ASSET PURCHASE
AGREEMENT
JESCO TECHNICAL SERVICES, INC.
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ASSET PURCHASE AGREEMENT
COME NOW, Xxxxx & Associates, Inc., a New Mexico corporation at 0000
Xxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxxxxxxxxx, Xxx Xxxxxx, 00000 (hereinafter
referred to as "Buyer"); Buyer's parent company, SOS Staffing Services, Inc., a
Utah corporation at 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000
(hereinafter referred to as "SOS"); JesCo Technical Services, Inc., a Washington
corporation at 00000 X.X. 0xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx, 00000
(hereinafter referred to as "Seller"); and Xxxx X. Xxxxxxxx (hereinafter
collectively referred to as "Principal") and agree as follows:
WITNESSETH:
WHEREAS, Seller owns the assets and business set out in Article 1 and
Exhibits A and B herein and desires to sell them to Buyer;
WHEREAS, Principal is an officer of Seller, is authorized to vote all of
the outstanding shares of Seller, is Seller's sole shareholder and stands to
benefit from Seller transferring said assets to Buyer;
WHEREAS, Buyer desires to purchase said assets and business from Seller
for cash and other consideration;
WHEREAS, the parties desire to enter into a written Agreement describing
and setting forth the terms and conditions under which they will transfer
ownership of said assets and business;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and conditions hereinafter set forth, and for other good and valuable
consideration, the parties agree as follows:
1. Buyer agrees to purchase and Seller agrees to sell, convey, transfer, and
deliver to Buyer the business and assets as set out more specifically in
Exhibits A and B which are hereby incorporated by reference as if fully set
forth herein (the "Assets" or "Business"). Buyer is only purchasing the assets
set forth on Exhibits A and B. Seller is conveying to Buyer only the assets
listed on Exhibits A and B. The Assets specifically exclude Seller's cash, cash
equivalents, accounts receivable for any services provided prior to the date of
Closing, workers' compensation deposits and bank accounts as of the Closing date
of this Agreement and shall not be transferred hereby to Buyer. The Assets also
specifically exclude personal property of the Principal, including those
software packages identified in Exhibit C. Assets not referenced or identified
on Exhibits A or B shall not be transferred to Buyer.
Seller agrees to sell or convey to Buyer and Buyer hereby agrees to purchase and
assume the equipment leases, third party contracts and/or other liabilities
listed in Exhibit D of this Agreement. Seller shall remain fully responsible and
liable for all liabilities, except for the liabilities specifically identified
on Exhibit D, which Buyer hereby agrees to assume. With respect to the
liabilities identified in Exhibit D, Buyer is assuming only those liabilities
arising after the Closing of this Agreement. Seller shall remain responsible for
all liabilities, including those listed in Exhibit D, to the extent performance
is required before the Closing. Buyer does not in any way or manner assume any
debt, liability, or obligation of Seller, other than those set forth in Exhibit
D, whether known or unknown, whether asserted or un-asserted, whether absolute
or contingent. Buyer hereby specifically assumes the obligations for real
property leases, contingent upon each respective landlord's approval, arising
after Closing for the real property referenced in Exhibit A, to wit: the real
property leases for the demised premises located at 00000 X.X. 0xx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxxxx, 00000 and 00000 XX 000xx Xxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx, 00000.
The parties acknowledge that there have been certain accruals, advances and
pre-payments made by Seller. The disposition of such accruals, advances and
pre-payments shall be as described in Schedule 1.0 hereto.
2. In consideration for receiving said assets and in consideration of the
representations, warranties, and covenants of Seller set forth herein, Buyer
agrees to pay Seller the following amounts on the conditions set forth herein:
(a) The total purchase price for the Assets and all earnouts and bonuses
made pursuant to this Article 2 shall in no event exceed Twelve
Million Dollars ($12,000,000.00).
(b) At the time of Closing of this Agreement, Buyer shall pay Seller
Four Million Nine Hundred Seventy Thousand Dollars ($4,970,000.00)
by direct wire transfer (or other method designated by Seller) to an
account which has been designated by
Seller.
(c) At the time of Closing of this Agreement, Buyer shall pay
Principal Thirty Thousand Dollars ($30,000.00) by direct wire
transfer (or other method designated by Principal) to an account
which has been designated by Principal.
(d) The "First Earnout Period" shall commence on the date of Closing
of the Agreement and continue for one year thereafter. Buyer shall
pay Seller two and one-quarter (2.25) times the Branch Profit (as
defined in Article 2 (g) herein) which is greater than $1,200,000.00
earned by the Business during the First Earnout Period. Such payment
shall be made no later than forty-five (45) days from the close of
the First Earnout Period.
(e) The "Second Earnout Period" shall commence on the first
anniversary date of Closing of the Agreement and continue for one
year thereafter. Buyer shall pay Seller one and one quarter (1.25)
times the Branch Profit (as defined in Article 2 (g) herein) which
is greater than $1,200,000.00 earned by the Business during the
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Second Earnout Period. Such payment shall be made no later than
forty-five (45) days from the close of the Second Earnout Period.
(f) Buyer shall pay Seller Seven Hundred Fifty Thousand Dollars
($750,000.00) as an additional Earnout, if during the during the
last six (6) months of the Second Earnout Period, the Branch Profit
(as defined in Article 2 (g) herein) earned by the Business is
greater than or equal to $900,000.00. Such payment shall be made no
later than forty-five (45) days from the close of the Second Earnout
Period.
(g) (i) "Branch Profit" as used in this Agreement means, with
respect to the Business as operated by Buyer as a distinct branch
after Closing, gross sales (total sales of goods and services) less
adjustments and discounts; the cost of sales (temporary employee
programs, direct costs, temporary payroll, temporary payroll taxes,
i.e. FICA, unemployment, etc., temporary worker's compensation, drug
testing and bonding insurance); branch staff expenses (branch staff
payroll, temporary staff payroll, commissions and bonuses, branch
staff and temporary staff payroll taxes, i.e. FICA, unemployment
insurance, etc., branch staff worker's compensation, sales and
travel, group insurance, background checks, and drug testing);
advertising expenses (specialty items, classified ads, yellow pages,
promotional events, other advertising); operation expenses
(telephone, office supplies, legal, interest on accounts receivable,
professional, postage and delivery, xxxxx cash, training expenses,
and other operating expenses); facilities expenses (rent, repair and
maintenance, utilities, depreciation and leasehold amortization);
bad debt (to constitute a bad debt the receivable must be actually
written off. No receivable aged less than one hundred twenty (120)
days shall be written off without the permission of Seller. Any
receivable aged over one hundred twenty (120) days, which shall be
considered a delinquent account, may be written off at the sole
discretion of Buyer; however any recovery made on such an account
shall be added back to total sales. Any account receivable aged over
one hundred twenty (120) days at the close of the Earnout Period
shall be considered bad debt for purposes of determining the Branch
Profit); miscellaneous expenses (dues and subscriptions,
adjustments/recoveries, and reimbursements); printing expenses;
computer expenses; consultation expenses; taxes (exclusive of
federal, state and local income tax) and insurance; gain or loss on
disposal of assets; depreciation of assets and other expenses
(career fair; services fees, internal expenses, etc.); plus other
income (bad debt recovery, finance charges collected and other
income). The interest on accounts receivable is calculated based on
the formula described in Exhibit E hereto. The interest expense
shall be calculated on a monthly basis and shall not exceed one
percent (1%) of the outstanding accounts receivable on the month's
end closing date. Branch Profit shall exclude any allowance for
Buyer's corporate overhead or administrative expenses, such as,
human resources, benefits administration and national advertising
expenses; the expense of the Earnout payments; expenses directly
related to the acquisition of assets contemplated by this Agreement,
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including any key man insurance premiums made with respect to
Principal; and amortization of good will or intangible assets
acquired by Buyer by this Agreement.
(ii) Seller acknowledges and agrees that Branch Profit will be
based on Buyer's operation of the Business and acknowledges that
Buyer's workers' compensation insurance, unemployment insurance,
bonding insurance, cost of interest, cost of employee benefits and
other costs differ from Seller's and past performance will not
necessarily be indicative of future profits.
(iii) Every six (6) months during the Earnout Periods,
Buyer, Seller and Principal shall review the amount of time
Principal is spending which benefits Buyer to the detriment of
maximizing Branch Profit. The parties shall negotiate in good faith
to determine the percentage of time Principal is engaged in such
activities. Principal's Annual Salary shall be multiplied by said
percentage and the product thereof shall be deducted from Branch
Profit to determine the Earnout.
(h) Buyers obligation to pay the Earnout and bonus payments pursuant
to Articles 2 (d), (e) and (g) shall survive the termination of
Principal's employment for any reason. If, however, Principal's
employment with Buyer is terminated without cause ("cause" as
used herein shall have the same meaning attributed to it in that
certain Employment, Nondisclosure and Non-Competition Agreement,
dated September ___, 1997 between Principal and Buyer) during
either Earnout period, and if the sum of the payments made
pursuant to Articles 2 (d), (e) and (g) is less than Four Million
Dollars ($4,000,000.00), then Buyer shall pay Seller the
difference between Four Million Dollars ($4,000,000.00) and the
amounts paid pursuant to Articles 2 (d), (e) and (g). Such
payment shall be made no later than forty-five (45) days from the
close of the Second Earnout Period.
(i) During the Earnout Periods, Buyer shall conduct the Business in a
manner consistent with good business judgement and consistent with
Buyer's ordinary business practices. During the Earnout Periods,
Buyer shall continue to operate the business in the same general
geographic area. Buyer shall not incur any unnecessary expense in
order to diminish the Branch Profit.
(j) The parties agree that the initial purchase payment of Five
Million Dollars ($5,000,000.00) shall be allocated as follows:
to Goodwill: $4,680,000.00;
to Customer Lists: $10,000.00;
to Employee Lists: $10,000.00;
to Contracts: $250,000.00;
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to the Non-Competition Covenant: $30,000.00 (paid directly
to Principal pursuant to Article 2 (c)); and
to Property, Facilities and Equipment: $20,000.00.
All other payments made pursuant to this Article 2 will be allocated
to Goodwill.
All parties agree to file IRS Form 8594 reflecting the purchase
price allocation contained herein.
3. As further consideration for Buyer to enter into this Agreement and in
consideration for Buyer making payments to Principal pursuant to Article 2 and
in consideration for Principal benefiting from this Agreement, Principal agrees
to the following:
(a) For a period commencing at the Closing Date of this Agreement
and continuing to the later of thirty-six (36) months after the
Closing or twelve (12) months after the termination of the
employment of Principal, Xxxx X. Xxxxxxxx ("Xxxxxxxx"), pursuant to
the employment agreement referenced in Article 13 herein or any
extension thereof, Principal shall not, for any reason, within one
hundred and fifty (150) miles of Bellevue, Washington or any other
office or branch of Buyer which comes under the supervision or
management of Xxxxxxxx or reports to Xxxxxxxx during the Term of
Xxxxxxxx'x employment as defined in the employment agreement of Xx.
Xxxxxxxx, (i) engage in the temporary staffing, consulting
personnel, staff leasing, payrolling, executive placement, permanent
placement, or employee testing business; information system or
information technology consulting, contract staffing or outsourcing
business; or provide any other related service; (ii) enter the
employ of, or render any services to or consult with, any person
engaged in competition with the Buyer, SOS, any affiliate or any of
their successors in interest; (iii) become associated with or
interested in any such person in any capacity, including, without
limitation, as an individual, partner, shareholder, officer,
director, principal, agent or trustee; provided, however, Principal
may own, directly or indirectly, solely as an investment, securities
of any person traded on any national securities exchange or
over-the-counter if Principal is not a controlling person of, or a
member of a group which controls, such person and does not, directly
or indirectly, own 5% or more of any class of securities of such
person, (iv) solicit or otherwise deal with any client of the Buyer,
SOS, any affiliate or any of their successors in interest in a
manner designed to (or that could) take business away from the
Buyer, SOS, any affiliate or any of their successors in interest;
(v) solicit or otherwise induce any employee of the Buyer, SOS, any
affiliate or any of their successors in interest to terminate
his/her employment with the Buyer, SOS, any affiliate or any of
their successors in interest; or (vi) hire or solicit any consultant
under contract with the Buyer, SOS, any affiliate or any of their
successors in interest or encourage such consultant to terminate
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such relationship.
(b) The Principal agrees not to disclose to any unauthorized person
any confidential information he may obtain or has obtained regarding
Seller's, Buyer's, SOS's, any affiliate's, or their successors'
services, products, customers, employees or methods of doing
business, nor use such information in violation of Article 3 (a)
during said period.
(c) The Principal acknowledges that he will be able to earn a
livelihood without violating the foregoing restrictions. The
Principal further acknowledges: (1) that compliance with the
restrictive covenant contained in this Article 3 is necessary to
protect the business and goodwill of the Buyer, SOS, any affiliate's
or its successors in interest, and (2) that a breach will result in
irreparable and continuing damage to the Buyer or its successors in
interest, for which money damages may not provide adequate relief.
Consequently, the Principal agrees that, in the event that he
breaches or threatens to breach the restrictive covenant of this
Article 3, the Buyer or its successors in interest shall be entitled
to seek: (1) a preliminary or permanent injunction to prevent the
continuation of harm, and (2) money damages insofar as they can be
determined. Nothing in this Agreement shall be construed to prohibit
the Buyer or its successors in interest from also pursuing any other
remedy, the parties having agreed that all remedies are cumulative.
(d) The parties have attempted to limit the Principal's right to
compete only to the extent necessary to protect the Buyer or its
successors in interest from unfair competition. The parties
recognize that reasonable people may differ in making a
determination. Consequently, the parties agree that, if the scope or
enforceability of the restrictive covenant is in any way disputed at
any time, a court, arbitrator or other trier of fact may modify and
enforce the covenant to the extent that it believes to be reasonable
under the circumstances existing at the time.
4. The "Closing" of the transactions contemplated by this Agreement shall
take place at 12:01 a.m. (Pacific Daylight Time) on September 28, 1997 (the
"Closing Date") 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000, SOS's
principal office. Closing may also take place at any other time or place
mutually agreed to in writing by the parties.
This Agreement shall be effective upon execution. For all purposes, the
transfer of the Assets and Business herein described to Buyer is hereby
recognized as occurring at 12:01 a.m. on the Closing Date, regardless of the
date when this Agreement shall be executed. At 12:01 a.m. on the Closing Date,
Buyer will also commence operation of Seller's Business with respect to the
Assets purchased.
5. (a) At Closing, Seller and Principal shall deliver to Buyer the
following:
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(i) A Xxxx of Sale for all items of personal and
tangible property to transferred hereby;
(ii) An assignment of all trademarks and trade names to be
transferred hereby;
(iii) All Assets to be transferred hereby;
(iv) Lien releases for any encumbered Asset;
(v) Consents to the assignment of all leases and contracts
to be assumed by Buyer; and
(vi) Consents to the assignment of all service contracts with
Seller's customers to the extent such all contracts
require consent for assignment to Buyer.
(b) At Closing, Buyer or SOS shall deliver to Seller or Principal the
following:
(i) All funds or monies described in Article 2 herein;
(ii) Certificate that all necessary consents have been
obtained;
(iii) Certificate that all stock options to be granted
hereunder have been approved;
(iv) Executed Employment Agreement between Buyer and
Principal; and
(v) Offer of employment to each current employee of Buyer or
acceptance of assignment of each employee's employment
contract.
6. The Closing of this Agreement is contingent upon a successful
completion of due diligence by Buyer. Buyer is currently undertaking a due
diligence review of Seller's books and records. Buyer shall not communicate with
any employee or customer of Seller until the Closing date, except upon prior
approval of Seller. Buyer will finish its due diligence review within five(5)
days from the execution of this Agreement. If, because of items discovered in
its due diligence review, Buyer determines not to close this transaction, Buyer
shall within five (5) days from the completion of its due diligence notify
Seller, in writing, of its intent not to close this Agreement and a detailed,
specific statement of its basis for such a decision. Buyer may choose not to
close if during its due diligence it discovers any material difference in: the
financial statements, information or records upon which the initial purchase
price described in Article 2 (b) herein is based; accruals or other
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representations made to Buyer by Seller. Buyer may also choose not to close if
during its due diligence review, it discovers any undisclosed actual or
contingent material liability or potential liability. As used in this Article 6,
"material" shall mean any discrepancies in the financial statements or other
representations or any actual or contingent liability or potential liability
which in the aggregate exceed twenty-five thousand dollars ($25,000.00). The
parties agree to negotiate in good faith for a period of thirty (30) days to
resolve any issues raised in the due diligence review. If by thirty (30) days
following the completion of due diligence by Buyer the transaction contemplated
hereby has not closed, then any party hereto may terminate this Agreement.
Seller's obligation to close is conditioned on the granting of third
parties of any necessary consents to the assignment of the contracts and leases
to be assigned hereunder.
The Closing of this Agreement is also contingent upon each party
delivering the items described in Article 5 herein at the Closing, unless waived
by the party for whose benefit the item is intended.
If the transaction contemplated by this Agreement does not close due
to the terms of this Article 6, this Agreement shall be void except for those
terms set forth in Article 7.
7. In the event the transaction contemplated by this Agreement does not
close, Buyer will maintain as confidential all proprietary information and shall
not use for any reason any proprietary information which it or any of its
representatives may obtain from Seller, any of its employees or the Principal.
This restriction shall not apply, however, (i) as may otherwise be required by
law (if such disclosure is required by legal process, Buyer shall notify Seller,
prior to any response to such legal process. Thereafter, Seller, at its sole
cost and expense, may oppose such disclosure), (ii) to the extent such
information (A) shall be or have become publicly available, (B) was legally
available to Buyer on a non-confidential basis prior to its disclosure by Seller
or (C) becomes available to Buyer on a non-confidential basis from a person
other than Seller or (iii) with respect to disclosure by Buyer to parties to
whom disclosure may be required or desirable in connection with the transactions
contemplated by this Agreement, provided such parties agree to be bound by the
provisions of this Article 6. This confidentiality Agreement will also apply to
any proprietary information not purchased by Buyer regardless of whether the
transaction closes.
8. Seller and Principal represent and warrant to the Buyer that the
statements made herein below are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date. As used in
this Article 8, "material" shall mean any discrepancy in the financial
statements or representations that in the aggregate have an impact of more than
twenty-five thousand dollars ($25,000.00).
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the state of Washington. Seller has
full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
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Seller is not in default under or in violation of any provision of
its charter, articles of incorporation, or bylaws.
(b) Seller has good and marketable title to all the assets listed in
Exhibits A and B. All such Assets are free and clear of mortgages,
liens, pledges, charges, encumbrances, equities, or claims, except
for leases of the following equipment: furniture and computer leases
described in Exhibit D.
(c) Neither the execution nor the delivery of this Agreement will
(i) violate any statute, regulation, judgment, order, or other
restriction of any governmental agency or court; or (ii) conflict
with, result in a breach or default under any Agreement, contract,
license, or other arrangement to which Seller is a party. The
parties acknowledge that certain contracts require consent for
assignment. The necessity of such consent shall not be a breach of
this representation or warranty.
(d) Seller has filed all income tax returns that it was required to
file, has paid in full all taxes associated with such tax returns
and is not deficient on any tax payments or liabilities.
(e) To the best of its knowledge and belief, Seller has complied
with all environmental, health, and safety laws in all material
respects and does not have any material liability relating to any
environmental, health, and safety laws.
(f) To the best of its knowledge and belief, Seller has complied
with all federal, state and local equal employment opportunity and
anti-discrimination laws in all material respects and does not have
any material liability relating to any federal, state and local
equal employment opportunity and anti-discrimination laws.
(g) To the best of its knowledge and belief, Seller has complied
with Employee Retirement Income Security Act of 1974, as amended
("ERISA"), in all material respects and does not have any material
liability relating to ERISA.
(h) To the best of its knowledge and belief, Seller has complied
with the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") in all material respects and does not have any
material liability relating to COBRA.
(i) Seller has paid all payroll taxes and other withholdings
mandated by federal, state and local laws.
(j) To the best of its knowledge and belief, Seller has complied
with all other employment and labor laws not specifically enumerated
in all material respects and does not have any material liability
relating to any employment or labor law.
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(k) Seller has disclosed all pending or potential lawsuits, claims
or causes of actions that have arisen against Seller that are known
to Seller.
(l) Seller warrants that all financial information and records
provided to Buyer are true and complete in all material respects.
(m) Seller warrants that it has not used the services of any broker or
agency in connection with the transaction contemplated by this
Agreement. Seller warrants that it is not obligated to pay any
broker, agency or finder's fee in connection with the transaction
contemplated by this Agreement.
9. Buyer represents and warrants to Seller and Principal that the statements
made below are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
(a) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the state of New Mexico. Buyer has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
Buyer is not in default under or in violation of any provision of
its charter, articles of incorporation, or bylaws.
(b) The Buyer's board of directors have approved the terms of this
Agreement and the officers of Buyer have been duly authorized to
enter into and execute this Agreement.
(c) The Buyer has obtained ll necessary consents to enter into this
Agreement.
(d) Neither the execution nor the delivery of this Agreement will (i)
violate any statute, regulation, judgment, order, or other
restriction of any governmental agency or court; or (ii) conflict
with, result in a breach or default under any Agreement, contract,
license, or other arrangement to which Buyer is a party.
(e) Buyer warrants that it has not used the services of any broker or
agency in connection with the transaction contemplated by this
Agreement. Buyer warrants that it is not obligated to pay any
broker, agency or finder's fee in connection with the transaction
contemplated by this Agreement.
10. SOS represents and warrants to Seller and Principal that the statements made
below are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
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(a) SOS is a corporation duly organized, validly existing, and in good
standing under the laws of the state of Utah. SOS has full corporate
power and authority and all licenses, permits, and authorizations
necessary to carry on the business in which it is engaged and to own
and use the properties owned and used by it. SOS is not in default
under or in violation of any provision of its charter, articles of
incorporation, or bylaws.
(b) SOS's board of directors have approved the terms of this Agreement
and the officers of SOS have been duly authorized to enter into and
execute this Agreement.
(c) SOS has obtained all necessary consents to enter into this
Agreement.
(d) Neither the execution nor the delivery of this Agreement will (i)
violate any statute, regulation, judgment, order, or other
restriction of any governmental agency or court; or (ii) conflict
with, result in a breach or default under any Agreement, contract,
license, or other arrangement to which SOS is a party.
(e) SOS warrants that it has not used the services of any broker or
agency in connection with the transaction contemplated by this
Agreement. SOS warrants that it is not obligated to pay any broker,
agency or finder's fee in connection with the transaction
contemplated by this Agreement.
(f) SOS warrants that the May 1995 Incentive Stock Option Plan under
which Principal and key employees of Seller are to be granted
options has been duly adopted in accordance with SOS's Articles of
Incorporation and By-Laws and with all applicable law.
11. Seller and Principal agree to indemnify Buyer and SOS, and hold Buyer
and SOS harmless from any material loss, damage, expense, liability, or claim,
including without limitation, attorney's fees and expenses of litigation, to
which Buyer or SOS may become subject arising out of: (a) any material
misstatement of the Seller or Principal as warranted in Article 8; or (b) any
material failure of Seller or Principal to perform any of its covenants,
Agreements or undertakings contained in this Agreement or in any other Agreement
executed in connection with the transactions contemplated herein.
Seller and Principal further agree to indemnify Buyer and SOS, and
hold Buyer SOS harmless from any material loss, damage, expense, liability, or
claim (whether known or unknown, whether asserted or un-asserted, whether
absolute or contingent), including without limitation, attorney's fees and
expenses of litigation, for any claim arising or occurring prior to the Closing
Date for which Buyer or SOS may be liable because of its purchase of Seller's
assets.
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As used in this Article 11, "material" shall mean losses, damages,
expenses, liabilities or claims, including without limitation, attorney's fees
and expenses of litigation which are twenty-five thousand dollars ($25,000.00)
in the aggregate.
12. Buyer and SOS agree to indemnify Seller and Principal and hold Seller
and Principal harmless from any material loss, damage, expense, liability, or
claim, including without limitation, attorney's fees and expenses of litigation,
to which Seller or Principal may become subject arising out of: (a) any material
failure of Buyer or SOS to perform any of their respective covenants, Agreements
or undertakings contained in this Agreement or in any other Agreement executed
in connection with the transactions contemplated herein; or (b) any material
misstatement of Buyer or SOS as warranted in Article 9 or 10.
Buyer and SOS agree to indemnify Seller and Principal and hold
Seller and Principal harmless from any material loss, damage, expense,
liability, or claim (whether known or unknown, whether asserted or un-asserted,
whether absolute or contingent), including without limitation, attorney's fees
and expenses of litigation, for any claim arising or occurring after the Closing
Date by reason of Buyer's or SOS's failure to perform any assumed liability or
for which Seller or Principal may be otherwise liable because of Buyer's or
SOS's operation of the Business.
As used in this Article 12, "material" shall mean losses, damages,
expenses, liabilities or claims, including without limitation, attorney's fees
and expenses of litigation which are twenty-five thousand dollars ($25,000.00)
in the aggregate.
13. Seller agrees from the time of the execution of this Agreement through
the Closing date, that Seller will conduct its Business only in the ordinary
course consistent with past practices and will not enter into any agreement
which would materially affect the business or the assets to be purchased which
would binding upon Buyer after the closing, without Buyer's consent.
14. Buyer agrees to employ Principal, Xxxx X. Xxxxxxxx for a period of two
(2) years following the Closing Date pursuant to the terms and conditions of a
separate employment agreement. The form of such agreement is attached hereto as
Exhibit F.
15. Buyer agrees that it shall offer employment to each of Seller's
current employees. Alternatively, Buyer shall assume and accept the assignment
of each such employee's employment contract with Seller. For each of Seller's
former employees hired by Buyer, Buyer shall recognize time of service with
Seller as time of service with Buyer for purposes of non-health, life or
disability benefits, such as, 401(k) eligibility and matching contribution
vesting, C-125, etc. Seller acknowledges that Buyer maintains a drug-free
workplace policy and that all of Seller's former employees hired by Buyer will
be subject to such policy. Such staff employees shall be exempt from the
pre-employment drug screen, but shall be subject to all other provisions of the
policy, including random drug screens or post incident screening. After the
Closing, each of Seller's employees hired by Buyer will be subject to post
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incident screening. After 180 days from the Closing, each of Seller's employees
hired by Buyer shall be subject to random screening pursuant to Buyer's policy.
Buyer may modify its policy at any time to reflect changes in statutory or case
law or for any other reason consistent with good business judgment.
16. SOS shall issue options to purchase a combined fifty thousand (50,000)
shares of SOS's common stock to certain key employees of Seller which as a
result of this Agreement are subsequently employed by Buyer. Such stock options
will be issued under a separate agreement pursuant to and in accordance with
SOS's May 1995 Incentive Stock Option Plan and shall vest over a period of five
(5) years pursuant to such separate agreement (the form of such agreement is
attached hereto as Exhibit G). The exercise price of such options shall be the
closing price of the stock on the date of grant as reported by the Wall Street
Journal. Said plan requires that any specific grant be approved by the
compensation committee of SOS's board of directors. Such approval shall occur
prior to Closing. SELLER shall provide to BUYER as a list of key employees and
number of shares to be granted as indicated in Exhibit H.
17. SOS shall issue options to purchase ten thousand (10,000) shares of
SOS's common stock to Xxxx X. Xxxxxxxx, Principal. Such stock options shall be
issued under a separate agreement pursuant to and in accordance with the SOS's
May 1995 Incentive Stock Option Plan and shall vest over a period of five (5)
years pursuant to such separate agreement. The exercise price of such options
shall be the closing price of the stock on the date of grant as reported by the
Wall Street Journal.
18. Seller shall pay all staff and temporary employee benefits, costs and
expenses earned prior to the Closing date of this Agreement. Seller agrees to
pay before the Closing Date or to accrue and maintain adequate reserves for any
staff and temporary employee benefits earned prior to the Closing Date of this
Agreement, but to be paid after the Closing Date. For those employee benefits,
costs or expenses which a specific date can not be determined, Buyer and Seller
shall share the payment of the benefit, cost or expense on a pro-rated basis.
Seller's share shall be the ratio of hours worked before the Closing Date to the
total hours worked and Buyer's share shall be the ratio of hours worked after
the Closing Date to the total hours worked.
19. Buyer agrees to assist Seller to collect accounts receivable. Such
assistance shall be limited to turning over payments due Seller which are
received by Buyer. If Buyer receives payment for both its services as well as
Seller's, Buyer will deposit said funds in its accounts and pay the amount due
Seller to Seller. Payments for which no invoice is designated shall be applied
to the oldest outstanding invoice.
Seller agrees if it receives any payment for any account receivable
due Buyer that it will turn over such payment to Buyer when received by Seller.
If Seller receives payment for both its services as well as Buyer's, Seller will
deposit said funds in its accounts and pay the amount due Buyer to Buyer.
Payments for which no invoice is designated shall be applied to the oldest
outstanding invoice.
13
20. Buyer, Seller, and Principal agree to take such further action as is
necessary to carry out the purpose of this Agreement, including the execution
and delivery of such further instruments and documents as any party reasonably
may request.
21. Buyer and Seller agree that prior to the commencement of any action
for breach of this agreement they will submit to non-binding mediation or
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time of the action. The parties agree
to negotiate in good faith to resolve the breach or enter a settlement. An
arbitrator will be chosen by the Buyer and Seller. If the parties are unable to
agree upon an arbitrator, an arbitrator shall be selected pursuant to the rules
of the American Arbitration Association then in effect. Arbitration shall take
place in Seattle , Washington.
22. This Agreement and all documents executed and delivered hereunder
shall be deemed to be contracts under the laws of the State of Washington, and
for all purposes shall be construed and governed in accordance with such laws.
Any suit or other action to enforce any provision of this Agreement or to obtain
any remedy with respect hereto shall be brought in any federal or state court
with competent jurisdiction sitting in King County, State of Washington.
23. In the event of the commencement of any litigation or arbitration to
enforce any provision of this Agreement or that is related to this Agreement,
the prevailing party shall be entitled to its costs for such action, including
reasonable attorney's fees, expert witness fees and other reasonable costs
incurred related to such action.
24. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, telegraphed, telexed,
sent by facsimile transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile transmission or, if
mailed, five days after the date of deposit in the United States mail, as
follows:
(i) if to Buyer, to:
Xxxxx & Associates, Inc.
0000 Xxxxxxx Xxxxxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxxx, XX 00000
(ii) if to SOS, to:
SOS Staffing Services, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Legal Department
(iii) if to Seller to:
14
if prior to Closing:
JesCo Technical Services, Inc.
00000 X.X. 0xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx, 00000
If after Closing:
To Principal's home address
(iv) if to Principal to:
Xxxx X. Xxxxxxxx
00000 XX 000xx
Xxxxxx, XX 00000
(v) if to Seller or Principal, copy to:
Xxxxxx Xxx Xxxxx, Esq.
HILLIS, CLARK, XXXXXX & XXXXXXXX, X.X.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Any party may change its address for notice hereunder by written
notice to the parties hereto.
25. Any term or provision of this Agreement that is invalid or
unenforceable shall not affect the validity and enforceability of the remaining
terms and provisions of this Agreement.
26. Each party shall bear its own costs and expenses incurred in
connection with this Agreement.
27. Each party acknowledges that it has sought the advice (or has had the
opportunity to do so) of competent legal counsel and tax advisors with respect
to the subject matter of this Agreement and the legal and tax consequences of
entering this Agreement.
28. This Agreement, together with the exhibits incorporated herein,
constitutes the entire agreement of the parties with respect to the subject
matter herein. This Agreement may only be modified by written instrument
executed by the parties hereto.
29. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all such
15
counterparts shall constitute one and the same instrument. As used herein,
"counterparts" shall include full copies of this Agreement signed and delivered
by facsimile transmission, as well as photocopies of such facsimile
transmission.
30. Time is of the essence of this Agreement and all its provisions.
31. SOS hereby guarantees the performance of Buyer of each provision of
this Agreement. If Buyer fails to perform or satisfy any covenant, promise, term
or condition of this Agreement, including Principal's employment agreement
described in Article 14, within ten (10) days of written notice from Seller or
Principal to SOS, SOS shall perform or cause Buyer to perform or satisfy such
covenant, promise, term or condition.
32. This Agreement may be assigned to SOS or any wholly owned subsidiary
of SOS without the consent of Seller or Principal. Any other assignment or
transfer of this Agreement shall require the consent of Seller and Principal.
For purposes hereof, a transfer of more than fifty percent (50%) ownership
interest of Buyer by SOS to a non-affiliate of SOS shall constitute an
assignment or transfer subject to Seller's and Principal's consent.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement.
DATED this day of , 1997. DATED this day of , 1997.
----- ----- ----- -----
Buyer SOS
Xxxxx & Associates, Inc., by: SOS Staffing Services, Inc. by:
--------------------------------- ------------------------------------------
Xxxxxx X. Xxxxx, President Xxxxxxx X. Xxxxxxxx, Chairman of the Board
DATED this day of , 1997.
----- -----
Seller
JesCo Technical Services, Inc.
----------------------------------------
Xxxx X. Xxxxxxxx, in his capacity as
President and as an individual Principal
EXHIBIT A
EXHIBIT A
The following assets are to be purchased and assumed by Buyer from Seller:
(a) The real property leases for the demised premises located at 00000 X.X. 0xx
Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx, 00000 and 00000 XX 000xx Xxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxxxx, 00000, together with all rights and privileges under
said leases to real property subject to said leases; and
(b) All papers and records in Seller's care, custody or control relating to the
operational aspects of Seller's staffing business or any of the Assets to be
transferred under this Agreement, including but not limited to all personnel and
labor relations records, environmental control records, sales records,
accounting and financial records, maintenance and production records, except
that Seller shall either have unlimited access to or copies of such records; and
(c) All records in any way related to Seller, its customers, business,
employees, etc. that are maintained at any location, except for Seller's
corporate minute books and other documents related solely to Seller's corporate
affairs or governance;
(d) Telephone numbers of Seller, to wit: (000) 000-0000, (000) 000-0000, and all
other telephone numbers listed or used by Seller (Seller shall transfer any
right or interest it might have in such numbers to Buyer) ; and
(e) Facsimile telephone numbers of Seller, to wit: (000) 000-0000 and
(000) 000-0000 Seller shall transfer any right or interest it might have in such
numbers to Buyer) ; and
(f) E-mail domain address of Seller; and
(g) All of Seller's Intangibles relating to its staffing business, including:
(i) all assumed business or trade names to the extent such trade names are
used in connection with providing outsourcing, consulting or staffing services,
including temporary help services, payroll services, permanent placement or
employee leasing. Such names to be transferred include but are not limited to:
"JesCo" all other assumed business names and trade names owned or used by
Seller; and all other slogans, trademarks and service marks related to Seller;
and
(ii) all employee lists, including, but not limited to complete personnel
files, work histories, employment agreements between Seller and employees of
Seller, employee Confidentiality and non-compete agreements between Seller and
employees of Seller, and all other documents related to employees of Seller
which are hired by Buyer; and
(iii) all customer lists, including but not limited to all telephone
numbers, credit histories, sales histories and other documents related to
Seller's customers; and
(iv) Seller's goodwill; and
(v) all other intangibles of Seller; and
(h) All proprietary and other software and hardware; and
(i) All prepaid expenses relating to any of the assets, facilities, and
operations being taken over by Buyer, including any deposits used in the normal
operation of Seller's business such as deposits for rent or security which were
or are required by the terms of any real property lease (excludes voluntary
pre-payments not required by any lease), all utility deposits, and any other
equipment lease deposit; and
(j) All operational assets of Seller including, but not limited to all
inventory, office furniture, phones, electronic and computer equipment and all
other equipment used by Seller to conduct business which are listed in Exhibit
B;
EXHIBIT B
[Exhibit B shall consist of the asset inventory provided by Seller]
EXHIBIT C
[Exhibit C shall list software packages owned by Principal which shall be
excluded from the assets to be transferred to Buyer]
EXHIBIT D
[Exhibit D shall consist of leases and third party contracts provided by
Seller]
EXHIBIT E
EXHIBIT F
EMPLOYMENT, NONDISCLOSURE AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT, NONDISCLOSURE AND NON-COMPETITION AGREEMENT (the
"Agreement") is entered into this day of September, 1997 by and between Xxxxx &
Associates, Inc., a New Mexico corporation (the "Company"), and Xxxx X. Xxxxxxxx
("Xxxxxxxx").
WHEREAS, the Company desires to employ Xxxxxxxx based on the terms and
conditions of this Agreement; and
WHEREAS, Xxxxxxxx desires to accept such employment on the terms and
conditions of this Agreement.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company hereby agrees to employ
Xxxxxxxx as a full-time employee of the Company in the position of Vice
President of the outsourcing division of the Company for the Term as hereinafter
defined, to render such services and to perform such duties as the management of
the Company shall reasonably request. Notwithstanding the foregoing, Xxxxxxxx'x
position and duties may be reasonably modified or changed from time to time at
the discretion of the management without additional compensation. Any material
change to Xxxxxxxx'x position or duties, including relocation, must be agreed to
by Xxxxxxxx. Xxxxxxxx shall also serve during all or any part of the Term in any
other office (office is limited to such office as President, Vice President or
other office of the corporation or subsidiary, and does not refer to any
physical office) to which he may be appointed or elected without any
compensation therefor other than that specified in this Agreement.
1.2 Acceptance of Employment by Xxxxxxxx. Xxxxxxxx hereby accepts
such continued employment and shall render the services described above.
Xxxxxxxx will faithfully, and at all times, and to the best of his ability,
experience and talents, perform all of the duties which are required of him
under this Agreement, including devoting of his full business time to and for
the exclusive benefit of the Company, and shall keep free from conflicting
enterprises or any other activities which would be detrimental to or interfere
with the business of the Company or the devotion of his full time to the
business of the Company. Xxxxxxxx agrees to use his best efforts to comply with
any and all instructions that management may give him from time to time, and to
promote and maintain the success, quality, professionalism and reputation of the
Company.
2. Term of Agreement and Employment. The term of this Agreement and
Xxxxxxxx'x employment hereunder (the "Term") shall commence on September , 1997
(the "Commencement Date") and shall continue for a period of two (2) years
thereafter (such period may hereinafter be referred to as the "Initial Term") or
as otherwise terminated as provided in Article 5 hereof. . Thereafter, the Term
shall be extended automatically on each anniversary of the Commencement Date for
successive one (1) year periods unless either the Company or Xxxxxxxx give
thirty (30) days written notice of its or his intent not to extend the contract,
prior to the end of the Initial Term or any extension thereof. As used in this
Agreement, "Term" shall mean and include any automatic extension of the Initial
Term.
3. Compensation and Other Benefits.
3.1 Compensation. As compensation for services to be rendered
pursuant to this Agreement, the Company shall pay Xxxxxxxx, during the Term, a
salary of $200,000.00 per annum (the "Annual Salary"), subject to such increases
as the management may, at its discretion, approve.
3.2 Bonus. During the Initial Term, Xxxxxxxx shall not be entitled
to any bonus. Thereafter, Xxxxxxxx shall be paid a bonus of five percent of the
Branch Profit earned by branches, offices or divisions reporting to him which is
in excess of $1,800,000 each year. Additionally, if the employment term is
automatically extended on January 1, 2000, and any year thereafter, Xxxxxxxx
shall be paid an additional five percent (5%) of the Branch Profit earned by
branches reporting to him to the extent the Branch Profit for the bonus year
exceeds the Branch Profit for the preceding year. For example if the Branch
Profit in 1999 is $2,000,000 then the Company would pay Xxxxxxxx a bonus of
$10,000 ($2,000,000 - $1,800,000 = $200,000 x 5% = $10,000). If the Branch
Profit in 2000 was $2,200,000, then the total bonus would be $30,000 ($2,200,000
- $1,800,000 = $400,000 x 5% = $20,000 and $2,200,000 - $2,000,000 = $200,000 x
5% = $10,000)
3.2.1 Branch Profit. "Branch Profit" as used herein shall have
the same meaning as attributed to the term in that certain Asset Purchase
Agreement, dated September , 1997 between the Company, Xxxxxxxx, XxxXx Technical
Services, Inc., and SOS Staffing Services, Inc. (the "Asset Purchase
Agreement").
3.3 Expenses. Xxxxxxxx shall be entitled to reimbursement of his
reasonable expenses incurred related to the performance of his duties hereunder
pursuant to the Company's expense reimbursement program. The expenses covered by
such policy include policy include mileage reimbursement for business related
travel or reimbursement for actual allowable automobile expenses or mileage,
reimbursement for other business related travel, entertainment of potential and
current customers of the Company, etc. Xxxxxxxx shall submit to the Company
receipts and the Company's expense reimbursement report. The Company shall
reimburse Xxxxxxxx within a reasonable time after the appropriate Company
employee receives the expense reimbursement report and supporting documentation.
3.4 Other Compensation. Xxxxxxxx shall be eligible for such other
compensation, whether in the form of additional stock options, stock
appreciation rights, restricted stock awards or otherwise, in such amounts and
upon such terms and conditions as the Board of Directors (or a compensation
2
committee thereof) may, at its discretion, approve. All compensations described
in Articles 3.2 through 3.4 shall be collectively referred to as "Additional
Compensation."
3.5 Payment. The Annual Salary and the Additional Compensation shall
be payable in accordance with the applicable payroll and/or other compensation
policies and plans of the Company as from time to time in effect, less such
deductions as shall be required to be withheld by applicable law and
regulations. In consideration of Xxxxxxxx agreeing to the terms of Article 4
hereof, the parties agree that in addition to any Annual Salary and Additional
Compensation due, Xxxxxxxx shall be entitled to receive two (2) months of
compensation, if the Company terminates his employment during the Term other
than for cause pursuant to Article 5 hereof. This provision shall not limit any
rights to receive additional payments that Xxxxxxxx or JesCo Technical Services,
Inc. may have under the Asset Purchase Agreement.
3.6 Participation in Employee Benefit Plans. Xxxxxxxx shall be
permitted, during the Term to participate in any group life, hospitalization or
disability insurance plan, health program, pension plan, nonqualified deferred
compensation plan, similar benefit plan or other so-called "fringe benefits" of
the Company for which he may be eligible pursuant to the terms of such plans on
the same terms and conditions as other employees of the Company.
4. Non-Competition. The terms of the non-competition, non-disclosure and
other covenants contained in Article 3 of the Asset Purchase Agreement are
hereby incorporated herein by reference and are fully adopted as if fully set
forth herein.
5. Termination of Agreement and Employment.
5.1 Termination upon Death. If Xxxxxxxx dies during the Term, this
Agreement and Xxxxxxxx'x employment hereunder shall terminate, except that
Xxxxxxxx'x legal representatives, successors, heirs or assigns shall be entitled
to receive the Annual Salary, the Additional Compensation, other accrued
benefits, if any, earned up to the date of Xxxxxxxx'x death, and two (2)
additional months compensation; provided, however, if any Additional
Compensation or other benefits are governed by the provisions of any written
employee benefit plan or policy of the Company, any written agreement
contemplated thereunder, or any other separate written agreement entered into
between Xxxxxxxx and the Company, the terms and conditions of such plan, policy
or agreement shall control in the event of any discrepancy or conflict with the
provisions of this Agreement regarding such Additional Compensation or other
benefit upon the death, termination or disability of Xxxxxxxx pursuant to this
Article 5.
5.2 Termination for Cause. The Company has the right, at any time during the
Term, subject to all of the provisions hereof, exercisable by serving notice,
effective in accordance with its terms, to terminate this Agreement and
Xxxxxxxx'x employment hereunder and discharge Xxxxxxxx for "Cause" (as
hereinafter defined). If such right is exercised, the Company's obligation to
3
Xxxxxxxx shall be limited to the payment of any unpaid Annual Salary, Additional
Compensation and other benefits, if any, accrued up to the effective date (which
shall not be retroactive) specified in the Company's notice of termination. As
used in this Section 5.2, the term "Cause" shall mean and include (i) material
breach by Xxxxxxxx of the terms of this Agreement, (ii) wrongful
misappropriation of any money or other assets or properties of the Company or
any subsidiary or affiliate of the Company, (iii) the conviction of Xxxxxxxx for
any felony, (iv) use of illegal drugs, (v) use of alcohol if such use renders
Xxxxxxxx unable to perform the essential functions of his job, (vi) Xxxxxxxx'x
gross moral turpitude relevant to his office or employment with the Company or
any subsidiary or affiliate of the Company ("gross moral turpitude" as used
herein shall mean any act involving dishonesty, fraud or deliberate
misrepresentation. "Gross moral turpitude" shall also mean any other act that is
morally repugnant to society and which act causes material economic harm to the
Company.
5.3 Suspension upon Disability. If during the Term, Xxxxxxxx becomes
physically or mentally disabled, whether totally or partially, as evidenced by
the written statement of (2) competent physicians licensed to practice medicine
in the United States, so that Xxxxxxxx is unable to substantially perform his
services hereunder for (i) a period of six consecutive months, or (ii) for
shorter periods aggregating six months during any twelve-month period, the
Company may at any time after the last day of the six consecutive months of
disability, or on the day on which the shorter periods of disability equal an
aggregate of six months, by written notice to Xxxxxxxx, suspend Xxxxxxxx'x
employment and the performance of the Company's obligations hereunder, including
payments of the Annual Salary, Additional Compensation and other benefits. If at
any time Xxxxxxxx shall no longer be disabled, as evidenced by the written
statement of two (2) competent physicians licensed to practice medicine in the
United States, the Company may, at its election, fully reinstate this Agreement
and Xxxxxxxx'x employment hereunder, and all of the terms of this Agreement,
including payment of the Annual Salary, shall resume in full force for the
balance of the Term. Nothing in this Section 5.3 shall be deemed, however, to
extend the Term. Additionally, nothing in this Section 5.3 shall limit or
diminish Company's obligations towards Xxxxxxxx with respect to the Americans
with Disabilities Act of 1990, as amended, the Family and Medical Leave Act of
1993, as amended, or any similar state laws.
5.4 Termination other than for Cause. If Xxxxxxxx is terminated
other than for cause as defined in Article 5.2 herein, Company's liability shall
be as described in Article 3.5 herein.
6. Insurance. The Company may, from time to time, apply for and take out,
in its own name and at its own expense, naming itself or others as the
designated beneficiary (which is may change from time to time), policies for
health, accident, disability or other insurance upon Xxxxxxxx in any amount or
amounts that it may deem necessary or appropriate to protect its interest.
Xxxxxxxx agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and delivering
such applications and other instruments in writing as may reasonably be required
by an insurance company or companies to which any application or applications
for insurance may be made by or for the Company.
4
7. Continuing Obligations. Notwithstanding the expiration or early
termination of the Term of this Agreement pursuant to Section 2 or Section 5
hereof, respectively, any provision of this Agreement calling for performance by
any party after such expiration or termination, including, without limitation,
the obligations of Xxxxxxxx set forth in Section 4 hereof, shall continue in
full force and effect.
8. Other Provisions.
8.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, five days after the date of deposit in the United States mail, as
follows:
(i) if to the Company, to:
Xxxxx & Associates, Inc.
0000 Xxxxxxx Xxxxxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxxx, XX 00000
copy to:
SOS Staffing Services, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Attn: Legal Department
(ii) if to Xxxxxxxx to:
Xxxx X. Xxxxxxxx
00000 XX 000xx
Xxxxxx, XX 00000
copy to:
Xxxxxx Xxx Xxxxx, Esq.
HILLIS, CLARK, XXXXXX & XXXXXXXX, X.X.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Any party may change its address for notice hereunder by written
notice to the parties hereto.
5
8.2 Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
8.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
8.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Washington applicable to agreements
made and to be performed entirely within such State.
8.5 Arbitration. Each party agrees that with respect to any dispute related to
or arising out of this Agreement or Xxxxxxxx'x employment with the Company that
the parties shall submit to binding arbitration in accordance with the
Arbitration Rules for Employment Contracts of the American Arbitration
Association in effect at the time of the action. The parties agree to negotiate
in good faith to resolve the breach or enter a settlement. An arbitrator will be
chosen by the parties. If the parties are unable to agree upon an arbitrator, an
arbitrator shall be selected pursuant to the rules of the American Arbitration
Association then in effect.
Arbitration shall take place in Seattle , Washington.
8.6 Venue and Jurisdiction. In the event the arbitration provision
of Article 8.5 is unenforceable, the parties submit themselves to the
jurisdiction of the federal and state courts located in King County, State of
Washington and that any action arising out of or relating to this Agreement or
Xxxxxxxx'x employment with the Company shall be brought and maintained within
such courts.
8.7 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party. Notwithstanding the foregoing, this Agreement may be
assigned by Xxxxx to its parent company (SOS Staffing Services, Inc., a Utah
corporation ("SOS")) or any subsidiary of SOS without Xxxxxxxx'x consent. For
purposes hereof, a transfer of more than fifty percent (50%) ownership interest
of the Company by SOS to a non-affiliate of SOS shall constitute an assignment
or transfer subject to Xxxxxxxx'x consent.
6
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.9 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
Xxxxx & Associates, Inc.
By:
--------------------------------
Xxxxxx X. Xxxxx
President
-----------------------------------
Xxxx X. Xxxxxxxx
7
EXHIBIT G
STOCK OPTION AGREEMENT
for the
SOS STAFFING SERVICES, INC.
STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
for the
SOS STAFFING SERVICES, INC.
STOCK INCENTIVE PLAN
This Stock Option Agreement (the "Agreement") is made and entered into
effective as of the ____ day of _____, 19__, by and between SOS Staffing
Services, Inc., a Utah corporation (the "Corporation"), and _____ (the
"Optionee"). Capitalized terms used herein without definition shall have the
meanings set forth in the SOS Staffing Services, Inc. Stock Incentive Plan, as
amended from time to time (the "Plan").
R E C I T A L S :
A. The Plan has been adopted by the Board and has been approved by
the shareholders of the Corporation;
B. The Optionee is an employee to whom the Committee has determined
to grant or has granted options (the "Options") to purchase Common Shares
under the Plan; and
C. The Committee, on behalf of the Corporation, and the Optionee now
desire to set forth the terms and conditions that will govern the issuance,
holding and exercise of the Options to be granted to the Optionee, subject in
all respects to the provisions contained in the Plan.
NOW, THEREFORE, upon these premises and in consideration of the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Number of Stock Options. The Corporation hereby acknowledges and
confirms the grant to the Optionee, upon the terms and conditions set forth in
this Agreement, of the following Options:
_____ Incentive Stock Options ("ISOs").
Each Option shall entitle the Optionee to purchase, upon the terms and
conditions set forth in this Agreement, one Common Share. The number of Common
Shares to which each Option pertains shall be adjusted, as necessary, in
accordance with the provisions of Article 11 of the Plan.
1
2. Exercise Price. The price for which each Option granted to the Optionee
may be exercised shall be payable in any manner provided under Article 6 of the
Plan in the following amounts: $__._____ per Common Share.
3. Time for Exercise. The Options granted to the Optionee shall be
exercisable during the following periods of time:
(a) Incentive Stock Options. Subject to any provisions contained in
the Plan regarding the exercisability of ISOs, the ISOs shall be exercisable in
accordance with the following schedule:
[20%] options shall be exercisable on or after _____ __, 1997;
[16%] options shall be exercisable on or after _____ __, 1998;
[16%] options shall be exercisable on or after _____ __, 1999;
[16%] options shall be exercisable on or after _____ __, 2000;
[16%] options shall be exercisable on or after _____ __, 2001; and
[16%] options shall be exercisable on or after _____ __, 2002.
All such ISOs shall be exercisable until _____ __, 2007, unless the period of
exercise is sooner terminated in accordance with the provisions of the Plan or
as set forth below. Unless the Committee provides otherwise in writing, upon the
termination of an Optionee's employment with the Company for any reason, (i) the
Optionee shall have no rights with respect to that portion of the ISOs which has
not yet vested and become exercisable in accordance with the above schedule or
paragraph (b) below, and (ii) the Optionee may for a period of ninety (90) days
after such termination exercise his or her ISOs to the extent, and only to the
extent, that such ISOs or portion thereof were vested and exercisable as of the
date the Optionee's employment was terminated, after which time the unexercised
portion of any ISOs shall automatically terminate in full. The preceding
sentence shall not be construed to extend the term of any Option or to permit
anyone to exercise any Option after the expiration of its term.
(b) Change in Control. In the event a Change in Control occurs with
respect to the Company, all outstanding Options evidenced by this Agreement
shall become fully exercisable as to all Common Shares subject to the Options.
(c) Right to Exercise. The Optionee understands and hereby agrees
that he or she has no right whatsoever to exercise any Option except during the
times provided herein and except as may be limited by any provisions of the
Plan.
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4. Governing Documents. This Agreement hereby incorporates by reference
all of the provisions of the Plan, as presently existing and as hereafter
amended. The Optionee expressly acknowledges and agrees that the terms and
conditions of this Agreement are subject in all respects to the provisions of
the Plan; that the terms and conditions of this Agreement in no way limit or
modify any provision of the Plan; and that in case of any conflict between the
provisions of the Plan and the terms and conditions of this Agreement, the
provisions of the Plan, as the case may be, shall control and shall bind the
parties hereto. The Optionee also hereby expressly agrees and represents as
follows:
(a) Optionee acknowledges receipt of a copy of the Plan, and
represents that he or she is familiar with the provisions of the Plan.
(b) Optionee acknowledges and understands that the establishment of
the Plan and the existence of this Agreement are not sufficient, in and of
themselves, to cause ISOs granted pursuant to the Plan to qualify for the
favorable tax treatment described in Section 422 of the Code, and that to be
entitled to such treatment, the Optionee must comply with all of the applicable
requirements of Section 422 of the Code, including without limitation, the
following requirements:
(1) Holding Period. The Optionee must not sell or otherwise
dispose of any Common Shares acquired through the exercise of an ISO
before the later of (i) two years after the date on which the Optionee was
granted the ISO or (ii) one year after the date on which the Optionee
received Common Shares pursuant to the exercise of the ISO.
(2) Employment. At all times during the period of time
beginning on the date on which an ISO is granted to the Optionee and
ending on the day that is three months before the date on which the
Optionee exercises the ISO, the Optionee must be an employee of the
Corporation or of a corporation (or parent or subsidiary corporation of
such corporation) issuing or assuming such ISOs in a transaction to which
Section 424(a) of the Code applies.
(c) Optionee acknowledges and understands that the establishment of
the Plan and the existence of this Agreement are not sufficient, in and of
themselves, to exempt the Optionee from the reporting requirements and
short-swing liability provisions of Section 16 of the Exchange Act and any rules
or regulations promulgated thereunder, and that Optionee shall not be exempt
from the short-swing liability provisions pursuant to Rule 16b-3 unless and
until Optionee shall comply with all applicable requirements of Rule 16b-3,
including without limitation, the requirement that the Optionee must not sell or
otherwise dispose of any Common Shares acquired upon exercise of an Option
unless and until a period of at least six months shall have elapsed between the
date upon which such Option was granted to the Optionee and the date upon which
the Optionee desires to sell or otherwise dispose of any Common Shares acquired
upon exercise of such Option.
(d) Optionee acknowledges and understands that the exercise of an
Option could have substantial adverse tax consequences to the Optionee, and that
the Corporation recommends that the Optionee consult with a knowledgeable tax
advisor before exercising any Option.
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5. Representations and Warranties. As a condition to the exercise of any
Option, the Corporation may require the Optionee to make any representations and
warranties to the Corporation that legal counsel for the Corporation may
reasonably determine to be advisable for the Corporation.
6. Restrictions on Encumbrances. During the lifetime of Optionee, the
Optionee agrees and covenants that no Options will be pledged or otherwise
encumbered in any manner, whether voluntarily or involuntarily, by operation of
law or otherwise. The foregoing sentence shall not be deemed or construed,
however, to prohibit any transfer otherwise allowed by will or by the laws of
descent and distribution.
7. Notices.
(a) All notices, demands or requests provided for or permitted to be
given pursuant hereto must be in writing. All notices, demands and requests
shall be deemed to have been properly given or served when deposited in the
United States mail, addressed to the individual or entity to whom notice is
given, postage prepaid and registered or certified with return receipt
requested, at the last known address of such individual or entity.
(b) By giving at least fifteen days prior written notice, the
Corporation and the Optionee shall have the right from time to time and at any
time during the term of this Agreement to change their addresses and to specify
any other address within the United States of America.
8. Titles and Captions. All Section and Paragraph titles and captions in
this Agreement are for convenience or reference only, and shall in no way
define, limit, extend or describe the scope or intent of any provision hereof.
9. Applicable Law. This Agreement shall be construed in accordance with
and shall be governed by the laws of the State of Utah, without reference to
choice of law rules.
10. Binding Effect. This Agreement shall be binding upon the Optionee and
upon the Optionee's heirs, executors, administrators, successors and legal
representatives. This Agreement shall be binding upon and shall inure to the
benefit of the Corporation, its successors and assigns.
11. Creditors. None of the provisions of this Agreement shall be for the
benefit of or shall be enforceable by any creditor of the Optionee.
12. Entire Agreement. This Agreement, including the provisions of the Plan
incorporated herein, constitutes the entire understanding and agreement between
the Corporation and the Optionee regarding the subject matter hereof. Any prior
agreement, commitment, negotiation or understanding concerning any stock option,
stock appreciation right or similar award to be granted by the Corporation and
not reflected herein or in a separately executed Stock Option Agreement is
hereby superceded and cancelled in all respects. This Agreement may not be
amended or supplemented in any manner except in a writing duly executed by both
parties hereto.
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13. Severability. In the event that any condition, covenant or other
provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the remainder of
this Agreement and shall in no way affect any other covenant, condition or
provision herein contained. If such condition, covenant or other provision shall
be deemed invalid due to its scope or breadth, such condition, covenant or
provision shall be deemed valid to the extent of the scope or breadth permitted
by law.
IN WITNESS WHEREOF, the Corporation and the Optionee have executed this
Agreement effective as of the date first set forth above.
"Corporation"
SOS STAFFING SERVICES, INC.,
a Utah corporation
By:
-----------------------------------
Title:
---------------------------------
Attest:
----------------------------
Secretary
"Optionee"
Name:
---------------------------------
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EXHIBIT H
[Exhibit H shall be a list of Key Employees of Seller to be granted stock
options. List to be provided by Seller]
Schedule 1.0
Seller has pre-paid rent through ___ 1997, in the amount of $ __. At Closing, in
addition to any payments made pursuant to Article 2, Buyer shall pay Seller $
for such pre-paid rent. Seller shall assign and transfer all rights it has
related to such pre-paid rent to Buyer. The amount of such payment shall be
treated as an expense for purposes of calculating the Branch Profit.
As of the Closing Date, Seller has advanced $___ to its employees for travel and
other expenses. At Closing, in addition to any payments made pursuant to Article
2, Buyer shall pay Seller $____. Seller shall assign and transfer all rights to
repayment of such advances to Buyer. Any re-payment of the advances received by
Buyer shall be excluded from gross sales for purposes of calculating Branch
Profit. After the close of the First Earnout Period, Seller shall pay Buyer the
sum of any advances which have not been repaid.
Seller has accrued $__ for employee vacation pay earned prior to Closing, but to
be used or paid after Closing. Such accrual accurately represents the amount of
vacation pay earned by Seller's employees prior to Closing. Seller shall pay
Buyer $______ at Closing. Such payment shall extinguish Seller's liabilities
pursuant to Article 18 of the Agreement, with respect to vacation pay. Buyer's
subsequent payment of such accrued vacation to Seller's former employees shall
be excluded as an expense for purposes of calculating Branch Profit.
