such invoices on or
before the last day of the first month following the end of the
applicable twelve month period, provided that any such debit memo or
credit memo is issued in the ordinary course of business consistent
with past practices prior to Closing and is in accordance with
generally accepted accouting principles. In addition to the foregoing,
it is understood and agreed that for purposes of this Exhibit C, if ,
during the Earnout Period, Mid-West secures an order which is wholly or
partially fulfilled out of non-Mid-West offices of Buyer (which, for
this purpose, shall be deemed to include fulfillment by Tandem
personnel at the shared office at 0000 X. Xxxxxxx Xxxxxx in Chicago,
Illinois (the "Shared Office")), then Buyer shall be entitled to
receive 50% if the gross profit attributable to the number of worksite
temporary employees provided by Buyer (and Seller shall only be
chargeable with 50% of the Cost of Sales with respect to such
employees) and, conversely, if Buyer secures an order which is wholly
or partially fulfilled by a Mid-West personnel, whether out of a
Mid-West office or the Shared Office, then the Adjusted GP of the
Business shall be increased by 50% of the gross profit attributable to
the number of worksite temporary employees provided by Mid-West. One
hundred percent (100%) of any business secured by a Mid-West sales
representative and filled by a Mid-West personnel, whether out of a
Mid-West office or the Shared Office, shall be included within Revenue
hereunder.
COST OF
SALES:(1) the sum of:
/bullet/ Gross Payroll of all worksite temporary employees working at
the Business Accounts; provided, however, that in any
instance where only 50% of the revenue is included within
Revenue hereunder, then only 50% of any such Gross Payroll
shall be included within Cost of Sales hereunder.
/bullet/ All employment related taxes paid by Buyer attributable to
worksite temporary employees working at the Business Accounts,
including, but not limited, to FICA, SUTA (Seller's rates) and
FUTA; provided, however, that in any instance where only 50%
of the revenue is included within Revenue hereunder, then only
50% of any such employment related taxes shall be included
within Cost of Sales hereunder.
/bullet/ WORKERS' COMPENSATION EXPENSE relating to worksite temporary
employees working at the Business Accounts (based upon
Seller's 1998/1999 rates as set forth on page 5 of the May 1,
1998 proposal from Wausau Underwriters Insurance Company, a
copy of which is attached hereto); provided, however, that in
any instance where only 50% of the revenue is included within
Revenue hereunder, then only 50% of any such Workers'
Compensation expenses shall be included within Cost of Sales
hereunder.
/bullet/ BAD DEBT relating to the Business Accounts. For purposes
hereof, a bad debt shall be deemed to mean solely the gross
profit amount on the amount of any invoice for the related
Business Accounts which is either written off as uncollectible
for the Earnout Period, or which is outstanding for more than
ninety (90) days as of August 31, 1999, plus 10% of such
uncollectible amount; provided however, then in any instance
where only 50% of the revenue is included within Revenue
hereunder, then only 50% of the bad debt (as defined above)
shall be included within Cost of Sales hereunder. The write
off of any invoice as uncollectible shall be made in the
ordinary and usual course of business on the basis of criteria
which is consistent with Seller's past practice prior to the
Closing date and which is in accordance with generally
accepted accounting principles.
----------
(1) For the purposes of the 1997-1998 base period gross profit calculation,
actual worker' compensation expenses are to be used.
2
EXHIBIT M
STATE OF ILLINOIS
COUNTY OF XXXX
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT made and entered into this 18th day of May, 1998, by and
between OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida corporation whose
address is 0000 Xxxx Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx 00000
("OutSource"),and XXXXXX XXXXX whose address is 0000 Xxxxx Xxxxxxxx #000,
Xxxxxxx, Xxxxxxxx 00000 ("Xxxxx").
STATEMENT OF BACKGROUND INFORMATION
OutSource has acquired and intends to operate a certain business (the
"Business") formerly known as Mid-West Temps, Inc. in Chicago, Illinois. Xxxxx
desires to render consulting services to OutSource in connection with the
Business. OutSource desires to engage the services of Xxxxx for such purpose.
The parties desire to state their intentions with respect to such engagement in
this Agreement.
STATEMENT OF AGREEMENT
For the consideration stated below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
OutSource and Xxxxx agree:
1. ENGAGEMENT: OutSource hereby engages Xxxxx to assist OutSource by
providing consulting services (the "Services") in connection with the Business.
The Services are to consult with and advise OutSource regarding the Business,
its clients, methods of operating, sources of revenue
1
and other general business concerns. Xxxxx accepts such engagement and agrees to
perform the Services as set forth herein.
2. CONSIDERATION: The consideration for this Agreement is the benefit
received by Xxxxx under the terms of that certain Asset Purchase Agreement dated
May 14, 1998 between and among OutSource, Mid-West Temps, Inc., Xxxxx and
Xxxxxxx Xxxxx. No further fee or payment is to be made to Xxxxx under this
Agreement.
3. OUTSOURCE'S DIRECTION: Xxxxx shall perform the Services as
reasonably requested by OutSource, but Xxxxx shall not be required to devote any
set number of hours or minimum time to provide the Services, only to consult
with and advise OutSource in good faith regarding the Business. Xxxxx shall be
reimbursed by OutSource for her reasonable business expenses incurred with the
approval of OutSource in connection with the Services.
4. CONTRACTS: Xxxxx shall not enter into any contracts with any party
in the name of OutSource. Xxxxx shall have no authority to bind OutSource to any
contract or agreement, or to acquiesce in any action on behalf of OutSource.
Xxxxx shall have no authority to obligate OutSource for any cost, expense, or
indebtedness.
5. TERM OF AGREEMENT: The term of this Agreement shall commence on the
date hereof and shall continue for one year from the date of this Agreement.
6. PROCEDURE ON TERMINATION. On the termination of this Agreement,
Xxxxx shall account to and deliver to OutSource all materials, supplies,
equipment, contracts, documents, and other items in her possession related to
the Services and furnish all information and take all further reasonable action
that OutSource may reasonably request to effectuate an orderly and systematic
termination of Xxxxx'x responsibilities hereunder.
2
7. NO PARTNERSHIP. OutSource and Xxxxx shall not and do not by this
Agreement in any way or for any purpose become partners, nor shall either be or
become a joint venturer or member of a joint enterprise with the other. Xxxxx is
an independent contractor and not an employee of OutSource.
8. NOTICES: All notices required, permitted, or given under this
Agreement shall be in writing and shall be deemed given when personally
delivered or deposited in the United States Mail, postage prepaid, return
receipt requested and addressed to the parties at their address stated above.
9. MISCELLANEOUS: This Agreement has been made and entered into under
the laws of the State of Illinois and shall be enforced and construed in
accordance with Illinois law. This Agreement shall be binding upon and inure to
the benefit of OutSource and Xxxxx and their respective heirs, legal
representatives, successors, and assigns. This Agreement, together with the
attachments hereto, constitutes the sole agreement between OutSource and Xxxxx
with respect to the matters contained herein and shall not be modified except by
a writing signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by OutSource and
Xxxxx as of the day written above.
3
Signed, sealed and delivered
in the presence of:
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
/S/ XXXXXXX XXXXXXXX By: /S/ XXXXX XXXXXXXX
---------------------------- -------------------------------
Its: ZONE VICE-PRESIDENT
---------------------------- ------------------------------
/S/ XXXXXX X. XXXXX
---------------------------- -----------------------------------
XXXXXX XXXXX
4
STATE OF ILLINOIS
COUNTY OF XXXX
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT made and entered into this 18th day of May, 1998, by and
between OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida corporation whose
address is 0000 Xxxx Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx 00000
("OutSource"),and XXXXXXX XXXXX whose address is 0000 Xxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxx 00000 ("Xxxxx").
STATEMENT OF BACKGROUND INFORMATION
OutSource has acquired and intends to operate a certain business (the
"Business") formerly known as Mid-West Temps, Inc. in Chicago, Illinois. Xxxxx
desires to render consulting services to OutSource in connection with the
Business. OutSource desires to engage the services of Xxxxx for such purpose.
The parties desire to state their intentions with respect to such engagement in
this Agreement.
STATEMENT OF AGREEMENT
For the consideration stated below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
OutSource and Xxxxx agree:
1. ENGAGEMENT: OutSource hereby engages Xxxxx to assist OutSource by
providing consulting services (the "Services") in connection with the Business.
The Services are to consult with and advise OutSource regarding the Business,
its clients, methods of operating, sources of revenue and other general business
concerns. Xxxxx accepts such engagement and agrees to perform the Services as
set forth herein.
5
2. CONSIDERATION: The consideration for this Agreement is the benefit
received by Xxxxx under the terms of that certain Asset Purchase Agreement dated
May 14, 1998 between and among OutSource, Mid-West Temps, Inc., Xxxxx and
Xxxxxxx Xxxxx. No further fee or payment is to be made to Xxxxx under this
Agreement.
3. OUTSOURCE'S DIRECTION: Xxxxx shall perform the Services as
reasonably requested by OutSource, but Xxxxx shall not be required to devote any
set number of hours or minimum time to provide the Services, only to consult
with and advise OutSource in good faith regarding the Business. Xxxxx shall be
reimbursed by OutSource for her reasonable business expenses incurred with the
approval of OutSource in connection with her Services.
4. CONTRACTS: Xxxxx shall not enter into any contracts with any party
in the name of OutSource. Xxxxx shall have no authority to bind OutSource to any
contract or agreement, or to acquiesce in any action on behalf of OutSource.
Xxxxx shall have no authority to obligate OutSource for any cost, expense, or
indebtedness.
5. TERM OF AGREEMENT: The term of this Agreement shall commence on the
date hereof and shall continue for one year from the date of this Agreement.
6. PROCEDURE ON TERMINATION. On the termination of this Agreement,
Xxxxx shall account to and deliver to OutSource all materials, supplies,
equipment, contracts, documents, and other items in her possession related to
the Services and furnish all information and take all further reasonable action
that OutSource may reasonably request to effectuate an orderly and systematic
termination of Xxxxx'x responsibilities hereunder.
7. NO PARTNERSHIP. OutSource and Xxxxx shall not and do not by this
Agreement in any way or for any purpose become partners, nor shall either be or
become a joint venturer or member
6
of a joint enterprise with the other. Xxxxx is an independent contractor and not
an employee of OutSource.
8. NOTICES: All notices required, permitted, or given under this
Agreement shall be in writing and shall be deemed given when personally
delivered or deposited in the United States Mail, postage prepaid, return
receipt requested and addressed to the parties at their address stated above.
9. MISCELLANEOUS: This Agreement has been made and entered into under
the laws of the State of Illinois and shall be enforced and construed in
accordance with Illinois law. This Agreement shall be binding upon and inure to
the benefit of OutSource and Xxxxx and their respective heirs, legal
representatives, successors, and assigns. This Agreement, together with the
attachments hereto, constitutes the sole agreement between OutSource and Xxxxx
with respect to the matters contained herein and shall not be modified except by
a writing signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by OutSource and
Xxxxx as of the day written above.
Signed, sealed and delivered in the presence of:
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.
By: /S/ XXXXX XXXXXXXX
--------------------------------
/S/ XXXXXXX XXXXXXXX Its: ZONE VICE-PRESIDENT
------------------------------- ------------------------------
/S/ XXXXXXX XXXXX
------------------------------- ------------------------------------
XXXXXXX XXXXX
7
