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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ) June 23, 1997
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C.H. Heist Corp.
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(Exact name of registrant as specified in charter)
New York 0-7907 16-0803301
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
810 North Belcher Road, Clearwater, Florida 33765
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 461-5656
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(Former name or former address, if changed since last report)
Exhibit Index: 3
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Item 2: Acquisition or Disposition of Assets
On June 23, 1997, Ablest Service Corp. ("Ablest") a wholly owned
subsidiary of C.H. Heist Corp. ("Company"), acquired the technical staffing and
documentation writing service business of The Kelton Group, Inc., a North
Carolina corporation, ("Kelton Group") pursuant to an Asset Purchase Agreement
("Purchase Agreement"). Ablest intends to combine the Kelton Group's business
with it's recently established Tech Resource division (collectively the "Tech
Resource Group").
Pursuant to the Purchase Agreement, Ablest purchased certain assets,
primarily customer and employee lists, of the Kelton Group, for $300,000 paid
in cash at closing. The purchase price was determined through negotiations and
is expected to be assigned primarily to the estimated value of the intangible
assets acquired. Ablest used funds available to it under it's revolving line
of credit to fund the $300,000 paid at closing.
The sole shareholder of the Kelton Group has also agreed not to compete
with Ablest for three years from the date of closing.
2
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Item 7: Financial Statements, Pro Forma Information and Exhibits
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(a), (b) Separate, audited financial and pro forma statements for the Kelton
Group are not required, as the Kelton Group does not qualify as
a significant subsidiary to the Company as defined in Article 1.02 of
Regulation S - X.
(c) Exhibits Pages
(2) Asset Purchase Agreement between Ablest, The Kelton Group, A1-A21
Inc., and its Shareholder dated June 23, 1997.
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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.
Dated: July 7, 1997
C. H. Heist Corp.
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(Registrant)
/s/ Mark P. Kashmanian
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Mark P. Kashmanian
Treasurer, Chief Accounting Officer
4
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
between
THE KELTON GROUP, INC.
and
ABLEST SERVICE CORP.
June 23, 1997
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TABLE OF CONTENTS
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ARTICLE I Sale and Purchase; Liabilities Assumed ......................... 1
1.1 Asset Purchase ..................................................... 1
1.2 Purchase Price ..................................................... 1
1.3 Assumption of Liabilities .......................................... 2
1.4 Allocation of Purchase Price ....................................... 2
1.5 Accounts Receivable ................................................ 2
1.6 Closing ............................................................ 3
ARTICLE II Representations and Warranties of Buyer ........................ 3
2.1 Corporate Organization ............................................. 3
2.2 Authorization ...................................................... 3
2.3 Consents and Approvals ............................................. 3
2.4 No Conflict ........................................................ 3
2.5 Brokers and Finders ................................................ 4
ARTICLE III Representations and Warranties of Seller and Shareholder ....... 4
3.1 Corporate Organization ............................................. 4
3.2 Authorization ...................................................... 4
3.3 Consent and Approvals .............................................. 5
3.4 Subsidiaries ....................................................... 5
3.5 Affiliates ......................................................... 5
3.6 Litigation ......................................................... 5
3.7 Stock Ownership and Authority ...................................... 5
3.8 No Conflicts ....................................................... 5
3.9 Financial Statements ............................................... 6
3.10 Absence of Certain Changes or Events ............................... 6
3.11 Taxes .............................................................. 6
3.12 Fixed Assets ....................................................... 6
3.13 Compliance with Laws; Authorization ................................ 7
3.14 Employee Benefits Plans ............................................ 7
3.15 Contracts .......................................................... 7
3.16 Books of Account; Records .......................................... 8
3.17 Labor Relations .................................................... 8
3.18 Insurance Funds .................................................... 8
3.19 Environmental Matters .............................................. 9
3.20 Brokers and Finders ................................................ 9
ARTICLE IV Conditions Precedent to Obligations ............................ 9
4.1 Conditions to Obligations of Buyer ................................. 9
4.2 Conditions of Seller ............................................... 10
ARTICLE V Closing ........................................................ 11
5.1 Deliveries of Seller at Closing .................................... 11
5.2 Deliveries of Buyer at Closing ..................................... 11
ARTICLE VI Indemnification ................................................ 12
6.1 Survival of Representations, Warranties and Agreements ............. 12
6.2 Indemnification .................................................... 12
6.3 Limitations on Indemnification ..................................... 13
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6.4 Procedure for Indemnification with Respect to
Third-Party Claims ................................................. 13
6.5 Procedure for Indemnification with Respect to Non-Third-Party
Claims ............................................................. 14
ARTICLE VII Covenants ...................................................... 14
7.1 Due Diligence Access ............................................... 14
7.2 Tax Covenants ...................................................... 15
7.3 Changes to Disclosure Schedule ..................................... 15
ARTICLE VIII Termination .................................................... 15
8.1 Termination of Agreement ........................................... 15
ARTICLE IX Miscellaneous Provisions ....................................... 16
9.1 Notice ............................................................. 16
9.2 Entire Agreement ................................................... 16
9.3 Binding Effect; Assignment ......................................... 17
9.4 No Third-Party Beneficiaries ....................................... 17
9.5 Counterparts ....................................................... 17
9.6 Expenses ........................................................... 17
9.7 Waiver; Consent .................................................... 17
9.8 Other and Further Covenants ........................................ 17
9.9 Governing Law ...................................................... 17
9.10 Public Announcements ............................................... 17
</TABLE>
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of June 23, 1997, between The Kelton Group, Inc., a North Carolina
corporation ("Seller") and Robert W. Kelton, the sole shareholder of Seller
("Shareholder") on the one hand, and Ablest Service Corp., a Delaware
corporation ("Buyer"), on the other.
WHEREAS, Seller owns and operates a staffing services business (the
"Business") concentrating in the information technology area and located in
Raleigh, North Carolina, and desires to sell the Assets (as defined herein) upon
the terms and conditions hereinafter stated;
WHEREAS, Buyer desires to purchase the Assets from Seller ("Asset
Purchase") upon the terms and conditions hereinafter stated;
Now, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the parties hereto agree as follows:
ARTICLE I
Sale and Purchase; Liabilities Assumed
1.1 Asset Purchase. At the Closing (as defined herein) and as of the
opening of business on the date thereof, Seller shall sell, convey, assign,
transfer and deliver to Buyer, free and clear of all liens and encumbrances of
any kind except those disclosed in the disclosure schedule attached hereto (the
"Disclosure Schedule") all of Seller's right, title, and interest in and to
those assets, rights, and interests, tangible or intangible, which are listed by
category on the attached Exhibit A (the "Assets"), and all books and records
which relate to the Assets (except for books and records which Seller is
required by law to retain in its possession, copies of which will be provided to
Buyer); provided, however, that there shall be excluded from the Assets those
assets listed on the attached Exhibit A-1. Contemporaneously with the Closing,
Seller shall prepare and deliver to Buyer, and Buyer shall promptly thereafter
make, the necessary filings in the State of North Carolina to change Seller's
corporate name to a name other than The Kelton Group, Inc. The business of
Seller as operated by Buyer following the Closing will be combined with the
business of Buyer's information technology group ("Tech Resource Group") and
will be operated under the name of that group.
1.2 Purchase Price. The purchase price for the Assets shall be $300,000
(the "Purchase Price"), which shall be paid by Buyer at the Closing by certified
or bank cashier's check payable to the order of, or by wire transfer of same-day
funds pursuant to instructions of, Seller.
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1.3 Assumption of Liabilities.
(a) In connection with the acquisition by Buyer of the Assets at the
Closing, Buyer shall assume only those liabilities under the Material Contracts
(as defined in this Agreement) of Seller, which Material Contracts are expressly
identified on the attached Exhibit B. Buyer does not hereby, and will not at any
time be required to, assume, pay, perform or discharge any other obligations,
claims, liabilities, costs or expenses of Seller, including without limitation
any of the following: (i) any liability in respect of separation or severance
pay to any person employed by Seller; (ii) any liability under any plan, fund,
program, policy or arrangement under which any persons are provided or promised
pensions, retirement income, deferred compensation or profit-sharing; (iii) any
liability under any plan, fund, program or arrangement under which any persons
are provided or promised bonuses, incentive pay, severance pay, vacations or
vacation pay, salary continuation, medical insurance or benefits, savings
benefits, stock options, life insurance or death benefits travel or accident
benefits or unemployment benefits; (iv) any liability for occupational health
and safety or environmental matters; (v) any liability of Seller (including
without limitation any liability or potential liability with respect to any
consolidated return filed or to be filed by any person) for federal, state or
local income or other taxes or penalties or interest thereon; (vi) any pending
or threatened litigation against Seller or any affiliate of Seller; (vii) any
intercompany loans, advances or other obligations owed by Seller to any
affiliate of Seller; and (viii) liability of any kind, direct or indirect, fixed
or contingent, arising out of, resulting from or relating to actions taken or
omitted to be taken by Seller prior to, on or after the Closing Date.
(b) Notwithstanding anything to the contrary in this Agreement, to the
extent that the assignment hereunder of any Material Contract (as defined in
this Agreement) shall require the consent of any other party (or in the event
that any of the same shall be non-assignable), neither this Agreement nor any
action taken pursuant to its provisions shall constitute an assignment or an
agreement to assign if such assignment or attempted assignment would constitute
a breach thereof or result in the loss or diminution thereof; provided, however,
that in each such case, Seller and the Shareholder shall use their best efforts
to obtain the consent of such other party to an assignment to Buyer. If such
consent is not obtained, Seller shall cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the benefits under any such contract
from and after the Closing.
1.4 Allocation of Purchase Price. The parties agree on the written
allocation attached hereto as Exhibit C of the Purchase Price among the Assets
and the covenants in Section 7.1 and 7.2 hereof. The parties agree to file all
federal, state and local tax returns in accordance with such allocation.
1.5 Accounts Receivable. Seller shall retain its accounts receivable
and Buyer shall have no obligation to collect
<PAGE> 6
them for Seller; provided, however, that Buyer shall provide reasonable clerical
and administrative assistance to Seller in connection with Seller's efforts to
collect its outstanding accounts receivable.
1.6 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 10:00 a.m., local time, on June 23, 1997, at the
offices of Poyner & Spruill, L.L.P., 3600 Glenwood Avenue, Raleigh, North
Carolina 27612, or on such other date or at such other place as the parties may
agree. The date and time of the Closing are sometimes referred to herein as the
"Closing Date." Buyer and Seller agree that the Closing shall be deemed
effective as of the opening of business on June 23, 1997, and that the Business
shall be operated for the benefit and at the risk of the Buyer on the Closing
Date.
1.7 Prorations. All rents and additional charges under any leases
listed as Material Contracts, and all personal property taxes, utility expenses
and other customary items shall be prorated between Buyer and Seller effective
as of the expiration of the day immediately preceding the Closing.
ARTICLE II
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller and Shareholder that:
2.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite power and authority to enter into this Agreement, perform its
obligations hereunder and consummate the Asset Purchase.
2.2 Authorization. All necessary and appropriate corporate action has
been taken by Buyer with respect to the execution and delivery of this Agreement
and the performance of its obligations hereunder, and this Agreement constitutes
a valid and binding obligation of Buyer enforceable against it in accordance
with its terms.
2.3 Consents and Approvals. To the best of Buyer's knowledge, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental or regulatory authority or agency is required in
connection with the execution and delivery of this Agreement by Buyer or its
performance of the terms hereof or for the validity or enforceability thereof.
2.4 No Conflict. Neither the execution and delivery of this Agreement
by Buyer nor the consummation by Buyer of the Asset Purchase will (i) conflict
with or result in a breach of any provision of the Certificate of Incorporation
or ByLaws of Buyer, (ii) violate, conflict with or result in a breach of any
provision
<PAGE> 7
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate or cause a default under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Buyer, under any agreement, indenture, or instrument, binding on Buyer
or its properties or assets, (iii) violate any judgment, order, decree,
stipulation, injunction or charge of any court, administrative agency or
commission or other governmental authority or instrumentality by which Buyer is
bound.
2.5 Brokers and Finders. Except for employing International Business
Consultants Inc. ("IBC"), Buyer has not employed any broker or finder or
incurred any liability for brokerage fees in connection with the Asset Purchase.
Buyer will be responsible for the fee owed to IBC.
ARTICLE III
Representations and Warranties of Seller and Shareholder
Seller and the Shareholder jointly and severally represent and warrant
to Buyer that:
3.1 Corporate Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. Seller has all requisite power and authority and, except as set forth
on the Disclosure Schedule, and to the best of Seller's and the Shareholder's
knowledge, all governmental licenses, authorizations consents and approvals
necessary to own, lease and operate its properties and conduct its business as
presently conducted. Seller is not qualified to do business as a foreign
corporation in any jurisdiction, and to the best of Seller's and the
Shareholder's knowledge neither the nature of the business conducted by it nor
the property it owns, leases or operates requires it to qualify to do business
as a foreign corporation in any jurisdiction except where the failure to be so
qualified would not have a Material Adverse Effect on Seller. "Material Adverse
Effect" as used in this Agreement means, with respect to any event, act,
condition or occurrence, a material adverse effect upon any of (i) the
properties, assets, liabilities, business, results of operations, prospects or
condition (financial or otherwise) of Seller, and (ii) the ability of Seller,
the Shareholder or Buyer, as the case may be, to consummate the Asset Purchase
or to perform its obligations set forth herein.
3.2 Authorization. Seller has the corporate power and authority, and
Shareholder has the capacity and legal right, to execute, deliver and perform
this Agreement and to consummate the Asset Purchase. This Agreement has been
executed and delivered by the Seller and Shareholder and constitutes the valid
and binding obligation of each of them. Seller's Board of Directors and the
<PAGE> 8
Shareholder have approved the execution, delivery and performance of this
Agreement by Seller.
3.3 Consent and Approvals. To the best of Seller's and the
Shareholder's knowledge, and except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"), no consent, approval, order or
authorization of, or declaration or filing with, any governmental or regulatory
authority or agency is required in connection with the execution and delivery
of this Agreement by Seller and Shareholder or its and his performance of the
terms hereof or for the validity or enforceability thereof as to it and him.
3.4 Subsidiaries. Seller has no subsidiaries and holds no direct or
indirect beneficial interest in any corporation, partnership, joint venture,
limited liability company, or other entity or enterprise.
3.5 Affiliates. Other than Seller's/Shareholder's training services
business, neither Seller nor Shareholder has any direct or indirect interest in
any corporation, partnership, limited liability company, or any other entity
which is involved in any way with, competes with, or conducts any business
similar to any business conducted by Seller or Buyer.
3.6 Litigation. Except as set forth in the Disclosure Schedule, there
is no claim, litigation, arbitration, action, suit, proceeding, investigation or
inquiry, administrative or judicial, pending or, to the best knowledge of Seller
and Shareholder, threatened, against Seller or Seller's assets or business, at
law or in equity, before any federal, state or local court, regulatory agency,
or governmental authority which is reasonably likely to have a Material Adverse
Effect on Seller. Except as set forth on the Disclosure Schedule, Seller is not
a party to or subject to the provisions of any judgment which may have a
Material Adverse Effect on it.
3.7 Stock Ownership and Authority. Shareholder owns beneficially and of
record all of the issued and outstanding capital stock of Seller.
3.8 No Conflicts. Except as set forth on the Disclosure Schedule,
neither the execution and delivery of this Agreement by Seller and Shareholder
nor the consummation by Seller and Shareholder of the Asset Purchase will (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or the ByLaws of Seller, (ii) to the best of Seller's and
Shareholder's knowledge violate, conflict with or result in the breach of any
term, condition or provision under any law or regulation applicable to Seller or
Shareholder or any of Seller's assets, (iii) except for third-party consents to
assignment required under the Material Contracts, to the best of Seller's and
Shareholder's knowledge violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise,
<PAGE> 9
would constitute a default) under, or entitle any party (with the giving of
notice, the passage of time or otherwise) to terminate, accelerate or cause a
default under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Seller under, any
agreement, indenture, or instrument, binding on Seller or Shareholder or upon
any of the Assets, or (iv) to the best of Seller's and Shareholder's knowledge
violate any judgment, order, decree, stipulation, injunction or charge of any
court, administrative agency or commission or other governmental or regulatory
authority or instrumentality by which Seller or Shareholder is bound.
3.9 Financial Statements. The unaudited financial statements of Seller
(consisting of balance sheet, income statement and cash flow statement) for the
years ended December 31, 1995 and December 31, 1996, and the four months ended
April 30, 1997, are accurate in all material respects, were prepared on an
accrual basis according to generally accepted accounting principles and have
been furnished to Buyer (the "Financial Statements").
3.10 Absence of Certain Changes or Events. Except as set forth on the
Disclosure Schedule, since December 31, 1996, there has not been any event or
change relating to the business of Seller that has had or would be reasonably
likely to have a Material Adverse Effect on Seller.
3.11 Taxes.
(a) For purposes of this Agreement, (i) "Tax" or "Taxes" shall
mean all Federal, state, local and foreign taxes and assessments, including all
interest, penalties and additions imposed with respect to such amounts; (ii)
"Pre-Closing Tax Period" shall mean all taxable periods ending before or
including the Closing Date; and (iii) "Returns" means returns, reports or forms,
including information returns.
(b) (i) Seller has filed or caused to be filed in a timely
manner (within any applicable extension periods) all Tax Returns required to be
filed by such party by the Internal Revenue Code of 1986, as amended, (the
"Code") or by applicable state, local or foreign Tax law, and each such Return
is complete and accurate, (ii) all Taxes of Seller shown as due on such Returns
have been duly and timely paid or accrued and (iii) no material Tax liens have
been filed and no claims are being asserted in a writing received by Seller with
respect to any Taxes.
(c) Seller has not been a member of any affiliated,
consolidated, combined, unitary or aggregate group for purposes of filing Tax
Returns or paying Taxes, and Seller has no liability under Treasury Regulation
Section 1.1502-6 or any comparable provision of state, local or foreign Tax law
for the Taxes of any member (other than such party) of such a group.
3.12 Fixed Assets. Except as set forth on the Disclosure Schedule,
Seller has marketable title to all furniture, fixtures,
<PAGE> 10
equipment, and machinery (the "Fixed Assets") included in the Assets, free and
clear of all liens, charges, security interests or other encumbrances of any
nature whatsoever. Except as set forth in the Disclosure Schedule, all of the
Fixed Assets are in good operating condition and repair, ordinary wear and tear
excepted, and are usable in the regular and ordinary course of business.
3.13 Compliance with Laws; Authorization. To the best of Seller's and
Shareholder's knowledge, except as set forth on the Disclosure Schedule, Seller
is in compliance in all material respects with all applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered, by any federal or state court or governmental
authority applicable to Seller, its business or its properties (collectively,
the "Applicable Laws"). To the best of Seller's and Shareholder's knowledge,
except as set forth on the Disclosure Schedule, Seller is not under
investigation with respect to, nor has it been charged with or given notice of
any violation of, any of the Applicable Laws. For purposes hereof, Seller will
be deemed in compliance in all material respects with Applicable Laws if a
violation thereof would not have a Material Adverse Effect on the continued
operations of Seller in the manner in which it is currently conducting its
business.
3.14 Employee Benefits Plans. Except as set forth in the Disclosure
Schedule:
(a) Seller has never directly or indirectly maintained or
contributed to, nor is Seller directly or indirectly maintaining or
contributing, for the benefit of the current and/or former employees of Seller,
any employee benefit plan, including, without limitation, any "employee benefit
plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, an amended ("ERISA")), any employment or severance contract, any stock
option plan or any plan of deferred compensation (individually, a "Plan" and
collectively the "Plans"). Seller does not have any commitment, whether formal
or informal, to create any such plans.
(b) Seller does not directly or indirectly maintain or
contribute to (or have an obligation to contribute to) any plan, fund or program
which provides medical, health, hospitalization, life, disability or other
insurance, vacation, deferred compensation, pension, bonus, stock options, stock
purchase rights, or other employee benefits with respect to present or former
employees of Seller.
(c) The consummation of the Asset Purchase will not entitle
any current or former employee of Seller to severance pay, unemployment
compensation or any other payment.
3.15 Contracts. Seller has made or will make available to Buyer all
contracts, agreements, and instruments to which Seller is a party, including all
amendments and supplements thereto, which are material to the business
operations, assets, properties or
<PAGE> 11
condition (financial or otherwise) of Seller (the "Material Contracts"). Except
as set forth on the Disclosure Schedule, and to the best of Seller's and the
Shareholder's knowledge, each Material Contract is legally valid and binding
against Seller, in full force and effect and enforceable against Seller in
accordance with its terms, except where the invalidity or non-binding nature
would not have a Material Adverse Effect on Seller.
3.16 Books of Account; Records. To the best of Seller's knowledge,
Seller's general ledgers, stock record books, minute books and other corporate
records relating to the assets, properties, contracts and outstanding legal
obligations of Seller are, in all material respects, true, correct and complete.
3.17 Labor Relations.
(a) There is no collective bargaining agreement to which
Seller is a party, collective bargaining agreement currently being negotiated by
Seller, or union or collective bargaining unit representing any of Seller's
employees.
(b) To the best of Seller's and the Shareholder's knowledge,
Seller has complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor or the termination thereof,
including those related to wages, salary withholdings, employee health and
safety, bonus, vacation pay and severance pay, working hours, and benefits for
employees and former employees, and the payment and withholding of taxes and
other sums as required by appropriate governmental authorities, or is holding
for payment not yet due to such authorities all amounts required to be withheld
from such employees and former employees of Seller and is not liable to any
person or entity (including any governmental entity) for any arrears of wages,
commissions and benefits for employees, taxes, penalties or other sums for
failure to comply with any of the foregoing, other than amounts not yet due and
payable in the ordinary course of business.
(c) Except as set forth in the Disclosure Schedule, Seller is
not a party to any employment contract or agreement with respect to any of its
employees, nor has Seller in any other manner limited its right to terminate the
employment relationship with its employees.
3.18 Insurance Funds. Except as set forth on the Disclosure Schedule:
(a) Seller maintains workers' compensation insurance covering
all its employees; and Seller has paid all premiums on said insurance and has no
outstanding debts with respect thereto; and
(b) To the best of Seller's and Shareholder's knowledge, no
work-related accident has occurred for which Seller may be classified as an
uninsured employer.
<PAGE> 12
3.19 Environmental Matters. To the best of Seller's and Shareholder's
knowledge, Seller is and has been in compliance in the conduct of its business
with all applicable environmental laws and regulations or any order, decree,
judgment, or injunction issued, entered, promulgated or approved thereunder.
3.20 Brokers and Finders. Except for employing John Adams, and possible
payments to Steve Pope as a result of the Asset Purchase neither Seller nor
Shareholder has employed any broker or finder or incurred any liability for
brokerage fees, commissions or finders' fees in connection with the Asset
Purchase. Seller will be responsible for the fee owed to John Adams and any such
payments to Steve Pope.
ARTICLE IV
Conditions Precedent to Obligations
4.1 Conditions to Obligations of Buyer. Each and every obligation of
Buyer to be performed under this Agreement shall be subject to the satisfaction
by Seller and the Shareholder at or prior to the Closing Date of each of the
following conditions (unless waived in writing by Buyer):
(a) Representations and Warranties. The representations and
warranties set forth in Article III of this Agreement shall be true and correct
at and as of the Closing Date.
(b) Performance of Agreement. Seller and Shareholder shall
have fully performed and complied with the covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
them at or prior to the Closing Date.
(c) Consents. All applicable third-party approvals or
consents, including consents and approvals under Material Contracts, shall have
been received or satisfied; provided, however that certain third-party approvals
or consents shall not have been obtained at or prior to Closing, as set forth on
the Disclosure Schedule.
(d) No Adverse Change. There shall not have been any change
which constitutes a Material Adverse Effect with respect to Seller or its
business since the date of this Agreement.
(e) No Adverse Proceeding. There shall not be pending or
threatened any claim, action, litigation or proceeding (judicial or
administrative) or governmental investigation against Buyer, Seller or
Shareholder for the purpose of enjoining or preventing the consummation of this
Agreement, or otherwise claiming that this Agreement or the consummation of the
Asset Purchase is illegal.
(f) Certificate. Seller shall have delivered to Buyer at the
Closing a certificate signed on its behalf by one of
<PAGE> 13
its officers, dated the date of Closing, to the effect that the conditions set
forth in subsections (a) through (e) of this Section 4.1 have been satisfied to
the best knowledge of such officer.
(g) Employee Agreement and Restrictive Agreement. At or prior
to the Closing, Steve Pope will execute and deliver to Buyer an employment
agreement (the "Employment Agreement") and a restrictive agreement (the
"Restrictive Agreement") substantially in the form of Exhibits D and E attached
hereto.
(h) Assignment and Assumption Agreement. At the Closing,
Seller shall execute and deliver the Assignment and Assumption Agreement in the
form attached hereto as Exhibit F (the "Assignment and Assumption Agreement").
(i) consulting and Noncompete Agreement. At the Closing,
Shareholder will execute and deliver to Buyer a consulting and noncompete
agreement (the "Consulting Agreement") substantially in the form of Exhibit G
attached hereto.
4.2 Conditions of Seller. Each and every obligation of Seller and
Shareholder to be performed under this Agreement shall be subject to the
satisfaction by Buyer at or prior to the Closing Date of the following
conditions (unless waived in writing by Seller and Shareholder):
(a) Representation and Warranties. The representations and
warranties of Buyer set forth in Article II of this Agreement shall be true and
correct at and as of the Closing Date.
(b) Performance of Agreement. Buyer shall have fully performed
and complied with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by it at or prior to the
Closing Date.
(c) Consents. All applicable third-party approvals or consents
shall have been received or satisfied.
(d) No Adverse Proceedings. There shall not be pending or
threatened any claim, action, litigation or proceeding (judicial or
administrative) or governmental investigation against Buyer, Seller or
Shareholder for the purpose of enjoining or preventing the consummation of the
Asset Purchase, or otherwise claiming that this Agreement or the consummation of
the Asset Purchase is illegal.
(e) Certificate. Buyer shall have delivered to Seller at the
Closing a certificate signed on its behalf by one of its officers, dated the
date of the Closing Date, to the effect that at the conditions set forth in
subsections (a) through (d) of this Section 4.2 have been satisfied to the best
knowledge of such officer.
(f) Purchase Price. Buyer shall have paid the Purchase Price
at the Closing.
<PAGE> 14
(g) Employee Agreement and Restrictive Agreement. At the
Closing, Buyer will execute and deliver to Steve Pope the Employment Agreement
and the Restrictive Agreement.
(h) Assignment and Assumption Agreement. At the Closing, Buyer
shall execute and deliver the Assignment and Assumption Agreement.
(i) Consulting Agreement. At the Closing, Buyer shall execute
and deliver the Consulting Agreement.
ARTICLE V
Closing
5.1 Deliveries of Seller at Closing. At the Closing, Seller and the
Shareholder will deliver or cause to be delivered to Buyer the following at
Seller's expense:
(a) The certificate referred to in Section 4.1(f) of this
Agreement.
(b) A certificate from the Secretary of State evidencing the
good standing of Seller in North Carolina.
(c) A copy of the Articles of Incorporation of Seller and all
amendments thereto certified by the Secretary of State of North Carolina.
(d) Certified copies of minutes reflecting the authorization
by the Board of Directors of Seller and by the Shareholder of the execution,
delivery and performance of this Agreement and consummation of the Asset
Purchase.
(e) The Restrictive Agreement and the Employment Agreement.
(f) The Assignment and Assumption Agreement.
(g) A Bill of Sale in form satisfactory to Buyer.
(h) The Consulting Agreement.
5.2 Deliveries of Buyer at Closing. At the Closing, Buyer will deliver
or cause to be delivered to Seller the following:
(a) The Purchase Price as set forth in Section 1.2;
(b) The certificate referred to in Section 4.2(e) of this
Agreement;
(c) Certified copies of resolutions adopted by the Board of
Directors of Buyer (or the Board's Executive Committee)
<PAGE> 15
authorizing the execution, delivery and performance of this Agreement and
consummation of the Asset Purchase.
(d) The Restrictive Agreement and the Employment Agreement.
(e) The Assignment and Assumption Agreement.
(f) The Consulting Agreement.
(g) A certificate from the Secretary of State evidencing the
good standing of Buyer in Delaware.
ARTICLE VI
Indemnification.
6.1 Survival of Representatons, Warranties and Agreements. Subject to
the limitations set forth in Section 6.3 of this Agreement, all representations,
warranties and covenants of the parties contained herein shall survive execution
and delivery of this Agreement.
6.2 Indemnification.
(a) Subject to the limitations set forth in Section 6.3 of
this Agreement, Seller and the Shareholder hereby covenant and agree to
indemnify and hold harmless Buyer and its officers, directors and shareholders,
from and against any and all losses, liabilities, damages, demands, claims,
suits, actions, judgments or causes of action, assessments, costs and expenses,
including, without limitation, interest, penalties, attorneys' fees, any and all
expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed on or incurred or suffered by Buyer or
its officers, directors or shareholders as a result of or arising from (i) any
breach of any of the representations, warranties or covenants made by Seller and
the Shareholder herein, (ii) any liability of Seller not specifically assumed by
Buyer hereunder, (iii) any Federal income Taxes attributable to Seller, any
state, local or foreign income or franchise Taxes attributable to Seller, or any
sales, use or similar Taxes for any Pre-Closing Tax Period and (iv) Seller's
operation of the business prior to the Closing (collectively, "Buyer's
Indemnifiable Claims").
(b) Buyer hereby covenants and agrees to indemnify and hold
harmless Seller and its officers, directors and shareholders from and against
any and all Damages asserted against, resulting to, imposed on or incurred or
suffered by Seller or its officers, directors or shareholders as a result of or
arising from (i) any breach of any of the representations, warranties or
covenants made by Buyer in this Agreement, (ii) any liability specifically
assumed by Buyer hereunder and (iii) Buyer's operation
<PAGE> 16
of the business after the Closing (collectively, "Seller's Indemnifiable
claims").
(c) Buyer's Indemnifiable Claims and Seller's Indemnifiable
Claims are collectively referred to hereinafter as "Indemnifiable Claims."
6.3 Limitations on Indemnification. Rights to indemnification hereunder
are subject to the following limitations:
(a) The obligation of indemnity provided herein with respect
to the representations and warranties set forth in Section 3.12 shall terminate
on the expiration of the periods of limitations applicable to assessment and
collection of federal, state, local and foreign taxes, taking into account any
extensions of such periods of limitations approved by Seller prior to the date
hereof.
(b) The obligations of indemnity provided herein with respect
to the representations and warranties set forth in Articles II and III (except
Section 3.12 of this Agreement) shall terminate on the first anniversary of the
Closing Date.
(c) The obligations of indemnity provided herein with respect
to the representations and warranties set forth in Article III (except Section
3.12 of this Agreement) shall not exceed $300,000 in the aggregate.
(d) The foregoing provisions of this Section notwithstanding,
if, prior to the termination of any obligation to indemnify as provided for
herein, written notice of a claimed breach is given by Buyer, Seller or the
Shareholder, or a suit or action based upon a claimed breach is commenced
against any party, no party shall be precluded from pursuing such claimed breach
or suit or action, or from recovering from the other party hereunder (whether
through the courts or otherwise) on the claim, suit or action, by reason of the
termination otherwise provided for above.
6.4 Procedure for Indemnification with Respect to Third-Party Claims.
(a) If a party (the "Indemnitee") determines to seek
indemnification under this Article with respect to Indemnifiable Claims
resulting from the assertion of liability by third parties, it shall give notice
to the other party (the "Indemnifying Party") within 30 days of the Indemnitee's
becoming aware of any such Indemnifiable claim; the notice shall set forth such
information with respect thereto as is then reasonably available to the
Indemnitee. In case any such liability is asserted against the Indemnitee, and
the Indemnitee notifies the Indemnifying Party thereof, the Indemnifying Party
will be entitled, if it so elects by written notice delivered to the Indemnitee
within 30 days after receiving the Indemnitee's notice, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnitee at all times
during the defense of such
<PAGE> 17
liability. Notwithstanding the foregoing, (i) the Indemnitee shall also have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Indemnitee (as long as the
Indemnifying Party continues to defend such matter); (ii) the Indemnitee shall
not have any obligation to give any notice of any assertion of liability by a
third party unless such assertion is in writing; and (iii) the rights of the
Indemnitee to be indemnified hereunder in respect of Indemnifiable Claims shall
be deemed forfeited by its failure to give notice pursuant to the foregoing only
to the extent that the Indemnifying Party is materially prejudiced by such
failure to give notice. With respect to any assertion of liability by a third
party that results in an Indemnifiable Claim, the parties hereto shall make
reasonably available to each other all relevant information in their possession
material to any such assertion.
(b) In the event that the Indemnifying Party, within 10 days after
receipt of the aforesaid notice of an Indemnifiable Claim, fails to assume the
defense of the Indemnitee against such Indemnified Claim, the Indemnitee shall
have the right to undertake the defense and to compromise or settle such action
on behalf of and for the account and risk of the Indemnifying Party.
6.5 Procedure for Indemnification with Respect to Non-Third-Party
Claims. If the Indemnitee asserts the existence of an Indemnifiable Claim giving
rise to Damages (but excluding claims resulting from the assertion of liability
by third parties), it shall give written notice to the Indemnifying Party
specifying the nature and amount of the claim asserted. If the Indemnifying
Party, within 30 days after receipt of the notice by the Indemnitee, shall not
give written notice to the Indemnitee announcing its intent to contest such
assertion of the Indemnitee, such assertion by the Indemnitee shall be deemed
accepted and agreed to by the Indemnifying Party.
ARTICLE VII
Covenants
7.3 Due Diligence Access. From the date of this Agreement until the
Closing, to enable Buyer to conduct due diligence, and following the Closing to
the extent needed by Buyer and its accountants to conduct and complete a
financial audit of Seller and its operations, Seller and the Shareholder shall
make or cause to be made available to Buyer; (i) members of management of Seller
for personal interviews; (ii) the Assets; and (iii) all books of account,
contracts, agreements, commitments, authorizations, insurance policies, records
and documents of every character relating to Seller's business for examination.
Accordingly, Seller and Shareholder shall permit Buyer and its representatives,
attorneys, accountants and agents to have access to the same at all reasonable
times and places.
<PAGE> 18
7.2 Tax Covenants.
(a) Seller, Shareholder and Buyer shall reasonably cooperate, and shall
cause their respective affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Returns
relating to Taxes, including maintaining and making available to each other all
records necessary in connection with Taxes and in resolving all disputes and
audits with respect to all taxable periods relating to Taxes.
(b) All transfer, documentary stamp, sales, use, registration and other
such Taxes and related fees (including any penalties, interest and additions to
Tax) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Seller; and Buyer shall cooperate in timely
making all filings as may be required to comply with the provisions of such Tax
laws.
(c) Any personal property or similar taxes with respect to the Assets
attributable to the Pre-Closing Tax Period shall be borne by Seller.
7.3 Changes to Disclosure Schedule. Between the date of this Agreement
and the Closing Date, Seller and Shareholder shall promptly inform Buyer of
events, circumstances, or other developments that occur between such dates that
would have been described in the Disclosure Schedule had such events,
circumstances or other developments occurred on or prior to the date of this
Agreement. Having so informed Buyer, Seller and Shareholder shall provide Buyer
with such further information regarding such event, circumstances or development
as Buyer reasonably requests. Within three business days of Buyer's receipt of
such additional information, Buyer shall notify Seller and Shareholder that: (i)
Seller and Shareholder may amend the Disclosure Schedule to describe such event,
circumstance or other development, without liability to Seller or Shareholder;
or (ii) Buyer intends to terminate this Agreement pursuant Section 8.1(b).
ARTICLE VIII
Termination
8.1 Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual written consent of all parties;
(b) by either Buyer or Seller and the Shareholder if any of the
representations or warranties of the other party contained herein shall be
inaccurate or untrue in any material respect and such inaccuracy cannot
reasonably be expected to be cured prior to the Closing;
(c) by either Buyer or Seller and the Shareholder if any obligation,
term or condition to be performed, kept or observed by
<PAGE> 19
such other party hereunder has not been performed, kept or observed in any
material respect at or prior to the time specified in this Agreement;
(d) by either Buyer or Seller and the Shareholder if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the transactions contemplated by this Agreement shall have
become final and nonappealable;
(e) by either Buyer or Seller and the Shareholder, if not then in
material breach of any of its obligations hereunder, if the Closing has not
occurred by August 1, 1997.
Any termination pursuant to this Section 8.1 shall be effective upon
notice thereof having been given to the non-terminating party in accordance
with Section 9.2 hereof.
No party hereto shall be liable to any other party hereto if this
Agreement is terminated pursuant to Section 8.1(a), (b) or (d).
ARTICLE IX
Miscellaneous Provisions
9.1 Notice. All notices, requests, demands and other communications
required or permitted under this Agreement shall be deemed to have been duly
given and made if in writing and served either by personal delivery (which shall
include delivery by Federal Express or similar services) to the party for whom
it is intended or three (3) days after being deposited postage prepaid,
certified or registered mail, return receipt requested (or such form of mail as
may be substituted therefor by postal authorities), in the United States mail,
bearing the address shown in this Agreement for, or such other address as may be
designated in writing hereafter by, such party:
If to Buyer: With a copy to:
Ablest Service Corp. William Appleton, Esq.
810 North Belcher Road Baker & Hostetler LLP
Clearwater, FL 34625 3200 National City Center
Attn: W. David Foster 1900 East 9th Street
Cleveland, OH 44114-3485
If to Shareholder or Seller: With a copy to:
Robert W. Kelton Craig G. Dalton, Jr.,
100 Bathgate Lane Poyner & Spruill, L.L.P.
Cary, NC 27513 3600 Glenwood Avenue
Raleigh, NC 27612
9.2 Entire Agreement. This Agreement and the Disclosure Schedule embody
the entire agreement and understanding of the
<PAGE> 20
parties hereto with respect to the subject matter hereof, and supersede all
prior agreements and understandings relative to said subject matter.
9.3 Binding Effect Assignment. This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be binding
upon Buyer, its representatives, successors and assigns, and Seller, its
representatives, successors and assigns, and Shareholder, his heirs, legal
representatives and assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be transferred or assigned (by
operation of law or otherwise) by any party hereto without the prior written
consent of the other parties.
9.4 No Third-Party Beneficiaries. Nothing herein, expressed or implied,
is intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any rights, remedies
or other benefits under or by reason of this Agreement.
9.5 Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
9.6 Expenses. Each of the parties hereto will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the Asset Purchase.
9.7 Waiver; Consent. This Agreement may not be changed, amended,
terminated, rescinded or discharged (other than in accordance with its terms),
in whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given or consented
thereto.
9.8 Other and Further Covenants. The parties shall, in good faith,
execute such other and further instruments, assignments or documents as may be
necessary for the consummation of the transactions contemplated by this
Agreement, and shall assist and cooperate with each other in connection with
these activities.
9.9 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the laws of the State of North Carolina, without
regard to any such laws relating to choice or conflict of laws.
9.10 Public Announcements. Neither Buyer nor Seller shall, without the
prior written consent of the other, make any public announcement or any release
to trade publications or to the press or make any statement to any competitor,
customer or any other third party with respect to the transactions contemplated
herein, except such announcement, release or statement necessary in
<PAGE> 21
the opinion of its counsel to comply with applicable requirements of law, the
content of which is mutually agreed to by the parties. The parties hereto agree
that upon execution of this Agreement and on the Closing Date, they shall
jointly prepare press releases for appropriate dissemination.
9.12 Use of Name. The parties hereby agree that Buyer shall have the
exclusive right to use the name "The Kelton Group" for so long as such name is
used by Buyer, it successors or assigns to describe its staffing services
business in Raleigh, North Carolina, or elsewhere. The parties further agree
that Seller and Shareholder shall have the nonexclusive right to use the name
"Kelton" in any business or endeavor of Seller or Shareholder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
THE KELTON GROUP, INC.
By: /s/ Robert W. Kelton
-----------------------------------------
Robert W. Kelton, President
ABLEST SERVICE CORP.
By: /s/ W. David Foster
-----------------------------------------
PRESIDENT Title
SHAREHOLDER:
/s/ Robert W. Kelton
--------------------------------------------
Robert W. Kelton
