SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: MAY 14, 1998
OUTSOURCE INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
FLORIDA 000-23147 65-0675628
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
1144 EAST NEWPORT CENTER DRIVE,
DEERFIELD BEACH, FLORIDA 33442
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 418-6200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
a) May 14, 1998, OutSource International of America, Inc. ("OSIA"), a
wholly owned subsidiary of the Registrant, purchased substantially all of the
tangible and intangible assets, excluding accounts receivable, of MidWest Temps,
Inc., an Illinois corporation ("MidWest"), pursuant to the terms of an Asset
Purchase Agreement dated May 14, 1998. The initial purchase price for the assets
was $4.95 million, of which $4.0 million was paid in cash at closing and $0.95
million was placed in escrow. The escrowed portion is payable to MidWest
approximately fourteen months after closing, less any portion payable to OSIA as
compensation for any losses resulting from any breach of the Asset Purchase
Agreement, including warranties and representations, by MidWest. OSIA is
obligated to pay MidWest an additional amount equivalent to any increase in the
amount of gross profit of the acquired locations for the twelve months ended May
31, 1999, as compared to the greater of a contractually defined amount or the
gross profit of those locations for the twelve months ended March 31, 1998. In
connection with the acquisition, OSIA entered into five-year non-competition
agreements with MidWest and Teresa Usher and Deborah Weiss, stockholders of
MidWest.
The purchase price was arrived at through arms-length negotiations
between the parties. The cash and escrowed portions of the purchase price were
funded from the Registrant's revolving credit agreement with Bank Boston, N.A.,
as agent for a syndicate of lenders.
MidWest is a temporary industrial staffing firm with two business
locations in the Chicago, Illinois metropolitan area and estimated 1997 revenues
of $6.7 million.
The Registrant currently intends to continue to operate the business
formerly conducted by MidWest at both of the purchased locations with the
purchased assets for the foreseeable future. The foregoing statement of the
Registrant's intention is a forward looking statement within the meaning of
Section 21E of the Securities Exchange Act of 1934, and is based on certain
assumptions, including among others, general economic conditions, management's
expectations regarding the operating results of the Registrant and the purchased
locations, the capital requirements of continuing MidWest's current business and
others. Should these assumptions change, or prove to be inaccurate, the
Registrant's actual future conduct of MidWest's business could differ materially
from the intention stated.
The above descriptions of the asset purchase agreement and the
non-competition agreements do not purport to be complete and are qualified in
their entirety by the full text of such documents which are attached as Exhibits
hereto.
b) On May 15, 1998, OSIA purchased substantially all of the tangible and
intangible assets, excluding accounts receivable, of Resource Dimensions, Inc.,
an Illinois corporation ("RDI"), pursuant to the terms of an Asset Purchase
Agreement dated May 15, 1998. The purchase price for the assets was $3.7
million, which included $1.75 million paid in cash at closing and the delivery
of a $1.75 million junior subordinated promissory note, which is payable in
three installments during a nineteen and one half month period after closing
plus interest at an annual rate of six percent. Payment of the remaining
$200,000 is primarily contingent upon the amount of gross profit of the acquired
location for the twelve months following the acquisition. In connection with the
acquisition, OSIA entered into five-year non-competition agreements with RDI,
Earl Pick, the President and majority stockholder of RDI, and RDI's minority
shareholders.
The purchase price was arrived at through arms-length negotiations
between the parties. The cash portion of the purchase price was funded from the
Registrant's revolving credit agreement with Bank Boston, N.A., as agent for a
syndicate of lenders.
RDI is a temporary industrial staffing firm with one business location
in the Chicago, Illinois metropolitan area and estimated 1997 revenues of $9.2
million.
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The Registrant currently intends to continue to operate the business
formerly conducted by RDI at the purchased location with the purchased assets
for the foreseeable future. The foregoing statement of the Registrant's
intention is a forward looking statement within the meaning of Section 21E of
the Securities Exchange Act of 1934, and is based on certain assumptions,
including among others, general economic conditions, management's expectations
regarding the operating results of the Registrant and the purchased location,
the capital requirements of continuing RDI's current business and others. Should
these assumptions change, or prove to be inaccurate, the Registrant's actual
future conduct of RDI's business could differ materially from the intention
stated.
The above descriptions of the asset purchase agreement, the
non-competition agreements, and the promissory note do not purport to be
complete and are qualified in their entirety by the full text of such documents
which are attached as Exhibits hereto.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is not practicable to provide the financial statements required to
be filed as a result of the acquisitions of the assets of MidWest and RDI
described in Item 2 hereof (the "Financial Statements") on the date that this
report is being filed with the Securities and Exchange Commission. The Financial
Statements will be filed by amendment to this Form 8-K as soon as practicable,
but in any event not later than 60 days after this report is filed. The Company
expects to file the Financial Statements no later than July 28, 1998.
(b) PRO FORMA FINANCIAL INFORMATION.
It is not practicable to provide the pro forma financial information
required to be filed as a result of the acquisitions of the assets of MidWest
and RDI described in Item 2 hereof (the "Pro Forma Information"), on the date
that this report is being filed with the Securities and Exchange Commission. The
Pro Forma Information will be filed by amendment to this Form 8-K as soon as
practicable, but in any event not later than 60 days after this report is filed.
The Company expects to file the Pro Forma Information no later than July 28,
1998.
(c) EXHIBITS.
2.1 Asset Purchase Agreement, dated May 14, 1998, by and
among OutSource International of America, Inc.,
MidWest Temps, Inc., Teresa Usher and Deborah Weiss.
2.2 Asset Purchase Agreement, dated May 15, 1998, by and
among OutSource International of America, Inc.,
Resource Dimensions, Inc., and Earl M. Pick.
10.1 Non-Competition Agreement, dated May 18, 1998,
between OutSource International of America, Inc. and
Teresa Usher.
10.2 Non-Competition Agreement, dated May 18, 1998,
between OutSource International of America, Inc. and
Deborah Weiss.
10.3 Non-Competition Agreement, dated May 18, 1998,
between OutSource International of America, Inc. and
MidWest Temps, Inc.
10.4 Junior Subordinated Promissory Note, dated as of May
15, 1998, issued by OutSource International of
America, Inc. to Resource Dimensions, Inc.
10.5 Non-Competition Agreement, dated May 15, 1998,
between OutSource International of America, Inc. and
Earl M. Pick.
10.6 Non-Competition Agreement, dated May 15, 1998,
between OutSource International of America, Inc. and
Resource Dimensions, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OUTSOURCE INTERNATIONAL, INC.
By: /S/ PAUL M. BURRELL
-------------------------
Paul M. Burrell
President
Dated: May 29, 1998
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Asset Purchase Agreement, dated May 14, 1998, by and among
OutSource International of America, Inc., MidWest Temps, Inc.,
Teresa Usher and Deborah Weiss.
2.2 Asset Purchase Agreement, dated May 15, 1998, by and among
OutSource International of America, Inc., Resource Dimensions,
Inc., and Earl M. Pick.
10.1 Non-Competition Agreement, dated May 18, 1998, between
OutSource International of America, Inc. and Teresa Usher.
10.2 Non-Competition Agreement, dated May 18, 1998, between
OutSource International of America, Inc. and Deborah Weiss.
10.3 Non-Competition Agreement, dated May 18, 1998, between
OutSource International of America, Inc. and MidWest Temps,
Inc.
10.4 Junior Subordinated Promissory Note, dated as of May 15, 1998,
issued by OutSource International of America, Inc. to Resource
Dimensions, Inc.
10.5 Non-Competition Agreement, dated May 15, 1998, between
OutSource International of America, Inc. and Earl M. Pick.
10.6 Non-Competition Agreement, dated May 15, 1998, between
OutSource International of America, Inc. and Resource
Dimensions, Inc.
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ASSET PURCHASE AGREEMENT
DATED MAY 14, 1998
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER,
MID-WEST TEMPS, INC.
AS SELLER
AND
TERESA USHER AND DEBORAH WEISS
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 15th
day of May, 1998 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation ("Buyer"), Mid-West Temps, Inc., an Illinois
corporation ("Seller") and Teresa Usher and Deborah Weiss ("Usher and Weiss").
RECITALS:
WHEREAS, Seller operates temporary and permanent staffing businesses in
the State of Illinois with two (2) offices in the locations set forth on
SCHEDULE 1 hereto (the "Business").
WHEREAS, Usher and Weiss are the principal shareholders of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of Seller, which together constitute substantially all of the assets
that are used in connection with, necessary for, or beneficial to, the operation
of the Business;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 SALE OF ASSETS OF SELLER. Subject to the terms and conditions
hereof, Seller will sell, convey, assign, transfer and deliver to Buyer at the
Closing (as hereafter defined), and Buyer will purchase and accept at the
Closing, all assets, properties, privileges, rights, interests, business and
goodwill owned by Seller or in which Seller has an interest (except the Excluded
Assets, as hereinafter defined), and used or held for use in connection with the
operation of the Business, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (such assets, properties,
privileges, rights, interests, business and goodwill being transferred hereunder
are hereinafter referred to collectively as the "Assets"). Without limiting the
generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following (except to the extent any of the
following constitute Excluded Assets):
(a) All supplies, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements and other tangible property owned by Seller or used by
Seller in connection with the Business, including, without limitation, the
tangible assets listed on SCHEDULE 1.1 hereto.
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(b) All of Seller's right, title and interest under all agreements or
contracts to which it is a party or by which it or the Assets are bound or which
otherwise relate to the Business, including, without limitation, the documents
listed on SCHEDULE 3.7 hereto;
(c) All of Seller's right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business;
(d) All proprietary knowledge, trade secrets, technical information,
quality control data, processes (whether secret or not), methods, and other
similar know-how or rights used in the Business;
(e) All rights of Seller in and to its trade names and trademarks used
in the Business, and variants thereof and all goodwill associated therewith;
(f) The Business as a going concern and, to the extent assignable, its
Permits (as hereinafter defined), licenses, telephone numbers, customer lists,
vendor lists, advertising material and data, restrictive covenants, lists of
temporary employees, choses in action, rights of recovery, rights of recoupment,
together with all books, computer software, files, papers, records and other
data of Seller relating to its respective assets, properties, business and
operations;
(g) All other property and rights of every kind or nature owned by
Seller or used in the Business, including but not limited to the employment
applications of temporary staff (the "Applications").
(h) All of Seller's utility deposits, security deposits and prepaid
expenses.
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following (collectively, the "Excluded
Assets"):
(a) All of Seller's cash, cash equivalents and accounts receivable,
including accounts from billings to customers for temporary labor services
during the week ending Sunday, May 17, 1998.
(b) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Seller as a corporation; and
(c) Any of the rights of Seller under this Agreement (or under any
agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement).
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(d) Such choses in action, rights of recovery, rights of recoupment,
rights of refund (including refunds under canceled insurance policies) or other
claims arising from, in connection with or related to the Excluded Assets or
arising from, in connection with or related to liabilities not assumed or
indemnified by Buyer.
(e) Rights under any tax returns, to any tax refunds and claims for
refund;
(f) Employee advances (excluding advances for salary, commission and
draws);
(g) The personal automobile used by Usher;
(h) Fax machines currently located in the homes of Usher and Weiss,
respectively;
(i) Stairmaster and exercise bike;
(j) Any other personal property used at home of Usher or Weiss.
1.3 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume, and
shall agree to satisfy and discharge as the same become due only those
liabilities and obligations of Seller specifically listed on SCHEDULE 1.3 hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume, agree to perform
or discharge, indemnify the Seller against, otherwise be responsible at any time
for any liability, obligation, debt or commitment of Seller, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise, that is
not expressly listed on SCHEDULE 1.3 hereto. Without limiting the generality of
the foregoing sentence, Buyer shall not assume or be responsible for any of the
following: any amounts due to any of Seller's creditors listed on SCHEDULE 1.3
hereto in excess of the amounts expressly listed thereon; any matured
obligations under leases, licenses, contracts or agreements in excess of the
amounts expressly listed on SCHEDULE 1.3 hereto; any liabilities, obligations,
debts or commitments of Seller incident to, arising out of, or incurred with
respect to, this Agreement and the transactions contemplated hereby; any and all
sales, use, franchise, income, gross receipts, excise, payroll, personal
property (tangible or intangible), real property, ad-valorem, value added,
leasing, leasing use, or other taxes, levies, imposts, duties, charges or
withholdings of any nature arising out of the transactions contemplated hereby.
Seller further agrees to satisfy and discharge as the same shall become due all
of its obligations and liabilities not specifically assumed by Buyer hereunder,
provided, that Seller may contest any such liability to a third party in good
faith. Buyer's assumption of the Assumed Obligations shall in no way expand the
rights and remedies of third parties against Buyer as compared to the rights and
remedies which such parties would have had against Seller had this Agreement not
been consummated. Effective as of the Closing Date, all of Seller's employees
shall be terminated by Seller, and at the option of Buyer, shall be employed by
Buyer at compensation levels set forth on Schedule 3.17 attached hereto. Buyer
will indemnify Seller, Usher and Weiss and defend and hold Seller, Usher and
Weiss harmless from loss related to such termination, only with respect to any
employee who accepts employment and completes all applicable
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employment forms including a noncompetition agreement with Buyer upon the
consummation of the transaction contemplated by this Agreement.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of Seller with respect to
any lease or leasehold interest (the "Assumed Leases") shall be subject to the
terms of the Lease Assignment and Assumption Agreements to be delivered pursuant
to Sections 2.2(i) and 2.3(e) of the Agreement. SCHEDULE 1.4 hereto contains a
complete list of all Assumed Leases. Seller shall use its best efforts to cause
the landlords of each of the properties listed on SCHEDULE 1.4 to execute the
Estoppel Certificate and Consent to Assignment of Lease attached hereto as
EXHIBIT A, but such best efforts shall not require Seller to expend more than
$350.00 in payment to any such landlord to obtain the Estoppel Certificate.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a purchase
price (the "Purchase Price") of Four Million Nine Hundred Forty Six Thousand,
Eight Hundred and 00/100 Dollars ($4,946,800.00), payable in accordance with
Section 1.6 hereto, and the Earnout specified below.
1.6 PAYMENT OF PURCHASE PRICE. At Closing, Buyer shall pay the Purchase
Price to Seller as follows:
(a) Cash in the amount of Four Million and 00/100 Dollars
($4,000,000.00) via bank wire transfer of immediately available funds to an
account designated by Seller in writing;
(b) Cash in the amount of $946,800.00 shall be paid by Buyer to Seller
via bank wire transfer of immediately available funds to an account at Chicago
Title and Trust Company in Chicago, Illinois which shall serve as an indemnity
reserve account to protect Buyer against loss resulting from any breach of this
Agreement by Seller, including the breach of any of Seller's warranties or
representations hereunder. Such account shall be governed by the terms of an
Escrow Agreement in the form attached hereto as Exhibit B to be executed by the
Escrow Agent, Buyer and Seller at the Closing. All costs, fees or charges of the
Escrow Agent shall be divided equally between Seller and Buyer.
(c) On or before September 1, 1999, Seller will be paid an Earnout
("Earnout") equal to the Incremental Gross Profit (defined below) for the period
commencing with the opening of business on June 1, 1998 and ending at the close
of business on May 31, 1999 (the "Earnout Period") less consulting payments, if
any, paid to Usher and Weiss. Incremental Gross Profit is defined as the
difference between the Adjusted GP of the Business (calculated by Buyer in
accordance with EXHIBIT C) for the Earnout Period following the Closing Date and
the greater of $1,725,000 or the Adjusted GP of the Business for the period
ending on March 31, 1998. Seller and its representatives may review all books,
records and work papers of Buyer, and make copies or extracts thereof, only as
related to the calculation of the Earnout and may object to the calculation made
by Buyer of the amount of Earnout. During the Earnout Period following the
closing, Buyer will operate the Business in Buyers usual
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manner of doing business, and Buyer will not delay billing, customers, nor
advance the payment of bills for the purpose of adversely affecting the Earnout.
1.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT D hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") and applicable Treasury regulations. Buyer
and Seller shall: (i) be bound by the Allocation for purposes of determining any
Taxes (as hereafter defined); (ii) prepare and file tax returns on a basis
consistent with the Allocation; and (iii) take no position inconsistent with the
Allocation in any proceeding before any taxing authority or otherwise. In the
event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice. Seller and Buyer each shall timely after the
Closing file form 8594 with the Internal Revenue Service detailing this
allocation. In the event that Buyer determines that any adjustments to such
allocation are necessary, and Seller consents to such adjustments, Seller shall
make such modifications as are necessary in Seller's form 8594 or any tax report
or return filed or to be filed by Seller in order to conform to Buyer's
allocation as adjusted.
1.8 ENCUMBRANCES. The Assets shall be sold and conveyed to Buyer free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, title defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 1.8 hereto (the "Permitted Liens").
1.9 PRORATION. Seller shall pay at Closing all applicable transfer,
sales, use, bulk sales and other taxes, and all documentary, filing, recording
and vehicle registration fees payable as a result of the transfer of the Assets.
All ad valorem and property taxes, and any similar assessment based upon or
measured by Seller's ownership interest in the Assets, shall be prorated between
Seller and Buyer as of the Closing Date based upon such taxes assessed against
the Assets for the tax period in question, or if there is insufficient
information for such tax period, based upon taxes assessed for the immediately
preceding tax period. All such taxes shall be prorated on the basis of a 365-day
year. Seller shall be charged for all such taxes and assessments based upon or
measured by Seller's ownership prior to the Closing Date and Buyer shall be
charged for all such taxes and assessments based upon or measured by Buyer's
ownership on or after the Closing Date. All such prorations and payments shall
be made 30 days after the Closing.
2. CLOSING DATE.
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase of
the Assets (the "Closing") will take place at Rudnick & Wolfe, Suite 1800, 203
North LaSalle Street, Chicago, Illinois commencing at 8:30 A.M. Central Daylight
Time, on May 14, 1998 or at such other time and place as the parties may
establish (the date of the Closing being hereinafter referred to as the "Closing
Date"). The transactions contemplated hereby shall be deemed to be effective as
of 12:01 a.m., Eastern Daylight Time, on May 18, 1998.
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2.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
execute and deliver or cause to be executed and delivered to Buyer the
following:
(a) A Bill of Sale, in substantially the form attached as EXHIBIT E
hereto;
(b) An Assumption Agreement, in substantially the form attached as
EXHIBIT F hereto, and which shall be executed by Buyer as provided;
(c) A Noncompetition Agreement in substantially the form attached as
EXHIBIT G hereto executed by Mid-West Temps, Inc., Teresa Usher and Deborah
Weiss pursuant to which they shall agree not to compete with Buyer for a period
from the date of this Agreement and up to and including May 11, 2003;
(d) An Employment Agreement, in substantially the form attached as
EXHIBIT H hereto, executed by Anna Greenberg.
(e) An Assignment of Applications, in substantially the form attached
as EXHIBIT I hereto;
(f) An Assignment of Trademarks substantially in the form attached
hereto as EXHIBIT J;
(g) A Certificate executed as of the Closing Date by a duly authorized
officer of Seller certifying: (i) the resolutions of the Board of Directors and
Shareholders of Seller approving the transactions contemplated hereby, and (ii)
as to the accuracy of Seller's representations and warranties and as to the
performance and compliance of all of the terms, provisions and conditions to be
performed or complied with by Seller at or before Closing;
(h) The documents required pursuant to Sections 6 of this Agreement;
and
(i) Assignments of Leases in form attached as EXHIBIT N;
(j) Such other instruments of sale, transfer, conveyance and assignment
as Buyer and its counsel may reasonably request.
2.3 DELIVERIES BY BUYER. At or prior to Closing, Buyer shall execute
and deliver or cause to be executed and delivered to Seller the following:
(a) The Assumption Agreement, in substantially the form attached as
EXHIBIT F hereto;
(b) A Certificate executed as of the Closing Date by a duly authorized
officer of Buyer
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certifying: (i) the resolutions of the Board of Directors of Buyer approving the
transactions contemplated hereby, and (ii) as to the accuracy of Buyer's
representations and warranties and as to the performance and compliance of all
of the terms, provisions and conditions to be performed or complied with by
Buyer at or before Closing;
(c) Escrow Agreement in substantially the form attached as EXHIBIT B
hereto; and
(d) The portion of the Purchase Price identified in paragraph 1.6 (a)
and (b) above;
(e) Such other instruments of assumption as Seller and its counsel may
reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER, USHER AND WEISS. Seller,
Usher and Weiss, jointly and severally, as a material inducement to Buyer to
enter into this Agreement and consummate the transactions contemplated hereby,
make the following representations and warranties to Buyer. The term "knowledge"
or similar language used in this Section 3 shall, in each case, mean the actual
knowledge of Seller, Usher or Weiss, as the case may be, after reasonable
investigation.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 1.8 hereto, Seller
has good, marketable and unencumbered title to the Assets (or, with respect to
any real or personal property leases included in the Assets, a valid leasehold
interest therein), free and clear of all mortgages, security interests, liens,
claims, encumbrances, title defects, pledges, charges, assessments, covenants,
encroachments and burdens of any kind or nature whatsoever, and have full right
and authority to transfer and deliver all the Assets. Except as described in
SCHEDULE 1.8 hereto, upon consummation of the transactions contemplated hereby,
Seller will have transferred to Buyer good, marketable and unencumbered title to
the Assets (or with respect to any real or personal property leases included in
the Assets, a valid leasehold interest therein), free and clear of all
mortgages, security interests, liens, claims, encumbrances, title defects,
pledges, charges, assessments, covenants, encroachments and burdens of any kind
or nature whatsoever except for liens, claims or encumbrances created or allowed
by Buyer. The Assets constitute all of the assets that are used in connection
with, necessary for, or beneficial to the operation of the Business, except for
Excluded Assets.
3.2 CORPORATE STATUS OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Seller is qualified to do business and in good standing in each jurisdiction
where the operation of its business requires that it be so qualified. Seller has
all requisite corporate power and authority to own, operate and lease its
properties and assets, to conduct its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. An accurate and complete copy
of the Articles of Incorporation and Bylaws of Seller, as presently in effect,
are included as an attachment to SCHEDULE 3.2 hereto.
3.3 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by
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Seller of this Agreement and of each agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized and
approved by all necessary corporate action of Seller. This Agreement is (and,
when executed and delivered, each agreement, document or instrument to be
executed and delivered in connection with the transactions contemplated hereby
will be) valid and binding upon Seller, and enforceable against Seller in
accordance with their respective terms except to the extent that enforcement
thereof may be limited by applicable bankruptcy, reorganization, insolvency or
moratorium laws, or other laws affecting the enforcement of creditors' rights or
by the principles governing the availability of equitable remedies.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. Seller does not
own any real property. Except as disclosed in SCHEDULE 3.4, and to the knowledge
of Seller without independent investigation, all real property leased by Seller
and used in the operation of the Business is listed and described in SCHEDULE
3.4 hereto and is in good condition and repair, subject only to normal wear and
tear. To Seller's knowledge, without independent investigation, all buildings
and improvements located thereon are in good condition and repair, subject only
to normal wear and tear. Seller has delivered to Buyer accurate and complete
copies of all leases relating to real and personal property leased by Seller and
used in the operation of the Business and, except as described in SCHEDULE 3.4,
all such leases are in full force and effect, no event of default has been
declared thereunder and, to the Seller's knowledge, no basis for any default
exists. No such lease of real or personal property is subject to termination or
modification as a result of the transactions contemplated hereby. All material
items of tangible personal property and assets owned or leased by Seller and
used in the operation of the Business are described in SCHEDULE 1.1 hereto. All
machinery and equipment listed in SCHEDULE 1.1 conforms to all applicable
ordinances, regulations, and other laws. Except as described in SCHEDULE 1.1,
all items listed on SCHEDULE 1.1 are in good operating condition and repair,
subject only to normal wear and tear, and are adequate to conduct the Business
as it is now being conducted.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's financial statements for the years ended
December 31, 1995, 1996 and 1997 (the "Financial Statements") and the interim
monthly financial statement as of March 31, 1998. The Financial Statements: (a)
present fairly the financial position and results of operations of the Seller
for the dates or periods indicated thereon; (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period indicated except for normal year end adjustments and the
omission for footnotes; and (c) fairly presents the transactions, assets and
liabilities of Seller as of the dates and for the periods presented. Except as
set forth in the Financial Statements or on SCHEDULE 3.5 hereto, Seller has no
debts, liabilities or obligations, whether direct or indirect, accrued,
absolute, contingent, matured, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance sheet in
accordance with generally accepted accounting principles. To the knowledge of
Seller, Usher or Weiss there is no basis for the assertion of any claims or
liabilities of any nature which are not fully
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reflected or reserved against in the Financial Statements or otherwise disclosed
in SCHEDULE 3.5 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 23, 1998, Seller
has conducted the Business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and has used all
reasonable efforts consistent with normal business practices to preserve and
promote the Business and to avoid any act that might have a material adverse
effect upon the value of the Business as a going concern or upon the Assets. To
Seller's knowledge, no event has occurred to prevent the Business from operating
in a normal and usual manner and in substantially the same manner as heretofore
operated. Except as expressly set forth in SCHEDULE 3.6 hereto, since March 23,
1998:
(a) there has not been any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the Business or the
Assets;
(b) there has not been any increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (i) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents; (ii) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any of such officers, employees or agents; or (iii) other material change
in the employment terms of any officer, employee or agent of Seller;
(c) there has not been any sale, transfer or other disposition of any
tangible or intangible asset, or real or personal property or interest therein,
or any mortgage, lien or encumbrance placed thereon except in the ordinary
course of business and consistent with past practice;
(d) there have not been any capital expenditures, capital additions,
capital improvements or charitable contributions made, or committed to be made,
involving, individually or in the aggregate, Two Thousand Five Hundred Dollars
($2,500.00) or more;
(e) there has not been any failure to maintain any of Seller's books,
accounts and records in the usual, regular and ordinary manner and in accordance
with good business practices and consistent with past practice;
(f) there has not been any action taken or omitted to be taken by
Seller which could cause (with or without the giving of notice or the passage of
time, or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement (as hereinafter defined) or the
imposition of any lien, encumbrance, mortgage or other claim or charge against
the Assets;
(g) there has not been any liability, obligation or commitment incurred
by Seller involving, individually or in the aggregate, more than Two Thousand
Five Hundred Dollars ($2,500.00), other than in the normal course of business;
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(h) there are no pending claims for worker's compensation submitted by
any employee of Seller with respect to services performed on behalf of Seller,
or to Seller's knowledge, facts or state of facts existing which could give rise
to claims for workers' compensation by any employee of Seller with respect to
services performed on behalf of Seller which are not listed on Schedule 3.19 and
which exceed individually or in the aggregate Five Thousand Dollars ($5,000.00).
(i) Seller has not entered into, nor has Seller or the Assets become
subject to, any contracts, agreements, commitments, indentures, mortgages,
notes, bonds, license, real or personal property leases or other obligations of
the type required to be disclosed in SCHEDULE 3.7 hereto that are not otherwise
disclosed herein;
(j) Seller has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(k) there has been no change made or authorized in the charter or
bylaws of Seller;
(l) Seller has not issued, sold or otherwise disposed of any of its
capital stock or granted any options, warrants or other rights to purchase or
obtain any of its capital stock;
(m) Seller has not declared, set aside or paid any dividend nor made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(o) To Seller's knowledge, there has not been any other event or
condition of any character which, individually or in the aggregate, has had or
could reasonably be expected to have a material adverse effect on the Assets,
the Business, or on the financial condition or operations of Seller; and
(p) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. SCHEDULE 3.7 hereto includes a true,
correct and complete list of all material contracts, agreements, commitments,
indentures, mortgages, notes, bonds, licenses, real and personal property leases
and other obligations to which Seller is a party, by which Seller or its assets
or properties are bound or may be affected or which otherwise relate to the
Business (the "Material Agreements"). Without limiting the generality of the
foregoing, the term Material Agreement includes: (a) any lease or license with
respect to any Assets, whether Seller is tenant, landlord, licensor or licensee
thereunder; (b) any agreement, contract, indenture or other instrument relating
to the borrowing of money or the guarantee of any obligation or the deferred
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payment of the purchase price of any Assets; (c) any agreement concerning a
partnership or joint venture; (d) any agreements between Seller on the one hand
and any of its shareholders, officers, directors or employees on the other; (e)
any agreement relating to confidentiality or noncompetition; (f) any
preferential purchase right, right of first refusal or similar agreement; (g)
any agreement entered into outside of the ordinary course of business which
obligates Seller to make any payment in excess of $2,000.00; or (h) any other
agreement (or group of related agreements) which could involve expenditures (in
cash or in kind) by Seller in excess of $2,500.00 per year other than in the
normal course of business. True and complete copies of all of the Material
Agreements are included as part of SCHEDULE 3.7 hereto. Each of the Material
Agreements listed in SCHEDULE 3.7 are valid, binding and enforceable in
accordance with their respective terms and are in full force and effect and were
entered into in the ordinary course of business on an "arms length" basis. No
part of Seller's rights or benefits under any Material Agreement has been
assigned, transferred, or in any way encumbered. Seller is not in breach of nor
has Seller defaulted under any of the Material Agreements and no occurrence or
circumstance exists which constitutes (with or without the giving of notice or
the passage of time or both) a breach or default by Seller under any Material
Agreement. To Seller's knowledge, the other parties to the Material Agreements
are not in default thereunder and no occurrence or circumstance exists which
constitutes or would constitute (with or without the giving of notice or the
passage of time or both) a breach or default by the other party thereunder.
Except as set forth on SCHEDULE 3.7 hereto, neither Seller nor any of the Assets
are bound by or subject to any contract, agreement, commitment, indenture,
mortgage, note, bond, license, real or personal property lease or other
obligation which on the Closing Date cannot be terminated upon thirty (30) days'
written notice by Seller or Buyer without penalty or other obligation being
incurred upon such termination.
3.8 ASSISTANCE. Usher and Weiss shall assist Buyer with the transition
of ownership for a period not to exceed twelve (12) months following the Closing
Date by entering into a one (1) year Consulting Agreement with Buyer in
substantially the form attached hereto as EXHIBIT M .
3.9 INTELLECTUAL PROPERTY. Seller owns or is licensed to use all
patents, trademarks, copyrights, trade names, service marks and other trade
designations, including common law rights, registrations, applications for
registration, technology, know-how or processes (the "Intellectual Property")
necessary to conduct the Business, free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by Seller
immediately prior to the Closing shall be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing. To
Seller's knowledge, Seller has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that Seller owns or uses
and to consummate the transfer and assignment thereof to Buyer. Seller has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of third parties, and Seller has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation. To the knowledge of
Seller, Usher and Weiss, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Seller. SCHEDULE 3.9 hereto contains a true and
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correct description of the following:
(a) All Intellectual Property currently owned, in whole or in part, by
Seller, and all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which Seller is a party; and
(b) All agreements relating to Intellectual Property that Seller is
licensed or authorized to use from others or which Seller licenses or authorizes
others to use.
3.10 TAXES. All federal, state, local and foreign tax returns
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state, local or foreign
agency, authority or body to be filed have been duly filed by such Seller.
Seller, Usher and Weiss have either: (i) paid all federal, state, county, local,
foreign and other taxes (hereinafter "Taxes" or individually a "Tax") required
to be paid by it through the Closing Date and all deficiencies or other
additions to Tax, including interest or penalties owed in connection with any
such Taxes; or (ii) included adequate provision for all such Taxes and
deficiencies or other additions to Tax applicable to Seller in the Seller's
Financial Statements. All Taxes and other assessments and levies required to be
collected or withheld by Seller with respect to the operation of its business
from customers with respect to sales of products or from employees for income
taxes, social security taxes and unemployment insurance taxes have been
collected or withheld, and either paid to the respective governmental agencies,
or set aside in an account owned by Seller and established for that purpose.
Seller is not a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. To Seller's
knowledge, no action or proceeding regarding assessment or collection of Taxes
is threatened against Seller. To Seller's knowledge, there are no facts or state
of facts existing that (with or without the giving of notice or the passage of
time or both) could form the basis for any such action or proceeding. Seller has
not executed or filed any agreement with the Internal Revenue Service or any
other taxing authority extending the period for the assessment or collection of
any Taxes.
3.11 LITIGATION. Except as set forth on Schedule 3.11 attached hereto;
there is no suit, proceeding, action, claim or investigation, at law or in
equity, pending or, to Seller's, Usher's or Weiss' knowledge, threatened against
or affecting in any way the assets, properties or property interests of Seller.
There are no facts or state of facts existing that (with or without the giving
or notice or the passage of time or both) could form the basis for any such
suit, proceeding, action, claim or investigation. Neither Seller nor any of its
assets, property or property interests is subject to any judgement, order, writ,
injunction or decree of any court or any federal, state, municipal, foreign or
other governmental authority, department, commission, board, bureau, agency or
other instrumentality.
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
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(a) There are no pension plans, retirement, profit sharing, deferred
compensation, stock option, stock purchase, bonus, disability, severance or
termination pay, insurance or incentive plan, and each other employee benefit
plan, program, agreement or arrangement, whether funded or unfunded, sponsored,
maintained or contributed to or required to be contributed to by Seller or by
any trade or business, whether or not incorporated, that together with Seller
would be deemed a "single employer" within the meaning of Section 4001 of ERISA
(a "Company ERISA Affiliate"), for the benefit of any employee or terminated
employee of Seller or any Seller ERISA Affiliate, except Seller's medical or
health plan. Seller has complied with and is in compliance with any and all
laws, regulations, rules or ordinances regarding its medical plan or health plan
administered by Seller, and with respect to such plan (the "Plan").
(b) Seller does not participate currently and has never participated in
and is not required currently and has never been required to contribute to or
otherwise participate in any "multi employer plan," as defined in Sections
3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the Code.
(c) True and complete copies of the Plan has been furnished to Buyer.
Seller has delivered to Buyer the most recent financial statement and the most
recent actuarial report prepared with respect to such Plan that is funded, the
most recent Internal Revenue Service ("Service") determination letter, the most
recent Summary Plan Description and the most recent Annual Report together with
a statement setting forth any such documents which cannot be furnished; and any
such documents furnished and the nature of the documents which cannot be
furnished shall be reasonably satisfactory to Buyer.
(d) If the Plan is required to be "qualified" within the meaning of
Section 401(a) of the Code, a determination letter from the Service has been
received to the effect that the Plan is qualified under Section 401 of the Code
and any trust maintained pursuant thereto is exempt from federal income taxation
under Section 501 of the Code, and nothing has occurred or will occur through
the Closing Date (including without limitation the transactions contemplated by
this Agreement) which would cause the loss of such qualification or exemption or
the imposition of any penalty or tax liability.
(e) All contributions required by the Plan or by law with respect to
all periods through the Closing Date shall have been made by such date (or
provided for by Seller by adequate reserves on its financial statements) and no
excise or other taxes have been incurred or are due and owing with respect to
the Plan because of any failure to comply with the minimum funding standards of
ERISA and the Code.
(f) No "accumulated funding deficiency", as defined in Section 302 of
ERISA, has been incurred with respect to the Plan, whether or not waived. No
"reportable event" of the type set forth in Section 4043 of ERISA has occurred
and is continuing with respect to the Plan. There are no violations of ERISA or
the Code with respect to the filing of applicable reports, documents, and
notices regarding the Plan with the Secretary of Labor, Secretary of the
Treasury, or the Pension Benefit Guaranty Corporation (the "PBGC") or furnishing
such documents to participants or
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beneficiaries, as the case may be. The Plan is not under audit by the Service or
the Department of Labor. No claim, lawsuit, arbitration, or other action has
been threatened, asserted, or instituted against the Plan, any trustee or
fiduciaries thereof, Seller, or any of the assets of any trust maintained under
the Plan. Seller has not incurred nor reasonably expects to incur, any liability
to the PBGC.
(g) All amendments required to bring the Plan into conformity with any
of the applicable provisions of ERISA and the Code have been duly adopted.
(h) The Plan has been operated and administered in accordance with its
terms and the terms and the provisions of ERISA and the Code (including rules
and regulations thereunder) applicable thereto and in practice is tax qualified
under Sections 401(a) and 501 of the Code. If the Plan is intended to be
"qualified" within the meaning of Section 401(a) of the Code, it is so qualified
and the trusts maintained under such Plan is exempt from taxation under section
501(a) of the Code.
(i) No "prohibited transaction," as such term is defined in Section
4975 of the Code and Section 406 of ERISA, has occurred with respect to the Plan
(and the transactions contemplated by this Agreement will not constitute or
directly or indirectly result in such a "prohibited transaction") which could
subject Seller, Buyer, or any officer, director or employee of any of the
foregoing, or any trustee, administrator or other fiduciary, to a tax or penalty
on prohibited transactions imposed by either Section 502 of ERISA or Section
4975 of the Code.
(j) The present value, determined on a termination basis, of all
accrued benefits, vested and unvested, under the Plan, determined using the
actuarial valuation assumptions and methods (including interest rates) contained
in the most recent actuarial report for the Plan, does not exceed the assets
thereof allocable to such benefits.
(k) No welfare benefit plan (within the meaning of Section 3(1) of
ERISA) provides for continuing benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment,
except as may be required by COBRA at the expense of the participant or the
beneficiary of the participant. Seller will continue health insurance coverage
for participants through May 31, 1998.
(l) Seller does not currently maintain or contribute to any severance
pay plan. No individual shall accrue or receive any additional benefits,
service, or accelerated rights to payment of benefits under the Plan as a result
of the actions contemplated by this Agreement.
(m) Seller has complied with all of the requirements of COBRA. Seller
has complied with and is in compliance with any and all laws, regulations, rules
or ordinances regarding any medical plan or medical reimbursement plan
administered by Seller.
3.13 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in
Schedule 3.13 attached hereto, neither the execution nor delivery by Seller of
this Agreement, or any agreement, document or instrument executed and delivered
or to be executed and delivered in connection with the
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transactions contemplated hereby, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
of the provisions hereof or thereof, will: (a) conflict with or result in a
breach of any provision of Seller's Articles of Incorporation or Bylaws; (b)
result in the breach of, or conflict with, any of the terms and conditions of,
or constitute a default (with or without the giving of notice or the passage of
time or both) with respect to, or result in the cancellation or termination of,
or the acceleration of the performance of any obligations or of any indebtedness
under, any Material Agreement; (c) result in the creation of a lien, security
interest, charge or encumbrance upon any of the Assets; or (d) violate any law
or any rule or regulation of any administrative agency or governmental body, or
any order, writ, injunction or decree of any court, administrative agency or
governmental body to which any Seller or its properties or assets may be
subject. No approval, authorization, consent or other action of, or filing with,
or notice to any court, administrative agency or other governmental authority or
any other person or entity is required for the execution and delivery by any
Seller of this Agreement or any agreement, document or instrument executed and
delivered or to be executed and delivered in connection with the transactions
contemplated hereby or thereby, or the consummation of the transactions
contemplated hereby or thereby.
3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy, approvals or other authorizations from and
registrations with federal, state, municipal and foreign governmental agencies
and private associations necessary to operate its business (collectively the
"Permits") and all such Permits are in full force and effect and, to the
knowledge of Seller, no suspension or cancellation of any such Permit is
threatened. All such Permits that are assignable shall continue in full force
and effect on behalf of Buyer following consummation of the transactions
contemplated by this Agreement. A list of the Permits is included in SCHEDULE
3.14 hereto.
3.15 INSURANCE. SCHEDULE 3.15 hereto contains a complete list of all
insurance policies maintained by Seller with respect to the Business or the
Assets. Such insurance: (i) is in full force and effect and will remain so
through the Closing Date; and (ii) is sufficient for compliance with all
requirements of law and any agreements to which Seller is a party or by which
the Assets are bound.
3.16 GUARANTEES. Except as set forth in SCHEDULE 3.16 attached hereto,
neither the Business nor any of the Assets is nor will be at the Closing,
directly or indirectly: (i) liable, by guarantee or otherwise, upon or with
respect to, (ii) obligated, by discount or repurchase agreement or in any other
way, to provide funds in respect of; or (iii) obligated to guarantee or assume,
any debt, dividend or other obligation of, any person, corporation, association,
partnership or other entity including, without limitation, Seller or any of its
affiliates.
3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Seller is in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Seller, including
those relating to terms and conditions of employment and wages. There are no
complaints pending, or to Seller's, Usher's or Weiss' knowledge threatened,
against Seller in connection with any employment related matters. SCHEDULE 3.17
hereto contains a list of the names,
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office locations, compensation, and years of credited service for vacation and
pension plan purposes of all full- and part-time employees of Seller as of May
11, 1998 and a description of all employee "perks" or other benefit practices.
To the knowledge of Seller, Usher and Weiss, within the twenty four (24) months
preceding the date hereof, no strike or labor dispute involving Seller has
occurred or was threatened. None of Seller's employees are covered by any union
or collective bargaining agreement. No key employee of Seller has indicated to
Seller that he or she is considering terminating his or her employment except as
noted on SCHEDULE 3.17. The consummation of the transactions contemplated by
this Agreement will not give rise to any liability of Seller for severance pay
or termination pay. SCHEDULE 3.17 includes a monthly report for April, 1998,
which accurately reflects Seller's entire current monthly payroll obligations to
its employees. SCHEDULE 3.17 also includes a list of the names and compensation
levels of any consultants, independent contractors or temporary employees
regularly utilized by Seller in core functions of the Business (excluding
employees supplied to clients for revenue generation purposes). If notice is
received by Buyer of any matter referred to in this paragraph which is
inconsistent with the representations made herein, Buyer will promptly inform
Seller and Seller will cooperate with Buyer and assist Buyer in the resolution
of such matter.
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted its business and the Assets have
been held in compliance with all applicable laws, regulations, ordinances,
orders and other requirements of governmental authorities having jurisdiction
over Seller. Seller has not received any formal or informal notice, advice,
claim or complaint alleging that Seller has violated or may have violated any
law, regulation, ordinance or order and, to Seller's, Usher's or Weiss'
knowledge, no such notice, advice, claim or complaint of any type is threatened.
Seller has at all times complied and presently comply with all applicable
federal, state, local and foreign laws, rules and regulations respecting
occupational safety and health standards and Seller has not received complaints
from any employee or any federal, state, local or foreign agency alleging any
violation of any federal, state, local or foreign laws respecting occupational
safety and health standards.
(b) Without limiting the generality of the foregoing, to Seller's
knowledge without independent investigation (i) all real property owned or
leased by Seller and all buildings, fixtures, equipment and other improvements
located thereon and the present use thereof comply in all respects with
applicable fire codes, building codes, health codes, ordinances and regulations;
(ii) the business operations of Seller (including without limitation its leased
and owned real property) are in compliance with all applicable statutes,
regulations, ordinances, decrees or orders of governmental authorities relating
to the environment (collectively the "Environmental Laws") including without
limitation those relating to Hazardous Materials (as hereinafter defined); (iii)
no Hazardous Material has been spilled, released, deposited or discharged on any
of Seller's owned or leased real property, no such real property has been used
as a landfill or waste disposal site, and such real property is free from
pollution; (iv) no notice, information, request, citation, summons or order has
been received by Seller and no complaint has been filed and no penalty has been
assessed or threatened by any
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governmental authority with respect to (x) any alleged violation by Seller of
any Environmental Law; (y) any alleged failure by Seller to have any
environmental permit required in connection with the operation of their
business; or (z) any generation, treatment, storage, recycling, transportation
of disposal of any Hazardous Material; and (v) there have not previously been
and are not presently any claims of any nature pursuant to any Environmental Law
on any properties owned or leased by Seller. As used in this Agreement, the term
Hazardous Material means any hazardous or toxic substance, material or waste or
pollutants, contaminants or asbestos containing material which is regulated by
any authority in any jurisdiction in which Seller does business.
3.19 WORKER'S COMPENSATION CLAIMS. SCHEDULE 3.19 contains a true,
correct and complete list of all claims or pending claims for workers'
compensation submitted or expected to be submitted by any employee of Seller
from January 1, 1995 to the closing with respect to services performed on behalf
of Seller (the "Worker's Compensation Claims"). Each claim listed shall include
the total reserve amount established for such claim by the Seller's workers'
compensation carrier (the "Carrier"). Except as set forth on SCHEDULE 3.19,
there are no facts or state of facts known to Seller and existing which could
give rise to Workers' Compensation Claims by any employee of Seller with respect
to services performed on behalf of Seller.
3.20 CUSTOMER LIST. Attached hereto as SCHEDULE 3.20 is a true, correct
and current list of all customers, clients and businesses which are now, or have
within the last year, received temporary or permanent staffing from the Company,
including the address, and for each such customer, client or business, and to
Seller's knowledge, the telephone number, fax number and principal contact
person for each such customer, client or business.
3.21 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement or any Exhibit or Schedule attached hereto, and no statement contained
in any certificate or other instrument or document furnished by or on behalf of
Seller pursuant to this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact that is
necessary to make the statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement for
Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer represents and warrants to Seller, Usher and Weiss as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, and
qualified to do business in the State of Illinois. Buyer has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now being conducted and to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by
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Buyer of this Agreement and of each agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by all necessary corporate action of Buyer, and do not violate or
contravene Buyers Articles of Incorporation, By Laws, or any agreement, order,
judgment or decree to which Buyer is a party or by which Buyer is bound. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Buyer, and enforceable
against Buyer in accordance with their respective terms except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or the principles governing the availability of
equity remedies.
4.3 NO PROHIBITION. No Agreement or Contract has been entered by Buyer
which would prohibit Buyer from entering or performing this Agreement.
4.4 PERMISSION. No permission of any person, individual, group,
committee, body or entity outside the Board of Directors of the Buyer is or will
be required in order for Buyer to lawfully enter or perform this Agreement or
any Agreement referenced herein, however this transaction was previously
approved by BankBoston, Triumph Capital Group and Bachow and Associates.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLER, USHER AND WEISS. Seller,
Usher and Weiss, jointly and severally, hereby agree to defend, indemnify and
hold harmless Buyer from, against and in respect of any loss, cost, damage or
expense, including but not limited to, reasonable legal and accounting fees and
expenses (and sales taxes thereon, if any) asserted against, imposed upon or
paid, incurred or suffered (a "Loss"):
(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller, Usher or Weiss in
this Agreement or in any agreement, document or instrument executed and
delivered in connection with the transactions contemplated hereby; or
(b) any misrepresentation or inaccuracy in, or omission from any
certificate, schedule, exhibit, written statement, document or instrument
furnished by Seller, Usher or Weiss to Buyer in connection with the transactions
contemplated by this Agreement.
(c) the obligation to indemnify hereunder shall expire six (6) years
following the Closing Date.
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5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller, Usher and Weiss from, against and in respect
of any Loss as a result of, arising from or in connection with any breach of any
representation, warranty, covenant or agreement of Buyer in this Agreement or in
any agreement, document or instrument executed and delivered in connection with
the transactions contemplated hereby. The obligation to indemnify hereunder
shall expire six (6) years following the Closing Date.
5.3 INDEMNITY PROCEDURE.
(a) A party hereto agreeing to be responsible for or to indemnify
against any matter pursuant to this Agreement is referred to herein as the
"Indemnifying Party" and the other party claiming indemnity is referred to as
the "Indemnified Party." The Indemnified Party under this Agreement shall give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim of indemnity under this Agreement; provided, however, that
any failure to give such notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are actually
prejudiced. As to any claim, action, suit or proceeding by a third party, the
Indemnifying Party shall be entitled to assume defense thereof (at its expense)
provided that counsel for the Indemnifying Party who shall conduct the defense
of such claim shall be approved by the Indemnified Party, such approval not to
be unreasonably withheld. The Indemnified Party shall provide such cooperation
and such access to its books, records and properties as the Indemnifying Party
shall reasonably request with respect to such matter; and the parties hereto
agree to cooperate with each other in order to ensure the proper and adequate
defense thereof. If, in the Indemnified Party's reasonable judgment, a conflict
of interest between the Indemnified Party and the Indemnifying Party exists in
respect of a claim, or, if the Indemnifying Party, after written notice from the
Indemnified Party, fails to take timely action to defend a claim, the
Indemnified Party may assume defense of such claim or action with counsel of its
choosing at the Indemnifying Party's cost.
(b) An Indemnifying Party shall not make any settlement of any claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a settlement: (i)
involving injunctive or other equitable relief against the Indemnified Party or
its assets, employees or business; or (ii) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
5.4 PAYMENT. The Indemnifying Party shall pay to the Indemnified Party
any amounts owed to the Indemnified Party pursuant to this Section 5 within
twenty (20) days after written request from the Indemnified Party to the
Indemnifying Party to make such payment accompanied by appropriate
substantiating documentation. In determining the amount owed hereunder, the
parties shall make appropriate adjustments for tax benefits, insurance proceeds,
and reimbursement or indemnification from other sources. Upon the payment in
full of any claim, the Indemnifying Party shall be subrogated to the rights of
the Indemnified Party against any person, firm or entity with
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respect to the subject matter of the claim or litigation.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to Closing, of each of the following conditions
precedent (any or all of which may be waived in writing, in whole or in part, by
Buyer):
6.1 PERFORMANCE OF OBLIGATIONS. Seller, Usher and Weiss shall have
performed all of the obligations and complied with all of the covenants required
to be performed or to be complied with by them under this Agreement on or prior
to the Closing Date.
6.2 APPROVALS. Seller shall have delivered to Buyer any and all
approvals, consents or assignments necessary for the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required: (i) by any governmental or administrative body; (ii) under any
Material Agreement; (iii) under any insurance policies that Buyer has determined
should continue in force after the Closing; or (iv) under any Permit.
6.3 ACCESS. Buyer shall have had full and complete access during normal
business hours to the properties, assets, books, agreements, files and records
of Seller for the purpose of verifying the information set forth herein. Buyer's
due diligence investigation shall not relieve Seller from any liability in
connection with its representations and warranties set forth in this Agreement.
6.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements and the Seller's most recent compiled financial statements.
6.5 PROPERTY. Except as previously noted, all of Seller's real and
personal property shall be in good operating condition, structurally sound and
in good repair.
6.6 APPROVAL. The board of directors of Seller shall have approved
Seller entering into this Agreement and the consummation of the transactions
contemplated hereby. The board of directors of Buyer shall have approved Buyer
entering into this Agreement and consummation of the transactions contemplated
hereby.
6.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller, any suit, action or other proceeding by any private
party or governmental agency, commission, bureau or body seeking to restrain or
prohibit any of the transactions contemplated by this Agreement.
6.8 ACCRUED EXPENSES AND CONTINGENT LIABILITIES. Seller shall have
resolved, in a manner satisfactory to Buyer in its sole and absolute discretion,
any issues relating to the accrued expenses and contingent liabilities of
Seller.
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6.9 NONCOMPETITION AGREEMENT. (a) Buyer, Seller, Usher and Weiss shall
have entered into Noncompetition Agreements prohibiting the Seller, Usher and
Weiss from competing with Buyer, for a period from the date of this Agreement
and up to and including May 18, 2003. (b) Buyer and Anna Greenberg shall have
entered into Noncompetition Agreement prohibiting Anna Greenberg from competing
with Buyer, for a period of one year following from Completion of Employment.
6.10 DELIVERIES. Seller, Usher and Weiss shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
6.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller, Usher and Weiss contained in this Agreement shall be true and correct
both at the date on which this Agreement is signed and at and as of the Closing
Date as if made anew at and as of such time. A disclosure in a schedule to this
Agreement shall be deemed a disclosure regarding all matters to which it
relates.
6.12 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion
from counsel of Seller dated as of the Closing Date and in substantially the
form attached as EXHIBIT K hereto.
6.13 EMPLOYMENT AGREEMENTS. Buyer shall have received an employment
agreement from Anna Greenberg detailing her salary commission and bonus plan,
substantially in the form attached hereto as EXHIBIT H.
6.14 PREPARATION OF FILINGS AND REPORTS. Seller, Usher and Weiss shall
have assisted Buyer with the preparation of financial statements, tax filings,
SEC filings and other required reports.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's
obligation to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to Closing, of each of the following
conditions precedent (any or all of which may be waived in writing, in whole or
in part, by Seller):
7.1 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all of its
obligations and complied with all of its covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement shall be true and correct both at the date on
which this Agreement is signed and at and as of the Closing Date as if made at
and as of such time.
7.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in
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Section 2.3 of this Agreement.
8. CERTAIN ADDITIONAL COVENANTS OF SELLER. Seller, Usher and Weiss
covenant and agree with Buyer as follows:
8.1 CONDUCT AND TRANSACTIONS PRIOR TO CLOSING. From and after the date
of this Agreement until the Closing Date, except to the extent contemplated by
this Agreement or otherwise consented to in writing by Buyer:
(a) Seller shall operate its business in the same manner as presently
conducted and only in the ordinary and usual course and consistent with past
practice, and will use all reasonable efforts to preserve intact its present
business organization and to keep available the services of all employees,
representatives and agents. Seller shall use all reasonable efforts, consistent
with its past practices, to promote its business and shall not take or omit to
take any action which causes, or which is likely to cause, any deterioration of
their present business or relationships with suppliers or customers.
(b) Seller will maintain all of its properties and assets, tangible or
intangible, in substantially the same condition and repair as such properties
and assets are maintained as of the date hereof, ordinary wear and tear
excepted, and shall take all reasonable steps necessary to maintain and protect
its intangible assets. Seller shall not sell, lease or otherwise dispose of any
of its assets except in the ordinary course of business consistent with past
practice.
(c) Without the prior written consent of Buyer, Seller shall not grant
any salary increase to any employee, or enter into any new or amend or alter any
existing employment agreement or bonus, incentive compensation, medical
reimbursement, life insurance, deferred compensation, profit sharing,
retirement, pension, stock option, group insurance, death benefit or other
fringe benefit plans or other arrangements for its employees.
(d) Seller shall keep its properties and business insured to the same
extent as insured on the date hereof.
(e) Seller shall not take any action or omit to take any action that
could cause (with or without the giving of notice or the passage of time or
both) the breach, default, acceleration, amendment, termination or waiver of or
under any Material Agreement or the imposition of any lien, encumbrance,
mortgage or other claim or charge against the Assets.
(f) Seller will maintain its books, accounts and records in accordance
with good business practice and generally accepted accounting principles
consistently applied.
(g) Seller shall not take any action that would cause its
representations and warranties set
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forth herein not to be true and correct at and as of the Closing Date as if made
at and as of such time.
(h) Seller shall not declare, set aside or pay any dividend or make any
distribution with respect its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock.
(i) Seller will use its best efforts to obtain the approvals referred
to in Section 6.2 hereto.
(j) At least five (5) days prior to the Closing, Buyer may notify
Seller of those insurance policies referred to in Section 3.15 that Buyer wants
Seller to assign to Buyer, if any, and, upon such notice, Seller shall arrange
for such insurance policies to be assigned to Buyer as of the Closing Date and
for Buyer to be named as the insured thereunder.
(k) Seller shall assume responsibility for the payment of all Federal
and State income tax liabilities incurred through the Closing Date.
(l) In the event that Buyer desires to use and retain the benefit of
Seller's unemployment insurance rating with respect to any employees of Seller
whom Buyer desires to employ, Seller shall cooperate with Buyer with respect to
the taking of any actions which may reasonably be necessary to effectuate or
facilitate the transfer of such rating and to allow Buyer to retain the full
benefit thereof.
(m) Seller shall not otherwise engage in any practice, take any action
or enter into any transaction of the sort described in Section 3.6 of this
Agreement.
8.2 POST-CLOSING COVENANTS.
(a) For a period of Two (2) Years subsequent to the Closing, Seller,
Usher and Weiss covenant and agree to provide to Buyer or Buyer's auditors
prompt access to Seller's books, files, records, and financial information; to
cause any of Seller's accountants, attorneys, agents, employees, or
representatives to provide to Buyer or Buyer's auditors prompt access to
records, books, files, and financial information of Seller; and to provide such
other prompt cooperation as may be necessary for Buyer or Buyer's auditors to
prepare, at Buyer's cost, such financial statements of Seller as may be
necessary or desirable in the conduct of Buyer's business, including but not
limited to such financial statements or opinions as may be necessary in any
required filings with the Securities and Exchange Commission.
(b) Seller, Usher and Weiss covenant and agree, at their sole cost and
expense, to notify Buyer, for a period of twelve (12) months after the Closing
Date, of any Workers' Compensation Claims reported to Seller or carrier, of
which they have or obtain knowledge, and which relate to work performed prior to
the Closing Date.
(c) Seller, Usher and Weiss covenant and agree with Buyer, its
successors and assigns,
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that they will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, any and all such further acts,
instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of this Agreement.
9. POST-CLOSING COVENANTS OF BUYER.
9.1 BUSINESS LOCATION. (a) Buyer covenants and agrees that it will keep
the two (2) offices constituting the Business in place for the immediate full
twelve (12) months following the Closing Date; (b) For twelve (12) months
following the Closing and the Earnout Period, Buyer agrees that it will allow
Mid-West to use office in Buyer=s leased office at 3452 South Western Avenue,
Chicago, Illinois 60608, for the purpose of recruiting, filling and servicing
Seller=s existing clients and soliciting future clients and may continue to use
the tradename "Mid-West Temps" for the Earnout Period.
9.2 SALES FORCE AND CUSTOMER SERVICE. Buyer covenants and agrees that
until expiration of the Earnout Period the number of sales associates and
customer service representatives will be kept constant with the number employed
on the Closing Date and the sales force commission plans and the customer
service compensation plans will be as described on Schedule 3.17 attached
hereto. The sales territory for Anna Greenberg will not be reduced for two (2)
years, and the sales territory for others will not be reduced for one (1) year
following Closing.
9.3 TERRITORY; CLOSED ACCOUNTS. Schedule 3.17 defines the territory for
the sales force mentioned above. For four (4) months following the Closing Date,
the accounts, clients or customers outside such territory may be closed and the
person entitled to compensation for such accounts, etc. may receive such amounts
that are due to the time of termination of the account.
10. MISCELLANEOUS.
10.1 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules to
this Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings, agreements, arrangements and understandings, both oral and
written, between the parties hereto with respect to such subject matter. The
Exhibits and Schedules to this Agreement are incorporated into and constitute
part of this Agreement.
10.2 AMENDMENT. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
10.3 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
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10.4 SURVIVABILITY. Notwithstanding any investigation made by or on
behalf of any party to this Agreement, the representations and warranties made
under and in connection with this Agreement shall be true and correct on and as
of the Closing Date with the same effect as if made on and as of such date and
shall survive the Closing and consummation of all the transactions contemplated
hereby for a period of six (6) years following the Closing Date.
10.5 WAIVERS AND REMEDIES. The waiver by any of the parties hereto of
any other party's prompt and complete performance, or breach or violation, of
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or violation, and the waiver by any of the parties
hereto to exercise any right or remedy which it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
10.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part hereof, all of which are inserted conditionally on their being valid
in law, and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
10.7 DESCRIPTIVE HEADINGS/RECITALS. Descriptive headings contained
herein are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. The recitals are incorporated
into and made a part of this Agreement.
10.8 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts by the separate parties hereto, all of which shall be
deemed to be one and the same instrument. Facsimile signatures shall have the
same effect as original signatures.
10.9 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given: (i) when
delivered by hand; (ii) when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
(iii) five (5) days after being deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
on the second business day after being sent (prepaid for next day delivery), via
Federal Express, United Parcel Service, DHL or other nationally recognized
delivery service, as follows:
If to Seller or Usher and Weiss:
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Teresa Usher
2512 North Bosworth #402
Chicago, Illinois 60614
Fax: (773) 248-2358
Deborah Weiss
3055 West Sherwin
Chicago, Illinois 60645
Fax: (773) 465-2616
With a copy to:
Stephen A. Landsman, Esquire
Rudnick & Wolfe
Suite 1800
203 N. LaSalle Street
Chicago, Illinois 60601-1293
Fax: (312) 630-7516
If to Buyer:
OutSource International of America, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Chief Executive Officer
Phone: (954) 418-6200
Fax: (954) 418-3365
With copies to:
Brian M. Nugent, Esquire
Vice President and General Counsel
OutSource International, Inc.
Deerfield Beach, Florida 33442
Phone: (954) 418-6580
and
John C. Lovett, Esquire
Katz, Kutter, Haigler, Alderman, et al.
106 East College Avenue
Suite 1200
Tallahassee, Florida 32301
Phone: (850) 224-9634
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or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the parties hereto shall assign any of its rights
or obligations hereunder without the express written consent of the other party
hereto.
10.11 APPLICABLE LAW. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in Accordance with, the laws of the State of
Illinois.
10.12 BROKERS AND AGENTS. Except as stated below, neither Buyer or
Seller has retained any agent or broker with respect to the transaction
contemplated pursuant to this Agreement. Seller has engaged the services of Mr.
Brandon Walsh in connection with this Agreement and Seller shall pay any fee,
charge or commission owing as a result of such engagement. Seller and Buyer
agree to indemnify each other with respect to any claims made by any third party
claiming a brokerage fee or commission arising out of the transaction
contemplated by this Agreement, except for the fee charge or commission to be
paid to Westgate Financial Group, LLC by Seller.
10.13 EXPENSES. Except as otherwise provided herein, each of the
parties hereto agrees to pay all of the respective expenses incurred by it in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including accountants' and attorneys' fees.
10.14 CONFIDENTIALITY. No party hereto shall divulge the existence of
the terms of this Agreement, the transactions contemplated hereby or any
information about another party that such party may have acquired in connection
with the transaction, without the prior written approval of all of the parties
hereto, except and as to the extent: (i) obligated by law, or (ii) necessary for
such party to defend or prosecute any litigation in connection with the
transactions contemplated hereby. The parties hereto acknowledge that any breach
of the foregoing will give rise to irreparable injury that is not compensable in
damages and agree that any party may seek and obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary or
permanent injunction, or any other equitable remedy that may then be available
to such party against the breach or threatened breach of such covenants, in
addition to any other legal remedies which may be available.
10.15 CERTAIN INTERPRETATIONS. Words such as "herein," "hereof,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular Section or subsection of this Agreement. The word
"material" as used in this Agreement shall mean a deviation of more than five
(5%) percent.
10.16 EQUITABLE RELIEF. The parties hereto acknowledge and agree that
any party's remedy
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at law for any breach or threatened breach of this Agreement which relates to
requiring that the breaching party take any action or refrain from taking any
action, would be inadequate and such breach or threatened breach shall be per se
deemed as causing irreparable harm to such party. Therefore, in the event of
such breach or threatened breach, the parties hereto agree that in absence of an
adequate remedy at law, an aggrieved party shall be entitled to seek and obtain
equitable relief in the form of specific enforcement, temporary restraining
order, temporary permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
10.17 PRESS RELEASE. Except for a release giving notice that the
transaction contemplated hereby has been closed, neither Buyer nor Seller shall
make any public announcement or press release disclosing the terms and
conditions of the transaction contemplated hereby without the written approval
of the other.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
BUYER:
Witness:
OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- ------------------------- ----------------------
Name: DAVID SPARKMAN
--------------------
Title: ZONE VICE-PRESIDENT
-------------------
SELLER:
Witness:
Mid-West Temps, Inc.
By: /S/ TERESA J. USHER
----------------------
Name: /S/ DEBORAH WEISS
- --------------------------------
Title: PRESIDENT
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USHER AND WEISS:
/S/ TERESA J. USHER
--------------------------
Teresa Usher, individually
/S/ DEBORAH WEISS
--------------------------
Deborah Weiss, individually
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EXHIBIT B
ESCROW AGREEMENT
This Escrow Agreement, dated as of May 18, 1998 (the "Closing Date") by
and among OutSource International of America, Inc., a Florida corporation (the
"Buyer"), Mid-West Temps, Inc., an Illinois corporation (the "Seller"), and The
Chicago Trust Company, an Illinois corporation, as escrow agent ("Escrow
Agent").
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated May
14, 1998, by and among Buyer, Seller, Teresa Usher and Deborah Weiss, Buyer will
purchase substantially all of the assets of Seller (the "Purchase Agreement");
WHEREAS, Buyer is unwilling to consummate the acquisition pursuant to
the Purchase Agreement unless Seller agrees to place nine hundred forty-six
thousand eight hundred dollars ($946,800) in escrow for a term of fourteen (14)
months as security for its indemnification obligations under the Purchase
Agreement; and
WHEREAS, to induce Buyer to enter into the Purchase Agreement and to
consummate the transactions contemplated thereby, Buyer and Seller desire to
execute this Escrow Agreement and to be bound by the terms hereof.
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties do hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent an amount equal to nine
hundred forty-six thousand eight hundred dollars ($946,800.00) in immediately
available funds (as increased by any earnings thereon and as reduced by any
disbursements, amounts withdrawn under Section 5(j), or losses on investments,
the "Escrow Fund"). Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof.
2. INVESTMENT OF FUNDS; DISBURSEMENTS OF EARNINGS
(a) The Seller shall have sole discretion to instruct the Escrow Agent
to invest the Escrow Fund in readily marketable securities of any type rated "A"
or better by Standard & Poor's Rating Group or an equivalent rating by any other
nationally recognized rating service (with a maturity date
<PAGE>
not greater than twelve (12) months from the date of investment), with any
remainder being deposited and maintained in a money market deposit account with
Escrow Agent, until disbursement of the entire Escrow Fund. Escrow Agent is
authorized to liquidate in accordance with its customary procedures any portion
of the Escrow Fund consisting of investments to provide for payments required to
be made under this Agreement.
(b) Escrow Agent shall make quarterly disbursements to Seller of all
earnings from the investments made pursuant to this Section 2 commencing October
1, 1998 and on each January 1, April 1 and July 1 thereafter.
3. CLAIMS
(a) From time to time on or before July 18, 1999, Buyer shall give
notice (a "Notice") to Seller and Escrow Agent specifying in reasonable detail
the nature and dollar amount of any claim (a "Claim") Buyer is asserting under
Section 1.6(b) of the Purchase Agreement; Buyer may make more than one Claim
with respect to any underlying state of facts. If Seller gives notice to Buyer
and Escrow Agent disputing any Claim (a "Counter Notice") within 30 days
following receipt by Seller of the Notice regarding such Claim, such Claim shall
be resolved as provided in Section 3(b) hereof. If no Counter Notice is received
by Escrow Agent within such 30-day period, then the dollar amount of damages
claimed by Buyer as set forth in its Notice shall be deemed established for
purposes of this Escrow Agreement and the Purchase Agreement and, at the end of
such 30-day period, Escrow Agent shall pay to Buyer the dollar amount claimed in
the Notice from (and only to the extent of) the Escrow Fund. Escrow Agent shall
not inquire into or consider whether a Claim complies with the requirements of
the Purchase Agreement.
(b) If a Counter Notice is given with respect to a Claim, Escrow Agent
shall make payment with respect thereto only in accordance with (i) joint
written instructions of Buyer and Seller or (ii) a final non-appealable order of
a court of competent jurisdiction. Any court order shall be accompanied by a
legal opinion by counsel for the presenting party satisfactory to Escrow Agent
to the effect that the order is final and non-appealable. Escrow Agent shall act
on such court order and legal opinion without further question.
4. TERMINATION OF ESCROW
On July 18, 1999, Escrow Agent shall pay and distribute the then amount
of Escrow Fund to Seller unless any Claims are then pending, in which case an
amount equal to the aggregate dollar amount of such Claims (as shown in the
Notices of such Claims) shall be retained by Escrow Agent in the Escrow Fund and
the balance shall be paid to Seller. If there shall be multiple Claims pending,
and any such Claim shall be resolved by settlement, litigation or otherwise, the
Escrow Agent shall pay and distribute the portion of the Escrow Fund relating to
such resolved Claim in the manner provided for in Section 3(b) above.
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5. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Fund
held by it hereunder any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Agreement. Uninvested funds held hereunder shall not earn or
accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out of
and in connection with this Agreement. Without limiting the foregoing, Escrow
Agent shall in no event be liable in connection with its investment or
reinvestment of any cash held by it hereunder in good faith, in accordance with
the terms hereof, including, without limitation, any liability for any delays
(not resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Fund, or any loss of interest or
principal incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from this Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number certification, or
non-resident alien certifications. This Section 5(e) and Section 5(b) shall
survive notwithstanding any termination of this Agreement or the resignation of
Escrow Agent.
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<PAGE>
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrow Fund to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or (b)
the day which is 30 days after the date of delivery of its written notice of
resignation to the other parties hereto. If at that time Escrow Agent has not
received a designation of a successor Escrow Agent, Escrow Agent's sole
responsibility after that time shall be to retain and safeguard the Escrow Fund
until receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final non-appealable
order of a court of competent jurisdiction.
(i) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Fund or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until
Escrow Agent shall have received (i) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Escrow Fund in accordance
with such order or agreement. Any court order shall be accompanied by a legal
opinion by counsel for the presenting party satisfactory to Escrow Agent to the
effect that the order is final and non-appealable. Escrow Agent shall act on
such court order and legal opinion without further question.
(j) Buyer and Seller shall pay Escrow Agent compensation (as payment in
full) for the services to be rendered by Escrow Agent hereunder in the amount of
$2,792.00 at the time of execution of this Agreement and agree to reimburse
Escrow Agent for all reasonable expenses, disbursements and advances incurred or
made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of its counsel). Any such
compensation and reimbursement to which Escrow Agent is entitled shall be borne
equally by Buyer and Seller.
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(k) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers, or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities
depository it reasonably deems appropriate, including, without limitation, the
Depositary Trust Company and the Federal Reserve Book Entry System.
6. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this agreement against Escrow Agent. Escrow Agent
shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
7. OWNERSHIP FOR TAX PURPOSES
Seller agrees that, for purposes of federal and other taxes based on
income, Seller will be treated as the owner of the Escrow Fund, respectively,
and that Seller will report all income, if any, that is earned on, or derived
from, the Escrow Fund as its income, in such proportions, in the taxable year or
years in which such income is properly includible and pay any taxes attributable
thereto.
8. NOTICES
Every notice or other communication required, contemplated or permitted
by this Agreement by any party shall be in writing and shall be delivered either
by personal delivery, telegram, telecopy (provided receipt thereof is confirmed
in writing on the date of receipt by the recipient thereof), private carrier
service or postage prepaid, return receipt requested certified or registered
mail, addressed to the party to whom intended at the following address:
(a) If to Seller:
Mid-West Temps, Inc.
2512 North Bosworth, No. 402
Chicago, Illinois 60614
Attention: Ms. Teresa Usher
Fax No. 773.248.2358
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With a copy to:
Rudnick & Wolfe
203 North LaSalle Street, Suite 1800
Chicago, Illinois 60601-1293
Attention: Stephen A. Landsman, Esq.
Fax No. 312.236.7516
(b) If to Buyer:
OutSource International of America, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Chief Executive Officer
Fax No. 954.418.3365
With a Copy to:
OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Brian Nugent, Esq.
Vice President and General Counsel
Fax No. 954.418.3365
and
Katz, Kutter, Haigler, Alderman, et al.
106 East College Avenue
Suite 1200
Tallahassee, Florida 32301
Attention: John C. Lovett, Esq.
Fax No. 850.224.0781
(c) If to Escrow Agent:
Chicago Title and Trust Company
171 N. Clark Street
Chicago, Illinois 60601
Attention: Ann Christensen/Max Mintzer
Fax No. 312.223.5888
6
<PAGE>
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Illinois, Cook County and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
11. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
12. WAIVER OF PROVISIONS
The terms, covenants, representations, warranties and conditions of
this Agreement may be waived only by a written instrument executed by the party
waiving compliance. The failure of any party at any time to require performance
of any provision hereof shall, in no manner, affect the right at a later date to
enforce the same. No waiver by any party of any condition, or breach of any
provision, term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any other
provision, term or covenant of this Agreement.
13. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Buyer, the
Seller and the Escrow Agent.
7
<PAGE>
14. GOVERNING LAW
The validity, construction and enforceability of this Agreement shall
be governed in all respects by the laws of the State of Illinois, without regard
to its conflict of laws rules.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
OUTSOURCE INTERNATIONAL MID-WEST TEMPS, INC.
OF AMERICA, INC.
By: /S/ DAVID SPARKMAN By: /S/ TERESA J. USHER
---------------------- ---------------------
Name: DAVID SPARKMAN Name: TERESA J. USHER
-------------------- -------------------
Title: ZONE VICE-PRESIDENT Title: PRESIDENT
------------------- ------------------
THE CHICAGO TRUST COMPANY
By:/S/ HUBERT A. ADAMS
----------------------------
Name: HUBERT A. ADAMS
-------------------------
Title: SENIOR VICE PRESIDENT
------------------------
9
<PAGE>
EXHIBIT C
ADJUSTED GP OF THE BUSINESS
For purposes of Section 1.6 of the Agreement, the Adjusted GP of the Business
will be calculated as:
REVENUE less COST OF SALES
REVENUE: total invoices for services rendered by the Business including, without
limitation, permanent placement fees, during the period commencing at
the opening of business on June 1, 1998 and terminating at the close of
business on May 31, 1999 (the "Earnout Period") that are attributable
to: (i) the accounts of Seller at the Closing Date that are being
purchased pursuant to the Agreement and retained by Buyer (the
"Purchased Accounts"); (ii) all incremental business attributed to the
Purchased Accounts; and (iii) any new accounts secured after the
Closing Date by employees of Buyer who were employees of Seller as of
the Closing Date or any replacements thereof of substitutions therefor
((i) (ii) and (iii) are collectively referred to herrein as the
"Business Accounts"). Revenue, as determined above, shall be adjusted
for credit or debit memos received with respect to such invoices on or
before the last day of the first month following the end of the
applicable twelve month period, provided that any such debit memo or
credit memo is issued in the ordinary course of business consistent
with past practices prior to Closing and is in accordance with
generally accepted accouting principles. In addition to the foregoing,
it is understood and agreed that for purposes of this Exhibit C, if ,
during the Earnout Period, Mid-West secures an order which is wholly or
partially fulfilled out of non-Mid-West offices of Buyer (which, for
this purpose, shall be deemed to include fulfillment by Tandem
personnel at the shared office at 3452 S. Western Avenue in Chicago,
Illinois (the "Shared Office")), then Buyer shall be entitled to
receive 50% if the gross profit attributable to the number of worksite
temporary employees provided by Buyer (and Seller shall only be
chargeable with 50% of the Cost of Sales with respect to such
employees) and, conversely, if Buyer secures an order which is wholly
or partially fulfilled by a Mid-West personnel, whether out of a
Mid-West office or the Shared Office, then the Adjusted GP of the
Business shall be increased by 50% of the gross profit attributable to
the number of worksite temporary employees provided by Mid-West. One
hundred percent (100%) of any business secured by a Mid-West sales
representative and filled by a Mid-West personnel, whether out of a
Mid-West office or the Shared Office, shall be included within Revenue
hereunder.
<PAGE>
COST OF
SALES:(1) the sum of:
/bullet/ Gross Payroll of all worksite temporary employees working at
the Business Accounts; provided, however, that in any
instance where only 50% of the revenue is included within
Revenue hereunder, then only 50% of any such Gross Payroll
shall be included within Cost of Sales hereunder.
/bullet/ All employment related taxes paid by Buyer attributable to
worksite temporary employees working at the Business Accounts,
including, but not limited, to FICA, SUTA (Seller's rates) and
FUTA; provided, however, that in any instance where only 50%
of the revenue is included within Revenue hereunder, then only
50% of any such employment related taxes shall be included
within Cost of Sales hereunder.
/bullet/ WORKERS' COMPENSATION EXPENSE relating to worksite temporary
employees working at the Business Accounts (based upon
Seller's 1998/1999 rates as set forth on page 5 of the May 1,
1998 proposal from Wausau Underwriters Insurance Company, a
copy of which is attached hereto); provided, however, that in
any instance where only 50% of the revenue is included within
Revenue hereunder, then only 50% of any such Workers'
Compensation expenses shall be included within Cost of Sales
hereunder.
/bullet/ BAD DEBT relating to the Business Accounts. For purposes
hereof, a bad debt shall be deemed to mean solely the gross
profit amount on the amount of any invoice for the related
Business Accounts which is either written off as uncollectible
for the Earnout Period, or which is outstanding for more than
ninety (90) days as of August 31, 1999, plus 10% of such
uncollectible amount; provided however, then in any instance
where only 50% of the revenue is included within Revenue
hereunder, then only 50% of the bad debt (as defined above)
shall be included within Cost of Sales hereunder. The write
off of any invoice as uncollectible shall be made in the
ordinary and usual course of business on the basis of criteria
which is consistent with Seller's past practice prior to the
Closing date and which is in accordance with generally
accepted accounting principles.
- ----------
(1) For the purposes of the 1997-1998 base period gross profit calculation,
actual worker' compensation expenses are to be used.
2
<PAGE>
EXHIBIT M
STATE OF ILLINOIS
COUNTY OF COOK
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT made and entered into this 18th day of May, 1998, by and
between OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida corporation whose
address is 1144 East Newport Center Drive, Deerfield Beach, Florida 33442
("OutSource"),and TERESA USHER whose address is 2512 North Bosworth #402,
Chicago, Illinois 60614 ("Usher").
STATEMENT OF BACKGROUND INFORMATION
OutSource has acquired and intends to operate a certain business (the
"Business") formerly known as Mid-West Temps, Inc. in Chicago, Illinois. Usher
desires to render consulting services to OutSource in connection with the
Business. OutSource desires to engage the services of Usher for such purpose.
The parties desire to state their intentions with respect to such engagement in
this Agreement.
STATEMENT OF AGREEMENT
For the consideration stated below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
OutSource and Usher agree:
1. ENGAGEMENT: OutSource hereby engages Usher to assist OutSource by
providing consulting services (the "Services") in connection with the Business.
The Services are to consult with and advise OutSource regarding the Business,
its clients, methods of operating, sources of revenue
1
<PAGE>
and other general business concerns. Usher accepts such engagement and agrees to
perform the Services as set forth herein.
2. CONSIDERATION: The consideration for this Agreement is the benefit
received by Usher under the terms of that certain Asset Purchase Agreement dated
May 14, 1998 between and among OutSource, Mid-West Temps, Inc., Usher and
Deborah Weiss. No further fee or payment is to be made to Usher under this
Agreement.
3. OUTSOURCE'S DIRECTION: Usher shall perform the Services as
reasonably requested by OutSource, but Usher shall not be required to devote any
set number of hours or minimum time to provide the Services, only to consult
with and advise OutSource in good faith regarding the Business. Usher shall be
reimbursed by OutSource for her reasonable business expenses incurred with the
approval of OutSource in connection with the Services.
4. CONTRACTS: Usher shall not enter into any contracts with any party
in the name of OutSource. Usher shall have no authority to bind OutSource to any
contract or agreement, or to acquiesce in any action on behalf of OutSource.
Usher shall have no authority to obligate OutSource for any cost, expense, or
indebtedness.
5. TERM OF AGREEMENT: The term of this Agreement shall commence on the
date hereof and shall continue for one year from the date of this Agreement.
6. PROCEDURE ON TERMINATION. On the termination of this Agreement,
Usher shall account to and deliver to OutSource all materials, supplies,
equipment, contracts, documents, and other items in her possession related to
the Services and furnish all information and take all further reasonable action
that OutSource may reasonably request to effectuate an orderly and systematic
termination of Usher's responsibilities hereunder.
2
<PAGE>
7. NO PARTNERSHIP. OutSource and Usher shall not and do not by this
Agreement in any way or for any purpose become partners, nor shall either be or
become a joint venturer or member of a joint enterprise with the other. Usher is
an independent contractor and not an employee of OutSource.
8. NOTICES: All notices required, permitted, or given under this
Agreement shall be in writing and shall be deemed given when personally
delivered or deposited in the United States Mail, postage prepaid, return
receipt requested and addressed to the parties at their address stated above.
9. MISCELLANEOUS: This Agreement has been made and entered into under
the laws of the State of Illinois and shall be enforced and construed in
accordance with Illinois law. This Agreement shall be binding upon and inure to
the benefit of OutSource and Usher and their respective heirs, legal
representatives, successors, and assigns. This Agreement, together with the
attachments hereto, constitutes the sole agreement between OutSource and Usher
with respect to the matters contained herein and shall not be modified except by
a writing signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by OutSource and
Usher as of the day written above.
3
<PAGE>
Signed, sealed and delivered
in the presence of:
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- ---------------------------- -------------------------------
Its: ZONE VICE-PRESIDENT
- ---------------------------- ------------------------------
/S/ TERESA J. USHER
- ---------------------------- -----------------------------------
TERESA USHER
4
<PAGE>
STATE OF ILLINOIS
COUNTY OF COOK
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT made and entered into this 18th day of May, 1998, by and
between OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida corporation whose
address is 1144 East Newport Center Drive, Deerfield Beach, Florida 33442
("OutSource"),and DEBORAH WEISS whose address is 3055 West Sherwin, Chicago,
Illinois 60645 ("Weiss").
STATEMENT OF BACKGROUND INFORMATION
OutSource has acquired and intends to operate a certain business (the
"Business") formerly known as Mid-West Temps, Inc. in Chicago, Illinois. Weiss
desires to render consulting services to OutSource in connection with the
Business. OutSource desires to engage the services of Weiss for such purpose.
The parties desire to state their intentions with respect to such engagement in
this Agreement.
STATEMENT OF AGREEMENT
For the consideration stated below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
OutSource and Weiss agree:
1. ENGAGEMENT: OutSource hereby engages Weiss to assist OutSource by
providing consulting services (the "Services") in connection with the Business.
The Services are to consult with and advise OutSource regarding the Business,
its clients, methods of operating, sources of revenue and other general business
concerns. Weiss accepts such engagement and agrees to perform the Services as
set forth herein.
5
<PAGE>
2. CONSIDERATION: The consideration for this Agreement is the benefit
received by Weiss under the terms of that certain Asset Purchase Agreement dated
May 14, 1998 between and among OutSource, Mid-West Temps, Inc., Usher and
Deborah Weiss. No further fee or payment is to be made to Weiss under this
Agreement.
3. OUTSOURCE'S DIRECTION: Weiss shall perform the Services as
reasonably requested by OutSource, but Weiss shall not be required to devote any
set number of hours or minimum time to provide the Services, only to consult
with and advise OutSource in good faith regarding the Business. Weiss shall be
reimbursed by OutSource for her reasonable business expenses incurred with the
approval of OutSource in connection with her Services.
4. CONTRACTS: Weiss shall not enter into any contracts with any party
in the name of OutSource. Weiss shall have no authority to bind OutSource to any
contract or agreement, or to acquiesce in any action on behalf of OutSource.
Weiss shall have no authority to obligate OutSource for any cost, expense, or
indebtedness.
5. TERM OF AGREEMENT: The term of this Agreement shall commence on the
date hereof and shall continue for one year from the date of this Agreement.
6. PROCEDURE ON TERMINATION. On the termination of this Agreement,
Weiss shall account to and deliver to OutSource all materials, supplies,
equipment, contracts, documents, and other items in her possession related to
the Services and furnish all information and take all further reasonable action
that OutSource may reasonably request to effectuate an orderly and systematic
termination of Weiss's responsibilities hereunder.
7. NO PARTNERSHIP. OutSource and Weiss shall not and do not by this
Agreement in any way or for any purpose become partners, nor shall either be or
become a joint venturer or member
6
<PAGE>
of a joint enterprise with the other. Weiss is an independent contractor and not
an employee of OutSource.
8. NOTICES: All notices required, permitted, or given under this
Agreement shall be in writing and shall be deemed given when personally
delivered or deposited in the United States Mail, postage prepaid, return
receipt requested and addressed to the parties at their address stated above.
9. MISCELLANEOUS: This Agreement has been made and entered into under
the laws of the State of Illinois and shall be enforced and construed in
accordance with Illinois law. This Agreement shall be binding upon and inure to
the benefit of OutSource and Weiss and their respective heirs, legal
representatives, successors, and assigns. This Agreement, together with the
attachments hereto, constitutes the sole agreement between OutSource and Weiss
with respect to the matters contained herein and shall not be modified except by
a writing signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by OutSource and
Weiss as of the day written above.
Signed, sealed and delivered in the presence of:
OUTSOURCE INTERNATIONAL
OF AMERICA, INC.
By: /S/ DAVID SPARKMAN
--------------------------------
/S/ MICHELE GRABASCH Its: ZONE VICE-PRESIDENT
- ------------------------------- ------------------------------
/S/ DEBORAH WEISS
- ------------------------------- ------------------------------------
DEBORAH WEISS
7
ASSET PURCHASE AGREEMENT
DATED MAY 15, 1998
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER,
RESOURCE DIMENSIONS, INC.
AS SELLER
AND
EARL M. PICK
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 15th
day of May, 1998 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation or its designee ("Buyer"), Resource Dimensions,
Inc., an Illinois corporation ("Seller") and Earl M. Pick ("Pick").
RECITALS:
WHEREAS, Seller operates temporary industrial and clerical help
businesses in the State of Illinois with two (2) offices in the locations set
forth on SCHEDULE 1 hereto (the "Business").
WHEREAS, Pick is a principal shareholder of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, certain of the assets
of Seller, as hereinafter described, which together constitute the assets that
are used in connection with, necessary for, or beneficial to, the operation of
the Business.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 SALE OF ASSETS OF SELLER. Subject to the terms and conditions
hereof, Seller will sell, convey, assign, transfer and deliver to Buyer at the
Closing (as hereafter defined), and Buyer will purchase and accept at the
Closing, all assets, properties, privileges, rights, interests, business and
goodwill owned by Seller or in which Seller has an interest (except the Excluded
Assets, as hereinafter defined), and used or held for use in connection with the
operation of the Business, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (such assets, properties,
privileges, rights, interests, business and goodwill being transferred hereunder
are hereinafter referred to collectively as the "Assets"). Without limiting the
generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following (except to the extent any of the
following constitute Excluded Assets):
(a) All supplies, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements and other tangible property owned by Seller or used by
Seller in connection with the Business, including, without limitation, the
tangible assets listed on SCHEDULE 1.1 hereto;
(b) All of Seller's right, title and interest under all agreements or
contracts to which it is a party or by which it or the Assets are bound or which
otherwise relate to the Business, including, without limitation, the documents
listed on SCHEDULE 3.7 hereto;
2
<PAGE>
(c) All of Seller's right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business;
(d) All proprietary knowledge, trade secrets, technical information,
quality control data, processes (whether secret or not), methods, and other
similar know-how or rights used in the Business;
(e) All rights of Seller in and to its trade names and trademarks used
in the Business, and variants thereof and all goodwill associated therewith;
(f) The Business as a going concern, its Permits (as hereinafter
defined) which are subject to assignment or transfer under applicable law, and
the Business' licenses, telephone numbers, customer lists, vendor lists,
advertising material and data, restrictive covenants, lists of temporary
employees, choses in action, rights of recovery, rights of recoupment, together
with all books, computer software, files, papers, records and other data of
Seller relating to its respective assets, properties, business and operations;
(g) All of Seller's utility, security and other deposits and prepaid
expenses; and
(h) All other property and rights of every kind or nature owned by
Seller or used in the Business, including but not limited to the employment
applications of temporary staff (the "Applications").
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following as set forth in SCHEDULE 1.2
(collectively, the "Excluded Assets"):
(a) All of Seller's cash, cash equivalents, accounts receivable, and
prepaids in excess of $2,000.00 individually, each as existing on the Closing
Date;
(b) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Seller as a corporation;
(c) Any of the rights of Seller under this Agreement (or under any
agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement);
(d) The personal effects of Pick described in Schedule 1.2; and
(e) Any indebtedness due Seller from any shareholder of Seller.
3
<PAGE>
1.3 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume, and
shall agree to satisfy and discharge as the same become due only those
liabilities and obligations of Seller specifically listed on SCHEDULE 1.3 hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume, agree to perform
or discharge, indemnify the Seller against, otherwise be responsible at any time
for any liability, obligation, debt or commitment of Seller, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise, that is
not expressly listed on SCHEDULE 1.3 hereto. Without limiting the generality of
the foregoing sentence, Buyer shall not assume or be responsible for any of the
following: any amounts due to any of Seller's creditors listed on SCHEDULE 1.3
hereto in excess of the amounts expressly listed thereon; any matured
obligations under leases, licenses, contracts or agreements in excess of the
amounts expressly listed on SCHEDULE 1.3 hereto; any liabilities, obligations,
debts or commitments of Seller incident to, arising out of, or incurred with
respect to, this Agreement and the transactions contemplated hereby; any and all
sales, use, franchise, income, gross receipts, excise, payroll, personal
property (tangible or intangible), real property, ad-valorem, value added,
leasing, leasing use, or other taxes, levies, imposts, duties, charges or
withholdings of any nature arising out of the transactions contemplated hereby.
Seller further agrees to satisfy and discharge as the same shall become due all
of its obligations and liabilities not specifically assumed by Buyer hereunder.
Buyer's assumption of the Assumed Obligations shall in no way expand the rights
and remedies of third parties against Buyer as compared to the rights and
remedies which such parties would have had against Seller or Pick had this
Agreement not been consummated.
Effective as of the Closing Date, all of Seller's employees shall be
terminated by Seller. On or shortly after the Closing Date, Buyer shall make
offers of employment, on the same terms and conditions as existing immediately
prior to Closing, to all of Seller's employees, except that Buyer may choose not
to make an offer of employment to any of Seller's employees with respect to
which Buyer is in possession of information that would justify the refusal to
hire an employee in the exercise of Buye s reasonable discretion. With respect
to any employee of Seller that accepts an offer of employment from Buyer, Buyer
agrees to indemnify Seller and hold Seller harmless from any severance or
similar type liability arising from any subsequent termination of that
employee's employment by Buyer; however, Buyer shall have no such liability with
respect to any employee of Seller who refuses an offer of employment with Buyer
or with respect to any employee of Seller for whom Buyer, in the exercise of its
reasonable discretion as set forth above, chooses not to make an offer of
employment.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of Seller with respect to
any lease or leasehold interest (the "Assumed Leases") shall be subject to the
terms of the Lease Assignment and Assumption Agreements to be delivered pursuant
to Sections 2.2(i) and 2.3(e) of the Agreement. SCHEDULE 1.4 hereto contains a
complete list of all Assumed Leases. Seller shall use reasonable efforts to
cause the landlords of each of the properties listed on SCHEDULE 1.4 to execute
the Estoppel Certificate and Consent to Assignment of Lease attached hereto as
EXHIBIT A.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a maximum
aggregate purchase price (the "Purchase Price") of Three Million Seven Hundred
Thousand and 00/100 Dollars
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($3,700,000.00), payable in accordance with Section 1.6 hereto, subject to
post-closing adjustment in accordance with Section 1.7 hereto.
1.6 PAYMENT OF PURCHASE PRICE. At Closing, Buyer shall pay the Purchase
Price as follows:
(a) Cash at Closing in the amount of One Million Seven Hundred Fifty
Thousand and 00/100 Dollars ($1,750,000.00) via bank wire transfer;
(b) The issuance and delivery at Closing of a Junior Subordinated Note
in the principal amount of One Million Seven Hundred Fifty Thousand and 00/100
Dollars ($1,750,000.00), bearing simple interest at the rate of Six Percent (6%)
per annum on the unpaid principal balance from time to time outstanding,
substantially in the form attached hereto as EXHIBIT J. The principal and
interest shall be paid in three (3) equal installments of principal, together
with interest thereon, due on January 1, 1999, July 1, 1999, and January 1,
2000.
(c) The balance of the Purchase Price shall be paid as an "Earnout
Payment" in an amount not to exceed Two Hundred Thousand Dollars ($200,000.00)
on or before September 1, 1999, if (i) the operations of the Business by Buyer
during the full twelve (12) month period commencing on the first day of the
month immediately following the month in which the Closing occurs (the "Twelve
Month Period"), result in a "Minimum Gross Profit" of no less than Two Million
Three Hundred Thousand Dollars ($2,300,000.00) and (ii) Seller enters into a
binding and enforceable agreement with Paul Hermes and Larry Gillespie requiring
that such persons will be paid by Seller the sum of Thirty Three Thousand
Dollars ($33,000.00) each at the Closing, plus approximately Four Percent (4%)
each of the post-Closing value of the net retained assets of the Seller within
Sixty (60) days of the Closing, and, if the Minimum Gross Profit is achieved
within the Twelve Month Period, Paul Hermes and Larry Gillespie will be paid by
Seller the sum of Twenty One Thousand Four Hundred Dollars ($21,400.00) each on
July 1, 1999 and January 1, 2000. Such persons shall be employees of Buyer and
their activities, duties and responsibilities shall be determined solely by
Buyer. Failure by Seller to make any of such payments shall relieve Buyer of any
responsibility to make payments of the Earnout Payment, unless Seller's failure
to make any of such payments results from Buyer's default of its obligations
under the Junior Subordinated Note described in Section 1.6(b). If the
conditions set forth in (i) and (ii) above are satisfied (including payment by
Seller of the amounts set forth in (ii) to be paid to Paul Hermes and Larry
Gillespie at Closing, 60 days post-Closing, and July 1, 1999), the Earnout
Payment will be paid as follows: Fifty Thousand Dollars ($50,000.00) to Paul
Hermes; Fifty Thousand Dollars ($50,000.00) to Larry Gillespie; and One Hundred
Thousand Dollars ($100,000.00) to Pick.
If the actual Gross Profit from Buyer's operation of the Business in
the Twelve Month Period is less than the Minimum Gross Profit stated above, the
Earnout Payment will be reduced by One Dollar ($1.00) for each Dollar that the
actual Gross Profit is less than the Minimum Gross Profit. Such reduction shall
be distributed pro rata between the shares of the Earnout Payment accruing to
Paul Hermes, Larry Gillespie, and Pick, such that each One Dollar ($1.00)
reduction in the Earnout
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Payment shall reduce Paul Hermes's and Larry Gillespie's shares of the Earnout
Payment by Twenty-Five Cents ($0.25) each, and shall reduce Pick's share of the
Earnout Payment by Fifty Cents ($0.50).
In the event that either Paul Hermes or Larry Gillespie, or both, is
(are) not employed for the full Twelve Month Period, the share(s) of the Earnout
Payment, if any, accruing to such individual(s) not remaining employed for the
full Twelve Month Period shall revert to and be payable to Pick.
For purposes of this paragraph, Gross Profit shall mean (i) "Revenue"
less (ii) "Cost of Sales", as such terms are defined on Exhibit "C-1" attached
hereto.
1.7 POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price and
other payments due under this Agreement shall be subject to the following
post-closing adjustments:
(a) SET-OFF. The Junior Subordinated Note and the Earnout Payment
shall be subject to set-off for any damage resulting from Pick's or Seller's
breach of this Agreement, including a breach of any warranty or representation,
provided that the amount of any such set-off shall not exceed the principal sum
of One Million and 00/100 Dollars ($1,000,000.00). As set forth in the Junior
Subordinated Note, any setoff of principal shall also include a setoff of any
interest accruing from the original date of the Junior Subordinated Note on the
setoff amount.
(b) RETAINED ASSETS. At least ten (10) business days prior to Closing,
Seller shall make a full accounting to Buyer in regard to any personal property
which Seller retains with Buyer's consent and which Buyer, in its sole
discretion, determines is not necessary for the operation of the Business
("Retained Assets"). The Retained Assets shall be limited to those listed on
SCHEDULE 1.2. Any adjustments to the Purchase Price shall be mutually agreed to
by the parties and shall be made at the closing.
1.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT C hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") and applicable Treasury regulations. Buyer
and Seller shall: (i) be bound by the Allocation for purposes of determining any
Taxes (as hereafter defined); (ii) prepare and file tax returns on a basis
consistent with the Allocation; and (iii) take no position inconsistent with the
Allocation in any proceeding before any taxing authority or otherwise. In the
event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice. Seller and Buyer each shall timely after the
Closing file form 8594 with the Internal Revenue Service detailing this
allocation. In the event that Buyer determines that any adjustments to such
allocation are necessary, and Seller consents to such adjustments, Seller shall
make such modifications as are necessary in Seller's form 8594 or any tax report
or return filed or to be filed by Seller in order to conform to Buyer's
allocation as adjusted.
1.9 ENCUMBRANCES. The Assets shall be sold and conveyed to Buyer free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, title
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defects, pledges, encroachments and burdens of every kind or nature whatsoever,
except for the matters set forth in SCHEDULE 1.9 hereto (the "Permitted Liens").
1.10 PRORATION. Seller shall pay at Closing all applicable transfer,
sales, use, bulk sales and other taxes, and all documentary, filing, recording
and vehicle registration fees payable as a result of the transfer of the Assets,
except for any taxes or charges which are the obligation of Buyer under
applicable law. All ad valorem and property taxes, and any similar assessment
based upon or measured by Seller's ownership interest in the Assets, shall be
prorated between Seller and Buyer as of the Closing Date based upon such taxes
assessed against the Assets for the tax period in question, or if there is
insufficient information for such tax period, based upon taxes assessed for the
immediately preceding tax period. All such taxes shall be prorated on the basis
of a 365-day year. Seller shall be charged for all such taxes and assessments
based upon or measured by Seller's ownership prior to the Closing Date and Buyer
shall be charged for all such taxes and assessments based upon or measured by
Buyer's ownership on or after the Closing Date. All such prorations and payments
shall be made within 30 days of the Closing.
2. CLOSING DATE.
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase of
the Assets (the "Closing") will take place at the offices of Laser, Pokorny,
Schwartz, Friedman and Economos, P.C., 205 N. Michigan Avenue, Suite 3800,
Chicago, Illinois, 60801, at am[pm] Daylight Time, on May 15, 1998, or at such
other time and place as the parties may establish (the date of the Closing being
hereinafter referred to as the "Closing Date"). The transactions contemplated
hereby shall be deemed to be effective as of 12:01 a.m., Eastern Daylight Time,
on May 15, 1998.
2.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
execute and deliver or cause to be executed and delivered to Buyer the
following:
(a) A Bill of Sale, in substantially the form attached as EXHIBIT D
hereto;
(b) An Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(c) Noncompetition Agreements in substantially the form attached as
EXHIBIT F hereto executed by Seller and Pick, pursuant to which they shall agree
not to compete with Buyer for a five year period from the effective date of this
Agreement (up to and including May 15, 2003) or, if later, for a five year
period from the date of termination of any employment or consulting on behalf of
Buyer.
(d) Noncompetition Agreements in substantially the form attached as
EXHIBIT F-1 hereto executed by Paul Hermes and Larry Gillespie, pursuant to
which each such person shall agree not to compete with Buyer for a one year
period from the effective date of this agreement (up to and including May 15,
1999), or if later, for a one year period from the date of termination of any
employment or consulting on behalf of Buyer.
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(e) An Assignment of Applications, in substantially the form attached
as EXHIBIT G hereto;
(f) An Assignment of Trademarks substantially in the form attached
hereto as EXHIBIT H;
(g) A Certificate executed as of the Closing Date by a duly authorized
officer of Seller certifying: (i) the resolutions of the Board of Directors and
Shareholders of Seller approving the transactions contemplated hereby, and (ii)
as to the accuracy of Seller's representations and warranties and as to the
performance and compliance of all of the terms, provisions and conditions to be
performed or complied with by Seller at or before Closing;
(h) The documents required pursuant to Sections 6 of this Agreement;
and
(i) Such other instruments of sale, transfer, conveyance and assignment
as Buyer and its counsel may reasonably request.
2.3 DELIVERIES BY BUYER. At or prior to Closing, Buyer shall execute
and deliver or cause to be executed and delivered to Seller the following:
(a) The Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(b) A Certificate executed as of the Closing Date by a duly authorized
officer of Buyer certifying: (i) the resolutions of the Board of Directors of
Buyer approving the transactions contemplated hereby, and (ii) as to the
accuracy of Buyer's representations and warranties and as to the performance and
compliance of all of the terms, provisions and conditions to be performed or
complied with by Buyer at or before Closing;
(c) Junior Subordinated Note in substantially the form attached as
EXHIBIT J hereto;
(d) An Opinion of Buyer's Counsel in substantially the form attached as
EXHIBIT K hereto;
(d) Such other instruments of assumption as Seller and its counsel may
reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND PICK. Seller and Pick,
jointly and severally, as a material inducement to Buyer to enter into this
Agreement and consummate the transactions contemplated hereby, make the
following representations and warranties to Buyer. Any action for a breach of
these representations and warranties must be commenced within six (6) years of
the effective date of this Agreement. This six (6) year limitation for
commencing an action shall not apply to an action for indemnification resulting
from a claim asserted by a third party against Buyer.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 1.9 hereto, Seller
has good, marketable and unencumbered title to the Assets (or, with respect to
any real or personal property leases included in the Assets, a valid leasehold
interest therein), free and clear of all mortgages,
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security interests, liens, claims, encumbrances, title defects, pledges,
charges, assessments, covenants, encroachments and burdens of any kind or nature
whatsoever, and have full right and authority to transfer and deliver all the
Assets. Except as described in SCHEDULE 1.9 hereto, upon consummation of the
transactions contemplated hereby, Seller will have transferred to Buyer good and
unencumbered title to the Assets (or with respect to any real or personal
property leases included in the Assets, a valid leasehold interest therein),
free and clear of all mortgages, security interests, liens, claims,
encumbrances, title defects, pledges, charges, assessments, covenants,
encroachments and burdens of any kind or nature whatsoever. The Assets
constitute all of the assets that are used in connection with, necessary for, or
beneficial to the operation of the Business, except for the Excluded Assets.
3.2 CORPORATE STATUS OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Seller is qualified to do business and in good standing in each jurisdiction
where the operation of its business requires that it be so qualified. Seller has
all requisite corporate power and authority to own, operate and lease its
properties and assets, to conduct its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. An accurate and complete copy
of the Articles of Incorporation and Bylaws of Seller, as presently in effect,
are included as an attachment to SCHEDULE 3.2 hereto.
3.3 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Seller of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized and approved by all necessary corporate action of Seller. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Seller and Pick, and
enforceable against Seller and Pick in accordance with their respective terms
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency or moratorium laws, or other laws
affecting the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies.
All of the Shareholders of Seller other than Pick have entered into a
"Stock Purchase Proposal and Disclosure Statement" by which each such
Shareholder consented, after full and fair disclosure, to the purchase of Seller
by Buyer on substantially the terms set forth in this Asset Purchase Agreement,
and by which each Shareholder sold all of his or her shares and interest in
Seller to Pick. An accurate and complete copy of the Stock Purchase Proposal and
Disclosure Statement, executed by all Shareholders of Seller, is included as an
attachment to SCHEDULE 3.3 hereto.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. Seller does not
own any real property. All real property leased by Seller and used in the
operation of the Business is listed and described in SCHEDULE 3.4 hereto. To the
best of Seller's and Pick's knowledge and belief, all buildings and improvements
located thereon are in good condition and repair, subject only to normal wear
and tear. Seller has delivered to Buyer accurate and complete copies of all
leases relating to real
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and personal property leased by Seller and used in the operation of the Business
and, except as described in SCHEDULE 3.4, all such leases are in full force and
effect, no event of default has been declared thereunder and, to the Seller's
knowledge, no basis for any default exists. To the best of Seller's and Pick's
knowledge and belief, no such lease of real or personal property is subject to
termination or modification as a result of the transactions contemplated hereby,
unless and except as explicitly set forth on SCHEDULE 3.4. All material items of
tangible personal property and assets owned or leased by Seller and used in the
operation of the Business are described in SCHEDULE 1.1 hereto. All machinery
and equipment listed in SCHEDULE 1.1 conforms to all applicable ordinances,
regulations, and other laws. To the best of Seller's and Pick's knowledge and
belief, except as described in SCHEDULE 1.1, all items listed on SCHEDULE 1.1
are in good operating condition and repair, subject only to normal wear and
tear, and are adequate to conduct the Business as it is now being conducted.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's unaudited compiled financial statements
for the years ended December 31, 1994, 1995, 1996 and 1997 (the "Financial
Statements"). The Financial Statements: (a) present fairly the financial
position and results of operations of the Seller for the dates or periods
indicated thereon; (b) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the period
indicated; and (c) accurately reflect the transactions, assets and liabilities
of Seller as of the dates and for the periods presented. Except as set forth in
the Financial Statements or on SCHEDULE 3.5 hereto, Seller has no debts,
liabilities or obligations, whether direct or indirect, accrued, absolute,
contingent, matured, known, unknown or otherwise, and whether or not of a nature
required to be reflected or reserved against in a balance sheet in accordance
with generally accepted accounting principles, except for obligations incurred
in the ordinary course of business after December 31, 1997. Neither Seller nor
Pick are aware of any basis for the assertion of any claims or liabilities of
any nature which are not fully reflected or reserved against in the Financial
Statements or otherwise disclosed in SCHEDULE 3.5 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 3, 1998, Seller
has conducted the Business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and has used all
reasonable efforts consistent with normal business practices to preserve and
promote the Business and to avoid any act that might have a material adverse
effect upon the value of the Business as a going concern or upon the Assets. No
event has occurred to prevent the Business from operating in a normal and usual
manner and in substantially the same manner as heretofore operated. Except as
expressly set forth in SCHEDULE 3.6 hereto, since April 3, 1998:
(a) there has not been any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the Business or the
Assets;
(b) there has not been any increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (i) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents; (ii) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
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with any of such officers, employees or agents; or (iii) other material change
in the employment terms of any officer, employee or agent of Seller;
(c) there has not been any sale, transfer or other disposition of any
tangible or intangible asset, or real or personal property or interest therein,
or any mortgage, lien or encumbrance placed thereon except in the ordinary
course of business and consistent with past practice;
(d) there have not been any capital expenditures, capital additions,
capital improvements or charitable contributions made, or committed to be made,
involving, individually or in the aggregate, Two Thousand Five Hundred Dollars
($2,500.00) or more;
(e) there has not been any failure to maintain any of Seller's books,
accounts and records in the usual, regular and ordinary manner and in accordance
with good business practices and consistent with past practice;
(f) there has not been any action taken or omitted to be taken by
Seller which could cause (with or without the giving of notice or the passage of
time, or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement (as hereinafter defined) or the
imposition of any lien, encumbrance, mortgage or other claim or charge against
the Assets;
(g) there has not been any liability, obligation or commitment incurred
by Seller involving, individually or in the aggregate, more than Two Thousand
Five Hundred Dollars ($2,500.00);
(h) there are no pending claims for worker's compensation submitted by
any employee of Seller with respect to services performed on behalf of Seller,
or facts or state of facts existing which could give rise to claims for workers'
compensation by any employee of Seller with respect to services performed on
behalf of Seller which exceed individually or in the aggregate Two Thousand Five
Hundred and 00/100 ($2,500.00).
(i) Seller has not entered into, nor has Seller or the Assets become
subject to, any contracts, agreements, commitments, indentures, mortgages,
notes, bonds, license, real or personal property leases or other obligations of
the type required to be disclosed in SCHEDULE 3.7 hereto that are not otherwise
disclosed herein;
(j) Seller has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(k) there has been no change made or authorized in the charter or
bylaws of Seller;
(l) Seller has not issued, sold or otherwise disposed of any of its
capital stock or granted any options, warrants or other rights to purchase or
obtain any of its capital stock;
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(m) Seller has not declared, set aside or paid any dividend nor made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(o) there has not been any other event or condition of any character
which, individually or in the aggregate, has had or could reasonably be expected
to have a material adverse effect on the Assets, the Business, or on the
financial condition or operations of Seller; and
(p) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. SCHEDULE 3.7 hereto includes a true,
correct and complete list of all material contracts, agreements, commitments,
indentures, mortgages, notes, bonds, licenses, real and personal property leases
and other obligations to which Seller is a party, by which Seller or its assets
or properties are bound or may be affected or which otherwise relate to the
Business (the "Material Agreements"). Without limiting the generality of the
foregoing, the term Material Agreement includes: (a) any lease or license with
respect to any Assets, whether Seller is tenant, landlord, licensor or licensee
thereunder; (b) any agreement, contract, indenture or other instrument relating
to the borrowing of money or the guarantee of any obligation or the deferred
payment of the purchase price of any Assets; (c) any agreement concerning a
partnership or joint venture; (d) any agreements between Seller on the one hand
and any of its shareholders, officers, directors or employees on the other; (e)
any agreement relating to confidentiality or noncompetition; (f) any
preferential purchase right, right of first refusal or similar agreement; (g)
any agreement entered into outside of the ordinary course of business; or (h)
any other agreement (or group of related agreements) which could involve
expenditures (in cash or in kind) by Seller in excess of $2,500.00 per year.
True and complete copies of all of the Material Agreements are included as part
of SCHEDULE 3.7 hereto. Each of the Material Agreements listed in SCHEDULE 3.7
are valid, binding and enforceable in accordance with their respective terms and
are in full force and effect and were entered into in the ordinary course of
business on an "arms length" basis. No part of Seller's rights or benefits under
any Material Agreement has been assigned, transferred, or in any way encumbered.
Seller is not in breach of nor has Seller defaulted under any of the Material
Agreements and no occurrence or circumstance exists which constitutes (with or
without the giving of notice or the passage of time or both) a breach or default
by Seller under any Material Agreement. To Seller's and Pick's knowledge, the
other parties to the Material Agreements are not in default thereunder and no
occurrence or circumstance exists which constitutes or would constitute (with or
without the giving of notice or the passage of time or both) a breach or default
by the other party thereunder. Except as set forth on SCHEDULE 3.7 hereto,
neither Seller nor any of the Assets are bound by or subject to any contract,
agreement, commitment, indenture, mortgage, note, bond, license, real or
personal property lease or other obligation which on the Closing Date cannot be
terminated upon thirty (30) days' written notice by Seller or Buyer without
penalty or other obligation being incurred upon such termination.
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3.8 ASSISTANCE. Pick shall assist OutSource with the transition of
ownership for a period of two (2) months following the Closing Date on an as
needed basis.
3.9 INTELLECTUAL PROPERTY. Seller owns or is licensed to use all
patents, trademarks, copyrights, trade names, service marks and other trade
designations, including common law rights, registrations, applications for
registration, technology, know-how or processes (the "Intellectual Property")
necessary to conduct the Business, free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by Seller
immediately prior to the Closing shall be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing. Seller has
not interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property rights of third parties, and Seller has
not received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation. To the knowledge of
Seller and Pick, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Seller. SCHEDULE 3.9 hereto contains a true and correct description of
the following:
(a) All Intellectual Property currently owned, in whole or in part, by
Seller, and all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which Seller is a party; and
(b) All agreements relating to Intellectual Property that Seller is
licensed or authorized to use from others or which Seller licenses or authorizes
others to use.
3.10 TAXES. All federal, state, local and foreign tax returns
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state, local or foreign
agency, authority or body to be filed have been duly filed by such Seller.
Seller has either: (i) paid all federal, state, county, local, foreign and other
taxes (hereinafter "Taxes" or individually a "Tax") required to be paid by it
through the Closing Date and all deficiencies or other additions to Tax,
including interest or penalties owed in connection with any such Taxes; or (ii)
included adequate provision for all such Taxes and deficiencies or other
additions to Tax applicable to Seller in the Seller's Financial Statements. All
Taxes and other assessments and levies required to be collected or withheld by
Seller with respect to the operation of its business from customers with respect
to sales of products or from employees for income taxes, social security taxes
and unemployment insurance taxes have been collected or withheld, and either
paid to the respective governmental agencies, or set aside in an account owned
by Seller and established for that purpose.
Seller is not a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. No action or
proceeding regarding assessment or collection of Taxes is threatened against
Seller. There are no facts or state of facts existing that (with or without the
giving of notice or the passage of time or both) could form the basis for any
such action or proceeding. Seller has not executed or filed any agreement with
the Internal Revenue Service or any other taxing authority extending the period
for the assessment or collection of any Taxes.
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3.11 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or threatened against or affecting
in any way the assets, properties or property interests of Seller. There are no
facts or state of facts existing that (with or without the giving or notice or
the passage of time or both) could form the basis for any such suit, proceeding,
action, claim or investigation. Neither Seller nor any of its assets, property
or property interests is subject to any judgement, order, writ, injunction or
decree of any court or any federal, state, municipal, foreign or other
governmental authority, department, commission, board, bureau, agency or other
instrumentality.
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.12 contains a true and complete list of each pension,
retirement, profit sharing, deferred compensation, stock option, stock purchase,
bonus, medical, welfare, disability, severance or termination pay, insurance or
incentive plan, and each other employee benefit plan, program, agreement or
arrangement, whether funded or unfunded, sponsored, maintained or contributed to
or required to be contributed to by Seller or by any trade or business, whether
or not incorporated, that together with Seller would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (a "Company ERISA
Affiliate"), for the benefit of any employee or terminated employee of Seller or
any Seller ERISA Affiliate (the "Plans"). SCHEDULE 3.12 identifies each Plan
that is an "employee benefit plan," within the meaning of Section 3(3) of ERISA
(the "ERISA Plans").
(b) Seller does not participate currently and has never participated in
and is not required currently and has never been required to contribute to or
otherwise participate in any "multi-employer plan," as defined in Sections
3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the Code.
(c) True and complete copies of each of the Plans and related trusts
have been furnished to Buyer. With respect to each of the Plans, Seller has
delivered to Buyer the most recent financial statement and the most recent
actuarial report prepared with respect to any of such Plans that is funded, the
most recent Internal Revenue Service ("Service") determination letter, the most
recent Summary Plan Description and the most recent Annual Report together with
a statement setting forth any such documents which cannot be furnished; and any
such documents furnished and the nature of the documents which cannot be
furnished shall be reasonably satisfactory to Buyer.
(d) With respect to each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code, a determination letter from the Service
has been received to the effect that the Plan is qualified under Section 401 of
the Code and any trust maintained pursuant thereto is exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred or will occur
through the Closing Date (including without limitation the transactions
contemplated by this Agreement) which would cause the loss of such qualification
or exemption or the imposition of any penalty or tax liability.
(e) All contributions required by each Plan or by law with respect to
all periods through the Closing Date shall have been made by such date (or
provided for by Seller by adequate reserves
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on its financial statements) and no excise or other taxes have been incurred or
are due and owing with respect to the Plan because of any failure to comply with
the minimum funding standards of ERISA and the Code.
(f) No "accumulated funding deficiency", as defined in Section 302 of
ERISA, has been incurred with respect to any Plan, whether or not waived. No
"reportable event" of the type set forth in Section 4043 of ERISA has occurred
and is continuing with respect to any Plan. There are no violations of ERISA or
the Code with respect to the filing of applicable reports, documents, and
notices regarding any Plan with the Secretary of Labor, Secretary of the
Treasury, or the Pension Benefit Guaranty Corporation (the "PBGC") or furnishing
such documents to participants or beneficiaries, as the case may be. No Plan is
under audit by the Service or the Department of Labor. No claim, lawsuit,
arbitration, or other action has been threatened, asserted, or instituted
against any Plan, any trustee or fiduciaries thereof, Seller, or any of the
assets of any trust maintained under any Plan. Seller has not incurred nor
reasonably expects to incur, any liability to the PBGC.
(g) All amendments required to bring any Plan into conformity with any
of the applicable provisions of ERISA and the Code have been duly adopted. Any
bonding required with respect to any ERISA Plan in accordance with applicable
provisions of ERISA has been obtained and is in full force and effect.
(h) Each Plan has been operated and administered in accordance with its
terms and the terms and the provisions of ERISA and the Code (including rules
and regulations thereunder) applicable thereto and in practice is tax qualified
under Sections 401(a) and 501 of the Code. Each Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the trusts
maintained under such Plan are exempt from taxation under section 501(a) of the
Code.
(i) No "prohibited transaction," as such term is defined in Section
4975 of the Code and Section 406 of ERISA, has occurred with respect to any Plan
(and the transactions contemplated by this Agreement will not constitute or
directly or indirectly result in such a "prohibited transaction") which could
subject Seller, Buyer, or any officer, director or employee of any of the
foregoing, or any trustee, administrator or other fiduciary, to a tax or penalty
on prohibited transactions imposed by either Section 502 of ERISA or Section
4975 of the Code.
(j) The present value, determined on a termination basis, of all
accrued benefits, vested and unvested, under each Plan, determined using the
actuarial valuation assumptions and methods (including interest rates) contained
in the most recent actuarial report for such Plan, does not exceed the assets
thereof allocable to such benefits.
(k) No welfare benefit plan (within the meaning of Section 3(1) of
ERISA) provides for continuing benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment,
except as may be required by COBRA at the expense of the participant or the
beneficiary of the participant.
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(l) Seller does not currently maintain or contribute to any severance
pay plan. No individual shall accrue or receive any additional benefits,
service, or accelerated rights to payment of benefits under any Plan as a result
of the actions contemplated by this Agreement.
(m) Seller has complied with all of the requirements of COBRA.
3.13 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution nor
delivery by Seller of this Agreement, or any agreement, document or instrument
executed and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
of the provisions hereof or thereof, will: (a) conflict with or result in a
breach of any provision of Seller's Articles of Incorporation or Bylaws; (b)
result in the breach of, or conflict with, any of the terms and conditions of,
or constitute a default (with or without the giving of notice or the passage of
time or both) with respect to, or result in the cancellation or termination of,
or the acceleration of the performance of any obligations or of any indebtedness
under, any Material Agreement; (c) result in the creation of a lien, security
interest, charge or encumbrance upon any of the Assets; or (d) violate any law
or any rule or regulation of any administrative agency or governmental body, or
any order, writ, injunction or decree of any court, administrative agency or
governmental body to which the Seller or its properties or assets may be
subject. No approval, authorization, consent or other action of, or filing with,
or notice to any court, administrative agency or other governmental authority or
any other person or entity is required for the execution and delivery by Pick or
the Seller of this Agreement or any agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby or thereby, or the consummation of the
transactions contemplated hereby or thereby.
3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy, approvals or other authorizations from and
registrations with federal, state, municipal and foreign governmental agencies
and private associations necessary to operate its business (collectively the
"Permits") and all such Permits are in full force and effect and no suspension
or cancellation of any such Permit is threatened. A list of the Permits is
included in SCHEDULE 3.14 hereto.
3.15 INSURANCE. SCHEDULE 3.15 hereto contains a complete list of all
insurance policies maintained by Seller with respect to the Business or the
Assets. Such insurance: (i) is in full force and effect; (ii) will remain in
full force and effect up to the Closing Date; and (iii) is sufficient for
compliance with all requirements of law and any agreements to which Seller is a
party or by which the Assets are bound.
3.16 GUARANTEES. Except as set forth in SCHEDULE 3.16 attached hereto,
neither the Business nor any of the Assets is nor will be at the Closing,
directly or indirectly: (i) liable, by guarantee or otherwise, upon or with
respect to, (ii) obligated, by discount or repurchase agreement or in any other
way, to provide funds in respect of; or (iii) obligated to guarantee or assume,
any debt, dividend or other obligation of, any person, corporation, association,
partnership or other entity including, without limitation, Seller or any of its
affiliates.
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3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Seller is in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Seller, including
those relating to terms and conditions of employment and wages. There are no
complaints pending, or to Seller's or Pick's knowledge threatened, against
Seller in connection with any employment related matters. SCHEDULE 3.17 hereto
contains a list of the names, office locations, compensation, and years of
credited service for vacation and pension plan purposes of all full- and
part-time employees of Seller as of March 5, 1998 and a description of all
employee "perks" or other benefit practices. No strike or labor dispute
involving Seller has occurred or is threatened. None of Seller's employees are
covered by any union or collective bargaining agreement. No key employee of
Seller has indicated to Seller that he or she is considering terminating his or
her employment except as noted on SCHEDULE 3.17. SCHEDULE 3.17 includes a
monthly report which accurately reflects Seller's entire current monthly payroll
obligations to its employees. SCHEDULE 3.17 also includes a list of the names
and compensation levels of any consultants, independent contractors or temporary
employees regularly utilized by Seller in core functions of the Business
(excluding employees supplied to clients for revenue generation purposes).
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted its business and the Assets have
been held in compliance with all applicable laws, regulations, ordinances,
orders and other requirements of governmental authorities having jurisdiction
over Seller. Seller has not received any formal or informal notice, advice,
claim or complaint alleging that Seller has violated or may have violated any
law, regulation, ordinance or order and no such notice, advice, claim or
complaint of any type is threatened. Seller has at all times complied and
presently complies with all applicable federal, state, local and foreign laws,
rules and regulations respecting occupational safety and health standards and
Seller has not received complaints from any employee or any federal, state,
local or foreign agency alleging any violation of any federal, state, local or
foreign laws respecting occupational safety and health standards.
(b) Without limiting the generality of the foregoing, (i) to the best
of Seller's and Pick's knowledge and belief, all real property owned or leased
by Seller and all buildings, fixtures, equipment and other improvements located
thereon and the present use thereof comply in all respects with applicable fire
codes, building codes, health codes, ordinances and regulations; (ii) the
business operations of Seller (including without limitation its leased and owned
real property) are in compliance with all applicable statutes, regulations,
ordinances, decrees or orders of governmental authorities relating to the
environment (collectively the "Environmental Laws") including without limitation
those relating to Hazardous Materials (as hereinafter defined); (iii) no
Hazardous Material has been spilled, released, deposited or discharged on any of
Seller's owned or leased real property, no such real property has been used as a
landfill or waste disposal site, and such real property is free from pollution;
(iv) no notice, information, request, citation, summons or order has been
received by Seller and no complaint has been filed and no penalty has been
assessed or threatened by any governmental authority with respect to (a) any
alleged violation by Seller of any Environmental Law, (b) any alleged failure by
Seller to have any environmental permit required in connection with the
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operation of their business, or (c) any generation, treatment, storage,
recycling, transportation of disposal of any Hazardous Material; and (v) there
have not previously been and are not presently any claims of any nature pursuant
to any Environmental Law on any properties owned or leased by Seller. As used in
this Agreement, the term Hazardous Material means any hazardous or toxic
substance, material or waste or pollutants, contaminants or asbestos containing
material which is regulated by any authority in any jurisdiction in which Seller
does business.
3.19 WORKER'S COMPENSATION CLAIMS. SCHEDULE 3.19 contains a true,
correct and complete list of all claims or pending claims for worker's
compensation submitted or expected to be submitted by any employee of Seller
from January 1, 1995 to the Closing with respect to services performed on behalf
of Seller (the "Worker's Compensation Claims"). Each claim listed shall include
the total reserve amount established for such claim by the Seller's worker's
compensation carrier (the "Carrier"). Except as set forth on SCHEDULE 3.19,
there are no facts or state of facts existing which could give rise to Worker's
Compensation Claims by any employee of Seller with respect to services performed
on behalf of Seller.
3.20 CUSTOMER LIST. Attached hereto as Schedule 3.20 is a true, correct
and current list of all customers, clients and businesses which are now, or have
within the last year, received temporary or permanent staffing from the Seller,
including the address, telephone number, fax number, principal contact person
and account number for each such customer, client or business.
3.21 NO FURTHER INTERESTS. Other than the Business and Assets as
defined herein, neither Seller nor Pick has, nor will acquire prior to the
Closing, any interest, direct or indirect, in any temporary industrial or
clerical help company located within, operating within, or providing services
within the State of Illinois.
3.22. NO COMPETING INTERESTS OF MINORITY SHAREHOLDERS OF SELLER. The
Shareholders of Seller other than Pick listed on the Stock Purchase Proposal and
Disclosure Statement attached as part of SCHEDULE 3.3 are passive investors in
Seller and are not actively employed in Seller's business. To Seller's and
Pick's knowledge, such shareholders are neither investors in, nor employed in,
any other temporary industrial or clerical help business competitive with Seller
or with OutSource's Labor World or Tandem businesses, and do not intend to
invest in or be employed in such businesses subsequent to the execution of this
Asset Purchase Agreement.
3.23 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement or any Exhibit or Schedule attached hereto, and no statement contained
in any certificate or other instrument or document furnished by or on behalf of
Seller pursuant to this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact that is
necessary to make the statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement for
Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer makes the following representations and warranties to
Seller. Any action for a breach of these representations and warranties must be
commenced within six (6) years of the effective date of this Agreement. This
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six (6) year limitation shall not apply to any action for indemnification
arising from the assertion of a claim against Seller by a third party.
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Buyer has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now being conducted and to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Buyer of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all necessary corporate action of Buyer. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Buyer, and enforceable
against Buyer in accordance with their respective terms except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or the principles governing the availability of
equity remedies.
4.3 NO PROHIBITION. No Agreement or Contract has been entered by Buyer
which would prohibit Buyer from entering or performing this Agreement.
4.4 PERMISSION. No permission of any person, individual, group,
committee, body or entity outside the Board of Directors of the Buyer is or will
be required in order for Buyer to lawfully enter or perform this Agreement or
any Agreement referenced herein, however this transaction was previously
approved by BankBoston, Triumph Capital Group and Bachow and Associates.
4.5 SENIOR INDEBTEDNESS. As of the Closing Date, the Buyer is in good
standing as to its obligations in regards to the Senior Indebtedness, as defined
in EXHIBIT J the Junior Subordinated Note A, is not in default as to the Senior
Indebtedness, and has no knowledge of any existing facts which would render it
to be in default as to the Senior Indebtedness.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLER AND PICK. Seller and Pick,
jointly and severally, hereby agree to defend, indemnify and hold harmless Buyer
from, against and in respect of any loss, cost, damage or expense, including but
not limited to, legal and accounting fees and expenses (and sales taxes thereon,
if any) asserted against, imposed upon or paid, incurred or suffered by Buyer
("Loss[es]"):
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(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller or Pick in this
Agreement or in any agreement, document or instrument executed and delivered in
connection with the transactions contemplated hereby; or
(b) any misrepresentation or inaccuracy in, or omission from any
certificate, schedule, exhibit, statement, document or instrument furnished by
Seller or Pick to Buyer in connection with the transactions contemplated by this
Agreement;
(c) any action by the present or former shareholders of Seller listed
on the Stock Purchase Proposal and Disclosure Statement attached as part of
SCHEDULE 3.3 hereto, which, if performed by Seller or Pick, would constitute a
breach of Seller's and Pick's non-competition or non-solicitation obligations
under the Noncompetition Agreements attached as Exhibit F hereto; except that no
such obligation shall apply with respect to any such shareholder who has entered
into a noncompetition agreement with OutSource substantially in the form
attached as Exhibit F-2 hereto.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller and Pick from, against and in respect of any
Loss or Losses as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Buyer in this Agreement
or in any agreement, document or instrument executed and delivered in connection
with the transactions contemplated hereby.
5.3 INDEMNITY PROCEDURE.
(a) A party hereto agreeing to be responsible for or to indemnify
against any matter pursuant to this Agreement is referred to herein as the
"Indemnifying Party" and the other party claiming indemnity is referred to as
the "Indemnified Party." The Indemnified Party under this Agreement shall give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim of indemnity under this Agreement; provided, however, that
any failure to give such notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are actually
prejudiced. As to any claim, action, suit or proceeding by a third party, the
Indemnifying Party shall be entitled to assume defense thereof (at its expense)
provided that counsel for the Indemnifying Party who shall conduct the defense
of such claim shall be approved by the Indemnified Party. The Indemnified Party
shall provide such cooperation and such access to its books, records and
properties as the Indemnifying Party shall reasonably request with respect to
such matter; and the parties hereto agree to cooperate with each other in order
to ensure the proper and adequate defense thereof. If, in the Indemnified
Party's reasonable judgment, a conflict of interest between the Indemnified
Party and the Indemnifying Party exists in respect of a claim, or, if the
Indemnifying Party, after written notice from the Indemnified Party, fails to
take timely action to defend a claim, the Indemnified Party may assume defense
of such claim or action with counsel of its choosing at the Indemnifying Party's
cost.
(b) An Indemnifying Party shall not make any settlement of any claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a
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settlement: (i) involving injunctive or other equitable relief against the
Indemnified Party or its assets, employees or business; or (ii) which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
5.4 PAYMENT. The Indemnifying Party shall pay to the Indemnified Party
any amounts owed to the Indemnified Party pursuant to this Section 5 within
twenty (20) days after written request from the Indemnified Party to the
Indemnifying Party to make such payment accompanied by appropriate
substantiating documentation. In determining the amount owed hereunder, the
parties shall make appropriate adjustments for tax benefits and insurance
proceeds. Upon the payment in full of any claim, the Indemnifying Party shall be
subrogated to the rights of the Indemnified Party against any person, firm or
entity with respect to the subject matter of the claim or litigation.
5.5. LIMITATIONS ON INDEMNITY OBLIGATIONS. No party shall have any
obligation to indemnify any other party pursuant to this Section 5 until and
unless the aggregate total of all Losses (as defined above) suffered by the
Indemnified Party exceeds Ten Thousand Dollars ($10,000.00), at which point the
Indemnifying Party shall be responsible as set forth in this Section 5 for the
portion of the aggregate Losses of the Indemnified Party exceeding Ten Thousand
Dollars ($10,000.00).
Prior to seeking indemnification as set forth in this Section 5, a
party must first exercise all rights of set-off available to that party as set
forth in this Asset Purchase Agreement.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's
obligation to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to Closing, of each of the following
conditions precedent (any or all of which may be waived in writing, in whole or
in part, by Buyer):
6.1 PERFORMANCE OF OBLIGATIONS. Seller and Pick shall have performed
all of the obligations and complied with all of the covenants required to be
performed or to be complied with by them under this Agreement on or prior to the
Closing Date.
6.2 APPROVALS. Seller shall have delivered to Buyer any and all
approvals, consents or assignments necessary for the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required: (i) by any governmental or administrative body; and (ii) under any
Material Agreement.
6.3 ACCESS. Buyer shall have had full and complete access during normal
business hours to the properties, assets, books, agreements, files and records
of Seller for the purpose of verifying the information set forth herein. Buyer's
due diligence investigation shall not relieve Seller or Pick from any liability
in connection with their representations and warranties set forth in this
Agreement.
6.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements and the Seller's most recent unaudited financial statements
(the "Interim Statements"). Each of the
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Financial Statements and the Interim Statements shall be accompanied by a
certificate of an officer of Seller in form and substance satisfactory to Buyer.
6.5 PROPERTY. All of Seller's real and personal property shall be in
good operating condition, structurally sound and in good repair.
6.6 APPROVAL. The board of directors and shareholders of Seller shall
have approved Seller entering into this Agreement and the consummation of the
transactions contemplated hereby. The board of directors of Buyer shall have
approved Buyer entering into this Agreement and consummation of the transactions
contemplated hereby.
6.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller or Pick, any suit, action or other proceeding by any
private party or governmental agency, commission, bureau or body seeking to
restrain or prohibit any of the transactions contemplated by this Agreement.
6.8 ACCRUED EXPENSES AND CONTINGENT LIABILITIES. Seller shall have
resolved, in a manner satisfactory to Buyer in its sole and absolute discretion,
any issues relating to the accrued expenses and contingent liabilities of
Seller.
6.9 NONCOMPETITION AGREEMENTS. Buyer, Seller, and Pick shall have
entered into Noncompetition Agreements prohibiting the Seller and Pick from
competing with Buyer, for a five year period from the effective date of this
Agreement (up to and including May 15, 2003) or, if later, for a five year
period from the termination date of any employment or consulting on behalf of
Buyer, within the State of Illinois.
In addition, Paul Hermes and Larry Gillespie, who are key employees of
Seller, shall have entered into Noncompetition Agreements prohibiting them from
competing with Buyer for a one year period from the effective date of this
Agreement (up to and including May 15, 1999), or, if later, for a one year
period from the termination date of any employment or consulting on behalf of
Buyer, within the State of Illinois.
6.10 DELIVERIES. Seller and Pick shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
6.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller and Pick contained in this Agreement shall be true and correct both at
the date on which this Agreement is signed and at and as of the Closing Date as
if made anew at and as of such time.
6.12 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion
from counsel of Seller dated as of the Closing Date and in substantially the
form attached as EXHIBIT I hereto.
7. CONDITIONS PRECEDENT TO SELLER'S AND PICK'S OBLIGATION TO CLOSE.
Seller's and Pick's obligation to consummate the transactions contemplated by
this Agreement shall be subject to
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the fulfillment, at or prior to Closing, of each of the following conditions
precedent (any or all of which may be waived in writing, in whole or in part, by
Seller or Pick):
7.1 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all of its
obligations and complied with all of its covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement shall be true and correct both at the date on
which this Agreement is signed and at and as of the Closing Date as if made at
and as of such time.
7.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
7.4 OPINION OF BUYER'S COUNSEL. Buyer shall have delivered an opinion
of Buyer's counsel dated as of the Closing date and substantially in the form
attached as Exhibit K to this Agreement.
8. CERTAIN ADDITIONAL COVENANTS OF SELLER. Seller and Pick covenant and
agree with Buyer as follows:
8.1 CONDUCT AND TRANSACTIONS PRIOR TO CLOSING. From and after the date
of this Agreement until the Closing Date, except to the extent contemplated by
this Agreement or otherwise consented to in writing by Buyer:
(a) Seller shall operate its business in the same manner as presently
conducted and only in the ordinary and usual course and consistent with past
practice, and will use all reasonable efforts to preserve intact its present
business organization and to keep available the services of all employees,
representatives and agents. Seller shall use all reasonable efforts, consistent
with its past practices, to promote its business and shall not take or omit to
take any action which causes, or which is likely to cause, any deterioration of
their present business or relationships with suppliers or customers.
(b) Seller will maintain all of its properties and assets, tangible or
intangible, in substantially the same condition and repair as such properties
and assets are maintained as of the date hereof, ordinary wear and tear
excepted, and shall take all reasonable steps necessary to maintain and protect
its intangible assets. Seller shall not sell, lease or otherwise dispose of any
of its assets except in the ordinary course of business consistent with past
practice.
(c) Without the prior written consent of Buyer, Seller shall not grant
any salary increase to any employee, or enter into any new or amend or alter any
existing employment agreement or bonus, incentive compensation, medical
reimbursement, life insurance, deferred compensation, profit sharing,
retirement, pension, stock option, group insurance, death benefit or other
fringe benefit plans or other arrangements for its employees.
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(d) Seller shall keep its properties and business insured to the same
extent as insured on the date hereof.
(e) Seller shall not take any action or omit to take any action that
could cause (with or without the giving of notice or the passage of time or
both) the breach, default, acceleration, amendment, termination or waiver of or
under any Material Agreement or the imposition of any lien, encumbrance,
mortgage or other claim or charge against the Assets.
(f) Seller will maintain its books, accounts and records in accordance
with good business practice and generally accepted accounting principles
consistently applied.
(g) Neither Seller nor Pick shall take any action that would cause
their representations and warranties set forth herein not to be true and correct
at and as of the Closing Date as if made at and as of such time.
(h) Seller shall not declare, set aside or pay any dividend or make any
distribution with respect its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock.
(i) Seller and Pick will use their best efforts to obtain the approvals
referred to in Section 6.2 hereto.
(j) Seller shall assume responsibility for the payment of all Federal
and State income tax liabilities incurred through the Closing Date.
(k) In the event that Buyer desires to use and retain the benefit of
Seller's unemployment insurance rating with respect to any employees of Seller
whom Buyer desires to employ, Seller and Pick shall cooperate with Buyer with
respect to the taking of any actions which may reasonably be necessary to
effectuate or facilitate the transfer of such rating and to allow Buyer to
retain the full benefit thereof.
(l) Neither Seller nor Pick shall otherwise engage in any practice,
take any action or enter into any transaction of the sort described in Section
3.6 of this Agreement.
8.2 POST-CLOSING COVENANTS.
(a) For a period of Two (2) Years subsequent to the Closing, Seller and
Pick covenant and agree to provide to Buyer or Buyer's auditors prompt access to
Seller's books, files, records, and financial information; to cause any of
Seller's accountants, attorneys, agents, employees, or representatives to
provide to Buyer or Buyer's auditors prompt access to records, books, files, and
financial information of Seller; and to provide such other prompt cooperation as
may be necessary for Buyer or Buyer's auditors to prepare, at Buyer's cost, such
financial statements of Seller as may be necessary or desirable in the conduct
of Buyer's business, including but not limited to such
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financial statements or opinions as may be necessary in any required filings
with the Securities and Exchange Commission.
(b) Seller and Pick covenant and agree, at their sole cost and expense,
to pay, within two weeks of the Closing Date, all accrued vacation pay due and
owing to any of Seller's employees as of the Closing Date.
(c) Seller and Pick covenant and agree, at their sole cost and expense,
to notify Buyer, for a period of twelve (12) months after the Closing Date, of
any Worker's Compensation Claims reported to Seller or Carrier.
(d) Seller and Pick covenant and agree with Buyer, its successors and
assigns, that they will do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, any and all such further acts,
instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of this Agreement.
(e) Buyer covenants and agrees with Seller and Pick to allow Seller and
Pick, for the purpose of preparing and generating necessary business documents
and reports relating to Seller, reasonable access to Seller's software and data
currently maintained on the computer hardware facilities previously owned by
Seller, up to and including April 1, 1999. However, Buyer shall not be liable
for the loss, corruption, damage, or destruction of any of such software or
data, and Buyer undertakes no responsibility with respect to the operation,
maintenance, or condition of Seller's software or data, or with respect to the
computer hardware facilities on which such software or data of Seller is stored
or maintained. Seller and Pick hereby release Buyer from any liability with
respect to damage, loss, corruption, or destruction of said software, data, and
computer hardware, including without limitation any damage, loss, corruption, or
destruction occurring as the result of a negligent, willful, wanton, malicious,
or criminal act of Buyer or any agent of Buyer.
(f) Each party hereby covenants and agrees that it shall promptly
transmit to the other party, together with appropriate supporting documentation,
any payment received by that party on an account receivable owned by the other
party pursuant to this Asset Purchase Agreement and related documents.
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules to
this Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings, agreements, arrangements and understandings, both oral and
written, between the parties hereto with respect to such subject matter. The
Exhibits and Schedules to this Agreement are incorporated into and constitute
part of this Agreement.
9.2 AMENDMENT. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
25
<PAGE>
9.3 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
9.4 SURVIVABILITY. Notwithstanding any investigation made by or on
behalf of any party to this Agreement, the representations and warranties made
under and in connection with this Agreement shall be true and correct on and as
of the Closing Date with the same effect as if made on and as of such date and
shall survive the Closing and consummation of all the transactions contemplated
hereby.
9.5 WAIVERS AND REMEDIES. The waiver by any of the parties hereto of
any other party's prompt and complete performance, or breach or violation, of
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or violation, and the waiver by any of the parties
hereto to exercise any right or remedy which it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
9.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part hereof, all of which are inserted conditionally on their being valid
in law, and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
9.7 DESCRIPTIVE HEADINGS/RECITALS. Descriptive headings contained
herein are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. The recitals are incorporated
into and made a part of this Agreement.
9.8 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts by the separate parties hereto, all of which shall be
deemed to be one and the same instrument. Facsimile signatures shall have the
same effect as original signatures.
9.9 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given: (i) when
delivered by hand; (ii) when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
(iii) five (5) days after being deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
on the second business day after being sent (prepaid for next day delivery), via
Federal Express, United Parcel Service, DHL or other nationally recognized
delivery service, as follows:
26
<PAGE>
If to Seller or to Pick:
Resource Dimensions, Inc.
310 W. Roosevelt Road
Lombard, IL 60148
With a copy to:
Laser, Pokorny, Schwartz, Friedman & Economos
205 N. Michigan Avenue
Suite 3800
Chicago, Illinois 60601
Attention: Bruce M. Friedman
Fax: (312) 540-0610
Kenneth Solomon
Mega Capital Corporation
18 S. Michigan
Chicago, Illinois 60603
Fax: (312) 419-1390
If to Buyer:
OutSource International of America, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Chief Executive Officer
Phone: (954) 418-6200
Fax: (954) 418-3365
With copies to:
Brian M. Nugent, Esquire
Vice President and General Counsel
OutSource International, Inc.
Deerfield Beach, Florida 33442
Phone: (954) 418-6580
and
John C. Lovett, Esquire
Katz, Kutter, Haigler, Alderman, et al.
106 East College Avenue
Suite 1200
Tallahassee, Florida 32301
Phone: (850) 224-9634
27
<PAGE>
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the parties hereto shall assign any of its rights
or obligations hereunder without the express written consent of the other party
hereto.
9.11 APPLICABLE LAW. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in Accordance with, the laws of the State of
Florida.
9.12 BROKERS AND AGENTS. Seller acknowledges that it has retained R.A.
Cohen as an agent with respect to the transactions contemplated by this
Agreement and is solely responsible for the payment of all the fees and expense
of said agent. Buyer has not retained any agent or broker with respect to the
transaction contemplated pursuant to this Agreement. Seller and Pick agree to
indemnify Buyer with respect to any claims made by any third party claiming a
brokerage fee or commission arising out of the transaction contemplated by this
Agreement from Buyer.
9.13 EXPENSES. Except as otherwise provided herein, each of the parties
hereto agrees to pay all of the respective expenses incurred by it in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
including accountants' and attorneys' fees.
9.14 CONFIDENTIALITY. No party hereto shall divulge the existence of
the terms of this Agreement, the transactions contemplated hereby or any
information about another party that such party may have acquired in connection
with the transaction, without the prior written approval of all of the parties
hereto, except and as to the extent: (i) obligated by law, or (ii) necessary for
such party to defend or prosecute any litigation in connection with the
transactions contemplated hereby. The parties hereto acknowledge that any breach
of the foregoing will give rise to irreparable injury that is not compensable in
damages and agree that any party may seek and obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary or
permanent injunction, or any other equitable remedy that may then be available
to such party against the breach or threatened breach of such covenants, in
addition to any other legal remedies which may be available. In addition to the
foregoing, the confidentiality obligations set forth in Paragraph 9 (including
subparts a. through j.) of the April 8, 1998 letter of intent between the
parties are expressly incorporated herein, and, irrespective of any other
provision of this Agreement, shall survive the execution of this Agreement
9.15 CERTAIN INTERPRETATIONS. Words such as "herein," "hereof,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular Section or subsection of this Agreement. The word
"material" as used in this Agreement shall mean a deviation of more than five
(5%) percent.
28
<PAGE>
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that
any claim, suit, action or proceeding, brought by any party, arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
submitted for adjudication exclusively in any Florida state or federal court
sitting in Broward County, Florida, and each of the parties hereto expressly
agrees to be bound by such selection of jurisdiction and venue for purposes of
such adjudication. Each party: (i) waives any objection which it may have that
such court is not a convenient forum for any such adjudication; (ii) agrees and
consents to the personal jurisdiction of such court with respect to any claim or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby; and (iii) agrees that process issued out of such court or
in accordance with the rules of practice of such court shall be properly served
if served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court. In the event of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby the prevailing party thereunder shall be
entitled to recover reasonable attorneys' and paralegals' fees (for
negotiations, trials, appeals and collection efforts) and costs incurred in
connection therewith in addition to any other relief to which such party may be
entitled. The prevailing party shall be the party that prevails on its claim
whether or not an award or judgement is entered in its favor.
9.17 EQUITABLE RELIEF. The parties hereto acknowledge and agree that
any party's remedy at law for any breach or threatened breach of this Agreement
which relates to requiring that the breaching party take any action or refrain
from taking any action, would be inadequate and such breach or threatened breach
shall be per se deemed as causing irreparable harm to such party. Therefore, in
the event of such breach or threatened breach, the parties hereto agree that in
addition to any available remedy at law, including but not limited to monetary
damages, an aggrieved party shall be entitled to obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary permanent
injunction, or any other equitable remedy that may then be available to the
aggrieved party.
9.18. TERMINATION. The parties may terminate this agreement under the
following circumstances: (a) Buyer, Seller, and Pick may terminate this
Agreement by written consent of all of the parties at any time prior to the
Closing; (b) Buyer may terminate this Agreement by giving written notice to the
Seller and Pick on or before May 25, 1998 if Buyer is not satisfied with the
results of its continuing business, legal and accounting due diligence review of
the Seller and the Business; (c) Buyer may terminate this Agreement by giving
written notice to Seller and Pick at any time prior to the Closing (A) if Seller
or Pick has breached any representation, warranty or covenant contained in this
Agreement in any material respect, Buyer has notified the Seller and Pick of the
breach, and (if curable) the breach has continued without cure for a period of
ten days after the notice of breach, or (B) if the Closing shall not have
occurred on or
29
<PAGE>
before , 1998, by reason of the failure of any condition precedent under Section
6 hereof to have been satisfied by such date (unless the failure results
primarily from Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement ); and (d) Seller and Pick may terminate this
Agreement by giving written notice, executed by Seller and Pick, to Buyer at any
time prior to the Closing (A) if Buyer has breached any representation, warranty
or covenant contained in this Agreement in any material respect, the Seller and
Pick have notified Buyer of the breach, and (if curable) the breach has
continued without cure for a period of ten days after the notice of breach, or
(B) the Closing shall not have occurred on or before , 1998, by reason of the
failure of any condition precedent under Section 7 hereof to have been satisfied
by such date (unless the failure results primarily from Seller or Pick breaching
any representation, warranty or covenant contained in this Agreement). If any
party terminates this Agreement pursuant to this Section 9.18, all rights and
obligations of the parties hereunder shall terminate without any liability of
any party to any other party (except for any liability of any party then in
breach).
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
BUYER:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- -------------------------- ------------------------------
Name: DAVID SPARKMAN
----------------------------
Title: ZONE VICE-PRESIDENT
---------------------------
SELLER:
Witness:
Resource Dimensions, Inc.
/S/ MICHELE MORRIS-SAKALICK By: /S/ EARL M. PICK
- ----------------------------- ------------------------------
Earl M. Pick, President
PICK:
/S/ EARL M. PICK
----------------------------------
Earl M. Pick
30
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 18th day of May, 1998, by and between OutSource International of
America, Inc., a Florida corporation ("OutSource"), and Teresa Usher
("Covenantor").
W I T N E S S E T H:
WHEREAS, Covenantor is a principal shareholder of Mid-West Temps, Inc.,
an Illinois corporation ("Seller"); and
WHEREAS, Seller is selling substantially all of its assets to OutSource
pursuant to the Asset Purchase Agreement among OutSource, Covenantor, and Seller
of even date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Covenantor pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. NONCOMPETITION AGREEMENT. Covenantor agrees that, for a period
from the date of this Agreement and up to and including May 11, 2003, without
the prior written consent of OutSource, Covenantor shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
in a Competitive Business perform services, directly or indirectly, on
behalf of itself or in connection with any other person, or as an
employee, proprietor, owner, partner, director, officer, associate,
shareholder, agent, contractor, employer, or consultant, of any entity,
within the state of Illinois (collectively the "Territory").
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory
except that Covenantor may own up to 5% of the issued and outstanding
stock in a Competitive Business which is a publicly held company.
1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business
<PAGE>
within the Territory;
1.4 have any direct or indirect interest in any entity which
is granted or is granting franchises or licenses to others to operate a
Competitive Business within the Territory except for an ownership of up
to 5% of the issued and outstanding shares of a Competitive Business
which is a publicly held company.
1.5 solicit, recruit or hire any employee of OutSource, its
affiliates or franchise associates, except for non-staffing employees
who respond to a general solicitation of employment or approach
Covenantor without prior solicitation;
1.6 except as allowed above with respect to a Competitive
Business, directly or indirectly, on behalf of itself or any other
person, or as an employee, proprietor, consultant, agent, contractor,
employer, affiliate, partner, owner, officer, director, associate, or
stockholder of any other person or entity, or in any other capacity,
solicit, divert, take away or interfere with any of the business,
customers, clients, contractors, trade or patronage of OutSource, its
affiliates or franchise associates.
In the event that any provisions of this Section 1 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, then such
provision shall be, and hereby is, reformed to the maximum time or geographic
limitations permitted under such applicable law.
2. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any light
industrial temporary labor business.
3. MATERIALITY. Covenantor recognizes and hereby agrees that the
purchase price paid by OutSource for Seller's business exceeds the book value of
Seller's business, and that a portion of the purchase price is attributed to the
execution and delivery of this Agreement by Covenantor and related agreements by
certain other individuals. Covenantor further recognizes and agrees that the
execution and delivery of this Agreement by Covenantor and the representations,
warranties, covenants and agreements of Covenantor set forth in Section 1 hereof
are material and substantial parts of the transactions contemplated by the Asset
Purchase Agreement.
4. PAYMENT. In consideration of the noncompetition agreement set forth
in Section 1 hereof, upon execution of this Agreement, OutSource will deliver or
cause to be delivered to the Seller the amount set forth in Section 1 of the
Asset Purchase Agreement pursuant to the terms of the Asset Purchase Agreement.
5. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such
2
<PAGE>
provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
6. SUCCESSORS AND ASSIGNS. The obligations of the Covenantor under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Covenantor under this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
OutSource.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The sole venue for any action
arising hereunder shall be Cook County, Illinois.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
IN WITNESS WHEREOF, the parties have executed and caused this Agreement
to be executed and delivered as of the date first written above.
OUTSOURCE:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- ----------------------- -------------------------------
Zone Vice President
Witness: COVENANTOR:
/S/ DEBORAH WEISS /S/ TERESA J. USHER
- ------------------------ -----------------------------------
Teresa Usher
3
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 18th day of May, 1998, by and between OutSource International of
America, Inc., a Florida corporation ("OutSource"), and Deborah Weiss
("Covenantor").
W I T N E S S E T H:
WHEREAS, Covenantor is a principal shareholder of Mid-West Temps, Inc.,
an Illinois corporation ("Seller"); and
WHEREAS, Seller is selling substantially all of its assets to OutSource
pursuant to the Asset Purchase Agreement among OutSource, Covenantor, and Seller
of even date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Covenantor pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. NONCOMPETITION AGREEMENT. Covenantor agrees that, for a period from
the date of this Agreement and up to and including May 11, 2003, without the
prior written consent of OutSource, Covenantor shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
in a Competitive Business perform services, directly or indirectly, on
behalf of itself or in connection with any other person, or as an
employee, proprietor, owner, partner, director, officer, associate,
shareholder, agent, contractor, employer, or consultant, of any entity,
within the state of Illinois (collectively the "Territory").
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory
except that Covenantor may own up to 5% of the issued and outstanding
stock in a Competitive Business which is a publicly held company.
1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business
1
<PAGE>
within the Territory;
1.4 have any direct or indirect interest in any entity which
is granted or is granting franchises or licenses to others to operate a
Competitive Business within the Territory except for an ownership of up
to 5% of the issued and outstanding shares of a Competitive Business
which is a publicly held company.
1.5 solicit, recruit or hire any employee of OutSource, its
affiliates or franchise associates, except for non-staffing employees
who respond to a general solicitation of employment or approach
Covenantor without prior solicitation;
1.6 except as allowed above with respect to a Competitive
Business, directly or indirectly, on behalf of itself or any other
person, or as an employee, proprietor, consultant, agent, contractor,
employer, affiliate, partner, owner, officer, director, associate, or
stockholder of any other person or entity, or in any other capacity,
solicit, divert, take away or interfere with any of the business,
customers, clients, contractors, trade or patronage of OutSource, its
affiliates or franchise associates.
In the event that any provisions of this Section 1 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, then such
provision shall be, and hereby is, reformed to the maximum time or geographic
limitations permitted under such applicable law.
2. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any light
industrial temporary labor business.
3. MATERIALITY. Covenantor recognizes and hereby agrees that the
purchase price paid by OutSource for Seller's business exceeds the book value of
Seller's business, and that a portion of the purchase price is attributed to the
execution and delivery of this Agreement by Covenantor and related agreements by
certain other individuals. Covenantor further recognizes and agrees that the
execution and delivery of this Agreement by Covenantor and the representations,
warranties, covenants and agreements of Covenantor set forth in Section 1 hereof
are material and substantial parts of the transactions contemplated by the Asset
Purchase Agreement.
4. PAYMENT. In consideration of the noncompetition agreement set forth
in Section 1 hereof, upon execution of this Agreement, OutSource will deliver or
cause to be delivered to the Seller the amount set forth in Section 1 of the
Asset Purchase Agreement pursuant to the terms of the Asset Purchase Agreement.
5. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such
2
<PAGE>
provision which, together with all other provisions of this Agreement, shall
likewise to the full extent consistent with law continue in full force and
effect.
6. SUCCESSORS AND ASSIGNS. The obligations of the Covenantor under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Covenantor under this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
OutSource.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The sole venue for any action
arising hereunder shall be Cook County, Illinois.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
IN WITNESS WHEREOF, the parties have executed and caused this Agreement
to be executed and delivered as of the date first written above.
OUTSOURCE:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- ------------------------ ------------------------
Zone Vice President
Witness: COVENANTOR:
/S/ TERESA J. USHER /S/ DEBORAH WEISS
- ------------------------ ----------------------------
Deborah Weiss
3
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 18th day of May, 1998, by and between OutSource International of
America, Inc., a Florida corporation ("OutSource"), and Mid-West Temps, Inc.
("Seller").
W I T N E S S E T H:
WHEREAS, Seller is selling substantially all of its assets to OutSource
pursuant to the Asset Purchase Agreement among OutSource, and Seller of even
date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Seller pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. NONCOMPETITION AGREEMENT. Seller agrees that, for a period from the
date of this Agreement and up to and including May 11, 2003, without the prior
written consent of OutSource, Seller shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
in a Competitive business perform services, directly or indirectly, on
behalf of itself or in connection with any other person, or as an
employee, proprietor, owner, partner, director, officer, associate,
shareholder, agent, contractor, employer, or consultant, of any entity,
within the state of Illinois (collectively the "Territory").
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory
except that Seller may own up 5% of the issued and outstanding stock in
a Competitive Business which is a publicly held company.
1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business within the Territory;
1.4 have any direct or indirect interest in any entity which
is granted or is granting
1
<PAGE>
franchises or licenses to others to operate a Competitive Business
within the Territory except for an ownership of up to 5% of the issued
and outstanding shares of a Competitive Business which is a publicly
held company.
1.5 solicit, recruit or hire any employee of OutSource, its
affiliates or franchise associates; except for non-staffing employees
who respond to a general solicitation of employment or approach Seller
without prior solicitation;
1.6 except as allowed above with respect to a Competitive
business, directly or indirectly, on behalf of itself or any other
person, or as an employee, proprietor, consultant, agent, contractor,
employer, affiliate, partner, owner, officer, director, associate, or
stockholder of any other person or entity, or in any other capacity,
solicit, divert, take away or interfere with any of the business,
customers, clients, contractors, trade or patronage of OutSource, its
affiliates or franchise associates.
In the event that any provisions of this Section 1 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, then such
provision shall be, and hereby is, reformed to the maximum time or geographic
limitations permitted under such applicable law.
2. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any light
industrial temporary labor business.
3. MATERIALITY. Seller recognizes and hereby agrees that the purchase
price paid by OutSource for Seller's business exceeds the book value of Seller's
business, and that a portion of the purchase price is attributed to the
execution and delivery of this Agreement by Seller and related agreements by
certain other individuals. Seller further recognizes and agrees that the
execution and delivery of this Agreement by Seller and the representations,
warranties, covenants and agreements of Seller set forth in Section 1 hereof are
material and substantial parts of the transactions contemplated by the Asset
Purchase Agreement.
4. PAYMENT. In consideration of the noncompetition agreement set forth
in Section 1 hereof, upon execution of this Agreement, OutSource will deliver or
cause to be delivered to the Seller the amount set forth in Section 1 of the
Asset Purchase Agreement pursuant to the terms of the Asset Purchase Agreement.
5. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
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6. SUCCESSORS AND ASSIGNS. The obligations of the Seller under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Seller under this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
OutSource.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The sole venue for any action
arising hereunder shall be Cook County, Illinois.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first written above.
OUTSOURCE:
Witness: OutSource International
of America, Inc.
By: /S/ DAVID SPARKMAN
- --------------------------- -----------------------------
Zone Vice President
Witness: SELLER:
Mid-West Temps, Inc.
By: /S/ TERESA J. USHER
- ---------------------------- -----------------------------
3
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
JUNIOR SUBORDINATED NOTE
$1,750,000.00 May 15, 1998
FOR VALUE RECEIVED, OutSource International of America, Inc., a
corporation organized and existing under the laws of the State of Florida (the
"Company"), hereby promises to pay Resource Dimensions, Inc., an Illinois
corporation (together with any subsequent holder of this Note, the "Noteholder")
the principal sum of One Million Seven Hundred Fifty Thousand and 00/100 Dollars
($1,750,000.00), with interest in arrears on the unpaid principal balance from
time to time outstanding from the date hereof until due and payable at the rate
provided in section 1(a) hereof. Each holder of this Note, by acceptance hereof,
agrees to and shall be bound by the provisions of this Note. This Note is issued
to the Noteholder pursuant to the terms of that certain Asset Purchase Agreement
by and among the Company, the Noteholder, and Earl M. Pick of even date herewith
(the "Asset Purchase Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed to such terms in the Asset
Purchase Agreement.
1. TERMS OF NOTE.
(a) INTEREST AND PRINCIPAL. This Note shall bear interest on the
outstanding principal balance hereof at the rate of six percent (6%) simple
interest per annum (computed on the basis of a 365 day year). Except as
otherwise provided herein, the Company shall make three (3) payments of
principal in the amount of Five Hundred Eighty Three Thousand, Three Hundred
Thirty Three and 34/100 Dollars ($583,333.34) each on January 1, 1999, July 1,
1999, and January 1, 2000. Each payment of principal shall be accompanied by
interest accrued to the date of payment. All payments of principal and interest
hereunder shall be made by the Company in lawful money of the United States of
America in immediately available funds on the date such payment is due at the
address of the Noteholder set forth below or such other place as the holder
hereof shall designate to the Company in writing.
(b) NO PREPAYMENT. This Note shall not be prepaid until the Senior
Indebtedness (as defined below) shall have been paid in full in cash and the
Credit Agreement (as defined below) shall have been irrevocably terminated.
(c) SETOFF. The payment of principal and interest on this Note is
subject to certain setoff provisions in the Asset Purchase Agreement. In the
event that the company elects to exercise its right of setoff under the Asset
Purchase Agreement, the Noteholder shall surrender this Note and the Company
shall issue and deliver to the Noteholder a new junior subordinated promissory
note bearing the same date as this original Note and reflecting the revised
outstanding principal and interest amounts following the exercise of such setoff
rights. In calculating the revised principal and interest
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amounts, interest accruing from the original date of this Note on any setoff
amount shall be deducted from the accrued interest, and the principal amount
shall, in addition to the setoff amount, be reduced by the amount of any
interest previously paid by Buyer on this Note that is attributable to any
setoff amount.
2. SUBORDINATION IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS.
(a) SUBORDINATION. The Company agrees, and each holder of this Note
agrees, that the principal and interest on this Note is and shall be
subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Indebtedness and
that the subordination of this Note pursuant to this Section 2 is for the
benefit of all holders of the Senior Indebtedness.
(b) SENIOR INDEBTEDNESS. "Senior Indebtedness" means all obligations
and undertakings of any kind owed by the Company or any Subsidiary of the
Company to the holders of the Senior Indebtedness from time to time under or
pursuant to any of the Senior Lending Agreements including, without limitation,
whether direct or indirect, absolute or contingent, secured or unsecured, now
existing or hereafter arising, all loans, advances, liabilities and debt
balances, all principal and interest (including all interest accruing after
commencement of any case, Proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company) accruing thereon, all charges,
expenses, fees and other sums chargeable to the Company or any Subsidiary of the
Company by the holders of the Senior Indebtedness, all reimbursement, indemnity
or other obligations due and payable to the holders of the Senior Indebtedness
and all covenants and duties at any time owed by the Company or any Subsidiary
of the Company to the holders of the Senior Indebtedness. Senior Indebtedness
shall include any debt, liability or obligation owing from the Company or any
Subsidiary of the Company to others which the holders of the Senior Indebtedness
may have obtained by assignment, pledge, purchase or otherwise. Senior
Indebtedness shall continue to constitute Senior Indebtedness notwithstanding
the fact that such Senior Indebtedness or any claim for such Senior Indebtedness
is subordinated, avoided or disallowed under the federal Bankruptcy Code or
other applicable law. Senior Indebtedness shall also include any indebtedness of
the Company or any Subsidiary of the Company incurred in connection with a
refinancing of the Senior Indebtedness under the Senior Lending Agreements.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
securities or other property) to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar Proceeding relating to the Company or its property:
(i) The holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all Senior Indebtedness or
such payment shall first be duly provided for in cash or in a
manner satisfactory to the holders of Senior Indebtedness
before Noteholder shall be entitled to receive any payment on
this Note; and
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<PAGE>
(ii) Until the Senior Indebtedness is paid in full in cash or
provided for in a manner satisfactory to the holders of Senior
Indebtedness, any payment or distribution to which the
Noteholder would be entitled but for this Section shall be
made to the Agent (as defined below) for application to the
payment of the Senior Indebtedness.
(iii) Notwithstanding the foregoing provisions of this Section, if
the Company shall make any payment or distribution to the
Noteholder on account of this Note at a time when such payment
is prohibited by this Section, such payment or distribution
shall be held by the Noteholder in trust for the ratable
benefit of, and shall be paid forthwith over and delivered to,
the Agent for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay
all Senior Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness, and the
Noteholder irrevocably authorizes, empowers and directs all
receivers, trustees, liquidators, custodians, conservators and
others having authority in the premises to effect all such
payments and distributions, and the Noteholder also
irrevocably authorizes, empowers and directs the Agent to
demand, sue for, collect and receive every such payment or
distribution.
(iv) The Noteholder agrees to execute, verify, deliver and file any
proofs of claim in respect of the indebtedness evidenced by
this Note requested by the Agent in connection with any such
Proceeding and hereby irrevocably authorizes, empowers and
appoints the Agent as the Company's agent and attorney-in-fact
to (A) execute, verify, deliver and file such proofs of claim
and (B) vote such claim in any such Proceeding; provided that
the Agency shall have no obligation to execute, verify,
deliver, file and/or vote any such proof of claim.
(d) DEFAULT ON SENIOR INDEBTEDNESS.
(i) Upon the maturity of the Senior Indebtedness by lapse of time,
acceleration (unless waived in writing by the holders of
Senior Indebtedness) or otherwise, all of the Senior
Indebtedness shall first be paid in full, or such payment duly
provided for, in cash or in a manner satisfactory to the
holders of the Senior Indebtedness, before any payment is made
by the Company on account of this Note and, until all of the
Senior Indebtedness is paid in full, any payment or other
distribution to which the Noteholder would be entitled but for
the provisions of this Section shall (unless otherwise
required by this Section 2) be made to the Agent, for
application to the payment of the Senior Indebtedness.
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<PAGE>
(ii) During the continuance of any default in the payment of any of
the Senior Indebtedness, the Company shall not make any
payment of interest or other amounts owing on this Note until
such payment default has been cured by the Company or waived
in writing by the holders of the Senior Indebtedness. Upon any
such cure or waiver, payments may resume. Interest on this
Note shall continue to accrue during any period for which
there is a payment default on the Senior Indebtedness and,
upon such cure or waiver, the amount of any such accrued
interest shall be paid in equal installments in each
subsequent payment due pursuant to the provisions of Section
1.
(iii) During the continuance of any other event of default with
respect to the Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, commencing upon receipt
by the Company of written notice from the Agent specifying
that such notice is a payment blockage notice delivered
pursuant to this Section, the Company may not make any payment
of principal, interest or other amounts owing on this Note for
a period ("Payment Blockage Period") commencing on the date of
receipt of such notice and ending one hundred and eighty (180)
days thereafter (unless such Payment Blockage Period shall be
terminated by written notice to the Company from the Agent).
The aggregate duration of all Payment Blockage Periods for
such nonpayment defaults shall not exceed one hundred eighty
(180) days during any period of three hundred sixty (360)
consecutive days. During any Payment Blockage Period, interest
shall continue to accrue as otherwise provided herein. Upon
the termination of any Payment Blockage Period, payments of
interest and/or principal shall resume as provided in Section
1; provided that the outstanding principal balance of this
Note shall be increased by the amount of interest that accrued
during such Payment Blockage Period and paid in equal
installments as provided in Section 1. No principal or
interest shall be paid with respect to said Payment Blockage
Period until the Senior Indebtedness is paid in full in cash
and the Credit Agreement shall have been irrevocably
terminated.
(iv) Notwithstanding the foregoing provisions of this Section, if
the Company shall make any payment or distribution to the
Noteholder on account of this Note at a time when such payment
is prohibited by this Section, unless otherwise required by
this Section, such payment or distribution shall be held by
Noteholder in trust for the ratable benefit of, and shall be
paid forthwith over and delivered to, the Agent for
application to the payment of all of the Senior Indebtedness
remaining unpaid to the extent necessary to pay all of the
Senior Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or distribution
to or for the holders of the Senior Indebtedness.
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<PAGE>
(e) SUBROGATION. After all Senior Indebtedness is paid in full and
until this Note is paid in full (but not prior to such time), the Noteholder
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments and distributions applicable to the Senior Indebtedness to the
extent that payments and distributions otherwise payable to the Noteholder have
been applied to the payment of the Senior Indebtedness. A payment or
distribution made under this Section to holders of Senior Indebtedness which
otherwise would have been made to the Noteholder is not, as between the Company
and the Noteholder, a payment by the Company on Senior Indebtedness, but until
such payment is made to Noteholder it is not a payment by the Company to the
Noteholder.
(f) DEFERRAL OF COLLECTION ACTION. In the event of a default in the
payment of any amounts due hereunder, the Noteholder agrees to promptly notify
the Agent of such default. The Noteholder shall not take any collection action
with respect to the indebtedness evidenced by this Note for a period
("Collection Deferral Period") commencing on the date of receipt of such notice
by the Agent and ending one hundred eighty days (180) thereafter (unless such
Collection Deferral Period shall be terminated by written notice to the
Noteholder from the Agent).
(g) RETURN OF PAYMENTS. After all Senior Indebtedness is paid in full,
the provisions of this Section 2 shall be reinstated if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of the Senior Indebtedness or any representative of such holder.
(h) NO CHALLENGE TO SENIOR INDEBTEDNESS. The Noteholder agrees not to
initiate or prosecute any claim, action or other Proceeding challenging the
enforceability of the Senior Indebtedness or any liens and security interests
securing the Senior Indebtedness, nor will the Noteholder file or join in the
filing of an involuntary bankruptcy petition against the Company. The right of
the holders of the Senior Indebtedness to enforce the provisions of this Section
2 shall not be prejudiced or impaired by any act or omitted act of the holders
of the Senior Indebtedness or the Company, including without limitation
forbearance, waiver, compromise, amendment, extension, renewal or taking or
release of security in respect of any Senior Indebtedness or noncompliance by
the Company with such provisions, regardless of the actual or imputed knowledge
of the holders of the Senior Indebtedness. In the event that the Senior
Indebtedness is refinanced in full, Noteholder agrees at the request of such
refinancing party to enter into a subordination agreement on terms substantially
similar to this Section 2.
(i) MODIFICATIONS TO SENIOR INDEBTEDNESS. The holders of the Senior
Indebtedness may at any time and from time to time without the consent of or
notice to the Noteholder, without incurring liability to the Noteholder and
without impairing or releasing the obligations of the Noteholder under this
Section 2, change the manner or place of payment or extend the time of payment
of or renew or alter any Senior Indebtedness, or amend in any manner any
agreement, note, guaranty, security agreement or other instrument evidencing or
securing or otherwise relating to the Senior Indebtedness.
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<PAGE>
(j) NO SECURITY FOR NOTE. The Noteholder represents that it does not
have, and agrees that it shall not require or obtain, any security interest in
the assets of the Company or any Subsidiary or parent of the Company as security
for the indebtedness evidenced hereby. The Noteholder acknowledges that the
holders of the Senior Indebtedness do have a security interest in the assets of
the Company.
(k) NO MODIFICATIONS OF NOTE. Except as provided in Section 1(b)
hereof, until all of the Senior Indebtedness is paid in full and all loan
commitments under the Credit Agreement have terminated, without the prior
written consent of the Agent, the Noteholder shall not agree to any amendment,
modification or supplement to this Note or the indebtedness evidenced by this
Note, including without limitation, any amendment, modification or supplement
the effect of which is to (i) increase the principal amount hereof or the rate
of interest herein, (ii) change the dates upon which payments of principal or
interest hereon are due, (iii) change or add any event of default, (iv) change
the prepayment provisions hereof or (v) alter the subordination provisions
hereof, including without limitation, subordinating this Note or the
indebtedness evidenced hereby to any other debt.
(l) ASSIGNMENT. Until all of the Senior Indebtedness is paid in full
and all loan commitments under the Credit Agreement have terminated, the
Noteholder shall not sell, assign, pledge, dispose of or otherwise transfer all
or any portion of this Note or the indebtedness evidenced hereby unless prior to
the consummation of any such action, the transferee thereof shall execute and
deliver to the Agent an agreement providing the continued subordination of this
Note and the indebtedness evidenced hereby as provided herein. Notwithstanding
the failure to execute or deliver any such agreement, the subordination effected
hereby shall survive any sale, assignment, pledge, disposition or other transfer
of all or any portion of this Note or the indebtedness evidenced hereby, and the
subordination terms of this Note shall be binding upon the successors and
assigns of the Noteholder.
(m) SCOPE OF SUBORDINATION. The provisions in this Section 2 are solely
to define the relative rights of the Noteholder and the holders of the Senior
Indebtedness. Nothing in this Section 2 shall impair, as between the Company and
the Noteholder, the unconditional and absolute obligation of the Company to
punctually pay the principal, interest, and any other amounts and obligations
owing to Noteholder under the terms of this Note, subject to the rights of the
holders of the Senior Indebtedness under this Note and the terms of this Note.
(n) CERTAIN DEFINED TERMS. As used herein,
(i) "Agent" means BankBoston, N.A., successor by merger to Bank of
Boston Connecticut, in its capacity as agent for the holders
of the Senior Indebtedness, or any successor agent appointed
pursuant to the terms of the Credit Agreement, provided that
the Noteholder may rely on a certificate from any such
successor agent to the effect that such successor is acting as
a successor agent under the Credit Agreement.
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(ii) "Collection Action" means (A) to demand, sue for, take or
receive from or on behalf of the Company, by set-off or in any
other manner, the whole or any part of any moneys which may
now or hereafter be owing by the Company under this Note, (B)
to initiate or participate with others in any lawsuit, action,
or Proceeding against the Company to (1) enforce payment of or
to collect the whole or any part of the indebtedness evidenced
by this Note, or (2) commence judicial enforcement of any of
the rights and remedies under this Note or under applicable
law with respect to this Note, or (C) to accelerate any
indebtedness evidenced by this Note.
(iii) "Credit Agreement" means the Credit Agreement dated as of
February 21, 1997, among the Company, the Banks from time to
time parties thereto and Bank of Boston Connecticut, as Agent,
as the same has been amended and restated prior to the date
hereof and as the same hereafter may be amended, modified,
supplemented, restated or extended from time to time.
(iv) "Proceeding" means any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation,
dissolution, reorganization, assignment for the benefit of
creditors, appointment of a custodian, receiver, trustee or
other officer with similar powers or any other proceeding for
the liquidation, dissolution or other winding up of the
Company.
(v) "Senior Lending Agreements" means collectively the Credit
Agreement and the other related loan documents between the
Company or any Subsidiaries of the Company and the holders of
Senior Indebtedness, including without limitation all notes,
pledge agreements, security agreements and guarantees,
together with any and all other instruments, documents and
agreements executed and delivered by the Company or any
Subsidiary of the Company from time to time in connection with
the Senior Indebtedness evidenced by the Credit Agreement and
such notes, as the same has been amended and restated prior to
the date hereof and as the same may hereafter be amended,
modified, supplemented, restated or extended from time to
time.
(vi) "Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company or other entity of
which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation,
partnership, limited liability company or other entity are at
the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
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3. EVENTS OF DEFAULTS AND ACCELERATION.
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about to be effected by operation of law or otherwise):
(a) the Company defaults in the payment of the principal of or any
interest on this Note and such default continues for a period of thirty (30)
business days after the date such payment was due; or
(b) the Company shall:
(i) have commenced a voluntary case under Title 11 of the United
States Code as from time to time in effect, or have
authorized, by appropriate proceedings of its board of
directors or other governing body, the commencement of such a
voluntary case;
(ii) have filed an answer or other pleading admitting or failing to
deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or
seeking, consenting to or acquiescing in the relief therein
provided, or have failed to controvert timely the material
allegations of any such petition;
(iii) be subject to the entry of an order for relief against it in
any involuntary case commenced under said Title 11 which
remains undischarged or unstayed for more than sixty (60)
days;
(iv) have sought relief as a debtor under any applicable law, other
than said Title 11, of any jurisdiction relating to the
insolvency, liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or have
consented to or acquiesced in such relief;
(v) be subject to the entry of an order by a court of competent
jurisdiction (A) finding it to be bankruptcy or insolvent or
(B) ordering or approving its liquidation, reorganization or
any or any modification or alteration of the rights of its
creditors which remains undischarged or unstayed for more than
sixty (60) days;
(vi) be subject to the entry of an order by a court of competent
jurisdiction assuming custody of, or appointing a receiver or
other custodian for, all or a substantial part of its property
which remains undischarged or unstayed for more than sixty
(60) days; or
8
<PAGE>
(vii) have entered into a composition with its creditors or have
appointed or consented to the appointment of a receiver of
other custodian for all or a substantial part of its property.
then the Noteholder may, subject to the provisions of Section 2, by providing
ten (10) days written notice to the Company, declare the Company to be in
default hereunder (an "Event of Default") and may exercise any right, power or
remedy permitted to such holder or holders by law, including, without
limitation:
(y) the right to declare the entire principal amount of
this Note and accrued interest thereon, if any, due
and payable; and
(z) the right to commence any proceeding against the
Company in furtherance of the foregoing.
4. COMPLIANCE WITH USURY LAWS.
All agreements between the Company and the Noteholder are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Noteholder for the
use, forbearance or detention of the Indebtedness evidenced hereby exceed the
maximum permissible under the applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof, provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date. If, from any circumstances whatsoever,
fulfillment of any provision hereof at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, then the obligation to be fulfilled shall automatically be reduced to the
limit of such validity, and if from any circumstances the Noteholder should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between the
Company and the Noteholder.
5. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing, shall be deemed to have been duly given when delivered at or
telecopied to the address specified below and shall be delivered by overnight
delivery service or hand delivered, addressed or telecopied as follows:
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If to Noteholder:
Resource Dimensions, Inc.
310 West Roosevelt Road
Lombard, Illinois 60148
If to Company:
OutSource International of America, Inc.
Attn: Brian Nugent, General Counsel
1144 E. Newport Center Drive
Deerfield Beach, Florida 33442
Phone No.: (954) 418-6580
Telecopier No.: (954) 418-3365
6. GOVERNING LAW.
This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of Florida. The sole venue for any action arising hereunder shall be Broward
County, Florida.
7. WAIVER OF TRIAL BY JURY.
THE COMPANY AND NOTEHOLDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE COMPANY OR NOTEHOLDER.
IN WITNESS WHEREOF, the Company has caused this Note to be executed at
Chicago, Illinois under seal by its duly authorized officer as of the date set
forth above.
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
By: /S/ DAVID SPARKMAN
---------------------
Name: David Sparkman
Title: Zone Vice-President
AGREED AND ACCEPTED:
10
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NOTEHOLDER
Resource Dimensions, Inc.
By: /S/ EARL M. PICK
--------------------
Name: Earl M. Pick
Title: President
11
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 15th day of May, 1998, by and between OutSource International of
America, Inc., a Florida corporation ("OutSource"), and Earl M. Pick
("Covenantor").
W I T N E S S E T H:
WHEREAS, Covenantor is a principal shareholder of Resource Dimensions,
Inc., an Illinois corporation ("Seller"); and
WHEREAS, Seller is selling certain of its assets to OutSource pursuant
to the Asset Purchase Agreement among OutSource, Covenantor, and Seller of even
date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Covenantor pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. NONCOMPETITION AGREEMENT. Covenantor agrees that, for a five-year
period from the date of this Agreement (up to and including May 15, 2003), or if
later for a five-year period from the termination of employment or consulting on
behalf of OutSource, without the prior written consent of OutSource, Covenantor
shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
perform services, directly or indirectly, on behalf of himself or in
connection with any other person, or as an employee, proprietor, owner,
partner, director, officer, associate, shareholder, agent, contractor,
employer, or consultant, of any entity engaged in a Competitive
Business within the State of Illinois ("the Territory");
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory;
1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business within the Territory;
1
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1.4 have any direct or indirect interest in any entity which
is granted or is granting franchises or licenses to others to operate a
Competitive Business within the Territory;
1.5 solicit, recruit or hire any employee of OutSource, its
affiliates or franchise associates; and/or
1.6 directly or indirectly, on behalf of himself or any other
person, or as an employee, proprietor, consultant, agent, contractor,
employer, affiliate, partner, owner, officer, director, associate, or
stockholder of any other person or entity, or in any other capacity,
solicit, divert, take away or interfere with any of the business,
customers, clients, contractors, trade or patronage of OutSource, its
affiliates or franchise associates.
In the event that any provisions of this Section 1 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, then such
provision shall be, and hereby is, reformed to the maximum time or geographic
limitations permitted under such applicable law.
2. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any
temporary personnel business, or any other business that provides the same or
similar services as are customarily offered by Labor World or Tandem Businesses.
3. MATERIALITY. Covenantor further recognizes and agrees that the
execution and delivery of this Agreement by Covenantor and the representations,
warranties, covenants and agreements of Covenantor set forth in Section 1 hereof
are material and substantial parts of the transactions contemplated by the Asset
Purchase Agreement.
4. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
5. SUCCESSORS AND ASSIGNS. The obligations of the Covenantor under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Covenantor under this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
OutSource.
6. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
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hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. The sole venue for any action
arising hereunder shall be Broward County, Florida.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
IN WITNESS WHEREOF, the parties have executed and caused this Agreement
to be executed and delivered as of the date first written above.
OUTSOURCE:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: S/ DAVID SPARKMAN
- ------------------------------ ----------------------
Zone Vice President
Witness: COVENANTOR:
/S/ MICHELE MORRIS-SAKALICK /S/ EARL M. PICK
- ------------------------------- --------------------------
Earl M. Pick
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NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and effective
as of the 15th day of May, 1998, by and between OutSource International of
America, Inc., a Florida corporation ("OutSource"), and Resource Dimensions,
Inc. ("Covenantor" or "Seller").
W I T N E S S E T H:
WHEREAS, Covenantor is a corporation duly organized under the laws of
Illinois; and
WHEREAS, Covenantor is selling certain of its assets to OutSource
pursuant to the Asset Purchase Agreement among OutSource, Covenantor, and Earl
M. Pick of even date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Covenantor pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. NONCOMPETITION AGREEMENT. Covenantor agrees that, for a five year
period from the date of this Agreement (up to and including May 15, 2003),
without the prior written consent of OutSource, Covenantor shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
perform services, directly or indirectly, on behalf of itself or in
connection with any other person, or as an employee, proprietor, owner,
partner, director, officer, associate, shareholder, agent, contractor,
employer, or consultant, of any entity engaged in a Competitive
Business within the state of Illinois (the "Territory").
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory;
1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business within the Territory;
1.4 have any direct or indirect interest in any entity which
is granted or is granting franchises or licenses to others to operate a
Competitive Business within the Territory;
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1.5 solicit, recruit or hire any employee of OutSource, its
affiliates or franchise associates; and/or
1.6 directly or indirectly, on behalf of itself or any other
person, or as an employee, proprietor, consultant, agent, contractor,
employer, affiliate, partner, owner, officer, director, associate, or
stockholder, of any other person or entity, or in any other capacity,
solicit, divert, take away or interfere with any of the business,
customers, clients, contractors, trade or patronage of OutSource, its
affiliates or franchise associates.
In the event that any provisions of this Section 1 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, then such
provision shall be, and hereby is, reformed to the maximum time or geographic
limitations permitted under such applicable law.
2. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any
temporary personnel business, or any other business that provides the same or
similar services as are customarily offered by Labor World or Tandem Businesses.
3. MATERIALITY. Covenantor recognizes and agrees that the execution and
delivery of this Agreement by Covenantor and the representations, warranties,
covenants and agreements of Covenantor set forth in Section 1 hereof are
material and substantial parts of the transactions contemplated by the Asset
Purchase Agreement.
4. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
5. SUCCESSORS AND ASSIGNS. The obligations of the Covenantor under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Covenantor under this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
OutSource.
6. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
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7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. The sole venue for any action
arising hereunder shall be Broward County, Florida.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
10. DEFAULT. In the event of default by Buyer under the Junior
Subordinated Note delivered to Sellers pursuant to the Asset Purchase Agreement,
Seller shall provide written notice to Buyer of said default by certified mail
to: OutSource International of America, Inc.; Attention: CEO; 1144 East Newport
Center Drive; Deerfield Beach, Florida 33442. If Buyer is unable to cure within
any cure period provided within the Junior Subordinated Note, then Seller shall
have the right to terminate this Noncompetition Agreement upon ten (10) days
prior written notice to OutSource at the address noted herein; provided,
however, that any right of Seller to terminate under this Paragraph 10 shall be
null and void should Seller have failed to meet, in any material manner, any of
its obligations and/or representations under the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first written above.
OUTSOURCE:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- --------------------------- ----------------------------
Zone Vice President
Witness: COVENANTOR:
Resource Dimensions, Inc.
/S/ MICHELE MORRIS-SAKALICK By: /S/ EARL M. PICK
- --------------------------- ----------------------------
Earl M. Pick
Title: PRESIDENT
-------------------------
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