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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): April 13, 1998
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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 April 13, 1998, Ablest Service Corp. ("Ablest"), a wholly owned
subsidiary of C.H. Heist Corp. ("Company"), acquired the technical staffing
service business of Milestone Technologies, Inc., an Arizona corporation,
("Milestone") pursuant to a Stock Purchase Agreement ("Purchase Agreement").
Ablest intends to continue to operate Milestone as a separate company.
Pursuant to the Purchase Agreement, Ablest purchased 100% of the
common stock of Milestone from its shareholders for approximately $6.6 million
paid in cash at closing and agreed to pay additional consideration based on the
achievement of certain pre-established earning targets for 1998. The purchase
price was determined through negotiations and is expected to be assigned to the
fair value of the assets and liabilities acquired with the excess being
assigned to various intangible assets, primarily goodwill. Ablest used funds
available to it under the Company's revolving line of credit to fund the cash
paid at closing.
The two former shareholders of Milestone and Ablest have entered into
two-year employment agreements providing certain base and incentive
compensation. Each shareholder of Milestone has also agreed not to compete
with Ablest for three years from the date of closing.
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Item 7: Financial Statements, Pro Forma Information and Exhibits
(a), (b) Separate, audited financial statements for Milestone
Technologies Inc. and pro forma statements for the Company
were not available at the time of this filing and will be
filed under cover of Form 8 within 60 days.
(c) Exhibits Pages
99.1 Stock Purchase Agreement between Ablest, Milestone
Technologies Inc. and its Shareholders dated
December 1, 1997. A1-A23
3
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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: April 24, 1998
C. H. Heist Corp.
(Registrant)
/s/ Mark P. Kashmanian
-------------------------------------
Mark P. Kashmanian
Treasurer, Chief Accounting
Officer
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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
between
STEVEN BYAS AND DAVID RYBAK
and
ABLEST SERVICE CORP.
as of December 1, 1997
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TABLE OF CONTENTS
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<TABLE>
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Page #
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ARTICLE I - Sale and Purchase.............................................. A-5
1.1 Stock Purchase....................................................... A-5
1.2 Consideration for the Milestone Stock ............................... A-5
1.4 Closing ............................................................. A-6
1.5 Effective Time ...................................................... A-6
1.6 Letter of Credit..................................................... A-6
ARTICLE II - Representations and Warranties of Buyer....................... A-6
2.1 Corporate Organization............................................... A-6
2.2 Authorization ....................................................... A-6
2.3 Government Consents and Approvals ................................... A-6
2.4 No Conflict.......................................................... A-6
2.5 Purchase for Investment.............................................. A-7
2.6 Brokers and Finders ................................................. A-7
ARTICLE III - Representations and Warranties of the Shareholders........... A-7
3.1 Corporate Organization............................................... A-7
3.2 Authorization ....................................................... A-7
3.3 Government Consent and Approvals..................................... A-7
3.4 Subsidiaries......................................................... A-7
3.5 Capitalization ...................................................... A-8
3.6 Affiliates .......................................................... A-8
3.7 Litigation........................................................... A-8
3.8 Milestone Stock Ownership............................................ A-8
3.9 No Conflicts......................................................... A-8
3.10 Financial Statements ............................................... A-9
3.11 Absence of Certain Changes or Events............................... A-9
3.12 Taxes............................................................... A-10
3.13 Title to Assets..................................................... A-11
3.14 Compliance with Laws; Authorization................................. A-11
3.15 Employee Benefit Plans ............................................. A-11
3.l6 Contracts .......................................................... A-12
3.17 Books of Account; Records .......................................... A-12
3.18 Labor Relations..................................................... A-12
3.19 Insurance .......................................................... A-13
3.20 Environmental Matters............................................... A-13
3.21 Brokers and Finders ................................................ A-13
3.22 Undisclosed Liabilities............................................. A-13
ARTICLE IV - Conditions Precedent to Obligations .......................... A-13
4.1 Conditions to Obligations of Buyer................................... A-13
(a) Representations and Warranties................................... A-13
(b) Performance of Agreement ........................................ A-13
(c) Consents ........................................................ A-13
</TABLE>
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<TABLE>
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(d) No Adverse Change................................................. A-13
(e) No Adverse Proceeding ............................................ A-14
(f) Certificate....................................................... A-14
(g) Employee Agreements and Restrictive Agreements.................... A-14
4.2 Conditions to Obligations of the Shareholders ........................ A-14
(a) Representations and Warranties.................................... A-14
(b) Performance of Agreement ......................................... A-14
(c) Consents.......................................................... A-14
(d) No Adverse Proceedings............................................ A-14
(e) Certificate....................................................... A-14
(f) Employee Agreements and Restrictive Agreements.................... A-14
ARTICLE V - Closing Deliveries.............................................. A-15
5.1 Deliveries of the Shareholders at Closing............................. A-15
5.2 Deliveries of Buyer at Closing........................................ A-15
ARTICLE VI - Survival....................................................... A-15
6.1 Survival of Representations, Warranties and Agreements................ A-15
ARTICLE VII - Covenants..................................................... A-16
7.1 Covenant Not to Compete............................................... A-16
7.2 Covenant Against Hiring .............................................. A-17
7.3 Due Diligence Access.................................................. A-17
7.4 Conduct of Interim Operations ........................................ A-17
(a) Affirmative Covenants............................................. A-17
(1) Operations ................................................ A-17
(2) Corporate Existence........................................ A-17
(3) Compliance with Applicable Laws ........................... A-17
(3) Compliance with Applicable Laws............................ A-17
(4) Insurance.................................................. A-17
(5) Litigation................................................. A-18
(6) Payment of Debt ........................................... A-18
(7) Material Loss ............................................. A-18
(8) Preservation of Business .................................. A-18
(b) Negative Covenants................................................ A-18
(1) New Encumbrances........................................... A-18
(2) Disposition of Assets ..................................... A-18
(3) Contracts ................................................. A-18
(4) Compensation .............................................. A-18
(5) Changes in Stock........................................... A-18
(6) Issuance of Securities..................................... A-19
(7) Governing Documents........................................ A-19
(8) Indebtedness............................................... A-19
(9) Accounting Policies and Procedures......................... A-19
(10) Dividends ................................................ A-19
7.5 Tax Covenants .......................................................... A-19
7.6 Changes to Disclosure Schedule ......................................... A-19
7.7 Cooperation............................................................. A-19
7.8 Line of Credit.......................................................... A-19
</TABLE>
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<TABLE>
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ARTICLE VIII - Termination................................................. A-20
8.1 Termination of Agreement............................................. A-20
ARTICLE IX - Miscellaneous Provisions...................................... A-20
9.1 No Negotiations by Milestone or the Shareholders .................... A-20
9.2 Notice............................................................... A-21
9.3 Entire Agreement .................................................... A-21
9.4 Binding Effect; Assignment........................................... A-21
9.5 No Third-Party Beneficiaries......................................... A-21
9.6 Counterparts......................................................... A-21
9.7 Expenses............................................................. A-22
9.8 Waiver; Consent...................................................... A-22
9.9 Other and Further Covenants.......................................... A-22
9.10 Governing Law....................................................... A-22
9.11 Public Announcements ............................................... A-22
</TABLE>
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of December 1, 1997, between Steven Byas and David Rybak, the sole
shareholders (the "Shareholders") of Milestone Technologies, Inc. an Arizona
corporation ("Milestone"), on the one hand, and Ablest Service Corp., a Delaware
corporation ("Buyer"), on the other.
WHEREAS, Milestone owns and operates a staffing services business
concentrating in the computer and information technology areas and located in
the Phoenix, Arizona metropolitan areas;
WHEREAS, the Shareholders desire to sell all outstanding shares of the
capital stock of Milestone owned beneficially and of record by the
Shareholders (the "Milestone Stock") upon the terms and conditions hereinafter
stated;
WHEREAS, Buyer desires to purchase the Milestone Stock from the
Shareholders ("Stock 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
1.1 Stock Purchase. At the Closing (as defined herein), to be
effective as of the Effective Time (as defined herein), upon the terms and
subject to the conditions set forth herein, the Shareholders shall sell, assign,
transfer and deliver to Buyer the Milestone Stock, free and clear of all liens,
charges, claims, restrictions on transfer, security interests, pledges, voting
trusts, and encumbrances of any kind (collectively, "Liens").
1.2 Consideration for the Milestone Stock. In consideration of
delivery to Buyer in accordance with this Agreement of certificates representing
the Milestone Stock and in consideration of the covenant not to compete set
forth in Section 7.1 of this Agreement, Buyer shall pay the following to the
Shareholders:
(a) Base Purchase Price. At the Closing, as consideration for the
Milestone Stock, Buyer shall pay, by cashier's checks or other certified or
wire-transfer funds payable to the order of the Shareholders, $4.9 million plus
or minus (the "Equity Adjustment") the difference between $930,000 and
Shareholders' Equity (as defined herein) (collectively, the "Base Purchase
Price"). Each Shareholder shall receive 50% of the Base Purchase Price.
(b) Earnouts. For purposes of this Section 1.2(b), the following
terms have the following meanings:
(i) the "l997 Earnout" shall mean $1,200,000;
(ii) "EBIT" shall mean earnings before interest expense and taxes
of Milestone as calculated in accordance with generally
accepted accounting principles;
(iii) "1997 EBIT" means the EBIT of Milestone for the period from
December 1, 1996 through November 30, 1997;
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(iv) the "1997 Deficit" means the difference, if any, between
$945,120 and the 1997 EBIT;
(v) the "1997 Earnout Deficit" means the product of 7.195
and the 1997 Deficit;
(vi) the "1998 Deficit" means the difference, if any, between
$945,120 and the 1998 EBIT;
(vii) the "1998 Earnout Deficit" means the product of one and
the 1998 Deficit;
(viii) the "1998 Earnout" means $600,000;
(ix) the "1998 EBIT" means the EBIT of Milestone for the
period from December 1, 1997 through November 30, 1998
calculated on the same basis as that used for
calculating 1997 EBIT and EBIT for fiscal years prior
thereto and not including any corporate, inter-company
or other allocated charge of Buyer and its affiliates
that Milestone would not have incurred in the normal
course of the conduct of its business prior to December
1, 1997; and
(x) the "1998 Excess" means the amount, if any, by which
1998 EBIT exceeds $945,120.
As additional consideration for the Milestone Stock, Buyer shall pay the
following total amounts by checks payable to the order of the Shareholders,
with each Shareholder receiving 50% of the applicable total amount paid at the
particular time set forth herein: (i) at the Closing, the 1997 Earnout if 1997
EBIT equals or exceeds $945,120 or, if the 1997 EBIT is less than $945,120, an
amount equal to the 1997 Earnout minus the 1997 Earnout Deficit and (ii) on or
before February 15, 1999, the 1998 Earnout if the 1998 EBIT equals $945,120 or,
if the 1998 EBIT is less than $945,120, an amount equal to the 1998 Earnout
minus the 1998 Earnout Deficit, or if the 1998 EBIT exceeds $945,120, the entire
1998 Earnout plus an amount equal to 20% of the 1998 Excess plus an amount
equal to the product of (A) the 1997 Earnout Deficit and (B) the lessor of one
(1) and a fraction the numerator of which equals the 1998 Excess and the
denominator of which equals the 1997 Deficit (the aforesaid payments
collectively, the "Earnout Payments").
(c) Non-Compete Payment. As consideration for the covenant
not to compete set forth in Section 7.1 of this Agreement, Buyer shall pay at
the Closing $50,000 to each of the Shareholders (the "Non-Compete Payments").
(d) For purposes of Article I of this Agreement, the
following terms have the following meanings:
(i) "Shareholders Equity" means total assets of
Milestone minus total liabilities of Milestone, all as
shown on the balance sheet as of November 30, 1997, to be
prepared in accordance with generally accepted
accounting principles by Buyer's independent auditors
(with the assistance of Milestone's auditors) on or
before the Closing. In calculating Shareholders Equity,
"total liabilities" shall not include deferred tax
liabilities in excess of $230,000. If deferred tax
liabilities exceed $230,000, the excess over $230,000
will be added to Shareholders Equity at November 30,
1997, the
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effect of which will be to negate the impact the excess
deferred liabilities otherwise would have on the Equity
Adjustment.
(ii) "Consideration" means the Base Purchase Price, the Earnout
Payments and the Non-Compete Payments.
1.3 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 10:00 a.m., Phoenix time, on April 6, 1998, at
Milestone's principal office, 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."
1.4 Effective Time. The "Effective Time" shall mean 12:01 a.m., Phoenix
time, on Monday, December 1, 1997.
1.5 Operation of Milestone. The parties agree that from the Effective
Time to the Closing, the business of Milestone shall be deemed operated for the
benefit of Ablest, which shall be entitled to the profits thereof during such
time should the Closing occur, and during such time the Shareholders will be
compensated only at the salary rates set forth in the Employment Agreement (as
defined herein) to be executed at the Closing by each of them.
1.6 Letter of Credit. To secure the Shareholders against certain adverse
tax consequences that could result from the Buyer's failure to close hereunder
in breach of this Agreement, the Buyer has delivered to the Shareholders a
letter of credit (expiring June 25, 1998) in the amount of $250,000.00 in the
form attached hereto as Exhibit A (the "Letter of Credit").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders 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 Stock 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 Government Consents and Approvals. 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 Assignment by
Buyer nor the consummation by Buyer of the Stock 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 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
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creation of any Lien upon any of the properties or assets of Buyer, under any
agreement, indenture, or instrument, binding on Buyer or its properties or
assets, or (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 Purchase for Investment. Buyer is acquiring the Milestone
Stock for its own account for investment purposes and not with a view to or for
resale in connection with any distribution thereof within the meaning of the
Securities Act of 1933, as amended. Buyer will refrain from transferring or
otherwise disposing of the Milestone Stock, or any interest therein, in such a
manner as to violate any securities laws.
2.6 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 Stock
Purchase. Buyer will be responsible for the fee owed to IBC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders jointly and severally represent and warrant to Buyer
that:
3.1 Corporate Organization. Milestone is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona. Milestone has all requisite power and authority and, except as set
forth on the attached schedule (the "Disclosure Schedule"), all governmental
licenses, authorizations, consents and approvals necessary to own, lease and
operate its properties and conduct its businesses as presently conducted or
currently proposed to be conducted. Milestone is not qualified to do business as
a foreign corporation in any jurisdiction, and 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
Milestone. "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) with respect to Milestone, the properties, assets, liabilities,
business, results of operations, prospects or condition (financial or otherwise)
of Milestone, and (ii) with respect to Milestone, the Shareholders or Buyer, the
ability of either Milestone, the Shareholders or Buyer, as the case may be, to
consummate the Stock Purchase or to perform their respective obligations set
forth herein. True, accurate and complete copies of the charter and bylaws,
including all amendments thereto, of Milestone have heretofore been delivered to
Buyer.
3.2 Authorization. Each of the Shareholders has the capacity and
legal right to execute, deliver and perform this Agreement and to consummate the
Stock Purchase. This Agreement has been executed and delivered by the
Shareholders and constitutes a valid and binding obligation enforceable against
them in accordance with its terms.
3.3 Government Consent and Approvals. 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 the Shareholders or their performance of the terms
hereof or for the validity or enforceability thereof as to them.
3.4 Subsidiaries. Milestone has no subsidiaries and holds no
direct or indirect beneficial interest in any corporation, partnership, joint
venture, limited liability company, entity or enterprise
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(collectively, "Entity"). Milestone is not subject to any obligation or
requirement to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any Entity.
3.5 Capitalization. The authorized capital stock of Seller
consists of 1,000,000 shares of common stock, without par value, 380,000 of
which are issued and outstanding and owned beneficially and of record by the
Shareholders and 120,000 of which are issued and held in treasury. Except as set
forth in the Disclosure Schedule, there are no outstanding subscriptions,
options (including employee stock options), warrants, puts, calls, agreements,
understandings, restrictions, or other commitments or rights of any type to
which Milestone or either Shareholder is a party, or by which any such party is
bound, relating to the issuance, sale or transfer by Milestone or either
Shareholder of any capital stock or other securities of Milestone. There are no
outstanding securities which are convertible into or exchangeable for any shares
of capital stock of Milestone. Milestone has no obligation of any kind to issue
any additional securities or to repurchase, redeem or otherwise acquire any
shares of its capital stock. Upon the sale of the Milestone Stock to Buyer at
the Closing, Buyer will acquire the entire legal and beneficial ownership in the
Milestone Stock, free and clear of any Liens.
3.6 Affiliates. Neither Milestone nor either Shareholder has any
direct or indirect interest in any corporation, partnership, joint venture,
limited liability company, or other entity or enterprise which is involved in
any way with, competes with, or conducts any business similar to any business
conducted by Milestone or Buyer. No director, officer, shareholder, or employee
of Milestone has any material financial interest, direct or indirect, in any
customer of, or other business which has significant transactions with,
Milestone.
3.7 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 the Shareholders, threatened, against Milestone or its assets or
business, at law or in equity, before any federal, state or local court,
regulatory agency, or governmental authority. Except as set forth on the
Disclosure Schedule, neither of the Shareholders nor Milestone is a party to or
subject to the provisions of any judgment, order, writ or injunction which may
have a Material Adverse Effect on him or it.
3.8 Milestone Stock Ownership. The Shareholders own beneficially
and of record all on the Milestone Stock, free and clear of all Liens. Each
Shareholder owns 190,000 shares of the Milestone Stock. All shares of the
Milestone Stock are validly authorized, issued, fully paid and nonassessable and
free of preemptive rights.
3.9 No Conflicts. Except as set forth on the Disclosure Schedule,
neither the execution and delivery of, and compliance with, this Agreement by
the Shareholders nor the consummation by the Shareholders of the Stock Purchase
will (i) conflict with or result in a breach of any provision of the charter or
bylaws of Milestone, (ii) violate, conflict with or result in the breach of any
term, condition or provision under any law or regulation applicable to Milestone
or the Shareholders or any of Milestone's assets, (iii) 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, 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 upon any of the properties or
assets of Milestone under, any agreement, indenture, or instrument binding on
Milestone or the Shareholders or upon any of their respective properties or
assets, or (iv) 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 Milestone or either
Shareholder is bound. Milestone has a line of credit with M&I Thunderbird Bank,
which is its only line of credit (the
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"Thunderbird Line"). As of November 30, 1997, and as of the date hereof, there
are no amounts owed or outstanding under the Thunderbird Line.
3.10 Financial Statements. Attached to the Disclosure Schedule are
the balance sheets (the "Balance Sheets") of Milestone as of June 30, 1997,
November 30, 1996 and November 30, 1995, and the related statements of
operations and cash flows for the seven months ended June 30, 1997 and the two
years ended November 30, 1996 and the accompanying notes (together with the
Balance Sheets, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Milestone in accordance (except for the
June 30, 1997 financial statements) with generally accepted accounting
principles consistently applied, and, except as set forth in the Disclosure
Schedule, fairly present in all material respects the financial position of
Milestone as at the dates thereof and the results of its operations for the
periods then ended.
3.11 Absence of Certain Changes or Events. Except as set forth in
the Disclosure Schedule, since June 30, 1997, there has not been:
(a) Any event or change relating to the business of
Milestone that has had or would be reasonably likely to have a Material Adverse
Effect on Milestone;
(b) Any declaration, setting aside or payment of any
dividend or distribution (in cash or in kind) to any person or entity with
respect to the capital stock of Milestone; any direct or indirect redemption,
purchase or other acquisition by Milestone of any of its capital stock or of any
options warrants, rights or agreements to purchase or acquire such stock;
(c) Any increase in amounts payable by Milestone to or
for the benefit of, or committed to be paid by Milestone to or for the benefit
of, any shareholder, director, officer, partner, consultant, agent or employee,
or in any benefits granted under any benefit plan, payment or arrangement made
to, for the benefit of, or with any of the foregoing;
(d) Any transaction entered into or carried out by
Milestone other than in the ordinary and usual course of its business;
(e) Any borrowing or agreement to borrow funds; any
incurring of any other obligation or liability, contingent or otherwise, except
current liabilities incurred in the usual and ordinary course of business; or
any endorsement, assumption or guarantee of payment or performance of any loan
or obligation of any other individual, firm, corporation or other entity by
Milestone;
(f) Any material change made by Milestone in the methods
of doing business or any change in the accounting principles or practices of
Milestone or the method of application of such principles or practices;
(g) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the property of Milestone; any purchase of or any agreement to
purchase capital assets for an amount in excess of $10,000 for any one such
purchase made by Milestone or in excess of $40,000 in the aggregate for all such
purchases made by Milestone; or any lease or any agreement to lease, as lessee,
any capital assets made by Milestone;
(h) Any loan or advance made by Milestone to any
individual, firm, corporation or other entity except for advances not material
in amount made in the usual and ordinary course of business to employees; or
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(i) Any modification, waiver, change, amendment,
rescission or termination of any material contract, agreement, or other
instrument to which Milestone is a party, other than any satisfaction by
performance in accordance with the terms thereof in the usual and ordinary
course of business.
3.12 Taxes.
(a) Except as disclosed in the Disclosure Schedule:
(i) Milestone has (A) duly filed with the appropriate
governmental authorities all Tax Returns (as
hereinafter defined) required to be filed by it on or
prior to the Closing Date, and such Tax Returns are
true, correct and complete, and (B) duly paid in full
or made provision in accordance with generally
accepted accounting principles for the payment of all
Taxes (as hereinafter defined) due with respect to
periods ending on or prior to the Closing Date;
(ii) all monies which Milestone has been required by law
to withhold from employees or other contractors with
respect to payments made or periods ending on or
before the Closing Date have been withheld and timely
paid to the appropriate governmental authority;
(iii) as of the date hereof, the Tax Returns for Milestone
are not currently the subject of any audits,
investigations or proceedings by any taxing authority
(collectively, "Audits"), and Milestone has not
received any notice of deficiency or assessment from
any taxing authority with respect to liabilities for
Taxes which have not been paid or finally settled,
other than Audits, deficiencies or assessments
disclosed in the Disclosure Schedule which are
being contested in good faith through appropriate
proceedings; and
(iv) the federal income Tax Returns of Milestone have
never been audited, and no waiver of any statute of
limitations in respect of Taxes or any extension of
time with respect to a Tax assessment or deficiency
granted by Milestone is currently in effect.
(b) "Taxes" means all taxes, charges, fees, levies, imposts,
duties or other assessments, including, without limitation, income, gross
receipts, estimated taxes, excise, personal property, real property, sales, ad
valorem, value-added, leasing, withholding, social security, workers
compensation, unemployment insurance, occupation, use, severance, premium,
service, service use, license, stamp, payroll, employment, windfall profit,
environmental, alternative or add-on minimum tax, franchise, transfer and
recording taxes, customs duties and other taxes, fees and charges, imposed by
the United States or any state, local or foreign governmental authority whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties, additions to tax, or
additional amounts attributable or imposed on or with respect to any such taxes,
charges, fees, levies, imposts, duties or other assessments. "Tax Return" means
any return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.
(c) Milestone (i) has not filed a consent pursuant to Section
341(f) of the Code nor agreed to have Section 341(f)(2) apply to any disposition
of a subsection (f) asset (as such term is defined in Section 341(f) of the
Code), (ii) has not agreed, or is not required, to make any adjustment under
Section
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481(a) of the Code by reason of a change in accounting method or otherwise that
will affect its liability for Taxes, (iii) has not made an election, or is not
required, to treat any asset as owned by another person pursuant to the
provisions of former Section 168(f)(8) of the Code, (iv) is not now or has not
ever been a party to any agreement, contract, arrangement, or plan that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code, (v) has not
participated in an international boycott as defined in Section 999 of the Code,
(vi) is not now or has not ever been a "foreign person" within the meaning of
Section 1445(b)(2) of the Code, (vii) is not now or has not ever been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code, and (viii) has not made any of the foregoing elections and is not
required to apply any of the foregoing rules under any comparable state or local
tax provision. After the date hereof, no election with respect to Taxes or any
extension of any period of limitation will be made without the written consent
of Buyer.
(d) Except as set forth in the Disclosure Schedule, Milestone has
not been a member of any affiliated, consolidated, combined, unitary or
aggregate group for purposes of filing Tax Returns or paying Taxes, and
Milestone 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.
(e) Complete and correct copies of the federal, state and local
Tax Returns of Milestone for the years 1991 to 1995, inclusive, have been
furnished to Buyer.
(f) The Shareholders shall be responsible for and shall pay all
Taxes owed by Milestone as a result of any Audits of any Tax Returns with
respect to periods ending on or prior to the Closing Date.
3.13 Title to Assets. Except as set forth on the Disclosure
Schedule, Milestone has marketable title to all furniture, fixtures, equipment,
and machinery (the "Fixed Assets") and all other of its assets, in all cases
free and clear of all Liens. Except as set forth in the Disclosure Schedule, all
of the Fixed Assets are in good working order.
3.14 Compliance with Laws; Authorization. Milestone 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 it, its business or its properties (collectively, the
"Applicable Laws"). Milestone 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. Milestone has all permits, licenses, franchises and other
governmental, authorizations, consents and approvals necessary to conduct its
business as presently conducted.
3.15 Employee Benefit Plans. Except as set forth in the Disclosure
Schedule:
(a) Milestone has never directly or indirectly maintained
or contributed to, nor is, Milestone directly or indirectly maintaining or
contributing, for the benefit of the current and/or former employees of
Milestone, 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, as amended ("ERISA"), any employment or severance
contract, any stock option plan or any plan of deferred compensation
(individually, a "Plan" and collectively the "Plans"). Milestone does not have
any commitment, whether formal or informal, to create any Plans.
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(b) Milestone does not directly or indirectly maintain or
contribute to (or have an obligation to contribute to) any plan, find 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 Milestone.
(c) The consummation of the Stock Purchase will not
entitle any current or former employee of Milestone to severance pay,
unemployment compensation or any other payment.
3.16 Contracts. The Shareholders have provided or made available to
Buyer a copy of each contract, agreement, and instrument to which Milestone is a
party, including all amendments and supplements thereto, which relate to its
business operations, assets, properties or condition (financial or otherwise)
(the "Milestone Contract). The Disclosure Schedule identifies each of the
Milestone Contracts that is a contract with a customer of Milestone. Except as
set forth in the Disclosure Schedule, each Milestone Contract is legally valid
and binding against Milestone, in full force and effect and enforceable by and
against Milestone in accordance with its terms, and there is no existing default
by Milestone thereunder which would result in a Material Adverse Effect.
3.17 Books of Account; Records; Bank Accounts. The general ledgers,
stock record books, minute books and other corporate records relating to the
assets, properties, contracts and outstanding legal obligations of Seller are
true, correct and complete. The Disclosure Schedule sets forth a true,' correct
and complete list of the names and locations of all banks or other depositories
in which Milestone has accounts or safe deposit boxes, and the names of the
persons authorized to draw thereon, borrow therefrom or have access thereto. No
person or entity holds a power of attorney of Milestone.
3.18 Labor Relations.
(a) There is no collective bargaining agreement to which
Milestone is a party, no collective bargaining agreement currently being
negotiated by it, no union or collective bargaining unit representing any of its
employees, and no organizing activity seeking to compel it to bargain with any
labor union as to wages and conditions of employment.
(b) Milestone has complied 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 its 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 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,
Milestone is not a party to any employment contract or agreement with respect to
any of its employees, nor has Milestone in any other manner limited its right to
terminate the employment relationship with its employees.
(d) Milestone maintains an insurance policy in full force
and effect with the Arizona State Insurance Fund covering all of its employees
and has paid all premiums on such policy and hate no outstanding debts with
respect thereto. No work-related accident has occurred for which Milestone may
be classified as an uninsured employer.
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3.19 Insurance. Set forth in the Disclosure Schedule is a schedule
of the insurance policies (including policy limits, expiration dates, coverage
layers, and named insureds) maintained by Milestone on its assets, premises,
operations and personnel. All such policies are currently in full force and
effect, and no notice of cancellation or termination has been received with
respect to any such policy. All premiums due and payable on such policies have
been paid.
3.20 Environmental Matters. Milestone is and has been in compliance
in the conduct of its business with all applicable environmental laws and
regulations and any order, decree, judgment, or injunction issued, entered,
promulgated or approved thereunder.
3.21 Brokers and Finders. Neither Seller nor the Shareholders have
employed any broker or finder or incurred any liability for brokerage fees,
commissions or finders' fees in connection with the Stock Purchase.
3.22 Undisclosed Liabilities. Except as set forth in the Disclosure
Schedule, Milestone has no liability or obligation of any nature (whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise, and
whether due or to become due) except:
(a) Those set forth or reflected in the Financial
Statements which have not been paid or discharged since the date thereof;
(b) Those arising under the Milestone Contracts; and
(c) Current liabilities incurred in or as a result of the
conduct of its business in the ordinary and usual course consistent with past
practice since June 30, 1997, which are properly reflected on its books and
which are not inconsistent with the representations, warranties and agreements
of the Shareholders set forth in this Agreement.
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 the Shareholders 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 have been true
and correct when made and shall be true and correct at and as of the Closing
Date as though such representations and warranties were made as of the Closing
Date.
(b) Performance of Agreement. Seller and Shareholders
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 material third-party approvals or
consents, including any such consents or approvals under the Milestone
Contracts, shall have been received or satisfied.
(d) No Adverse Change. There shall not have been any
Material Adverse Effect with respect to Milestone since the date of this
Agreement. The death of either of the Shareholders prior to the Closing shall
not be deemed a Material Adverse Effect with respect to Milestone, but the death
of
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both of them prior to the Closing shall be a Material Adverse Effect giving
Buyer the right to terminate this Agreement and the Letter of Credit.
(e) No Adverse Proceeding. There shall not be pending or
threatened any claim, actions litigation or proceeding (judicial or
administrative) or governmental investigation against Buyer, Milestone or the
Shareholders for the purpose of enjoining or preventing the consummation of this
Agreement, or otherwise claiming that this Agreement or the consummation of the
Stock Purchase is illegal.
(f) Certificate. Shareholders shall have delivered to
Buyer at the Closing a certificate 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.
(g) Employee Agreements and Restrictive Agreements. At
the Closing, each Shareholder will terminate the current employment agreement
that he has entered into with Milestone prior to the date hereof, and each
Shareholder will then execute and deliver to Buyer an employment agreement (the
"Employment Agreement") and a restrictive agreement (the "Restrictive
Agreement") substantially in the form of Exhibits B and C attached hereto.
4.2 Conditions to Obligations of the Shareholders. Each and every
obligation of the Shareholders 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 the Shareholders,
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in Article II of this Agreement shall have
been true and correct when made, and shall be true aid correct at and as of the
Closing Date as though such representations and warranties were made 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 material 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, Milestone or the
Shareholders for the purpose of enjoining or preventing the consummation of the
Stock Purchase, or otherwise claiming that this Agreement or the consummation of
the Stock Purchase is illegal.
(e) Certificate. Buyer shall have delivered to the
Shareholders 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 the conditions
set forth in subsections (a) through (d) of this Section 4.2 have been
satisfied.
(f) Employee Agreements and Restrictive Agreements. At
the Closing, Buyer will execute and deliver to the Shareholders the Employment
Agreements and the Restrictive Agreement.
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ARTICLE V
CLOSING DELIVERIES
5.1 Deliveries of the Shareholders at Closing. At the Closing, the
Shareholders will deliver or cause to be delivered to Buyer the following:
(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 Milestone in Arizona, as of a recent date.
(c) A copy of the Certificate of Incorporation of
Milestone and all amendments thereto certified by the Secretary of State of
Arizona.
(d) The Restrictive Agreements and the Employment
Agreements.
(e) Certificates representing the Milestone Stock,
endorsed in blank or together with duly executed stock transfer powers in favor
of Buyer.
(f) The Letter of Credit, which shall be canceled by
Buyer.
5.2 Deliveries of Buyer at Closing. At the Closing, Buyer will
deliver or cause to be delivered to the Shareholders the following:
(a) The portion of the Consideration set forth in
Sections 1.2(a)(i) and 1.2(c) hereof.
(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 authorizing the execution, delivery and performance of
this Agreement and consummation of the Stock Purchase.
(d) The Restrictive Agreements and the Employment
Agreements.
ARTICLE VI
SURVIVAL
6.1 Survival of Representations, Warranties and Agreements.
(a) All representations, warranties and agreements of the
parties contained herein shall survive execution and delivery of this Agreement
for two years following the Closing Date, except that 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 Milestone prior to the date hereof.
(b) The Shareholders shall be responsible for all losses,
liabilities, damages, 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
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litigation (collectively, "Damages"), asserted against, resulting to, imposed on
or incurred or suffered by Buyer directly or indirectly, as a result of or
arising from any breach of any of the representations, warranties or covenants
made by the Shareholders. Notwithstanding the foregoing, Buyer shall be
responsible for attorneys and accountants fees relating to any Audit of any Tax
Return with respect to periods ending on or prior to the Closing Date.
(c) Buyer shall be responsible for all Damages asserted
against, resulting to, imposed on or incurred or suffered by the Shareholders,
directly or indirectly, as a result of or arising from ally breach of any of the
representations, warranties, covenants or other agreements made by Buyer in this
Agreement.
ARTICLE VII
COVENANTS
7.1 Covenant Not to Compete. (a) In consideration of the payment
of $50,000 to each of the Shareholders as set forth in Section 1.2(c) hereof,
each Shareholder covenants and agrees that, for a period of three years
following the date hereof, except on behalf of Buyer or a subsidiary thereof
(including Milestone), he shall not, whether on his own account or as a
shareholder, partner, joint venturer or agent of any person, firm, corporation,
partnership, limited liability company or other entity, or otherwise, directly
or indirectly:
(i) Enter into or engage in the technical
staffing business (a "Competing Business") in the Phoenix, Arizona metropolitan
statistical area (the "Territory") as an officer, sales person, marketing agent,
consultant, supervisor or otherwise; or
(ii) Solicit customers or business patronage for
any Competing Business; or
(iii) Promote or assist, financially or otherwise,
any person, firm, association, corporation, partnership, limited liability
company or other entity engaged in any Competing Business in the Territory;
provided, however, that the foregoing covenant shall not be deemed to have been
violated by the ownership of shares of any class of capital stock of any
corporation so long as the aggregate beneficial and record holdings of the
Shareholders represent less than five percent (5%) of the outstanding shares of
such class of capital stock.
(b) Injunctive Relief. If a Shareholder breaches the covenant
provided herein, or if Buyer shall have reason to believe that a Shareholder
intends to, or is attempting to, breach this covenant, then in any such event
Buyer shall be entitled to seek an injunction in any court having jurisdiction
to enforce this covenant, and shall be entitled to recover from such Shareholder
any and all damages resulting, directly or indirectly, from said breach.
(c) Reformation. If the time or area of limitations, or both,
contained in this covenant are held by any court of competent jurisdiction to be
unreasonable or otherwise unenforceable, such covenant shall nevertheless be
enforceable for such lesser time or area, or both, as the court shall find
reasonable. The Shareholders acknowledge having consulted as to such covenant
with counsel, fully understand the content of the same and agree, in view of the
relevant facts, that the limitations contained herein are reasonable.
(d) Termination. This covenant shall terminate automatically with
respect to a Shareholder if Milestone terminates the Employee Agreement with
such Shareholder without "cause" as defined therein.
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7.2 Covenant Against Hiring. The Shareholders understand that in
Buyer's view it is essential to the successful operation of a technical staffing
business in the Territory that Buyer retain substantially unimpaired Milestone's
current operating organization. The Shareholders covenant and agree that neither
of them, nor any affiliate of either of them, without the prior written consent
of Buyer, shall take any action which would induce any employee, representative
or independent contractor of Milestone prior to the Effective Time not to become
or continue as an employee, representative or independent contractor of
Milestone after the Effective Time.
7.3 Due Diligence Access. From the date of this Agreement until
the Closing, to enable Buyer to conduct due diligence, the Shareholders shall
make or cause to be made available to Buyer: (i) members of management of
Milestone for personal interviews; (ii) the assets and properties of Milestone
for inspection; and (iii) all books of account, contracts, agreements,
commitments, authorizations, insurance policies, records and documents of every
character relating to Milestone's business for examination, including such of
the foregoing as are needed to complete, prior to the Closing, an audit of
Milestone's 1996 and 1997 fiscal years to be conducted by Buyer's outside
auditors, with such assistance from Milestone's auditors as is appropriate.
Accordingly, the Shareholders shall permit Buyer and its officers, employees,
representatives, attorneys, accountants and agents to have access to the same at
all reasonable times and places. Shareholders shall use all reasonable efforts
to obtain any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party, required to be
obtained or made by such party in connection with the Stock Purchase or the
taking of any action contemplated by this Agreement. Buyer agrees that it will
not contact any employees of Milestone before March 9, 1998, at which time
Shareholders are prepared to announce the sale of the Milestone Stock. Before
March 9, 1998, Buyer shall not issue any press release or make any filing with
the Securities and Exchange Commission or American Stock Exchange disclosing
this Agreement or the transactions contemplated hereby. Buyer agrees that it
will hold in confidence any confidential or proprietary information about
Milestone obtained during its due diligence and disclose such information only
to those officers, employees, representatives, attorneys, accountants and agents
of Buyer who have a need to know such information.
7.4 Conduct of Interim Operations. From the date hereof to the
Closing Date:
(a) Affirmative Covenants. The Shareholders shall do, or
cause Milestone to do, the following:
(i) Operations. Conduct its business as
presently conducted in the usual, regular,
and ordinary course and scope, and do all
things in the ordinary course of business,
consistent with past practice, necessary to
preserve, renew, and keep in full force and
effect all rights and franchises that are
necessary to continue its business.
(ii) Corporate Existence. Maintain its corporate
existence, good standing, and qualification
to transact business in the State of
Arizona.
(iii) Compliance with Applicable Laws.
Substantially comply with all Applicable
Laws and timely pay all amounts that, if
unpaid, would have a Material Adverse Effect
on Milestone's business affairs or
prospects.
(iv) Insurance. Maintain all insurance.
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(v) Litigation. Advise Buyer immediately of any
lawsuit threatened or filed against
Milestone or either Shareholder.
(vi) Payment of Debt. Duly and punctually pay all
of Milestone's indebtedness in accordance
with the terms and conditions of such
indebtedness as and when due.
(vii) Material Loss. Immediately notify Buyer of
any event causing or that may reasonably be
expected to cause a material loss to
Milestone with respect to its assets or
result in a material decline in value of
such assets or Milestone's business or
prospects.
(viii) Preservation of Business. Employ best
efforts to preserve Milestone's business
intact, to keep available the present
employees, consultants and contract
programmers of Milestone, and to maintain
good relations with suppliers and customers
and others having business relations with
Milestone.
(b) Negative Covenants. Milestone shall not do any of the
following:
(i) New Encumbrances. Create, incur, assume, or
suffer to exist any new encumbrance
(including, but not limited to, encumbrances
on property purchased under conditional
sales or other title retention agreements)
on any of its assets, except in the ordinary
course and scope of its business.
(ii) Disposition of Assets. Sell, dispose of,
mortgage, pledge, grant a security interest
in or otherwise dispose of or encumber any
asset or interests therein, except in the
ordinary course and scope of its business.
(iii) Contracts. Enter into any contracts or
agreements, or amend, modify, or terminate
any contracts or agreements, except in the
ordinary course and scope of its business;
(iv) Compensation. Except for wage increases
required by law or governmental regulations,
and merit or length of service increases
granted in the ordinary course and scope of
its business consistent with past practices,
increase the compensation or benefits
payable or to become payable to any
employee.
(v) Changes in Stock. Split (including a reverse
stock split), combine or reclassify any of
its capital stock or issue or authorize or
propose the issuance of any other securities
in respect of, in lieu of or in substitution
for shares of its capital stock.
(vi) Issuance of Securities. Issue, transfer or
sell, or authorize or propose or agree to
the issuance, transfer or sale of, any
shares of its capital stock of any class,
any other equity interests or any securities
convertible into, or any rights, warrants,
calls, subscriptions, options or other
rights or agreements, commitments or
understandings to acquire, any such shares,
equity interests or convertible securities.
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(vii) Governing Documents. Amend its charter or
bylaws in a manner adverse to Buyer or
otherwise inconsistent with the transactions
contemplated hereby.
(viii) Indebtedness. Incur any indebtedness for
borrowed money or guarantee any such
indebtedness or issue or sell any debt
securities or warrants or rights to acquire
any debt securities or guarantee any such
obligations of others.
(ix) Accounting Policies and Procedures. Change
any of its accounting principles, policies
or procedures, except as may be required by
generally accepted accounting principles.
(x) Dividends. Declare or pay any dividend or
declare or make any other distribution,
whether in cash, stock, property or any
combination thereof, in respect of the
capital stock of Milestone.
7.5 Tax Covenants. All transfer, documentary stamp, sales, use,
transfer, 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 the
Shareholders.
7.6 Changes to Disclosure Schedule. Between the date of this
Agreement and the Closing Date, the Shareholders 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, the Shareholders shall provide Buyer with
such further information regarding such event, circumstance or development as
Buyer reasonably requests. Within three business days of Buyer's receipt of such
additional information, Buyer shall notify the Shareholders that: (i) the
Shareholders may amend the Disclosure Schedule to describe such event,
circumstance or other development, without liability to the Shareholders; or
(ii) Buyer intends to terminate this Agreement pursuant Section 8.1(b).
7.7 Cooperation. Neither party hereto shall take any action that
would or is reasonably likely to result in any of the conditions to the Closing
set forth in Article IV not being satisfied or that would materially impair the
ability of the parties to consummate the transactions contemplated herein in
accordance with the terms hereof or materially delay such consummation, and each
party shall promptly advise the other orally and in writing of any change in, or
event with respect to, its business or operations having, or which, insofar as
can reasonably be foreseen, could have, a Material Adverse Effect.
7.8 Line of Credit. The Thunderbird Line will be terminated on or
prior to the Closing Date, and all security provided by Milestone in connection
with such line shall be released and any related security agreement terminated.
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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 Buyer and the
Shareholders;
(b) by the Shareholders if any of the representations or
warranties of Buyer 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 the Shareholders if any obligation, term or
condition to be performed, kept or observed by Buyer hereunder has not been
performed, kept or observed in any material respect at or prior to the time
specified in this Agreement;
(d) by Buyer if any of the representations or warranties
of the Shareholders 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;
(e) by Buyer if any obligation, term or condition to be
performed, kept or observed by the Shareholders hereunder has not been
performed, kept or observed in any material respect at or prior to the time
specified in this Agreement; and
(f) by either Buyer or the Shareholders 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.
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 the other party hereto if
this Agreement is terminated pursuant to Section 8.1(a) or (f).
If this Agreement is terminated by the Shareholders pursuant
to Section 8.1(b) or (c) as a result of the breach of this Agreement by Buyer,
then the Shareholders shall be entitled to draw upon the Letter of Credit in
full.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 No Negotiations by Milestone or the Shareholders. Unless and
until this Agreement has been properly terminated pursuant to Article VIII
hereof, neither Milestone nor either Shareholder shall directly or indirectly,
through any officer, director, agent, employee, representative or otherwise,
make, solicit, initiate or encourage the submission of proposals or offers, or
accept offers, from any person (including any of its officers or employees)
relating to any recapitalization, merger, consolidation or other business
combination involving Milestone, any sale of all or a substantial portion of the
assets of
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Milestone, or the sale of any equity interest in Milestone (any of the
foregoing, a "Competing Transaction"). During such period, neither Milestone nor
the Shareholders shall, directly or indirectly, participate in any negotiations
regarding, furnish to any other person any information with respect to, or
otherwise cooperate, assist or participate in, any effort or attempt by any
third party to propose or effect any Competing Transaction. Milestone and the
Shareholders shall notify Buyer of any Competing Transaction or any inquiry
relating to a possible Competing Transaction and shall deliver to Buyer any
information furnished to or by any such third party.
9.2 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 by 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, Florida 34625 312 Walnut Street
Attn: W. David Foster Suite 2650
Cincinnati, Ohio 45202
If to the Shareholders: With a copy to:
Steven Byas and David Rybak William D. Fearnow, Esq.
1356 North Hazelton Drive Ridenour, Swenson, Cleere & Evans, P.C.
Chandler, Arizona 85226 Two Renaissance Square
40 North Central Avenue, Suite 1400
Phoenix, Arizona 85004-2397
9.3 Entire Agreement. This Agreement, the Exhibits, the Appendices
and the Disclosure Schedule embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof, and supersede all
prior agreements and understandings relative to said subject matter.
9.4 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 each
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.
9.5 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.
9.6 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.
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9.7 Expenses. Each of the parties hereto will bear his or its own
costs and expenses (including legal, accounting and consulting fees and
expenses) incurred in connection with this Agreement and the Stock Purchase.
9.8 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.
9.9 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.
9.10 Governing Law. This Agreement shall in all respects be construed
in accordance with and governed by the laws of the State of Delaware, without
regard to any such laws relating to choice or conflict of laws.
9.11 Public Announcements. Neither Buyer nor the Shareholders 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 the opinion of its counsel to comply with applicable requirements of law.
The parties hereto agree that upon execution of this Agreement and on the
Closing Date, they shall jointly prepare press releases for appropriate
dissemination.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
ABLEST SERVICE CORP.
BY: /s/ W. David Foster
----------------------------
W. David Foster, President
SHAREHOLDERS:
/s/ Steven Byas
-------------------------------
Steven Byas
/s/ David Rybak
-------------------------------
David Rybak
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