May 7, 1999
VIA FACSIMILE : 000-000-0000
----------------------------
Xx. Xxxx X. Xxxxxxx
President, Chief Executive Officer, and Chairman
Outsource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Re: Outsource International, Inc. (the "Company")
Dear Xxxx:
This letter agreement sets forth the services to be provided by
Crossroads Capital Partners LLC ("Crossroads") to the Company and the terms and
conditions under which such services will be performed (the "Engagement"). All
references in this letter agreement to Crossroads shall include officers,
executives, owners, members, agents, and employees of Crossroads, and
independent contractors retained by Crossroads, if any.
Scope of Services. Outsource International, Inc. has experienced significant
growth through acquisition, and has had to integrate divergent systems and
cultures. Successful integration of the acquisitions, overall company
performance, and stock price improvement are key challenges for the Company. The
Engagement will support the development of a revised business strategy to meet
these objectives by reviewing in depth the existing business plan and
determining financial and operational improvement opportunities, focusing on the
following:
o Business plan and its implementation
o Financial analysis and potential improvement areas
o Evaluation of facilities, personnel, and technology
o Potential process improvements
o Cost savings opportunities
o Organization structure
o Short term and longer term sales and marketing plans
Outsource International, Inc.
May 7, 1999
Page 2 of 15
To implement this evaluation, Crossroads will present a written and an oral
report addressing the above-mentioned issues, based upon completing the
following:
o Perform approximately 6-12 site visits at selected key offices;
o Review key processes, systems, and organization structure for
operations;
o Interview key management and staff, and collect appropriate data from
these areas to determine as-is processes, level of performance, and
performance improvement opportunities;
o Conduct an analysis of financial structure and resources;
o Produce recommendations that address the identified issues.
1. Fees. Crossroads will provide to the Company the services of
Professionals to be named or suitable additions or replacements as determined by
Crossroads, on the following terms:
Xxxxxxx Xxxxxx, Principal in Charge $250 per hour
(1) Director $250 per hour
Xxxxxx Xxxxxx, Consultant $200 per hour
Other Consultants $175 per hour
(a) Crossroads shall charge hourly for the consulting services
described above for the Engagement (exclusive of expenses). The Company shall
pay $25,000 as a retainer due upon signing this letter agreement. The balance of
Crossroads' fees shall be paid within five business days after delivery of the
report referred to in Paragraph 2 below.
(b) Crossroads anticipates using two full-time and one part-time
Professionals to provide services for the Engagement. Crossroads shall use any
additional full-time Professionals, if required, with the prior approval of the
Company.
(c) The Company shall pay all expenses incurred by Crossroads for
services related to the Company (e.g., actual out of pocket expenses such as
communications, travel, meals, and living expenses incurred in connection with
the Engagement). These fees will be paid upon submission of an invoice by
Crossroads. Crossroads shall reasonably endeavor to keep travel expenses to an
economical level by traveling at coach fares, using moderate-priced hotels, and
the like.
(d) Crossroads may arrange to provide to the Company the services of
other professionals (the "Other Professionals") as determined by Crossroads and
the Company, to provide consulting services to assist the Company in resolving
its present issues on the following terms:
Principal(s) $ 300-350 per hour
Director(s) $ 250 per hour
Other Consultant(s) $ 175 - $195 per hour
Outsource International, Inc.
May 7, 1999
Page 3 of 15
Failure of the Company to promptly pay amounts due for services
rendered or for reimbursement of expenses shall constitute justification for
Crossroads to terminate this letter agreement upon five days' written notice.
2. Term of Engagement. The term of the Engagement shall commence
off-site as of May 10, 1999 and on-site at the Company on or about May 18, 1999.
The anticipated completion date shall be approximately four weeks from the
commencement date. This letter agreement may be terminated by either party upon
five days' written notice, with payment due to Crossroads for services rendered
and expenses incurred through the termination.
The schedule of work is anticipated to be as follows:
----------------- ------------------------------------ ------------------------------------------------
Week 1 May 10-14 Off-site financial and business analysis
----------------- ------------------------------------ ------------------------------------------------
Week 2 May 18-21 Deerfield Beach
----------------- ------------------------------------ ------------------------------------------------
Week 3 May 24-28 Field
----------------- ------------------------------------ ------------------------------------------------
Week 4 June 1-4 Deerfield Beach wrap-up
----------------- ------------------------------------ ------------------------------------------------
REPORT Deliver no later than June 11
----------------- ------------------------------------ ------------------------------------------------
3. Transaction Fee. If Crossroads is requested to assist with a
financing transaction, the terms of a Transaction Fee shall be negotiated and
set forth in a separate agreement.
THE ADDITIONAL TERMS AND CONDITIONS ATTACHED TO THIS LETTER
AGREEMENT ARE HEREBY MADE PART OF THIS LETTER AGREEMENT AS THOUGH FULLY SET
FORTH HEREIN.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
Outsource International, Inc.
May 7, 1999
Page 4 of 15
If you agree to the terms and conditions set forth above,
please indicate your acceptance and approval by signing this letter in the space
provided below and on the duplicate copy attached.
Crossroads looks forward to serving you in this important
matter.
Very truly yours,
CROSSROADS CAPITAL PARTNERS LLC
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Xxxxxx X. Xxxxx
Managing Principal
AGREED AND ACCEPTED:
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx Xxxxxxx
CFO & Treasurer
Date: May 10, 1999
Outsource International, Inc.
May 7, 1999
Page 5 of 15
ADDITIONAL TERMS AND CONDITIONS
Amounts Not Paid. All amounts not paid when due will bear interest at
an annual rate of 12% or the maximum rate allowed by law, whichever is greater.
Agreement Not to Employ. Crossroads' business is in part centered on
its ability to identify and secure the services of talented personnel for its
client companies. Absent an agreement with Crossroads providing it fair
compensation, Crossroads would suffer serious economic harm were its client
companies to hire directly or through other companies Crossroads' employees or
independent contractors. The Company, its board members, officers and affiliates
agree that during the term of this letter agreement and for twelve months
thereafter they shall not, directly or indirectly, solicit, offer employment to
or hire any employee or independent contractor of Crossroads or its affiliates
who are or were involved on behalf of Crossroads on the Engagement. If the
Company and Crossroads agree that the Company may hire Officer or any other
Crossroads' employee or independent contractor, notwithstanding the prohibition
in the immediately preceding sentence, and such hiring occurs within twelve
months after the terminations of this letter agreement, the Company shall pay
Crossroads one-half of the intended first year's compensation payable to the
Officer or other Crossroads employee or independent contractor, but not less
than $500,000. Any such payment shall be made on the date Officer or other
Crossroads' employee or independent contractor begins work for the Company.
Warranties and Indemnification. Crossroads neither expresses nor
implies any warranties of its work nor predicts results of the Engagement.
Crossroads has not offered any assurances that the efforts to resolve the
financial, structural or management issues facing the Company can or will be
successful.
Crossroads shall not be subject to any liability to the Company for any
act or omission relating to, in connection with or arising out of services
rendered hereunder, unless Crossroads' acts or omissions constitute malfeasance,
gross negligence or the reckless disregard of Crossroads' obligations or duties
hereunder. In furtherance of the foregoing, the Company agrees and covenants
that it will not initiate any legal or administrative proceedings whatsoever
against Crossroads relating to, in connection with or arising from the services
rendered hereunder seeking more than the amount of the fees actually paid to
Crossroads for the Engagement.
The Company releases, indemnifies and holds Crossroads harmless from
and against any losses, claims, damages or liabilities ("Losses") to which
Crossroads may become subject and shall reimburse Crossroads for any legal or
other expenses (including the cost of any investigations and the hiring of any
accountant or other experts) reasonably incurred by Crossroads relating to, in
connection with or arising from the services rendered hereunder, whether or not
resulting in any liability, unless such Losses resulted in whole or in part from
Crossroads' malfeasance, gross negligence or the reckless disregard of its
obligations or duties hereunder.
Legal Proceedings. If after the termination of the Engagement
Crossroads is requested and agrees or is required to participate in any manner
in legal or administrative proceedings regarding the Company, compensation shall
be paid to Crossroads for its time at the hourly rates specified herein.
Accuracy of Information. The Company will use reasonable efforts to
assure that all information, financial or otherwise, provided by or on behalf of
the Company with respect to the Engagement (the "Information") to Crossroads
will, as of its respective dates, be accurate and complete in all its material
respects. The Company understands that Crossroads will not be responsible for
independently verifying the accuracy of the Information. The Company assumes
full responsibility for inaccuracies in any Information provided by or on behalf
of the Company to Crossroads or any third party. The Company will reasonably
cooperate with Crossroads in all phases of Crossroads' services under the
Engagement. Specifically, without limiting the generality of the foregoing, if
at any time during the Engagement, the Company discovers that any of the
Information is inaccurate in any material respect it will immediately notify
Crossroads.
Work Output. Crossroads' work product, including, but not limited to,
computer generated business models,
Outsource International, Inc.
May 7, 1999
Page 6 of 15
schedules, work papers and internal memoranda and other material
assembled or prepared by Crossroads during the Engagement ("Work Product") will
be and remain the property of Crossroads. Any materials furnished by Crossroads
to the Company may be retained by the Company as part of the Company's permanent
corporate records. Any records of the Company obtained by Crossroads will be
returned to the Company at the conclusion of the Engagement. Crossroads agrees
to provide copies of all Work Product to the Company at the conclusion of the
Engagement at the Company's expense.
Future Engagements. Crossroads has offices throughout the United
States. Crossroads is or expects to be engaged by other clients from time to
time and cannot assure that, following the Engagement, an engagement will not be
accepted elsewhere for an interested party.
Independent Contractor. The Company acknowledges that Crossroads is
being retained as an independent contractor to the Company and no employment
relationship, partnership, joint venture or other association shall be deemed
created by this letter agreement.
Confidentiality. During the term of the Engagement and thereafter,
Crossroads shall keep secret and retain in strictest confidence, any and all
confidential information relating to the Company or of which Crossroads shall
obtain knowledge by reason of the Engagement, including, without limitation,
trade secrets, customer lists, financial plans or projections, pricing policies,
marketing plans or strategies, business acquisition or divestiture plans, new
personnel acquisition plans, technical processes and other research projects.
Crossroads shall not, except in connection with the performance of its duties
hereunder, disclose any such information to anyone outside the Company, except
as required by law (provided prior written notice thereof is given by Crossroads
to the Company) or except with the Company's prior written consent, which shall
not be unreasonably withheld or delayed. The obligations of Crossroads in this
paragraph shall not apply to information which is (i) known generally to the
public; (ii) known to Crossroads prior to the date of this letter agreement;
(iii) lawfully disclosed to Crossroads by a third party; or (iv) generally known
in the industry in which the Company is engaged.
The Company shall not, except as required in the conduct of its
business, disclose any Work Product to any third party other than the Company's
lenders, attorneys and advisors or as otherwise required by law, without the
prior written consent of Crossroads, which consent shall not be unreasonably
withheld or delayed.
Agreement to Mediate / Arbitrate. The parties agree to mediate any
dispute or claim arising between them out of the Engagement or any resulting
transaction before resorting to arbitration or court action. Mediation is a
process by which parties attempt to resolve a dispute or claim by submitting it
to an impartial, neutral mediator, who is authorized to facilitate the
resolution of the dispute, but who is not empowered to impose a settlement on
the parties. Mediation fees, if any, shall be divided equally among the parties
involved. Evidence of anything said, any admission made, and any documents
prepared, in the course of the mediation, shall not be admissible in evidence,
or subject to discovery in any arbitration or court action. If any party
commences an arbitration or court action based on a dispute or claim to which
this paragraph applies without first attempting to resolve the matter through
mediation, then in the discretion of the arbitrator(s) or judge, that party
shall not be entitled to recover attorneys' fees, even if they would otherwise
be available to that party in any such arbitration or court action. The parties
agree that any dispute or claim in law or equity arising out of or in connection
with the Engagement, which is not settled through mediation, shall be decided by
neutral, binding arbitration and not by court action, except as provided by law
for judicial review of arbitration proceedings. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association
(AAA). Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. The parties shall have no right to
discovery. Each party in any arbitration shall be responsible for its own
attorneys' fees and costs. Notwithstanding any of the above, Company may seek
injunctive relief in a court of law without first having to mediate or arbitrate
to enforce the confidentiality provisions of this letter agreement.
Notices. The Company agrees that Crossroads shall have the right to use
the Company's name and logo in a description of the services provided by
Crossroads under the letter agreement for promotional purposes only.
Outsource International, Inc.
May 7, 1999
Page 7 of 15
Entire Agreement; Amendment and Waiver; Applicable Law; Headings. The
letter agreement contains the entire understanding between the parties with
respect to its subject matter. The letter agreement may not be amended,
modified, supplemented or waived, except by a written instrument signed by the
parties. No waiver of any provision of the letter agreement shall be deemed or
shall constitute a waiver of any other provision, nor shall such waiver
constitute a continuing waiver. The paragraph headings in the letter agreement
and the Additional Terms and Conditions are for informational purposes only.
Outsource International, Inc.
Page 8 of 15
June 18, 1999
VIA FACSIMILE : 000-000-0000
----------------------------
Xx. Xxxx X. Xxxxxxx
President, Chief Executive Officer, and Chairman
Outsource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Re: Addendum to Crossroads Letter Agreement dated May 7, 1999
Dear Xxxx:
Reference is made to the letter agreement dated May 7, 1999 (the
"Letter Agreement") between Outsource International, Inc. ("Client") and
Crossroads Capital Partners LLC, its employees, independent contractors and
agents ("Crossroads").
This will amend the Letter Agreement by adding the following:
1) Scope of Services.
Crossroads shall provide the following additional services (the
"Additional Services":
(a) Crossroads shall work with the Client's management team to verify
cash flow projections, and shall report its findings to management and the
secured lending group.
(b) Subject to a revised compensation agreement to be dated no later
than June 28, 1999 and satisfactory to Client and Crossroads, Crossroads shall
assist with the implementation of any of the recommendations Crossroads provided
to Client. The recommendations are based upon Crossroads' report of findings
associated with the Engagement described in the Letter Agreement dated May 7,
1999.
Outsource International, Inc.
Page 9 of 15
2) Term of Engagement and Fees.
(a) The Additional Services shall commence on June 21, 1999 and shall
continue until terminated by either party upon five days' written
notice.
(b) Fees and expenses for the Additional Services shall be invoiced
bi-weekly and are payable upon receipt.
3) This Addendum incorporates by reference all of the terms and conditions
contained in the Letter Agreement dated May 7, 1999.
If you agree to the terms and conditions set forth above, please
indicate your acceptance and approval by signing this letter in the space
provided below and on the duplicate copy attached.
Crossroads looks forward to serving you in this important matter.
Very truly yours,
CROSSROADS CAPITAL PARTNERS LLC
By: /s/ Xxxxxx Xxxxx
--------------------
Xxxxxx X. Xxxxx
Managing Principal
AGREED AND ACCEPTED:
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
Date:
Outsource International, Inc.
Page 10 of 15
July 1, 1999
VIA FEDERAL EXPRESS
-------------------
Xx. Xxxx X. Xxxxxxx
President, Chief Executive Officer, and Chairman
Outsource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Re: Second Addendum to Crossroads Letter Agreement
dated May 7, 1999 - Phase II
Dear Xxxx:
Reference is made to the letter agreement dated May 7, 1999 (the
"Letter Agreement") between Outsource International, Inc. ("the Company") and
Crossroads Capital Partners LLC, its employees, independent contractors and
agents ("Crossroads").
This will amend the Letter Agreement by adding the following ("Phase II"):
2) Scope of Services.
Crossroads shall provide the following additional services (the
"Additional Services") and shall report periodically to the Board of Directors
and the secured lenders. Crossroads shall develop a revised business plan based
upon the recommendations from the previous Engagement report (Phase I). The
Additional Services are expected to focus on the following:
a) Develop a plan for the under-performing branches.
b) Raise sub-debt (see attached Finder's Agreement between Crossroads
and the Company)
c) Assist in the selection of a non-vendor Information Technology (IT)
consultant to assess IT strategy
Outsource International, Inc.
Page 11 of 15
d) Assist in the selection of an organizational behavior firm to study
culture, assess employees, observe progress, mediate management
disagreements, and make recommendations to the Board of Directors.
e) Form and facilitate a committee tasked to study current markets to
determine which ones to grow.
f) Form and facilitate a committee tasked to determine which markets to
franchise.
g) Form and facilitate a committee tasked to determine what functions
could be decentralized; examine competition.
h) Assist in building a cash-flow model, update existing business
models, and draft a revised business plan.
i) Develop "flash" reports for use by secured lenders and Board of
Directors.
j) Identify key factors to measure the business.
k) Other such tasks as assigned by the Board of Directors and accepted
by Crossroads.
2) Term of Engagement and Fees.
(a) The Additional Services shall commence on July 1, 1999 and shall
continue until terminated by either party upon fifteen days'
written notice.
Crossroads' Engagement team shall be led by Xxxx Xxxx,
Principal; Xxxxxxx Xxxxxx, Principal; Xxx Xxxxxxxx, Principal;
and shall include other Professionals as determined by
Crossroads, at a monthly fee of $125,000 for the first four
months of Phase II. If the Synadyne Division is sold within
the first 90 days of the Engagement, Crossroads will review
the staffing requirements and fee structure. The fee shall be
subject to negotiation for the period after October 31, 1999.
(b) Fees and expenses for the Additional Services shall be invoiced
bi-monthly, and are payable on the 1st and 15th of each month.
(c) The Company shall pay $50,000 as a retainer due upon signing
this Addendum. The retainer is not to be applied or credited
to amounts due from the Company, but will be returned to the
Company once all amounts due hereunder are paid in full.
Outsource International, Inc.
Page 12 of 15
3) Disclosures. As we have discussed, Crossroads has represented, and
will in the future represent, many different clients with various business
interests in numerous industries. These clients are often referred to Crossroads
by intermediaries such as lawyers, investment bankers, lenders and accountants.
("Referral Sources"). In undertaking the Engagement on behalf of the Company,
Crossroads' objective is to provide services for the Company to the best of its
ability, but without precluding Crossroads from representation of other clients
or in accepting referrals from or making referrals to Referral Sources. Since
Crossroads wants the Company to be comfortable with the retention of Crossroads
in light of other client and Referral Sources relationships, Crossroads makes
the following disclosures, based on the list provided by the Company of parties
with an interest in the Engagement attached to this letter agreement as Schedule
1:
>> BankBoston is a referral source for Crossroads and is a member of
the Bank group in an unrelated matter.
>> LaSalle Bank is a referral source for Crossroads and is a member of
the Bank group in an unrelated matter.
>> Suntrust Bank is a referral source for Crossroads and is a member of
the Bank group in an unrelated matter.
>> Comerica Bank is a referral source for Crossroads and is a member of
the Bank group in an unrelated matter.
>> Fleet Bank is a referral source for Crossroads and is a member of
the Bank group in an unrelated matter.
>> Xxxxxxx, Xxxx is a referral source for Crossroads and represented
creditors in an unrelated matter.
4) This Addendum incorporates by reference all of the terms and conditions
contained in the Letter Agreement, which shall remain unchanged and in full
force and effect, as amended by this Addendum.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
Outsource International, Inc.
Page 13 of 15
If you agree to the terms and conditions set forth above, please
indicate your acceptance and approval by signing this letter in the space
provided below and on the duplicate copy attached.
Crossroads looks forward to serving you in this important matter.
Very truly yours,
CROSSROADS CAPITAL PARTNERS LLC
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Xxxxxx X. Xxxxx
Managing Principal
AGREED AND ACCEPTED:
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
Date: 7/2/99
Outsource International, Inc.
Page 14 of 15
August 2, 1999
VIA FEDERAL EXPRESS
-------------------
Xx. Xxxx X. Xxxxxxx
President, Chief Executive Officer, and Chairman
Outsource International, Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Re: Third Addendum to Crossroads Letter Agreement
dated May 7, 1999
Dear Xxxx:
Reference is made to the letter agreement dated May 7, 1999 (the
"Letter Agreement") between Outsource International, Inc. ("the Company") and
Crossroads Capital Partners LLC, its employees, independent contractors and
agents ("Crossroads").
This will amend the Letter Agreement by adding the following ("Additional
Services"):
1) Scope of Services.
Crossroads will provide to the Company the services of X. X. "Xxxx"
Ball, Crossroads Principal or a suitable replacement ("Officer") as determined
by Crossroads. Officer will serve as the Company's Interim Chief Operating
Officer ("COO") and President of the Tandem division on the following terms:
(a) Officer shall perform the ordinary duties associated with the role
of Interim Chief Operating Officer and shall report to the
Company's Board of Directors. As Interim COO, Officer shall
have the full authority to operate the Company. The Company,
Crossroads and Officer recognize that the number of hours devoted
to the Engagement by Officer will fluctuate based upon the
activities in progress.
Outsource International, Inc.
Page 15 of 15
(b) Officer shall be covered by the Company's Directors and
Officers insurance liability policy (the "D&O Policy"), to the
extent the Company obtains and maintains such insurance. Officer
shall be added as an additional named insured party under the D&O
Policy. The Company agrees to purchase a "tail policy" to the D&O
Policy covering a period of time of not less than one year after
the conclusion of the Engagement. The Company will deliver to
Crossroads prior to the commencement of the Engagement a
Certificate of Insurance evidencing such coverage.
2) This Addendum incorporates by reference all of the terms and
conditions contained in the Letter Agreement and Addenda, which shall remain
unchanged and in full force and effect, as amended by this Addendum.
If you agree to the terms and conditions set forth above, please indicate your
acceptance and approval by signing this letter in the space provided below and
on the duplicate copy attached.
Crossroads looks forward to serving you in this important matter.
Very truly yours,
CROSSROADS CAPITAL PARTNERS LLC
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Xxxxxx X. Xxxxx
Managing Principal
AGREED AND ACCEPTED:
By: /s/ Xxxx X. Xxxxxxx
--- -------------------
Xxxx X. Xxxxxxx
Chief Executive Officer
Date: __________________________
