SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): March 31, 1999
Oxford Capital Corp.
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(Exact name of Registrant as specified in its charter)
2-98747-D
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(Commission file number)
Nevada 87-0421454
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(State or other jurisdiction (I.R.S. Employer Identification
of incorporation) Number)
4245 North Central Expressway, Suite 300, Dallas, Texas 75205
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(Address of principal executive offices) (Zip code)
(214) 520-0100
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
On March 31, 1999, Oxford Capital Corp. (the "Company") completed the sale of
the principal assets of two wholly-owned subsidiaries, Crest Outsourcing, Inc.
("Crest") and Webster Leasing, Inc. ("Webster"). The Crest assets were sold to
US Personnel V L.P. ("USP"). The Webster assets were sold to Brae Leasing LLC
("Brae").
In addition to the sale of the Crest and Webster assets, the Company has entered
into agreements in principal with respect to (1) the sale of the assets and
assumption of certain liabilities of PRC Enterprises, Inc. ("PRC") by US
Personnel VI L.P. ("USP VI") effective April 30, 1999, and (2) the sale of the
principal assets of Rx Staffing Corporation ("Rx Staffing") to Brae effective
June 30, 1999. USP effectively took over active control and management of the
operations of Crest, Webster and Rx Staffing, on March 1, 1999, including the
hiring of substantially all of the employees of these three businesses.
With respect to the sale of Crest and Webster, the Company sold the customer
list of each business and related contracts and agreements, and retained
substantially all other current and non-current assets and liabilities. The
acquired assets of Crest and Webster were purchased for $343,500 and $2,239,500,
respectively, with 25% paid in cash at closing and the balance in the form of a
note to be paid over 54 months. The notes bear interest at the rate of 7.75% and
are unsecured. The respective purchase prices were essentially based upon the
acquirers valuation of current and future worksite employee profitability. USP
VI will hire substantially all of the employees of PRC in connection with the
pending sale of PRC.
Rx Staffing entered into a Subservice Agreement effective March 1, 1999, under
which Brae will perform the operations necessary to serve the clients of Rx
Staffing until the intended closing on June 30, 1999. During this four-month
period the Company will receive weekly payments of $750 as part of the
consideration for the assets sold. The sale is subject to receipt of Internal
Revenue Service approval. Upon final closing, the Company will receive
additional consideration of approximately $267,000, which will be paid to the
Internal Revenue Service under a to be negotiated agreement.
With respect to the pending sale of PRC, as consideration USP VI will assume the
Company's $4,500,000 obligation, plus accrued interest, to PRC that arose in
connection with the Company's acquisition of PRC effective September 1, 1997.
Such obligation is currently in default due to the Company's failure to meet
certain debt service requirements.
2
<PAGE>
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
Page
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- Introduction to pro forma financial information 5
- Unaudited pro forma consolidated balance sheet as of
December 31, 1998 6
- Unaudited pro forma consolidated statement of operations
for the six months ended December 31, 1998 8
- Unaudited pro forma consolidated statement of operations
for the year ended June 30,1998 9
- Notes to unaudited pro forma combined financial statements 10
(c) Exhibits
2.1 Asset Purchase Agreement dated March 31, 1999 between U.S.
Personnel V L.P., Crest Outsourcing, Inc., El Dorado Staff
Leasing, Inc. and Oxford Capital Corp.
2.2 Asset Purchase Agreement dated March 31, 1999 between Brae
Leasing LLC, Webster Leasing, Inc. and Oxford Capital Corp.
3
<PAGE>
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 hereunto duly authorized.
OXFORD CAPITAL CORP.
By: /s/ Robert E. Cheney
---------------------------------
Robert E. Cheney
Chairman and Chief Executive Officer
Date: April 29, 1999
4
<PAGE>
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet at December
31, 1998 and the unaudited pro forma consolidated statements of operations for
the six months ended December 31, 1998 and the year ended June 30, 1998 are
derived from Oxford Capital Corp.'s (the "Company") historical financial
statements and are presented to reflect the effects of the following events:
1. The consummation, on March 31, 1999, of the sale of the principal
operating assets of two wholly-owned subsidiaries, Crest Outsourcing,
Inc. ("Crest") and Webster Leasing, Inc. ("Webster").
2. The pending sale of the assets, and assumption of liabilities, of PRC
Enterprises, Inc. ("PRC") scheduled to close April 30, 1999.
3. The pending sale of the principal assets of Rx Staffing Corporation
("Rx Staffing"), scheduled to close June 30, 1999.
The unaudited pro forma statements of operations set forth below give
effect to the Crest and Webster sale, as well as the pending PRC and Rx Staffing
sales, as if the closing of those sales had occurred at July 1, 1997. The
unaudited pro forma balance sheet gives effect to the sale and the pending sales
as if the closing of those sales had occurred at the balance sheet date.
The Crest and Webster sales were consummated on March 31, 1999 for $343,500
and $2,239,500, respectively, with 25% paid in cash at closing and the balance
payable in periodic installments pursuant to a 54 month promissory note with
interest at 7.75%.
The PRC sale is scheduled to close on April 30, 1999 with the acquirer
assuming an existing $4.5 million note owed by the Company relating to the
original acquisition of PRC.
The Rx Staffing sale is scheduled to close on June 30, 1999, subject to
receipt of approval from the Internal Revenue Service. Upon closing of the sale
of Rx Staffing's assets, the Company will receive $267,000 which will be paid
directly to the IRS under a proposed settlement agreement relating to payroll
tax liability of Rx Staffing. Under the terms of the Rx Staffing sale, the
acquirer assumed control of the operations of Rx Staffing and is paying the
Company $750 per week pending closing of the sale.
This pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the sale and proposed sales had been consummated at
the dates assumed for purposes hereof, nor is it necessarily indicative of
future operating results or financial position.
5
<PAGE>
OXFORD CAPITAL CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
Divested Pro Forma
Historical Businesses Adjustments Pro Forma
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
ASSETS:
- ------
Current Assets:
Cash $ 103,666 $ (94,233) (1e) $ 655,183
645,750 (1a)
Accrued payroll receivable 2,050,815 (2,050,815) (1e) -
Accounts receivable, clients 994,830 (596,852) (1e) 397,978
Other current assets 125,183 (44,361) (1e) 80,822
----------- ----------- ----------
Total Current Assets 3,274,498 (2,140,511) 1,133,987
----------- ----------- ----------
Fixed Assets
Furniture, fixtures and equipment 806,833 (213,797) (1e) 593,036
Less: Accum. depreciation (395,555) 78,752 (1e) (316,803)
----------- ----------- ----------
Net Fixed Assets 411,281 (135,045) 276,236
----------- ----------- ----------
Other Assets
Goodwill 6,105,604 (6,105,604) (2) -
Less: Accum. amortization (1,266,364) 1,266,364 (2) -
Covenant not to compete 81,991 (81,991) (2) -
Less: Accum. amortization (80,000) 80,000 (2) -
Notes Receivable - 1,937,250 (1b) 1,937,250
Receivable from related party 5,000 5,000
----------- ----------- ----------- ----------
Total Other Assets 4,846,231 1,937,250 (4,841,231) 1,942,250
----------- ----------- ----------- ----------
Total Assets $ 8,532,010 $ (338,306) $(4,841,231) $ 3,352,473
=========== =========== =========== ==========
</TABLE>
6
<PAGE>
OXFORD CAPITAL CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(Continued)
<TABLE>
Divested Pro Forma
Historical Businesses Adjustments Pro Forma
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
LIABILITIES AND
- ----------------
SHAREHOLDERS' EQUITY
- ---------------------
Current Liabilities:
Bank overdraft $ 243,478 $ 243,478
Accrued payroll payable 1,990,649 (1,990,649) (1e) -
Accounts payable 127,358 (27,447) (1e) 99,911
Accrued expenses 3,136,944 (302,692) (1e) 2,338,889
(495,363) (1d)
Payroll taxes payable 4,690,423 (363,612) (1e) 4,326,811
Payable to related party 920,269 920,269
Current portion of capital lease 5,201 (5,201) (1e) -
Current portion of long-term debt 52,938 52,938
Note payable 4,637,113 (4,500,000) (1c) 137,113
----------- ----------- ----------
Total Current Liabilities 15,804,374 (7,684,964) 8,119,409
----------- ----------- ----------
Capital Lease 15,408 (15,408) (1e) -
Long-term debt 456,307 456,307
----------- ----------- ----------
Total Liabilities 16,276,088 (7,700,372) 8,575,716
----------- ----------- ----------
Shareholders' Equity
Common stock 10,335 10,335
Additional paid-in capital 1,393,204 1,393,204
Retained deficit (9,147,618) 7,362,066 (1f) (4,841,231) (2) (6,626,783)
----------- ----------- ----------- ----------
Total Shareholders' Equity (7,744,079) 7,362,066 (4,841,231) (5,223,244)
----------- ----------- ----------- ----------
Total Liabilities and
Shareholders' Equity $ 8,532,009 $ (338,306) $(4,841,231) $ 3,352,472
=========== =========== =========== ==========
</TABLE>
7
<PAGE>
OXFORD CAPITAL CORP.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
<TABLE>
Divested Pro Forma
Historical Businesses Adjustments Pro Forma
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Management fees $ 180,000 $ 180,000
Employee leasing revenue 54,211,559 (54,208,899) (3) 2,660
----------- ----------- ----------
Total revenues 54,391,559 (54,208,899) 182,660
Cost of sales 51,824,453 (51,824,453) (3) -
----------- ----------- ----------
Gross profit 2,567,105 (2,384,445) 182,660
----------- ----------- ----------
Operating expenses:
General and administrative 2,212,395 (1,801,475) (3) (35,370) (4) 375,550
Marketing and sales 720,120 (719,224) (3)
----------- ----------- ----------- ----------
Total operating expenses 2,932,515 (2,520,699) (35,370) 376,446
----------- ----------- ----------- ----------
Operating loss (365,410) 136,254 35,370 (193,786)
----------- ----------- ----------- ----------
Other income (expense)
Interest income 72,647 (5) 72,647
Interest expense (207,662) 23,536 (3) 180,000 (6) (4,127)
IRS penalties and interest (154,097) 154,097 (7) -
Amortization (313,358) 313,358 (3) -
Depreciation (73,733) 70,130 (3) (3,603)
----------- ----------- ----------- ----------
(748,850) 407,023 406,744 64,917
----------- ----------- ----------- ----------
Net loss $ (1,114,260) $ 543,277 $ 442,114 $ (128,869)
=========== ============ =========== ==========
</TABLE>
8
<PAGE>
OXFORD CAPITAL CORP.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR MONTHS ENDED JUNE 30, 1998
<TABLE>
Divested Pro Forma
Historical Businesses Adjustments Pro Forma
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Management fees $ 569,167 $ 569,167
Employee leasing revenue 81,937,381 (81,915,330) (3) 22,051
----------- ----------- ----------
Total revenues 82,506,548 (81,915,330) 591,218
Cost of sales 78,146,881 (78,146,881) (3) -
----------- ----------- ----------
Gross profit 4,359,667 (3,768,449) 591,218
----------- ----------- ----------
Operating expenses:
General and administrative 4,726,014 (3,032,090) (3) (757,696) (4) 936,228
Marketing and sales 519,170 (488,920) (3) (27,224) (4) 3,026
----------- ----------- ------------ ----------
Total operating expenses 5,245,184 (3,521,010) (784,920) 939,254
----------- ----------- ------------ ----------
Operating loss (885,517) (247,439) 784,920 (348,036)
----------- ----------- ------------ ----------
Other income (expense)
Other income 43,554 (43,554) (3) -
Interest income 145,294 (5) 145,294
Interest expense (425,999) 68,466 (3) 357,533 (6) -
IRS penalties and interest (634,145) 634,145 (7) -
Amortization (715,257) 715,257 (3) -
Depreciation (139,766) 128,965 (3) (10,802)
----------- ----------- ------------ ----------
(1,871,613) 869,134 1,136,972 134,492
----------- ----------- ------------ ----------
Net loss $(2,757,130) $ 621,695 $ 1,921,892 $ (213,544)
=========== =========== ============ ==========
</TABLE>
9
<PAGE>
OXFORD CAPITAL CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments
(1) Adjustment to record (1) elimination of net assets sold, consisting of
assets transferred less liabilities assumed, (2) receipt of consideration
for net assets sold, consisting of cash, a note payable and the assumption
of a note payable and certain accounts payable, and (3) a reduction in
retained deficit in an amount equal to the excess of the consideration
received over the net assets sold:
Cash 645,750 (a)
Note Receivable 1,937,250 (b)
Note payable assumed 4,500,000 (c)
Accounts payable assumed 495,363 (d)
Net assets sold 216,297 (e)
Retained deficit 7,362,066 (f)
(2) Adjustments to eliminate good will associated with the divested businesses.
(3) Adjustment to eliminate revenues and expenses attributable to divested
businesses.
(4) Adjustment to reduce certain expenses, such as travel expenses and
professional fees, to the lower level associated with the remaining
operations.
(5) Adjustment to reflect interest income on the notes received as part of the
consideration paid to the company in connection with the completed and
pending asset sales.
(6) Adjustment to reduce interest expense attributable to debt obligations
assumed by the acquirer.
(7) Adjustment to eliminate IRS penalties and interest attributable to a
pending sale of a business. The related obligation to the IRS which is not
being assumed by the acquirer is not eliminated from the pro forma
consolidated balance sheet as of December 31, 1998; however, the expense is
eliminated from the pro forma consolidated statements of operations since
it would not have been incurred by the remaining entity.
10
<PAGE>
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (this "Agreement"), dated as of March 31, 1999 by
Crest Outsourcing, Inc., a Nevada corporation ("Crest"), and El Dorado Staff
Leasing, Inc., a California corporation ("El Dorado") (Crest and El Dorado
herein collectively called "Sellers"), and U.S. Personnel V L.P., a Delaware
limited partnership ("Buyer"), and joined in by U.S. Personnel, Inc., a Delaware
corporation and the limited partner of Buyer ("USP"), and joined in by Oxford
Capital Corp., a Nevada corporation and the parent corporation of Crest
("Oxford").
WHEREAS, Oxford owns all the outstanding shares of Crest and Crest owns all
the outstanding shares of El Dorado; and
WHEREAS, Sellers desire to sell to Buyer and Buyer desires to purchase from
Sellers, the assets of Sellers herein further described on Exhibit A; and
WHEREAS Oxford desires to join in the execution of this agreement for the
purpose of its consent to the consummation of the contemplated transaction and
for the purpose of making certain representations and warranties to and
covenants and agreements with Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Sellers, Oxford, USP and Buyer hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Agreement to Sell and to Purchase Assets. At the Closing, and on the
terms and subject to the conditions set forth in this Agreement, Sellers shall
sell and deliver to Buyer, and Buyer shall purchase and accept from Sellers, the
Assets described on Exhibit A (the "Assets"). In order to effectuate the
transfer of the Assets at the Closing, Sellers shall execute and deliver, or
cause to be executed and delivered, to Buyer, dated the Closing Date, all such
bills of sale, certificates of title, and other documents or instruments of
assignment, transfer, or conveyance as Buyer shall reasonably deem necessary or
appropriate to vest in or confirm to Buyer good and marketable title to the
Assets, free and clear of all Encumbrances.
1.2 Purchase Price and Payment. In consideration of the sale of the Assets
to Buyer, Buyer shall pay to Sellers for the purchase of all the Assets the
total purchase price of $2,239,500 as set forth below and as adjusted and as
subject to offset pursuant to this Agreement:
A. At Closing Twenty-five Percent of the Total Purchase Price $559,875;
and
B. On the six month anniversary of the Closing Date a payment of
$150,000; and
C. Eighteen months from the date of the payment in 1.2A above is due,
$382,406 plus accrued interest at 7.75% per annum; and
D. On each of the next three successive anniversary dates from the date
payment in 1.2C is made an additional $382,406 plus accrued interest
at 7.75% per annum until the purchase price is paid in full. The
amounts payable in 1.2C and 1.2D shall be evidenced by a Promissory
Note of Buyer in the form of Exhibit B.
1.3 Adjustments. The total purchase price is based on $1,500 times a base
of 1493 equivalent Work-site Employees (determined on the basis of February
gross payroll, by client, divided by 1/12th of $20,000) ("FTE") employed by
Closing Date clients of Sellers as set forth on Exhibit C. Any loss of FTE's not
as a result of substandard service by Buyer shall result in the amount to be
paid pursuant to 1.2C and 1.2D above to be adjusted using the following formula:
Such amount is subject to adjustment for any loss in the actual number of FTE's
employed by clients at the Closing Date that are not clients at the twelve-month
anniversary of the Closing Date. Such amount will be adjusted by the above loss
of FTE's, multiplied by $1,500. Interest payable under 1.2C and 1.2D will be
calculated on the adjusted amount due.
1
<PAGE>
1.4 Certain Liabilities Assumed by Buyer. As further consideration for the
transfer of the Assets to Buyer, Buyer agrees, upon the terms and subject to the
conditions set forth herein, to assume, at the Closing, and thereafter to pay,
perform, and discharge, the following liabilities and obligations of Sellers
(but only such liabilities and obligations): All obligations of Sellers accruing
from and after the Closing Date under the contracts and agreements described on
Exhibit D (the "Assumed Liabilities").
1.5 Liabilities Not Assumed by Buyer . Buyer shall not assume or take title
to the Assets subject to, or in any way be liable or responsible for, any
liabilities or obligations of Sellers or Oxford (whether or not referred to in
any Schedule or Exhibit hereto), except as specifically provided in Section 1.4,
it being expressly acknowledged that it is the intention of the parties hereto
that all liabilities and obligations that Sellers or Oxford have or may have in
the future (whether accrued, absolute, contingent, unliquidated, or otherwise,
whether or not known to Sellers or Oxford, and whether due or to become due),
other than the Assumed Liabilities, shall be and remain the liabilities and
obligations of Sellers and Oxford. Without limiting the generality of the
foregoing, Buyer shall not assume or take title to the Assets subject to, or in
any way be liable or responsible for:
(a) any liability or obligation of Sellers or Oxford under any
mortgage, deed of trust, security agreement, or financing statement, or any
note, bond, or other instrument or obligation secured thereby,
(b) any liability or obligation of Sellers or Oxford in respect of any
express or implied representation, warranty, agreement, or guaranty made
(or claimed to have been made) by Sellers or Oxford, or imposed (or
asserted to be imposed) by operation of law, in respect of any products
produced or services rendered, distributed, or sold by Sellers in
connection with the Business on or prior to the Closing Date,
(c) any liability or obligation of Sellers or Oxford existing at or
arising after the Closing Date under any leases, contracts, insurance
policies, agreements, or Permits, whether or not included in the Assets,
which results from the breach, default, or wrongful action or inaction of
Sellers or Oxford prior to the close of business on the Closing Date (or
thereafter),
(d) any liability or obligation of Sellers resulting from or relating
to the employment relationship between Sellers and any of Sellers' present
or former employees engaged in connection with the ownership or operation
of the Assets or the termination of any such employment relationship,
including without limitation severance pay, bonuses, commissions (other
than those incurred since March 1, 1999 pursuant to the Subservicer
Agreement) and other similar benefits, if any, and any claims filed on or
prior to the Closing Date or which may thereafter be filed by or on behalf
of any such present or former employee relating to the employment or
termination of employment of any such employee by Sellers, including
without limitation any claim for wrongful discharge, breach of contract,
unfair labor practice, employment discrimination, unemployment
compensation, employee benefits or workers' compensation,
(e) any liability or obligation of Sellers or Oxford in respect of any
agreement, trust, plan, fund, or other arrangement under which benefits or
employment is provided for any of Sellers' present or former employees
engaged in connection with the ownership or operation of the Assets, and
(f) any income or payroll tax liabilities or deficiencies, whether
federal, state, or local, and any ad valorem property taxes, in each such
case to the extent applicable to periods ending on or prior to the Closing
Date (or February 28, 1999 for persons subject to the Subservicer
Agreement).
2
<PAGE>
For purposes of this Section, references to Sellers shall include their
predecessors in title.
1.6 Allocation of Purchase Price . Buyer will determine the appropriate
allocation of the purchase price among the Assets pursuant to Section 1060 of
the Code and will notify Sellers of such determination. Sellers and Buyer shall
report the transactions contemplated hereby on all Tax Returns (including
information returns and supplements thereto required to be filed by the parties
under Section 1060 of the Code) in a manner consistent with such allocation.
ARTICLE II
CLOSING AND CLOSING DATE
2.1 Closing and Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall take place (i) at the offices of Thompson & Knight,
1700 Pacific Avenue, Suite 3300, Dallas, Texas, 75214, at 10:00 a.m., local
time, on March 31, 1999 (with a signing and pre-closing on March 30, 1999), or
(ii) at such other time or place or on such other date as the parties hereto
shall agree. The date on which the Closing is required to take place (or, by
agreement actually takes place) is herein referred to as the "Closing Date". The
effective date and time for the purchase and sale of the Assets (the "Effective
Date") shall be the close of business on March 31, 1999.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND OXFORD
Sellers and Oxford jointly and severally represent and warrant to Buyer that:
3.1 Corporate Organization. The Sellers and Oxford are corporations duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and have all requisite corporate power and
corporate authority to own, lease, and operate its properties and to carry on
its business as now being conducted. No actions or proceedings to dissolve the
Sellers and Oxford are pending. Except as disclosed in Exhibit 3.2, Oxford owns
all of the voting and nonvoting (if any) securities of Crest, and Crest owns all
of the voting and nonvoting (if any) securities of El Dorado.
3.2 Qualification. The Sellers and Oxford are duly qualified or licensed to
do business and in good standing in each of the jurisdictions set forth on
Exhibit 3.2, which are all the jurisdictions in which it owns, leases, or
operates property or in which such qualification or licensing is required for
the conduct of its business.
3.3 Authority Relative to this Agreement. Sellers and Oxford have full
corporate power and corporate authority to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance by Sellers and Oxford of the Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of Sellers and Oxford including, if
required, approval of their respective shareholders. This Agreement has been
duly executed and delivered by Sellers and Oxford and constitutes, and each
other agreement, instrument, or document executed or to be executed by Sellers
and Oxford in connection with the transactions contemplated hereby has been, or
when executed will be, duly executed and delivered by Sellers and Oxford and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of Sellers and Oxford, enforceable against Sellers and Oxford
in accordance with their respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principals which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
3
<PAGE>
3.4 Noncontravention . The execution, delivery, and performance by Sellers
and Oxford of this Agreement and the Ancillary Documents to which it is a party
and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or result in a violation of any provision
of the charter or bylaws of Sellers and Oxford, (ii) conflict with or result in
a violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, or require any consent,
approval, authorization, or waiver of, or notice to, any party to, any bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which Sellers or Oxford is a party or by which
Sellers, Oxford, the Business, or any of the Assets may be bound or any Permit
held by Sellers or Oxford or the Business, (iii) result in the creation or
imposition of any Encumbrance upon any of the Assets, or (iv) violate any
Applicable Law binding upon Sellers or Oxford, the Business, or any of the
Assets.
3.5 Governmental Approvals . No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Sellers or Oxford in connection with the
execution, delivery, or performance by Sellers or Oxford of this Agreement and
the Ancillary Documents to which it is a party or the consummation by it of the
transactions contemplated hereby or thereby.
3.6 Exclusive Operation of Business . Sellers do not have any direct or
indirect equity or ownership interest in any corporation, partnership, joint
venture, or other entity other than Crest's ownership of El Dorado, and the
Business is conducted solely and exclusively by Sellers. Oxford is not engaged
in the staff leasing business other than through Sellers and PRC Enterprises,
Inc., Webster Leasing, Inc., management of United Staffing Corp. (Oregon), and
Rx Staffing Corp., and any entity disclosed in writing by Oxford to Buyer.
3.7 Title to Assets . Sellers are the owner of, and have good and
marketable title to, all the Assets, free and clear of all Encumbrances. Upon
Sellers' transfer of the Assets to Buyer pursuant to this Agreement, Buyer will
have good and marketable title to all the Assets, free and clear of all
Encumbrances. No financing statement (or other instrument sufficient or
effective as a financing statement) under the Uniform Commercial Code with
respect to any of the Assets has been filed and is effective in any
jurisdiction, and Sellers and Oxford have not signed any such financing
statement (or other instrument) or any mortgage or security agreement
authorizing any secured party thereunder to file any such financing statement
(or other instrument).
3.8 Financial Statements . Sellers and Oxford have delivered to Buyer
accurate and complete copies of (i) Oxford's audited consolidated balance sheet
as of June 30, 1997 and 1998, and the related audited consolidated statements of
income, stockholders' equity, and cash flows for each of the years ended June
30, 1997 and 1998, and the notes and schedules thereto, together with the
qualified reports thereon of Cheshier & Fuller, L.L.C., independent public
accountants (the "Audited Financial Statements"), and (ii) Oxford's Form 10-QSB
filed February 22, 1999 with the Securities and Exchange Commission for the
quarterly period ended December 31, 1998 (the "Latest Balance Sheet"), and the
related unaudited statements of income, stockholders' equity, and cash flows for
the three-month period then ended (the "Unaudited Financial Statements"),
(collectively, the "Financial Statements"). The Financial Statements (i)
represent actual bona fide transactions, (ii) have been prepared from the books
and records of each Seller in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years throughout the
periods involved, and (iii) accurately, completely, and fairly present Oxford's
consolidated financial position as of the respective dates thereof and its
results of operations for the periods then ended. The statements of income
included in the Financial Statements do not contain any items of special or
nonrecurring income, and the balance sheets included in the Financial Statements
do not reflect any write-up or revaluation increasing the book value of any
assets, nor have there been any transactions giving rise to special or
nonrecurring income or any such write-up or revaluation.
3.9 Liabilities . Except as described on Exhibit 3.9, Sellers have no
liabilities or obligations (whether accrued, absolute, contingent, unliquidated,
or otherwise, and whether due or to become due) in respect of the Business,
except (i) liabilities reflected on the Latest Balance Sheet, and
(ii) liabilities which have arisen since the date of the Latest Balance Sheet in
the ordinary course of the operation of the Business (none of which is a
material liability for breach of contract, breach of warranty, tort, or
infringement).
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3.10 Absence of Certain Changes . Except as described on Exhibit 3.9, other
than normal business transactions, since June 30, 1998, (i) there has not been
any adverse change in, or any event or condition that might reasonably be
expected to result in any adverse change in, the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Business or
the ownership or operation of the Assets or any material portion thereof;
(ii) the Business has been conducted only in the ordinary course consistent with
past practice; (iii) Sellers have not, in respect of the Business, incurred any
liability, engaged in any transaction, or entered into any agreement outside the
ordinary course of business consistent with past practice; (iv) Sellers have not
suffered any loss, damage, destruction, or other casualty to any of the Assets
(whether or not covered by insurance); (v) Sellers have acquired no knowledge
of, and have not taken or permitted any action, event or circumstance that would
result in the loss or diversion of Sellers' clients to others; and (vi) Sellers
have not, in respect of the Business, taken any of the actions set forth in
Section 5.2 except as permitted thereunder.
3.11 Tax Matters .
(a) Each Seller has (and as of the Closing Date will have) duly filed
all federal, state, local, and foreign Tax Returns required to be filed by
or with respect to it with the IRS or other applicable Taxing authority in
connection with the Assets or the operation of the Business, and no
extensions with respect to such Tax Returns have (or as of the Closing Date
will have) been requested or granted except as disclosed in Exhibit 3.11;
(b) Each Seller has (and as of the Closing Date will have) paid, or
adequately reserved against in the Financial Statements, all Taxes due, or
claimed by any Taxing authority to be due, from or with respect to it
relating to the Assets or the operation of the Business;
(c) There has been no issue raised or adjustment proposed (and none is
pending) by the IRS or any other Taxing authority in connection with any
Tax Returns relating to the Assets or the operation of the Business;
(d) Each Seller has (and as of the Closing Date will have) made all
deposits required with respect to Taxes relating to the Assets or the
operation of the Business except as disclosed in Exhibit 3.11;
(e) No waiver or extension of any statute of limitations as to any
federal, state, local, or foreign Tax matter relating to the Assets or the
operation of the Business has been given by or requested from any Seller;
and
(f) Sellers have not filed a consent under Section 341(f) of the Code.
3.12 Compliance With Laws . To the best of knowledge of Sellers, Sellers
have complied with all Applicable Laws relating to the ownership or operation of
the Assets or the operation of the Business (including without limitation
Applicable Laws relating to securities, properties, business products,
manufacturing processes, advertising and sales practices, employment practices,
terms and conditions of employment, wages and hours, safety, occupational
safety, health, environmental protection, product safety, and civil rights) and
Sellers have not received any written notice, which has not been dismissed or
otherwise disposed of, that Sellers have not so complied. Sellers are not
charged or, to the best knowledge of Sellers or Oxford, threatened with, or, to
the best knowledge of Sellers or Oxford are, under investigation with respect
to, any violation of any Applicable Law relating to any aspect of the ownership
or operation of the Assets or the operation of the Business. In addition, (i)
each of the Sellers' Client Services Agreements complies with all Applicable
Laws, (ii) neither Oxford, the Sellers nor, to the knowledge of Oxford or
Sellers, any current client of Sellers (while a client of Sellers), has ever
been the subject of any inspection or investigation relating to its compliance
with or alleging any violation of (A) the Immigration Reform and Control Act or
1986, or any related federal statute and the rules and regulations promulgated
thereunder (collectively, "Immigration Laws"), or (B) federal or state
occupational safety and accident laws ("OSHA Laws"), and (iii) Sellers have
never been fined or otherwise penalized by reason of any failure to comply with
Immigration Laws or OSHA Laws, nor is any such proceeding pending or threatened.
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3.13 Legal Proceedings . There are no Proceedings pending or, to the best
knowledge of Sellers or Oxford, threatened against or involving any Seller
relating to the Assets or the operation of the Business, except as disclosed on
Exhibit 3.13. Except as disclosed on Exhibit 3.13, any and all potential
liability of Sellers under such Proceedings is adequately covered (except for
standard deductible amounts) by the existing insurance maintained by Sellers.
Except as disclosed on Exhibit 3.13, no judgment, order, writ, injunction, or
decree of any Governmental Entity has been issued or entered against Sellers or
any of their affiliates which continues to be in effect with respect to or
affecting the Assets or the operation of the Business. Except as disclosed on
Exhibit 3.13, neither Sellers nor any of their affiliates are subject to any
judgment, order, writ, injunction, or decree of any Governmental Entity which
has had or is reasonably likely to have a material adverse effect or which is
reasonably likely to result in a material adverse change in the Assumed
Liabilities. There are no Proceedings pending or, to the best knowledge of
Sellers, threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the transactions contemplated
hereby.
3.14 Sufficiency and Condition of Assets . Except for assets leased to
Buyer, the Assets (i) constitute all the assets and properties used or held for
use in connection with the operation of the Business and (ii) constitute all the
assets and properties the use or benefit of which are reasonably necessary for
the operation of the Business as currently conducted and as presently proposed
to be conducted. All the Assets are (i) in the case of tangible assets and
properties, in good operating condition and repair and have been maintained in
accordance with standard industry practice, (ii) suitable for the purposes used,
and (iii) adequate and sufficient for the normal operation of the Business, as
presently conducted. Sellers own or have a valid leasehold interest in, or
otherwise have a valid right to use, all the Assets. The Assets and their uses
conform to all Applicable Laws, and Sellers have not received any notice to the
contrary. All tangible assets and properties included in the Assets are in
Sellers' possession or under their control.
3.15 [reserved] Leased Property .
3.16 Permits . Set forth on Exhibit 3.16 is a list of all Permits included
in the Assets. Such Permits, to the best knowledge of Sellers and Oxford,
constitute all the Permits necessary or required for the ownership and operation
of the Assets and the conduct of the Business. Each of such Permits is in full
force and effect, each Seller is in compliance with all its obligations with
respect thereto, and, to the best knowledge of Sellers, no event has occurred
which permits, or with or without the giving of notice or the passage of time or
both would permit, the revocation or termination of any thereof. No notice has
been issued by any Governmental Entity and no Proceeding is pending or, to the
best knowledge of Sellers, threatened with respect to any alleged failure by a
Seller to have any Permit the absence of which would have a material adverse
effect on the Business.
3.17 Agreements .
(a) All Client Service Agreements and all other agreements,
arrangements, and understandings of any nature (written or oral, formal or
informal) (collectively, for purposes of this Section, "agreements") to
which any Seller is a party or by which any Seller is otherwise bound,
regardless of amount or subject matter, that relate to the Assets or the
Business are listed on Exhibit 3.17.
(b) Sellers have delivered to Buyer accurate and complete copies of
the agreements listed on Exhibit 3.17. To the best knowledge of Sellers,
each of such agreements is a valid and binding agreement of Sellers and the
other party or parties thereto, enforceable against Sellers and such other
party or parties in accordance with its terms. Sellers are not in breach of
or in default under, nor has any event occurred which (with or without the
giving of notice or the passage of time or both) would constitute a default
by Sellers under, any of such agreements, and Sellers have not received any
notice from, or given any notice to, any other party indicating that a
Seller is in breach of or in default under any of such agreements. To the
best knowledge of Sellers, no other party to any of such agreements is in
breach of or in default under such agreements, nor has any assertion been
made by Sellers of any such breach or default. Each of such agreements is
freely and fully assignable to Buyer without penalty or other adverse
consequence.
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(c) Sellers have not received notice of any plan or intention of any
other party to any agreement to exercise any right of offset with respect
to, or any right to cancel or terminate, any agreement, and Sellers do not
know of any fact or circumstance that would justify the exercise by any
such other party of such a right other than the automatic termination of
such agreement in accordance with its terms. Sellers do not currently
contemplate, or have reason to believe any other person currently
contemplates, any amendment or change to any agreement, which amendment or
change could have a material adverse effect on the Business.
3.18 ERISA . During the past five years, neither Sellers nor any of their
affiliates have made or been required to make contributions to any
"multiemployer plan", as defined in Section 3(37) of ERISA. Sellers and all the
affiliates of Sellers have paid and discharged promptly when due all liabilities
and obligations arising under ERISA or the Code of a character which if unpaid
or unperformed might result in the imposition of a lien against any of the
Assets. For purposes of this Section only, an "affiliate" of any person means
any other person which, together with such person, would be treated as a single
employer under Section 414 of the Code.
3.19 Labor Relations .
(a) (i) There are no collective bargaining agreements or other labor
union contracts applicable to any employees of the Business to or by which
any Seller is a party or is bound, no such agreement or contract has been
requested by any employee or group of employees of the Business, and no
discussions have occurred with respect thereto by management of any Seller
with any such employees; (ii) no employees of the Business are represented
by any labor organization, collective bargaining representative, or group
of employees; (iii) no labor organization, collective bargaining
representative, or group of employees claims to represent a majority of the
employees of the Business; (iv) Sellers and Oxford are not aware of or
involved with any representational campaign or other organizing activities
by any union or other organization or group seeking to become the
collective bargaining representative of any of the employees of the
Business; (v) Sellers are not obligated to bargain collectively with
respect to wages, hours, and other terms and conditions of employment with
any recognized or certified labor organization, collective bargaining
representative, or group of employees representing employees of the
Business; and (vi) Sellers and Oxford are not aware of any strikes, work
stoppages, work slowdowns, or lockouts or any threats thereof by or with
respect to any employees of the Business, and there have been no labor
disputes, strikes, work stoppages, work slowdowns, lockouts, or similar
matters involving any such employees.
(b) To the best of their knowledge, Sellers are in compliance with all
Applicable Laws pertaining to employment and employment practices and
wages, hours, and other terms and conditions of employment in respect of
the employees of the Business and have no accrued liability for any arrears
of wages or any Taxes or penalties for failure to comply with any thereof.
Sellers are not, in respect of the Business or the employees thereof,
engaged in any unfair labor practices or unlawful employment practices.
There is no pending or, to the best knowledge of Sellers or Oxford,
threatened Proceeding against or involving any Seller by or before, and
Sellers are not subject to any judgment, order, writ, injunction, or decree
of or inquiry from, the National Labor Relations Board, the Equal
Employment Opportunity Commission, the Department of Labor, or any other
Governmental Entity in connection with any current, former, or prospective
employee of the Business.
(c) Sellers believe that relations with the employees of the Business
are satisfactory.
(d) No employment agreement between a Seller and any Worksite Employee
will survive the termination of the related Client Service Agreement.
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3.20 Employees . Set forth on Exhibit 3.20 is a list of the name, social
security number, and dates of employment by each Seller of each Internal
Employee, agent (other than Worksite Employees), independent contractor,
commissioned agent, and consultant of each Seller as of March 1, 1999, together
with the individual and total amounts of salary, bonuses, and other compensation
paid or payable by such Seller, together with accrued vacation and vacation pay,
sick leave or other permissible time off with pay that can be accrued, to each
such person for the current calendar year and the immediately preceding calendar
year.
The consummation of the transactions contemplated by this Agreement will
not result in the incurring of any severance pay obligations to any Internal
Employee or Worksite Employee. Sellers have no compensation, bonus or commission
obligations to any employee or independent contractor that will survive the
termination of the relationship with that party. Neither Sellers nor any
affiliate of Sellers has entered into any type of employment or consulting
agreement, written or oral, with any Internal Employee or Worksite Employee of a
Seller, nor has any Seller or any affiliate of Sellers engaged in discussions
with any such employee relating thereto.
3.21 Insider Interests . No shareholder, director, officer, or employee of
a Seller or any associate of any such shareholder, director, officer, or
employee is presently, directly or indirectly, a party to any transaction with a
Seller relating to the Assets or the Business, including, without limitation,
any agreement, arrangement, or understanding, written or oral, providing for the
employment of, furnishing of services by, rental of real or personal property
from, or otherwise requiring payments to any such shareholder, director,
officer, employee, or associate.
3.22 Powers of Attorney . Sellers and Oxford have not granted to any
person, and there is not currently existing, any power of attorney of any type
pertaining to the Assets or the Business.
3.23 Books and Records . All the books and records of Sellers relating to
the Assets or the Business, including all personnel files, employee data, and
other materials relating to employees of the Business, are complete and correct,
have been maintained in accordance with good business practice and all
Applicable Laws, and, in the case of the books of account, have been prepared
and maintained in accordance with generally accepted accounting principles
consistently applied. Such books and records accurately and fairly reflect, in
reasonable detail, all transactions, revenues, expenses, assets, and liabilities
of Sellers with respect to the Business. The personnel files for all Internal
Employees and Worksite Employees contain current documentation signed by each
such employee concerning tax withholding, citizenship status, health or other
benefit plan enrollment and payroll deductions.
3.24 Brokerage Fees . Neither Sellers, Oxford nor any of their affiliates
has retained any financial advisor, broker, agent, or finder or paid or agreed
to pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Sellers and Oxford shall
indemnify and hold harmless Buyer from and against any and all losses, claims,
damages, and liabilities (including legal and other expenses reasonably incurred
in connection with investigating or defending any claims or actions) with
respect to any finder's fee, brokerage commission, or similar payment in
connection with any transaction contemplated hereby asserted by any person on
the basis of any act or statement made or alleged to have been made by Sellers,
Oxford or any of their affiliates.
3.25 Disclosure . No representation or warranty made by Sellers and Oxford
in this Agreement, and no statement of Sellers and Oxford contained in any
document, certificate, or other writing furnished or to be furnished by Sellers
or Oxford pursuant hereto or in connection herewith, contains or will contain,
at the time of delivery, any untrue statement of a material fact or omits or
will omit, at the time of delivery, to state any material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they are made, not misleading. Sellers and Oxford know of no matter
which has not been disclosed to Buyer pursuant to this Agreement which has or
will have a material adverse effect on the Business.
3.26 Representations and Warranties on Closing Date . The representations
and warranties made in this Article III will be true and correct on and as of
the Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date, except that any such
representations and warranties which expressly relate only to an earlier date
shall be true and correct on the Closing Date as of such earlier date.
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3.27 Certain Financial Matters . Sellers and Oxford hereby represent and
warrant that they have no knowledge of any act, omission, event or occurrence as
of or prior to the date hereof that will, or may have reasonable likelihood to,
reduce or impair future revenues or administrative fees of the Sellers, or the
number or make-up of the Sellers' clients, Internal Employees or Worksite
Employees, or prices or margins for any of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND USP
Buyer and USP represent and warrant to Sellers and Oxford that:
4.1 Corporate Organization. Buyer is a limited partnership and USP is a
corporation duly formed or organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation or incorporation and have
all requisite partnership or corporate power and partnership or corporate
authority to own, lease, and operate their properties and to carry on their
business as now being conducted. No actions or proceedings to dissolve Buyer or
USP are pending.
4.2 Authority Relative to This Agreement. Buyer and USP have full
partnership or corporate power and partnership or corporate authority to
execute, deliver, and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance by Buyer and USP
of the Agreement, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary partnership or corporate
action of Buyer and USP. This Agreement has been duly executed and delivered by
Buyer and USP and constitutes, and each other agreement, instrument, or document
executed or to be executed by Buyer and USP in connection with the transactions
contemplated hereby has been, or when executed will be, duly executed and
delivered by Buyer and USP and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of Buyer and USP, enforceable
against Buyer and USP in accordance with their respective terms, except that
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
4.3 Noncontravention. The execution, delivery, and performance by Buyer and
USP of this Agreement and the consummation by it of the transactions
contemplated hereby do not and will not (i) conflict with or result in a
violation of any provision of the certificate or agreement of limited
partnership of USP or the charter or bylaws of Buyer, (ii) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or passage of time or both) to any right
of termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which Buyer or USP is a party or by which Buyer or USP or any of
its properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer or USP, or (iv) assuming compliance
with the matters referred to in Section 4.4, violate any Applicable Law binding
upon Buyer or USP, except, in the case of clauses (ii), (iii), and (iv) above,
for any such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, condition (financial or otherwise), or prospects of Buyer or USP and
its subsidiaries considered as a whole or on the ability of Buyer to consummate
the transactions contemplated hereby.
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4.4 Governmental Approvals. No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Buyer or USP in connection with the
execution, delivery, or performance by Buyer and USP of this Agreement or the
consummation by it of the transactions contemplated hereby, other than (i) as
set forth on Exhibit 4.4; (ii) filings with Governmental Entities to occur in
the ordinary course following the consummation of the transactions contemplated
hereby; and (iii) such consents, approvals, orders, or authorizations which, if
not obtained, and such declarations, filings, or registrations which, if not
made, would not, individually or in the aggregate, have a material adverse
effect on the business, assets, results of operations, condition (financial or
otherwise), or prospects of Buyer or USP and its subsidiaries considered as a
whole or on the ability of Buyer or USP to consummate the transactions
contemplated hereby.
4.5 Financing. Buyer and USP have, and at the Closing will have, such funds
as are necessary for the consummation by it of the transactions contemplated
hereby.
4.6 Legal Proceedings. There are no Proceedings pending or, to the best
knowledge of Buyer, threatened seeking to restrain, prohibit, or obtain damages
or other relief in connection with this Agreement or the transactions
contemplated hereby.
4.7 Brokerage Fees. Neither Buyer nor USP nor any of their affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or any transaction contemplated hereby. Buyer and USP shall indemnify and hold
harmless Sellers and Oxford from and against any and all losses, claims,
damages, and liabilities (including legal and other expenses reasonably incurred
in connection with investigating or defending any claims or actions) with
respect to any finder's fee, brokerage commission, or similar payment in
connection with any transaction contemplated hereby asserted by any person on
the basis of any act or statement made or alleged to have been made by Buyer or
USP or any of its affiliates.
4.8 Disclosure. No representation or warranty made by Buyer or USP in this
Agreement, and no statement of Buyer or USP contained in any document,
certificate, or other writing furnished or to be furnished by Buyer or USP
pursuant hereto or in connection herewith, contains or will contain, at the time
of delivery, any untrue statement of a material fact or omits, or will omit, at
the time of delivery, to state any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
are made, not misleading.
4.9 Representations and Warranties on Closing Date. The representations and
warranties made in this Article IV will be true and correct in all material
respects on and as of the Closing Date with the same force and effects as if
such representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties with expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Conduct and Preservation of Business . Except as expressly provided in
this Agreement, during the period from the date hereof to the Closing, Sellers
and Oxford (i) shall conduct the Business only in the ordinary course consistent
with past practice and in compliance with all Applicable Laws; (ii) shall use
their reasonable best efforts to preserve, maintain, and protect the Assets; and
(iii) shall use their best efforts to preserve intact the business organization
of the Business, to keep available the services of the employees of the
Business, and to maintain existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers, and others having business
relationships with the Business. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Closing, Sellers and Oxford shall not, without the prior written consent
of Buyer:
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(a) transfer or sell its equity interests in a Seller or make any
change in the ongoing operations of the Assets or the Business;
(b) mortgage or pledge any of the Assets or create or suffer to exist
any Encumbrance thereupon;
(c) (i) enter into, adopt, or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase, pension, retirement, deferred compensation, employment,
severance, or other employee benefit agreement, trust, plan, fund, or other
arrangement for the benefit or welfare of any employee of the Business;
(ii) increase in any manner the compensation or fringe benefits of any
employee of the Business; or (iii) pay to any employee of the Business any
benefit not required by any employee benefit agreement, trust, plan, fund,
or other arrangement as in effect on the date hereof;
(d) sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets;
(e) pay, discharge, or satisfy any claims, liabilities, or obligations
relating to the Business (whether accrued, absolute, contingent,
unliquidated, or otherwise, and whether asserted or unasserted), other than
the payment, discharge, or satisfaction in the ordinary course of the
Business consistent with past practice, or in accordance with their terms,
of liabilities reflected or reserved against in the Financial Statements;
(f) enter into any lease, contract, agreement, commitment,
arrangement, or transaction relating to the Business;
(g) amend, modify, or change any existing lease, contract, or
agreement relating to the Business;
(h) waive, release, grant, or transfer any rights of value relating to
the Business;
(i) delay payment of any account payable or other liability of Sellers
relating to the Business beyond its due date or the date when such
liability would have been paid in the ordinary course of the Business
consistent with past practice;
(j) permit any current insurance or reinsurance policies to be
cancelled or terminated or any of the coverages thereunder to lapse if such
policy covers Assets or insures risks, contingencies, or liabilities of the
Business;
(k) change any of the accounting principles or practices used by it
relating to the Business;
(l) take any action which would or might make any of the
representations or warranties of Sellers or Oxford contained in this
Agreement untrue or inaccurate as of any time from the date of this
Agreement to the Closing or would or might result in any of the conditions
set forth in this Agreement not being satisfied; or
(m) authorize or propose, or agree in writing or otherwise to take,
any of the actions described in this Section.
5.2 Access to Information; Confidentiality.
(a) Between the date of the Letter of Intent (as herein defined) and the
Closing, Sellers and Oxford (i) shall give Buyer and its authorized
representatives reasonable access to all employees, all plants, offices,
warehouses, and other facilities, and all books and records, including work
papers and other materials prepared by Sellers' and Oxford's independent public
accountants, of Sellers and Oxford, (ii) shall permit Buyer and its authorized
representatives to make such inspections as they may reasonably require, and
(iii) shall cause Sellers' and Oxford's officers to furnish Buyer and its
authorized representatives with such financial and operating data and other
information with respect to Sellers and Oxford as Buyer may form time to time
reasonably request; provided, however, that no investigation pursuant to this
Section shall affect any representation or warranty of Sellers or Oxford
contained in this Agreement or in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith; and provided further that
Sellers and Oxford shall have the right to have a representative present at all
times. Buyer shall hold in confidence all such information on the terms and
subject to the conditions contained in the letter of intent dated February 5,
1999 (the "Letter of Intent"), from Buyer to Crest and Oxford.
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(b) Sellers acknowledge and agree that irreparable damage would occur in
the event any confidential information regarding the business, assets, results
of operation, or financial condition of Sellers were disclosed to or utilized on
behalf of any person which is in competition with any line or lines of business
of the Sellers. Accordingly, Sellers and Oxford covenant and agree that they
will not, directly or indirectly, without the prior written consent of Buyer
disclose any of such confidential information to any person; provided, however,
that confidential information shall not be deemed to include information which
(i) was or becomes generally available to the public other than as a result of
disclosure by Sellers or Oxford or its affiliates. Notwithstanding the foregoing
provisions of this paragraph, Sellers and affiliates may disclose any
confidential information to the extent that, in the opinion of counsel for
Sellers such person is legally compelled to do so, provided that, prior to
making such disclosure, such person advises and consults with Buyer regarding
such disclosure and provided further that such person discloses only that
portion of such confidential information as is legally required.
(c) Until Closing, the provisions of the Letter of Intent relating to the
solicitation of others or expressions of interest in the Business shall be
continued so long as the parties agree to an extension of the Closing Date first
mentioned above.
5.3 Third Party Consents. Sellers and Oxford shall use their reasonable
best efforts to obtain all consents, approvals, orders, authorizations, and
waivers of, and to effect all declarations, filings, and registrations with, all
third parties (including Governmental Entities) that are necessary, required, or
deemed by Buyer to be desirable to enable the Sellers to transfer the Assets to
Buyer as contemplated by this Agreement and to otherwise consummate the
transactions contemplated hereby. All costs and expenses of obtaining or
effecting any and all of the consents, approvals, orders, authorizations,
waivers, declarations, filings, and registrations referred to in this Section
shall be borne by the Sellers and Oxford.
5.4 Reasonable Best Efforts. Each party hereto agrees that it will not
voluntarily undertake any course of action inconsistent with the provisions or
intent of the Agreement and will use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
reasonably necessary, proper, or advisable under Applicable Laws to consummate
the transactions contemplated by this Agreement, including, without limitation,
(i) cooperation in determining whether any consents, approvals, orders,
authorizations, waivers, declarations, filings, or registrations of or with any
Governmental Entity or third party are required in connection with the
consummation of the transactions contemplated hereby; (ii) reasonable best
efforts to obtain any such consents, approvals, orders, authorizations, and
waivers and to effect any such declarations, filings, and registrations; (iii)
reasonable best efforts to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (iv) reasonable best efforts
to defend, and cooperation in defending, all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby; and (v) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby. Sellers and Oxford shall
cooperate with and assist Buyer and its authorized representatives in order to
provide an efficient and orderly transfer of the control and management of the
Business and Assets of the Sellers to Buyer and to avoid any undue interruption
in the activities and operations of such Business following the Closing.
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5.5 Noncompetition.
(a) Sellers and Oxford agree that, for a period of three (3) years from and
after the Closing Date, neither Sellers, Oxford nor any of their affiliates
will, directly or indirectly, engage or participate in, or own any interest in
(other than an interest of less than 10%), provide any financing for, perform
any service for, or act in any other capacity for any business or organization
which engages or participates, directly or indirectly, in the Business in the
Greater Dallas-Ft. Worth, Texas or Albuquerque and Santa Fe, New Mexico or Los
Angeles (including El Dorado), California Metropolitan Areas or solicit any
clients of the Business.
(b) Sellers and Oxford regard the restrictions contained in this Section as
reasonable and as designed to provide Buyer with limited, legitimate, and
reasonable protection against subsequent diminution of the value of the Business
of the Sellers attributable to any actions of Sellers, Oxford or its affiliates
contrary to such restrictions. Sellers and Oxford acknowledges that irreparable
damage would occur in the event any of the provisions of this Section were
breached and accordingly agrees that Buyer shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section, and shall be
entitled to enforce specifically the provisions of this Section, in any court of
the United States or any state thereof having jurisdiction, in addition to any
other remedy to which Buyer may be entitled under this Agreement or at law or in
equity. It is the intent and understanding of the parties hereto that if, in any
action before any Governmental Entity legally empowered to enforce the
provisions of this Section, any term, restriction, covenant, or promise in this
Section is found to be unreasonable and for that reason unenforceable, then such
term, restriction, covenant, or promise shall be deemed modified to the extent
necessary to make it enforceable by such Governmental Entity.
(c) The covenants of Sellers and Oxford contained in this Section may be
assigned by Buyer to any person to whom the business and assets of the Buyer are
transferred, it being the intention of the parties hereto that such covenants
shall inure to the benefit of any successor to the business and assets of Buyer,
with the same force and effect as if such covenants had been made directly to
such successor or successors.
(d) Sellers, Oxford and Buyer agree that of the aggregate consideration to
be paid to or on behalf of Sellers for the Assets, the sum of $25,000 shall be
allocated to the covenants contained in this Section.
5.6 No Solicitation of Employees. Sellers and Oxford agree that, for a
period of three (3) years from and after the Closing Date, neither Sellers,
Oxford nor any of their affiliates will, directly or indirectly, employ, or
arrange or assist in the employment (as an employee, consultant, independent
contractor or otherwise) of, any employee of Buyer (regardless of whether such
person is an Internal Employee or a Worksite Employee of Buyer on the Closing
Date), or otherwise solicit, induce or attempt to persuade any such employee to
leave Buyer's employment; provided, however, that Sellers may seek to hire any
person who is neither an employee of Buyer or its affiliates (and who was a
former employee of Sellers) and was not during the ninety (90) day period prior
to hire an employee of Buyer or its affiliates provided that (a) Sellers seek
Buyer's approval for such hiring (which approval will not be unreasonably
withheld), and (b) none of Sellers or its affiliates has violated the provisions
of this Section prior to seeking Buyer's approval.
5.7 Public Announcements. Buyer, on the one hand, and Sellers and Oxford,
on the other, shall consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement prior to such consultation (but no approval
thereof shall be required), except as required by Securities and Exchange
Commission regulations.
5.8 Fees and Expenses; Use of Proceeds. Except as otherwise expressly
provided in this Agreement, all fees and expenses, including fees and expenses
of counsel, financial advisors, and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fee or expense, whether or not the Closing shall have
occurred. Sellers shall use the payments to be received under Section 1.2A and
1.2B for the full and complete discharge of the obligations of Sellers and their
affiliates under the Oxford-sponsored benefit plans.
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5.9 Survival of Covenants. Except for any covenant or agreement which by
its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation.
5.10 Audits. Following the Closing, each of Sellers and Oxford shall
cooperate with Buyer and its representatives to facilitate the preparation by
Buyer at Buyer's expense of audited financial statements for the Business for
the three years ended December 31, 1998 (or for such other similar periods or
other similar financial statements as Buyer shall reasonably request).
5.11 Taxes; Other Charges . All sales and use Taxes resulting from the
consummation of the transactions contemplated hereby shall be borne by Sellers
and Oxford, and the parties shall cooperate in obtaining all exemptions from
such Taxes. All other registration, transfer, recording, and deed and stamp
Taxes and fees incurred in connection with the consummation of the transactions
contemplated hereby shall be borne by Sellers and Oxford. Sellers and Oxford
shall file all necessary documentation with respect to, and make all payments
of, such Taxes and fees on a timely basis.
5.12 Access to Records After Closing. Sellers and Oxford agree to keep
accurate and complete copies of all books, files, documents, papers, books of
account and other records of Sellers relating to the Business or the Assets. For
a period of five years from and after the Closing Date, Buyer and its
representatives shall have reasonable access to inspect and copy all such books
and records which Sellers or Oxford or any of their affiliates may retain after
the Closing Date. Such access shall be afforded upon receipt of reasonable
advance notice and during normal business hours.
5.13 Employee and Employee Benefit Plan Matters .
(a) Sellers, at Sellers' discretion, may terminate the employment of all
employees of the Business effective as of the Closing Date (unless earlier
terminated). Buyer may, but is not in any way obligated to, offer employment to
some or all of the terminated employees upon such terms and conditions as Buyer
shall in its sole discretion determine.
(b) Buyer is not hereby, and at no time hereafter will be, adopting,
accepting, or assuming any employee benefit plan or collective bargaining
agreement of Sellers or Oxford relating to any of their employees or any other
agreement, trust, plan, fund, or other arrangement of Sellers or Oxford that
provides for employee benefits or perquisites (collectively, "Employment
Arrangements"), and Buyer shall have no liability or obligation whatsoever under
any Employment Arrangement to Sellers or Oxford or to any employees of Sellers
or Oxford, whether or not any of such employees are offered employment by or
become employees of Buyer. Buyer is not obligated to replace any of the
Employment Arrangements for any employees of Sellers who become employees of
Buyer, nor is Buyer obligated to provide such persons with any similar
agreements, plans, or arrangements.
(c) Sellers and Oxford will comply after the Closing Date with the
requirements of Sections 601 through 608 of ERISA and Section 4980B of the Code
with respect to any employee or former employee of Sellers or Oxford (and any
dependent or former dependent thereof) whose employment with Sellers terminates
in connection with Buyer's purchase of the Assets.
5.14 Subservicer Agreement . At (and subject to the occurrence of) the
Closing, the Subservicer Agreement dated March 1, 1999 between Sellers and Buyer
(the "Subservicer Agreement")shall terminate, automatically, in all respects,
and no additional sums shall be due thereunder by Buyer (other than any
contractual weekly payment obligations which are then due and unpaid).
5.15 Sublease . At (and subject to the occurrence of) the Closing, Sellers
and Buyer shall enter into the Sublease attached hereto as Exhibit E which
sublease shall be approved by Landlord if required or such other agreement as
the parties may mutually agree.
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLERS AND OXFORD
The obligations of Sellers and Oxford to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
6.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct on and as of the Closing
Date as if made on and as of such date, except as affected by transactions
contemplated or permitted by this Agreement and except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct as of such
specified date.
6.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
the Agreement to be performed or complied with by it on or prior to the Closing
Date.
6.3 Certificate. Sellers shall have received a certificate executed on
behalf of Buyer by the president and the controller of Buyer, dated the Closing
Date, representing and certifying, in such detail as Sellers may reasonably
request, that the conditions set forth in Sections 6.1 and 6.2 have been
fulfilled and that Buyer to the best of its knowledge is not in breach of any
provision of this Agreement.
6.4 Legal Proceeding. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
6.5 Other Documents. Sellers and Oxford shall have received (unless waived)
the certificates, instruments, documents and payments listed below:
(a) A copy of the resolutions of the Board of Directors or similar
governing body of Buyer authorizing the execution, delivery, and
performance by Buyer of this Agreement, certified by the secretary or an
assistant secretary of Buyer.
(b) Certificates from the Secretary of State of Delaware and the
Comptroller of Public Accounts of the State of Texas, each dated not more
that ten days prior to the Closing Date, as to the legal existence and good
standing, respectively, of Buyer under the laws of such states.
(c) Such other certificates, instruments, and documents as may be
reasonably requested by Sellers or Oxford prior to the Closing Date to
carry out the intent and purposes of this agreement.
6.6 Approval of Counsel to Oxford and Sellers. All legal matters in
connection with the consummation of the transactions contemplated hereby and all
agreements, instruments, and documents delivered in connection therewith shall
be reasonably satisfactory in form and substance to Vanderkam and Sanders,
Counsel to Sellers and Oxford.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Sellers and Oxford contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such specified date.
7.2 Covenants and Agreements Performed. Except as otherwise disclosed
herein, Sellers and Oxford shall have performed and complied with in all
material respects all covenants and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date. Buyer,
Oxford and the other parties shall have executed and delivered asset purchase
agreements and other definitive documentation relative to the sale to Buyer of
substantially all the assets of Webster Leasing, Inc. Buyer and Robert Cheney
shall have executed and delivered a mutually agreeable Consulting and
Nonsolicitation Agreement.
7.3 Certificate. Buyer shall have received a certificate executed on behalf
of Sellers and Oxford by the chairman or president and the vice
president-finance of each of Sellers and Oxford, representing and certifying, in
such detail as Buyer may reasonably request, that the conditions set forth in
Sections 7.1 and 7.2 have been fulfilled and that Sellers and Oxford are not in
breach of any provision of this Agreement.
7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.5 Consents. All consents and approvals of third parties (including
Governmental Entities) required to be obtained by or on the part of the parties
hereto or otherwise reasonably necessary for the consummation of the
transactions contemplated hereby shall have been obtained, and all thereof shall
be in full force and effect at the time of Closing.
7.6 No Material Adverse Change . Since December 31, 1998, except as
contemplated by the Subservicer Agreement referred to herein, there shall not
have been any material adverse change in the business, assets, results of
operations, condition (financial or otherwise), or prospects of Sellers, the
Assets or the Business.
7.7 [reserved] Due Diligence .
7.8 Other Documents. Buyer shall have received the certificates,
instruments, and documents listed below:
(a) The written opinion of Vanderkam and Sanders, and Kroney,
Silverman and Mincey, counsel to Oxford and Sellers, respectively, in the
form of Exhibits 7.8(a)(1)-(2) hereto.
(b) A copy of the resolutions of the Board of Directors and
shareholders of Oxford authorizing the execution, delivery, and performance
by Oxford of this Agreement, certified by the Secretary or an assistant
secretary of Oxford.
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(c) A copy of the resolutions of the Board of Directors and
shareholder of each Seller authorizing the execution, delivery, and
performance by each Seller of this Agreement, certified by the secretary or
an assistant secretary of such Seller.
(d) A certificate from the appropriate governmental authorities of the
States of Texas and of Nevada, each dated not more than five days prior to
the Closing Date, as to the legal existence and good standing,
respectively, of the Sellers under the laws of such states.
(e) Certificates from the Secretaries of State of the states listed on
Exhibit 3.2 in which the Sellers are qualified or licensed to do business,
as to the due qualification or licensing of Sellers to do business in such
states, dated not more than ten days prior to the Closing Date.
(f) Certificates from the Secretary of State of Texas and Nevada and
the Comptroller of Public Accounts of the State of Texas, each dated not
more than five days prior to the Closing Date, as to the legal existence
and good standing, respectively, of Oxford under the laws of such states.
(g) Lien search reports, each dated not more than two days prior to
the Closing Date, showing that no financing statements or other liens (or
notices with respect to liens) naming Oxford or Sellers as debtor are on
file in the Uniform Commercial Code or other relevant records of the office
of the Secretary of State of Nevada and Texas or the county clerk's office
of Harris, Dallas, or Travis Counties, except to the extent previously
reviewed and approved by Buyer. Sellers and Oxford shall also evidence to
Buyer that the Assets are not subject to any accrued, potential or
threatened Encumbrances, including the IRS, Liberty Mutual Insurance, CNA,
health plan providers or others.
(h) A certificate or receipt from the Comptroller of Public Accounts
of the States of Nevada, New Mexico and California, dated not more than
five (5) days prior to the Closing Date, stating that no amount is due by
the Sellers under Title 2 of the Texas Tax Code or showing that all such
amounts have been paid.
(i) The Sublease and documentation, in form for filing with the
appropriate state authorities, to change the corporate names of each Seller
to a dissimilar name.
(j) Such other certificates, instruments, and documents as may be
reasonably requested by Buyer to carry out the intent and purposes of this
Agreement.
7.9 Approval of Counsel to Buyer. All legal matters in connection with the
consummation of the transactions contemplated hereby and all agreements,
instruments, and documents delivered in connection therewith shall be reasonably
satisfactory in form and substance to Thompson & Knight, P.C., legal counsel to
Buyer.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Sellers, Oxford and Buyer; or
(b) by Oxford, if, on the Closing Date, any of the conditions set
forth in Article VI shall not have been satisfied and shall not have been
waived by Oxford; or
(c) by Buyer, if, on the Closing Date, any of the conditions set forth
in Article VII shall not have been satisfied and shall not have been waived
by Buyer.
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 by Sellers and Oxford, on the one hand, or
Buyer, on the other, written notice thereof shall forthwith be given to the
other party specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, except that
the agreements contained in this Section and in Section 5.2., 5.8 and 5.9 and
Article IX shall survive the termination hereof. Nothing contained in this
Section shall relieve any party from liability for damages actually incurred as
a result of any breach of this Agreement.
8.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of all the parties hereto.
8.4 Waiver. Each of Sellers and Oxford, on the one hand, and Buyer, on the
other, may (i) waive any inaccuracies in the representations and warranties of
the other contained herein or in any document, certificate, or writing delivered
pursuant hereto or (ii) waive compliance by the other with any of the other's
agreements or fulfillment of any conditions to its own obligations contained
herein. Any agreement on the part of a party hereto to any such waiver shall be
valid only if set forth in an instrument in writing signed by or on behalf of
such party. No failure or delay by a party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party.
9.2 Indemnification by Sellers et al.
(a) Sellers and Oxford jointly and severally shall indemnify, defend,
and hold harmless Buyer and USP, the subsidiaries of Buyer, each director
and officer of Buyer or any of its subsidiaries, partners or parent
corporations, and each affiliate thereof, and their respective heirs, legal
representatives, successors, and assigns (collectively, the "Buyer Group"),
from and against any and all claims, actions, causes of action, demands,
assessments, losses, damages, liabilities, judgments, settlements,
penalties, costs, and expenses (including costs of investigation and
reasonable attorneys' fees and expenses), of any nature whatsoever, whether
actual or consequential (collectively, "Damages"), asserted against,
resulting to, imposed upon, or incurred by any member of the Buyer Group,
directly or indirectly, by reason of or resulting from (i) ny breach by
Sellers or Oxford of any of their representations, warranties, covenants,
or agreements contained in this Agreement or in any certificate,
instrument, or document delivered pursuant hereto; (ii) any liability or
obligation of Sellers, Oxford or their affiliates (whether accrued,
absolute, contingent, unliquidated, or otherwise, whether or not known to
Sellers or Oxford, and whether due or to become due), other than the
Assumed Liabilities; (iii) the noncompliance by Sellers or Buyer with any
bulk sales or bulk transfer laws of any jurisdiction in connection with the
sale of the Assets to Buyer; (iv) the ownership, management, or use of the
Assets prior to the close of business on the Closing Date; (v) the
operation of the Business prior to the close of business on the Closing
Date; or (vi) any acts or omissions of Sellers or Oxford prior to the close
of business on the Closing Date or any events or occurrences involving the
Assets, the operation of the Business, or the employees or former employees
of Sellers or their affiliates taking place prior to the close of business
on the Closing Date.
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9.3 Indemnification by Buyer. Buyer and USP jointly and severally shall
indemnify, defend, and hold harmless Sellers and Oxford, subsidiaries of Sellers
or Oxford, each director and officer of each Seller or Oxford or any of its
subsidiaries or parent corporations and each affiliate thereof, and their
respective heirs, legal representatives, successors, and assigns (collectively,
the "Seller Group", from and against any and all Damages asserted against,
resulting to, imposed upon, or incurred by the Seller Group, directly or
indirectly, by reason of or resulting from (i) any breach by Buyer or USP of any
of their representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto; (ii) any liability or obligation of Buyer, USP or their affiliates
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether or
not known to Buyer and USP, and whether due or to become due), other than the
Assumed Liabilities or other liabilities asserted against Buyer or USP, if any,
as a result of this transaction; (iii) the ownership, management, or use of the
Assets after the Closing Date; (iv) the operation of the Business after the
Closing Date; or (v) any acts or omissions of Buyer and USP or their affiliates
taking place prior to the close of business on the Closing Date.
9.4 Procedure for Indemnification. Promptly after receipt by an indemnified
party under Section 9.2 or 9.3 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure so to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party. In case any such action shall be brought against an indemnified party and
it shall give written notice to the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may wish, to assume the defense thereof, subject to the
provisions of this Section, with counsel reasonably satisfactory to such
indemnified party, and after written notice from the indemnifying party to such
indemnified party of the indemnifying party's election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such Section 9.2 or 9.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of such action with counsel reasonably satisfactory to the indemnified
party; provided, however, that the fees and expenses of the indemnified party's
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party or (ii) the named parties to such action (including any impleaded parties)
include both the indemnified party and the indemnifying party and such
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to such indemnified party which are not available
to the indemnifying party (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for the indemnified party, which firm
shall be designated in writing by the indemnified party). If the indemnifying
party elects to assume the defense of such action, (a) no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party's written consent (which shall not be unreasonably withheld)
unless (i) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claims that may
be made against the indemnified party and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (b) the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its written consent (which shall not be
unreasonably withheld). If notice is given to an indemnifying party of the
commencement of any action and it does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of the
indemnifying party's election to assume the defense thereof, the indemnifying
party shall be bound by any determination made in such action or any compromise
or settlement thereof effected by the indemnified party. Notwithstanding the
foregoing provisions of this Section, if an indemnified party determines in good
faith that there is a reasonable probability that an action may adversely affect
it or its affiliates other than as a result of monetary damages, such
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such action, but the indemnifying party
shall not be bound by any determination of an action so defended or any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld). It is further agreed that (i) any amounts
to which an indemnified party is entitled under this Article IX shall be paid by
the indemnifying party upon request and (ii) upon its receipt of any amount paid
by an indemnifying party pursuant to this Article IX the indemnified party shall
deliver to the indemnifying party such documents as it may reasonably request
assigning to the indemnifying party any and all rights the indemnified party may
have against third parties with respect to the claim for which indemnification
is being received.
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9.5 Exclusivity. The parties hereto agree that, in relation to any breach,
default, or nonperformance of any representation, warranty, covenant, or
agreement made or entered into by a party hereto pursuant to this Agreement or
any certificate, instrument, or document delivered pursuant hereto, the only
relief and remedy available to the other party hereto in respect of said breach,
default, or nonperformance shall be:
(a) termination, but only if said termination is expressly permitted under
the provisions of Article VIII; or
(b) damages, but only to the extent properly claimable hereunder pursuant
to this Article IX or otherwise hereunder; or
(c) specific performance if a court of competent jurisdiction in its
discretion grants the same; or
(d) injunctive or declaratory relief if a court of competent jurisdiction
in its discretion grants the same.
ARTICLE X
10.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, telefax, or telex, to the parties at the
following addresses ( or at such other addresses as shall be specified by the
parties by like notice):
If to Buyer:
U.S. Personnel V L.P.
U.S. Personnel, Inc.
1600 Airport Freeway, Suite 208
Bedford, Texas 76022
Attention: President
Phone: (817)354-7785
Telefax: (817)354-3186
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with a copy to:
Thompson & Knight, P.C.
1700 Pacific Ave., Suite 3300
Dallas, Texas 75214
Attention: James R. Peacock III
Phone: (214)969-1700
Telefax: (214)969-1751
If to Sellers:
Crest Outsourcing, Inc.
El Dorado Staff Leasing, Inc.
4245 N. Central Expressway, Suite 300
Dallas, TX 75205
Attention: Chairman
Phone: (214)520-0100
Telefax: (214)520-1881
with a copy to:
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, TX 77002
Attention: Hank Vanderkam
Phone: (713)547-8900
Telefax: (713)547-8910
If to Oxford:
4245 N. Central Expressway, Suite 300
Dallas, TX 75205
Attention: Chairman
Phone: (214)520-0100
Telefax: (214)520-1881
with a copy to:
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, TX 77002
Attention: Hank Vanderkam
Phone: (713)547-8900
Telefax: (713)547-8910
10.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits, Annexes, and other writings referred to herein or delivered pursuant
hereto, constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Except as otherwise expressly provided in this Agreement, neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, except that Buyer may assign to any wholly-owned subsidiary of Buyer
any of Buyer's rights, interests, or obligations hereunder. Except as provided
in Article IX, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties hereto, and their respective
heirs, legal representatives, successors and permitted assigns, any rights,
benefits, or remedies of any nature whatsoever under or by reason of this
Agreement.
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10.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10.6 Further Assurances. From time to time following the Closing, at the
request of any party hereto and without further consideration, the other party
or parties hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
10.7 Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only, do not constitute part of this Agreement, and
shall not affect in any manner the meaning or interpretation of this Agreement.
10.8 Gender. Pronouns in masculine, feminine, and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
10.9 References. All references in this Agreement to Articles, Sections,
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement unless expressly provided otherwise. The words "this
Agreement", "herein", "hereof", "hereby", "hereunder", and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Whenever the words "include", "includes", and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation". All Schedules, Exhibits, and Annexes
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein.
10.10 Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
10.11 Right of Setoff. Buyer is hereby authorized at any time and from time
to time following the Closing to set off and apply any and all indebtedness or
other amounts at any time owing by Buyer under Section 1.2 of this Agreement or
the Promissory Note against (a) any of and all the indemnification obligations
of Sellers and Oxford hereunder which are actually paid by Buyer and (b) any of
and all the indemnification obligations of Oxford owed to Buyer otherwise than
under this Agreement which are actually paid by Buyer. The rights of Buyer under
this Section are in addition to any other rights and remedies which Buyer may
have, whether under this Agreement or otherwise.
10.12 Jurisdiction and Venue. In respect of any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, each of the parties hereto consents to the jurisdiction and venue of any
federal of state court located within Dallas or Tarrant County, Texas, waives
personal service of any and all process upon it, consents that all such service
of process may be made by first class registered or certified mail , postage
prepaid, return receipt requested, directed to it at the address specified in
Section 10.1 agrees that service so made shall be deemed to be completed upon
actual receipt thereof, and waives any objection to jurisdiction or venue of,
and waives any motion to transfer venue from, any of the aforesaid courts.
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ARTICLE XI
11.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the certain meaning given it below:
"affiliate" means, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
"Business" means the staff leasing business conducted by Crest and
El Dorado.
"Client Service Agreement" means a written or oral agreement for the
provision of professional employment services by a Seller.
"employee" means, unless the context otherwise requires, a person who
is either an Internal Employee or a Worksite Employee.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition, or otherwise), easements, and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign).
"Intellectual Property" means patents, trademarks, service marks,
trade names, copyrights, trade secrets, know-how, inventions, and similar
rights, and all registrations, applications, licenses, and rights with
respect to any of the foregoing.
"Internal Employee" means an employee (including any person acting as
an independent contractor on behalf of a Seller) of a Seller who is not a
Worksite Employee.
"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents, approvals,
and other amortizations of or from Governmental Entities.
"person" means any individual, corporation, partnership, joint
venture, association, join-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or Governmental
Entity.
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"reasonable best efforts" means a party's reasonable best efforts in
accordance with reasonable commercial practice and without incurring
unreasonable expense.
"Taxes" means any income Taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise, or other Tax imposed by any
United States federal, state, or local (or any foreign or provincial)
Taxing authority, including any interest, penalties, or additions
attributable thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"to the best knowledge of Sellers and Oxford" (or similar references
to Sellers' and Oxford knowledge) means the knowledge of or receipt of
notice (oral or written) by any of Sellers' or Oxford's executive officers,
as such knowledge has been obtained in the normal conduct of the business
of Sellers or Oxford in connection with the preparation of the Schedules to
this Agreement and the furnishing of information to Buyer as contemplated
by this Agreement, after having made a reasonable investigation of the
accuracy of the representations and warranties made by Sellers and Oxford
in this Agreement or in any document, certificate, or other writing
furnished by Sellers or Oxford to Buyer pursuant hereto or in connection
herewith.
"Worksite Employee" means an active employee of a Seller who is under
an explicit co-employment agreement with a client of a Seller relating to a
Client Service Agreement that is in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
CREST OUTSOURCING, INC.
By:
-------------------------------
Name: Robert E. Cheney
Title:President
EL DORADO STAFF LEASING, INC.
By:
-------------------------------
Name: Robert E. Cheney
Title:President
OXFORD CAPITAL CORP.
By:
--------------------------------
Name: Robert E. Cheney
Title:Chairman/CEO
U.S. PERSONNEL V L.P.
By: USP Holding, Inc., its General Partner
By:
---------------------------
Name: Dennis L. Baker
Title: President
U.S. PERSONNEL, INC.
By:
--------------------------------
Name: Dennis L. Baker
Title: President/Chief Executive Officer
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EXHIBIT A
Purchased Assets
All Client Service Agreements ("CSA") owned by a Seller at the Closing Date
that are acceptable to Buyer and with respect to which the clients
thereunder sign new CSA's with Buyer no later than the six-month
anniversary of the Closing Date, and all related rights to hire all
Worksite Employees under such new CSA's. Buyer will use its best efforts,
in coordination and cooperation with Sellers and Oxford, to sign all
replacement CSA's by the six-month anniversary date.
All goodwill, trade names, client lists and work-site employee
relationships.
All Sellers' rights under all non-competition agreements, including those
acquired by Oxford in connection with the acquisition of Sellers from prior
owners.
All books, files, documents, papers, customer lists, lists of prospects,
mailing lists, operating systems and procedures, books of account and other
records of Sellers relating to or used in the Business for all periods
ending on or before the Closing Date, other than the originals of Sellers'
(A) corporate minute books, (B) tax returns, (C) files not related to the
operation of the Business and (D) files relating to Sellers' accounts
receivable, copies of which originals shall be included as Assets.
The following revenue producing relationships directly related to Sellers,
at the option of Buyer: EEAP, Inc.
All Permits issued by any Governmental Entity relating to the Business.
All telephone numbers, telephone directory listings, classified and "yellow
pages" advertisements and listings used by or in the Business.
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (this "Agreement"), dated as of March 31, 1999 by
Webster Leasing, Inc., dba Staffing Systems, Inc., a Texas corporation
("Seller"), and Brae Leasing, LLC, dba Benemax Employee Leasing, a Delaware
limited liability company ("Buyer"), and joined in by U.S. Personnel, Inc., a
Delaware corporation and the sole member of Buyer ("USP"), and joined in by
Oxford Capital Corp., a Nevada corporation and the parent corporation of Seller
("Oxford").
WHEREAS, Oxford owns all the outstanding shares of Seller; and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, the assets of Seller herein further described on Exhibit A; and
WHEREAS Oxford desires to join in the execution of this agreement for the
purpose of its consent to the consummation of the contemplated transaction and
for the purpose of making certain representations and warranties to and
covenants and agreements with Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Seller, Oxford, USP and Buyer hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Agreement to Sell and to Purchase Assets. At the Closing, and on the
terms and subject to the conditions set forth in this Agreement, Seller shall
sell and deliver to Buyer, and Buyer shall purchase and accept from Seller, the
Assets described on Exhibit A (the "Assets"). In order to effectuate the
transfer of the Assets at the Closing, Seller shall execute and deliver, or
cause to be executed and delivered, to Buyer, dated the Closing Date, all such
bills of sale, certificates of title, and other documents or instruments of
assignment, transfer, or conveyance as Buyer shall reasonably deem necessary or
appropriate to vest in or confirm to Buyer good and marketable title to the
Assets, free and clear of all Encumbrances.
1.2 Purchase Price and Payment. In consideration of the sale of the Assets
to Buyer, Buyer shall pay to Seller for the purchase of all the Assets the total
purchase price of $343,500 as set forth below and as adjusted and as subject to
offset pursuant to this Agreement:
A. At Closing Twenty-five Percent of the Total Purchase Price $85,875;
and
B. On the six month anniversary of the Closing Date a payment of $40,000;
and
C. Eighteen months from the date of the payment in 1.2A above, $54,406
plus accrued interest at 7.75% per annum; and
D. On each of the next three successive anniversary dates from the date
payment in 1.2C is made an additional $54,406 plus accrued interest at
7.75% per annum until the purchase price is paid in full. The amounts
payable in 1.2C and 1.2D shall be evidenced by a Promissory Note of
Buyer in the form of Exhibit B.
1.3 Adjustments. The total purchase price is based on $1,500 times a base
of 229 equivalent Work-site Employees (determined on the basis of February gross
payroll, by client, divided by 1/12th of $20,000) ("FTE") employed by Closing
Date clients of Seller as set forth on Exhibit C. Any loss of FTE's not as a
result of substandard service by Buyer shall result in the amount to be paid
pursuant to 1.2C and 1.2D above to be adjusted using the following formula: Such
amount is subject to adjustment for any loss in the actual number of FTE's
employed by clients at the Closing Date that are not clients at the twelve-month
anniversary of the Closing Date. Such amount will be adjusted by the above loss
of FTE's, multiplied by $1,500. Interest payable under 1.2C and 1.2D will be
calculated on the adjusted amount due.
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1.4 Certain Liabilities Assumed by Buyer. As further consideration for the
transfer of the Assets to Buyer, Buyer agrees, upon the terms and subject to the
conditions set forth herein, to assume, at the Closing, and thereafter to pay,
perform, and discharge, the following liabilities and obligations of Seller (but
only such liabilities and obligations): All obligations of Seller accruing from
and after the Closing Date under the contracts and agreements described on
Exhibit D (the "Assumed Liabilities").
1.5 Liabilities Not Assumed by Buyer . Buyer shall not assume or take title
to the Assets subject to, or in any way be liable or responsible for, any
liabilities or obligations of Seller or Oxford (whether or not referred to in
any Schedule or Exhibit hereto), except as specifically provided in Section 1.4,
it being expressly acknowledged that it is the intention of the parties hereto
that all liabilities and obligations that Seller or Oxford have or may have in
the future (whether accrued, absolute, contingent, unliquidated, or otherwise,
whether or not known to Seller or Oxford, and whether due or to become due),
other than the Assumed Liabilities, shall be and remain the liabilities and
obligations of Seller and Oxford. Without limiting the generality of the
foregoing, Buyer shall not assume or take title to the Assets subject to, or in
any way be liable or responsible for:
(a) any liability or obligation of Seller or Oxford under any
mortgage, deed of trust, security agreement, or financing statement, or any
note, bond, or other instrument or obligation secured thereby,
(b) any liability or obligation of Seller or Oxford in respect of any
express or implied representation, warranty, agreement, or guaranty made
(or claimed to have been made) by Seller or Oxford, or imposed (or asserted
to be imposed) by operation of law, in respect of any products produced or
services rendered, distributed, or sold by Seller in connection with the
Business on or prior to the Closing Date,
(c) any liability or obligation of Seller or Oxford existing at or
arising after the Closing Date under any leases, contracts, insurance
policies, agreements, or Permits, whether or not included in the Assets,
which results from the breach, default, or wrongful action or inaction of
Seller or Oxford prior to the close of business on the Closing Date (or
thereafter),
(d) any liability or obligation of Seller resulting from or relating
to the employment relationship between Seller and any of Seller's present
or former employees engaged in connection with the ownership or operation
of the Assets or the termination of any such employment relationship,
including without limitation severance pay, bonuses, commissions (other
than those incurred since March 1, 1999 pursuant to the Subservicer
Agreement), and other similar benefits, if any, and any claims filed on or
prior to the Closing Date or which may thereafter be filed by or on behalf
of any such present or former employee relating to the employment or
termination of employment of any such employee by Seller, including without
limitation any claim for wrongful discharge, breach of contract, unfair
labor practice, employment discrimination, unemployment compensation,
employee benefits or workers' compensation,
(e) any liability or obligation of Seller or Oxford in respect of any
agreement, trust, plan, fund, or other arrangement under which benefits or
employment is provided for any of Seller's present or former employees
engaged in connection with the ownership or operation of the Assets, and
(f) any income or payroll tax liabilities or deficiencies, whether
federal, state, or local, and any ad valorem property taxes, in each such
case to the extent applicable to periods ending on or prior to the Closing
Date (or February 28, 1999 for persons subject to the Subservicer
Agreement).
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For purposes of this Section, references to Seller shall include their
predecessors in title.
1.6 Allocation of Purchase Price . Buyer will determine the appropriate
allocation of the purchase price among the Assets pursuant to Section 1060 of
the Code and will notify Seller of such determination. Seller and Buyer shall
report the transactions contemplated hereby on all Tax Returns (including
information returns and supplements thereto required to be filed by the parties
under Section 1060 of the Code) in a manner consistent with such allocation.
ARTICLE II
CLOSING AND CLOSING DATE
2.1 Closing and Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall take place (i) at the offices of Thompson & Knight,
1700 Pacific Avenue, Suite 3300, Dallas, Texas, 75214, at 10:00 a.m., local
time, on March 31, 1999 (with a signing and pre-closing on March 30, 1999), or
(ii) at such other time or place or on such other date as the parties hereto
shall agree. The date on which the Closing is required to take place (or, by
agreement actually takes place) is herein referred to as the "Closing Date". The
effective date and time for the purchase and sale of the Assets (the "Effective
Date") shall be the close of business on March 31, 1999.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND OXFORD
Seller and Oxford jointly and severally represent and warrant to Buyer that:
3.1 Corporate Organization. Seller and Oxford are corporations duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and have all requisite corporate power and
corporate authority to own, lease, and operate its properties and to carry on
its business as now being conducted. No actions or proceedings to dissolve
Seller and Oxford are pending. Oxford owns all of the voting and nonvoting (if
any) securities of Seller.
3.2 Qualification. Seller and Oxford are duly qualified or licensed to do
business and in good standing in each of the jurisdictions set forth on Exhibit
3.2, which are all the jurisdictions in which it owns, leases, or operates
property or in which such qualification or licensing is required for the conduct
of its business.
3.3 Authority Relative to this Agreement. Seller and Oxford have full
corporate power and corporate authority to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance by Seller and Oxford of the Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of Seller and Oxford including, if
required, approval of their respective shareholders. This Agreement has been
duly executed and delivered by Seller and Oxford and constitutes, and each other
agreement, instrument, or document executed or to be executed by Seller and
Oxford in connection with the transactions contemplated hereby has been, or when
executed will be, duly executed and delivered by Seller and Oxford and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of Seller and Oxford, enforceable against Seller and Oxford
in accordance with their respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principals which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
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3.4 Noncontravention . The execution, delivery, and performance by Seller
and Oxford of this Agreement and the Ancillary Documents to which it is a party
and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or result in a violation of any provision
of the charter or bylaws of Seller and Oxford, (ii) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, or require any consent,
approval, authorization, or waiver of, or notice to, any party to, any bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which Seller or Oxford is a party or by which
Seller, Oxford, the Business, or any of the Assets may be bound or any Permit
held by Seller or Oxford or the Business, (iii) result in the creation or
imposition of any Encumbrance upon any of the Assets, or (iv) violate any
Applicable Law binding upon Seller or Oxford, the Business, or any of the
Assets.
3.5 Governmental Approvals . No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Seller or Oxford in connection with the
execution, delivery, or performance by Seller or Oxford of this Agreement and
the Ancillary Documents to which it is a party or the consummation by it of the
transactions contemplated hereby or thereby.
3.6 Exclusive Operation of Business . Seller does not have any direct or
indirect equity or ownership interest in any corporation, partnership, joint
venture, or other entity and the Business is conducted solely and exclusively by
Seller. Oxford is not engaged in the staff leasing business other than through
Seller and PRC Enterprises, Inc., Crest Outsourcing, Inc., El Dorado Staff
Leasing, Inc., management of United Staffing Corp. (Oregon), and Rx Staffing
Corp., and any entity disclosed in writing by Oxford to Buyer.
3.7 Title to Assets . Seller is the owner of, and have good and marketable
title to, all the Assets, free and clear of all Encumbrances. Upon Seller's
transfer of the Assets to Buyer pursuant to this Agreement, Buyer will have good
and marketable title to all the Assets, free and clear of all Encumbrances. No
financing statement (or other instrument sufficient or effective as a financing
statement) under the Uniform Commercial Code with respect to any of the Assets
has been filed and is effective in any jurisdiction, and Seller and Oxford have
not signed any such financing statement (or other instrument) or any mortgage or
security agreement authorizing any secured party thereunder to file any such
financing statement (or other instrument).
3.8 Financial Statements . Seller and Oxford have delivered to Buyer
accurate and complete copies of (i) Oxford's audited consolidated balance sheet
as of June 30, 1997 and 1998, and the related audited consolidated statements of
income, stockholders' equity, and cash flows for each of the years ended June
30, 1997 and 1998, and the notes and schedules thereto, together with the
qualified reports thereon of Cheshier & Fuller, L.L.C., independent public
accountants (the "Audited Financial Statements"), and (ii) Oxford's Form 10-QSB
filed February 22, 1999 with the Securities and Exchange Commission for the
quarterly period ended December 31, 1998 (the "Latest Balance Sheet"), and the
related unaudited statements of income, stockholders' equity, and cash flows for
the three-month period then ended (the "Unaudited Financial Statements"),
(collectively, the "Financial Statements"). The Financial Statements (i)
represent actual bona fide transactions, (ii) have been prepared from the books
and records of Seller in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years throughout the
periods involved, and (iii) accurately, completely, and fairly present Oxford's
consolidated financial position as of the respective dates thereof and its
results of operations for the periods then ended. The statements of income
included in the Financial Statements do not contain any items of special or
nonrecurring income, and the balance sheets included in the Financial Statements
do not reflect any write-up or revaluation increasing the book value of any
assets, nor have there been any transactions giving rise to special or
nonrecurring income or any such write-up or revaluation.
3.9 Liabilities . Except as described on Exhibit 3.9, Seller has no
liabilities or obligations (whether accrued, absolute, contingent, unliquidated,
or otherwise, and whether due or to become due) in respect of the Business,
except (i) liabilities reflected on the Latest Balance Sheet, and
(ii) liabilities which have arisen since the date of the Latest Balance Sheet in
the ordinary course of the operation of the Business (none of which is a
material liability for breach of contract, breach of warranty, tort, or
infringement).
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3.10 Absence of Certain Changes . Except as described on Exhibit 3.9, other
than normal business transactions, since June 30, 1998, (i) there has not been
any adverse change in, or any event or condition that might reasonably be
expected to result in any adverse change in, the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Business or
the ownership or operation of the Assets or any material portion thereof;
(ii) the Business has been conducted only in the ordinary course consistent with
past practice; (iii) Seller has not, in respect of the Business, incurred any
liability, engaged in any transaction, or entered into any agreement outside the
ordinary course of business consistent with past practice; (iv) Seller has not
suffered any loss, damage, destruction, or other casualty to any of the Assets
(whether or not covered by insurance); (v) Seller has acquired no knowledge of,
and have not taken or permitted any action, event or circumstance that would
result in the loss or diversion of Seller's clients to others; and (vi) Seller
has not, in respect of the Business, taken any of the actions set forth in
Section 5.2 except as permitted thereunder.
3.11 Tax Matters .
(a) Seller has (and as of the Closing Date will have) duly filed all
federal, state, local, and foreign Tax Returns required to be filed by or
with respect to it with the IRS or other applicable Taxing authority in
connection with the Assets or the operation of the Business, and no
extensions with respect to such Tax Returns have (or as of the Closing Date
will have) been requested or granted except as disclosed in Exhibit 3.11;
(b) Seller has (and as of the Closing Date will have) paid, or
adequately reserved against in the Financial Statements, all Taxes due, or
claimed by any Taxing authority to be due, from or with respect to it
relating to the Assets or the operation of the Business;
(c) There has been no issue raised or adjustment proposed (and none is
pending) by the IRS or any other Taxing authority in connection with any
Tax Returns relating to the Assets or the operation of the Business;
(d) Seller has (and as of the Closing Date will have) made all
deposits required with respect to Taxes relating to the Assets or the
operation of the Business except as disclosed in Exhibit 3.11;
(e) No waiver or extension of any statute of limitations as to any
federal, state, local, or foreign Tax matter relating to the Assets or the
operation of the Business has been given by or requested from Seller; and
(f) Seller has not filed a consent under Section 341(f) of the Code.
3.12 Compliance With Laws . To the best of knowledge of Seller, Seller has
complied with all Applicable Laws relating to the ownership or operation of the
Assets or the operation of the Business (including without limitation Applicable
Laws relating to securities, properties, business products, manufacturing
processes, advertising and sales practices, employment practices, terms and
conditions of employment, wages and hours, safety, occupational safety, health,
environmental protection, product safety, and civil rights) and Seller has not
received any written notice, which has not been dismissed or otherwise disposed
of, that Seller has not so complied. Seller is not charged or, to the best
knowledge of Seller or Oxford, threatened with, or, to the best knowledge of
Seller or Oxford are, under investigation with respect to, any violation of any
Applicable Law relating to any aspect of the ownership or operation of the
Assets or the operation of the Business. In addition, (i) each of the Seller's
Client Services Agreements complies with all Applicable Laws, (ii) neither
Oxford, the Seller nor, to the knowledge of Oxford or Seller, any current client
of Seller (while a client of Seller), has ever been the subject of any
inspection or investigation relating to its compliance with or alleging any
violation of (A) the Immigration Reform and Control Act or 1986, or any related
federal statute and the rules and regulations promulgated thereunder
(collectively, "Immigration Laws"), or (B) federal or state occupational safety
and accident laws ("OSHA Laws"), and (iii) Seller has never been fined or
otherwise penalized by reason of any failure to comply with Immigration Laws or
OSHA Laws, nor is any such proceeding pending or threatened.
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3.13 Legal Proceedings . There are no Proceedings pending or, to the best
knowledge of Seller or Oxford, threatened against or involving Seller relating
to the Assets or the operation of the Business, except as disclosed on Exhibit
3.13. Except as disclosed on Exhibit 3.13, any and all potential liability of
Seller under such Proceedings is adequately covered (except for standard
deductible amounts) by the existing insurance maintained by Seller. Except as
disclosed on Exhibit 3.13, no judgment, order, writ, injunction, or decree of
any Governmental Entity has been issued or entered against Seller or any of
their affiliates which continues to be in effect with respect to or affecting
the Assets or the operation of the Business. Except as disclosed on Exhibit
3.13, neither Seller nor any of its affiliates are subject to any judgment,
order, writ, injunction, or decree of any Governmental Entity which has had or
is reasonably likely to have a material adverse effect or which is reasonably
likely to result in a material adverse change in the Assumed Liabilities. There
are no Proceedings pending or, to the best knowledge of Seller, threatened
seeking to restrain, prohibit, or obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby.
3.14 Sufficiency and Condition of Assets . Except for assets leased to
Buyer, the Assets (i) constitute all the assets and properties used or held for
use in connection with the operation of the Business and (ii) constitute all the
assets and properties the use or benefit of which are reasonably necessary for
the operation of the Business as currently conducted and as presently proposed
to be conducted. All the Assets are (i) in the case of tangible assets and
properties, in good operating condition and repair and have been maintained in
accordance with standard industry practice, (ii) suitable for the purposes used,
and (iii) adequate and sufficient for the normal operation of the Business, as
presently conducted. Seller owns or has a valid leasehold interest in, or
otherwise have a valid right to use, all the Assets. The Assets and their uses
conform to all Applicable Laws, and Seller has not received any notice to the
contrary. All tangible assets and properties included in the Assets are in
Seller's possession or under their control.
3.15 [reserved] Leased Property .
3.16 Permits . Set forth on Exhibit 3.16 is a list of all Permits included
in the Assets. Such Permits, to the best knowledge of Seller and Oxford,
constitute all the Permits necessary or required for the ownership and operation
of the Assets and the conduct of the Business. Each of such Permits is in full
force and effect, Seller is in compliance with all its obligations with respect
thereto, and, to the best knowledge of Seller, no event has occurred which
permits, or with or without the giving of notice or the passage of time or both
would permit, the revocation or termination of any thereof. No notice has been
issued by any Governmental Entity and no Proceeding is pending or, to the best
knowledge of Seller, threatened with respect to any alleged failure by Seller to
have any Permit the absence of which would have a material adverse effect on the
Business.
3.17 Agreements .
(a) All Client Service Agreements and all other agreements,
arrangements, and understandings of any nature (written or oral, formal or
informal) (collectively, for purposes of this Section, "agreements") to
which Seller is a party or by which Seller is otherwise bound, regardless
of amount or subject matter, that relate to the Assets or the Business are
listed on Exhibit 3.17.
(b) Seller has delivered to Buyer accurate and complete copies of the
agreements listed on Exhibit 3.17. To the best knowledge of Seller, each of
such agreements is a valid and binding agreement of Seller and the other
party or parties thereto, enforceable against Seller and such other party
or parties in accordance with its terms. Seller is not in breach of or in
default under, nor has any event occurred which (with or without the giving
of notice or the passage of time or both) would constitute a default by
Seller under, any of such agreements, and Seller has not received any
notice from, or given any notice to, any other party indicating that Seller
is in breach of or in default under any of such agreements. To the best
knowledge of Seller, no other party to any of such agreements is in breach
of or in default under such agreements, nor has any assertion been made by
Seller of any such breach or default. Each of such agreements is freely and
fully assignable to Buyer without penalty or other adverse consequence.
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(c) Seller has not received notice of any plan or intention of any
other party to any agreement to exercise any right of offset with respect
to, or any right to cancel or terminate, any agreement, and Seller does not
know of any fact or circumstance that would justify the exercise by any
such other party of such a right other than the automatic termination of
such agreement in accordance with its terms. Seller does not currently
contemplate, or have reason to believe any other person currently
contemplates, any amendment or change to any agreement, which amendment or
change could have a material adverse effect on the Business.
3.18 ERISA . During the past five years, neither Seller nor any of its
affiliates have made or been required to make contributions to any
"multiemployer plan", as defined in Section 3(37) of ERISA. Seller and all the
affiliates of Seller have paid and discharged promptly when due all liabilities
and obligations arising under ERISA or the Code of a character which if unpaid
or unperformed might result in the imposition of a lien against any of the
Assets. For purposes of this Section only, an "affiliate" of any person means
any other person which, together with such person, would be treated as a single
employer under Section 414 of the Code.
3.19 Labor Relations .
(a) (i) There are no collective bargaining agreements or other labor union
contracts applicable to any employees of the Business to or by which Seller is a
party or is bound, no such agreement or contract has been requested by any
employee or group of employees of the Business, and no discussions have occurred
with respect thereto by management of Seller with any such employees; (ii) no
employees of the Business are represented by any labor organization, collective
bargaining representative, or group of employees; (iii) no labor organization,
collective bargaining representative, or group of employees claims to represent
a majority of the employees of the Business; (iv) Seller and Oxford are not
aware of or involved with any representational campaign or other organizing
activities by any union or other organization or group seeking to become the
collective bargaining representative of any of the employees of the Business;
(v) Seller is not obligated to bargain collectively with respect to wages,
hours, and other terms and conditions of employment with any recognized or
certified labor organization, collective bargaining representative, or group of
employees representing employees of the Business; and (vi) Seller and Oxford are
not aware of any strikes, work stoppages, work slowdowns, or lockouts or any
threats thereof by or with respect to any employees of the Business, and there
have been no labor disputes, strikes, work stoppages, work slowdowns, lockouts,
or similar matters involving any such employees.
(b) To the best of their knowledge, Seller is in compliance with all
Applicable Laws pertaining to employment and employment practices and wages,
hours, and other terms and conditions of employment in respect of the employees
of the Business and have no accrued liability for any arrears of wages or any
Taxes or penalties for failure to comply with any thereof. Seller is not, in
respect of the Business or the employees thereof, engaged in any unfair labor
practices or unlawful employment practices. There is no pending or, to the best
knowledge of Seller or Oxford, threatened Proceeding against or involving Seller
by or before, and Seller is not subject to any judgment, order, writ,
injunction, or decree of or inquiry from, the National Labor Relations Board,
the Equal Employment Opportunity Commission, the Department of Labor, or any
other Governmental Entity in connection with any current, former, or prospective
employee of the Business.
(c) Seller believes that relations with the employees of the Business are
satisfactory.
(d) No employment agreement between Seller and any Worksite Employee will
survive the termination of the related Client Service Agreement.
3.20 Employees . Set forth on Exhibit 3.20 is a list of the name, social
security number, and dates of employment by Seller of each Internal Employee,
agent (other than Worksite Employees), independent contractor, commissioned
agent, and consultant of Seller as of March 1, 1999, together with the
individual and total amounts of salary, bonuses, and other compensation paid or
payable by Seller, together with accrued vacation and vacation pay, sick leave
or other permissible time off with pay that can be accrued, to each such person
for the current calendar year and the immediately preceding calendar year.
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The consummation of the transactions contemplated by this Agreement will
not result in the incurring of any severance pay obligations to any Internal
Employee or Worksite Employee. Seller has no compensation, bonus or commission
obligations to any employee or independent contractor that will survive the
termination of the relationship with that party. Neither Seller nor any
affiliate of Seller has entered into any type of employment or consulting
agreement, written or oral, with any Internal Employee or Worksite Employee of
Seller, nor has Seller or any affiliate of Seller engaged in discussions with
any such employee relating thereto.
3.21 Insider Interests . No shareholder, director, officer, or employee of
Seller or any associate of any such shareholder, director, officer, or employee
is presently, directly or indirectly, a party to any transaction with Seller
relating to the Assets or the Business, including, without limitation, any
agreement, arrangement, or understanding, written or oral, providing for the
employment of, furnishing of services by, rental of real or personal property
from, or otherwise requiring payments to any such shareholder, director,
officer, employee, or associate.
3.22 Powers of Attorney . Seller and Oxford have not granted to any person,
and there is not currently existing, any power of attorney of any type
pertaining to the Assets or the Business.
3.23 Books and Records . All the books and records of Seller relating to
the Assets or the Business, including all personnel files, employee data, and
other materials relating to employees of the Business, are complete and correct,
have been maintained in accordance with good business practice and all
Applicable Laws, and, in the case of the books of account, have been prepared
and maintained in accordance with generally accepted accounting principles
consistently applied. Such books and records accurately and fairly reflect, in
reasonable detail, all transactions, revenues, expenses, assets, and liabilities
of Seller with respect to the Business. The personnel files for all Internal
Employees and Worksite Employees contain current documentation signed by each
such employee concerning tax withholding, citizenship status, health or other
benefit plan enrollment and payroll deductions.
3.24 Brokerage Fees . Neither Seller, Oxford nor any of their affiliates
has retained any financial advisor, broker, agent, or finder or paid or agreed
to pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Seller and Oxford shall
indemnify and hold harmless Buyer from and against any and all losses, claims,
damages, and liabilities (including legal and other expenses reasonably incurred
in connection with investigating or defending any claims or actions) with
respect to any finder's fee, brokerage commission, or similar payment in
connection with any transaction contemplated hereby asserted by any person on
the basis of any act or statement made or alleged to have been made by Seller,
Oxford or any of their affiliates.
3.25 Disclosure . No representation or warranty made by Seller and Oxford
in this Agreement, and no statement of Seller and Oxford contained in any
document, certificate, or other writing furnished or to be furnished by Seller
or Oxford pursuant hereto or in connection herewith, contains or will contain,
at the time of delivery, any untrue statement of a material fact or omits or
will omit, at the time of delivery, to state any material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they are made, not misleading. Seller and Oxford know of no matter
which has not been disclosed to Buyer pursuant to this Agreement which has or
will have a material adverse effect on the Business.
3.26 Representations and Warranties on Closing Date . The representations
and warranties made in this Article III will be true and correct on and as of
the Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date, except that any such
representations and warranties which expressly relate only to an earlier date
shall be true and correct on the Closing Date as of such earlier date.
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3.27 Certain Financial Matters . Seller and Oxford hereby represent and
warrant that they have no knowledge of any act, omission, event or occurrence as
of or prior to the date hereof that will, or may have reasonable likelihood to,
reduce or impair future revenues or administrative fees of the Seller, or the
number or make-up of the Seller's clients, Internal Employees or Worksite
Employees, or prices or margins for any of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND USP
Buyer and USP represent and warrant to Seller and Oxford that:
4.1 Corporate Organization. Buyer is a limited liability company and USP is
a corporation duly formed or organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation or incorporation and have
all requisite company or corporate power and company or corporate authority to
own, lease, and operate their properties and to carry on their business as now
being conducted. No actions or proceedings to dissolve Buyer or USP are pending.
4.2 Authority Relative to This Agreement. Buyer and USP have full company
or corporate power and company or corporate authority to execute, deliver, and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery, and performance by Buyer and USP of the Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary company or corporate action of Buyer and USP. This
Agreement has been duly executed and delivered by Buyer and USP and constitutes,
and each other agreement, instrument, or document executed or to be executed by
Buyer and USP in connection with the transactions contemplated hereby has been,
or when executed will be, duly executed and delivered by Buyer and USP and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of Buyer and USP, enforceable against Buyer and USP in
accordance with their respective terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
4.3 Noncontravention. The execution, delivery, and performance by Buyer and
USP of this Agreement and the consummation by it of the transactions
contemplated hereby do not and will not (i) conflict with or result in a
violation of any provision of the certificate or agreement of limited
partnership of USP or the charter or bylaws of Buyer, (ii) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or passage of time or both) to any right
of termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which Buyer or USP is a party or by which Buyer or USP or any of
its properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer or USP, or (iv) assuming compliance
with the matters referred to in Section 4.4, violate any Applicable Law binding
upon Buyer or USP, except, in the case of clauses (ii), (iii), and (iv) above,
for any such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, condition (financial or otherwise), or prospects of Buyer or USP and
its subsidiaries considered as a whole or on the ability of Buyer to consummate
the transactions contemplated hereby.
4.4 Governmental Approvals. No consent, approval, order, or authorization
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Buyer or USP in connection with the
execution, delivery, or performance by Buyer and USP of this Agreement or the
consummation by it of the transactions contemplated hereby, other than (i) as
set forth on Exhibit 4.4; (ii) filings with Governmental Entities to occur in
the ordinary course following the consummation of the transactions contemplated
hereby; and (iii) such consents, approvals, orders, or authorizations which, if
not obtained, and such declarations, filings, or registrations which, if not
made, would not, individually or in the aggregate, have a material adverse
effect on the business, assets, results of operations, condition (financial or
otherwise), or prospects of Buyer or USP and its subsidiaries considered as a
whole or on the ability of Buyer or USP to consummate the transactions
contemplated hereby.
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4.5 Financing. Buyer and USP have, and at the Closing will have, such funds
as are necessary for the consummation by it of the transactions contemplated
hereby.
4.6 Legal Proceedings. There are no Proceedings pending or, to the best
knowledge of Buyer, threatened seeking to restrain, prohibit, or obtain damages
or other relief in connection with this Agreement or the transactions
contemplated hereby.
4.7 Brokerage Fees. Neither Buyer nor USP nor any of their affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or any transaction contemplated hereby. Buyer and USP shall indemnify and hold
harmless Seller and Oxford from and against any and all losses, claims, damages,
and liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission, or similar payment in connection with
any transaction contemplated hereby asserted by any person on the basis of any
act or statement made or alleged to have been made by Buyer or USP or any of its
affiliates.
4.8 Disclosure. No representation or warranty made by Buyer or USP in this
Agreement, and no statement of Buyer or USP contained in any document,
certificate, or other writing furnished or to be furnished by Buyer or USP
pursuant hereto or in connection herewith, contains or will contain, at the time
of delivery, any untrue statement of a material fact or omits, or will omit, at
the time of delivery, to state any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
are made, not misleading.
4.9 Representations and Warranties on Closing Date. The representations and
warranties made in this Article IV will be true and correct in all material
respects on and as of the Closing Date with the same force and effects as if
such representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties with expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Conduct and Preservation of Business . Except as expressly provided in
this Agreement, during the period from the date hereof to the Closing, Seller
and Oxford (i) shall conduct the Business only in the ordinary course consistent
with past practice and in compliance with all Applicable Laws; (ii) shall use
their reasonable best efforts to preserve, maintain, and protect the Assets; and
(iii) shall use their best efforts to preserve intact the business organization
of the Business, to keep available the services of the employees of the
Business, and to maintain existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers, and others having business
relationships with the Business. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Closing, Seller and Oxford shall not, without the prior written consent
of Buyer:
(a) transfer or sell its equity interests in Seller or make any change
in the ongoing operations of the Assets or the Business;
(b) mortgage or pledge any of the Assets or create or suffer to exist
any Encumbrance thereupon;
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(c) (i) enter into, adopt, or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase, pension, retirement, deferred compensation, employment,
severance, or other employee benefit agreement, trust, plan, fund, or other
arrangement for the benefit or welfare of any employee of the Business;
(ii) increase in any manner the compensation or fringe benefits of any
employee of the Business; or (iii) pay to any employee of the Business any
benefit not required by any employee benefit agreement, trust, plan, fund,
or other arrangement as in effect on the date hereof;
(d) sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets;
(e) pay, discharge, or satisfy any claims, liabilities, or obligations
relating to the Business (whether accrued, absolute, contingent,
unliquidated, or otherwise, and whether asserted or unasserted), other than
the payment, discharge, or satisfaction in the ordinary course of the
Business consistent with past practice, or in accordance with their terms,
of liabilities reflected or reserved against in the Financial Statements;
(f) enter into any lease, contract, agreement, commitment,
arrangement, or transaction relating to the Business;
(g) amend, modify, or change any existing lease, contract, or
agreement relating to the Business;
(h) waive, release, grant, or transfer any rights of value relating to
the Business;
(i) delay payment of any account payable or other liability of Seller
relating to the Business beyond its due date or the date when such
liability would have been paid in the ordinary course of the Business
consistent with past practice;
(j) permit any current insurance or reinsurance policies to be
cancelled or terminated or any of the coverages thereunder to lapse if such
policy covers Assets or insures risks, contingencies, or liabilities of the
Business;
(k) change any of the accounting principles or practices used by it
relating to the Business;
(l) take any action which would or might make any of the
representations or warranties of Seller or Oxford contained in this
Agreement untrue or inaccurate as of any time from the date of this
Agreement to the Closing or would or might result in any of the conditions
set forth in this Agreement not being satisfied; or
(m) authorize or propose, or agree in writing or otherwise to take,
any of the actions described in this Section.
5.2 Access to Information; Confidentiality.
(a) Between the date of the Letter of Intent (as herein defined) and the
Closing, Seller and Oxford (i) shall give Buyer and its authorized
representatives reasonable access to all employees, all plants, offices,
warehouses, and other facilities, and all books and records, including work
papers and other materials prepared by Seller's and Oxford's independent public
accountants, of Seller and Oxford, (ii) shall permit Buyer and its authorized
representatives to make such inspections as they may reasonably require, and
(iii) shall cause Seller's and Oxford's officers to furnish Buyer and its
authorized representatives with such financial and operating data and other
information with respect to Seller and Oxford as Buyer may form time to time
reasonably request; provided, however, that no investigation pursuant to this
Section shall affect any representation or warranty of Seller or Oxford
contained in this Agreement or in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith; and provided further that
Seller and Oxford shall have the right to have a representative present at all
times. Buyer shall hold in confidence all such information on the terms and
subject to the conditions contained in the letter of intent dated February 5,
1999 (the "Letter of Intent"), from Buyer to Seller and Oxford.
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(b) Seller acknowledges and agrees that irreparable damage would occur in
the event any confidential information regarding the business, assets, results
of operation, or financial condition of Seller were disclosed to or utilized on
behalf of any person which is in competition with any line or lines of business
of Seller. Accordingly, Seller and Oxford covenant and agree that they will not,
directly or indirectly, without the prior written consent of Buyer disclose any
of such confidential information to any person; provided, however, that
confidential information shall not be deemed to include information which (i)
was or becomes generally available to the public other than as a result of
disclosure by Seller or Oxford or its affiliates. Notwithstanding the foregoing
provisions of this paragraph, Seller and affiliates may disclose any
confidential information to the extent that, in the opinion of counsel for
Seller such person is legally compelled to do so, provided that, prior to making
such disclosure, such person advises and consults with Buyer regarding such
disclosure and provided further that such person discloses only that portion of
such confidential information as is legally required.
(c) Until Closing, the provisions of the Letter of Intent relating to the
solicitation of others or expressions of interest in the Business shall be
continued so long as the parties agree to an extension of the Closing Date first
mentioned above.
5.3 Third Party Consents. Seller and Oxford shall use their reasonable best
efforts to obtain all consents, approvals, orders, authorizations, and waivers
of, and to effect all declarations, filings, and registrations with, all third
parties (including Governmental Entities) that are necessary, required, or
deemed by Buyer to be desirable to enable Seller to transfer the Assets to Buyer
as contemplated by this Agreement and to otherwise consummate the transactions
contemplated hereby. All costs and expenses of obtaining or effecting any and
all of the consents, approvals, orders, authorizations, waivers, declarations,
filings, and registrations referred to in this Section shall be borne by Seller
and Oxford.
5.4 Reasonable Best Efforts. Each party hereto agrees that it will not
voluntarily undertake any course of action inconsistent with the provisions or
intent of the Agreement and will use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
reasonably necessary, proper, or advisable under Applicable Laws to consummate
the transactions contemplated by this Agreement, including, without limitation,
(i) cooperation in determining whether any consents, approvals, orders,
authorizations, waivers, declarations, filings, or registrations of or with any
Governmental Entity or third party are required in connection with the
consummation of the transactions contemplated hereby; (ii) reasonable best
efforts to obtain any such consents, approvals, orders, authorizations, and
waivers and to effect any such declarations, filings, and registrations; (iii)
reasonable best efforts to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (iv) reasonable best efforts
to defend, and cooperation in defending, all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby; and (v) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby. Seller and Oxford shall
cooperate with and assist Buyer and its authorized representatives in order to
provide an efficient and orderly transfer of the control and management of the
Business and Assets of Seller to Buyer and to avoid any undue interruption in
the activities and operations of such Business following the Closing.
5.5 Noncompetition.
(a) Seller and Oxford agree that, for a period of three (3) years from and
after the Closing Date, neither Seller, Oxford nor any of their affiliates will,
directly or indirectly, engage or participate in, or own any interest in (other
than an interest of less than 10%), provide any financing for, perform any
service for, or act in any other capacity for any business or organization which
engages or participates, directly or indirectly, in the Business in the Greater
Dallas-Ft. Worth, Texas or Albuquerque and Santa Fe, New Mexico or Los Angeles
(including El Dorado), California Metropolitan areas or solicit any clients of
the Business.
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(b) Seller and Oxford regard the restrictions contained in this Section as
reasonable and as designed to provide Buyer with limited, legitimate, and
reasonable protection against subsequent diminution of the value of the Business
of Seller attributable to any actions of Seller, Oxford or its affiliates
contrary to such restrictions. Seller and Oxford acknowledges that irreparable
damage would occur in the event any of the provisions of this Section were
breached and accordingly agrees that Buyer shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section, and shall be
entitled to enforce specifically the provisions of this Section, in any court of
the United States or any state thereof having jurisdiction, in addition to any
other remedy to which Buyer may be entitled under this Agreement or at law or in
equity. It is the intent and understanding of the parties hereto that if, in any
action before any Governmental Entity legally empowered to enforce the
provisions of this Section, any term, restriction, covenant, or promise in this
Section is found to be unreasonable and for that reason unenforceable, then such
term, restriction, covenant, or promise shall be deemed modified to the extent
necessary to make it enforceable by such Governmental Entity.
(c) The covenants of Seller and Oxford contained in this Section may be
assigned by Buyer to any person to whom the business and assets of the Buyer are
transferred, it being the intention of the parties hereto that such covenants
shall inure to the benefit of any successor to the business and assets of Buyer,
with the same force and effect as if such covenants had been made directly to
such successor or successors.
(d) Seller, Oxford and Buyer agree that of the aggregate consideration to
be paid to or on behalf of Seller for the Assets, the sum of $5,000 shall be
allocated to the covenants contained in this Section.
5.6 No Solicitation of Employees. Seller and Oxford agree that, for a
period of three (3) years from and after the Closing Date, neither Seller,
Oxford nor any of their affiliates will, directly or indirectly, employ, or
arrange or assist in the employment (as an employee, consultant, independent
contractor or otherwise) of, any employee of Buyer (regardless of whether such
person is an Internal Employee or a Worksite Employee of Buyer on the Closing
Date), or otherwise solicit, induce or attempt to persuade any such employee to
leave Buyer's employment; provided, however, that Seller may seek to hire any
person who is neither an employee of Buyer or its affiliates (and who was a
former employee of Seller) and was not during the ninety (90) day period prior
to hire an employee of Buyer or its affiliates provided that (a) Seller seek
Buyer's approval for such hiring (which approval will not be unreasonably
withheld), and (b) neither Seller nor its affiliates has violated the provisions
of this Section prior to seeking Buyer's approval.
5.7 Public Announcements. Buyer, on the one hand, and Seller and Oxford, on
the other, shall consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement prior to such consultation (but no approval
thereof shall be required), except as required by Securities and Exchange
Commission regulations.
5.8 Fees and Expenses; Use of Proceeds. Except as otherwise expressly
provided in this Agreement, all fees and expenses, including fees and expenses
of counsel, financial advisors, and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fee or expense, whether or not the Closing shall have
occurred. Seller shall use the payments to be received under Section 1.2A and
1.2B for the full and complete discharge of the obligations of Seller and their
affiliates under the Oxford-sponsored benefit plans.
5.9 Survival of Covenants. Except for any covenant or agreement which by
its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation.
5.10 Audits. Following the Closing, Seller and Oxford shall cooperate with
Buyer and its representatives to facilitate the preparation by Buyer at Buyer's
expense of audited financial statements for the Business for the three years
ended December 31, 1998 (or for such other similar periods or other similar
financial statements as Buyer shall reasonably request).
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5.11 Taxes; Other Charges . All sales and use Taxes resulting from the
consummation of the transactions contemplated hereby shall be borne by Seller
and Oxford, and the parties shall cooperate in obtaining all exemptions from
such Taxes. All other registration, transfer, recording, and deed and stamp
Taxes and fees incurred in connection with the consummation of the transactions
contemplated hereby shall be borne by Seller and Oxford. Seller and Oxford shall
file all necessary documentation with respect to, and make all payments of, such
Taxes and fees on a timely basis.
5.12 Access to Records After Closing. Seller and Oxford agree to keep
accurate and complete copies of al books, files, documents, papers, books of
account and other records of Seller relating to the Business or the Assets. For
a period of five years from and after the Closing Date, Buyer and its
representatives shall have reasonable access to inspect and copy all such books
and records which Seller or Oxford or any of their affiliates may retain after
the Closing Date. Such access shall be afforded upon receipt of reasonable
advance notice and during normal business hours.
5.13 Employee and Employee Benefit Plan Matters .
(a) Seller, at Seller's discretion, may terminate the employment of all
employees of the Business effective as of the Closing Date (unless earlier
terminated). Buyer may, but is not in any way obligated to, offer employment to
some or all of the terminated employees upon such terms and conditions as Buyer
shall in its sole discretion determine.
(b) Buyer is not hereby, and at no time hereafter will be, adopting,
accepting, or assuming any employee benefit plan or collective bargaining
agreement of Seller or Oxford relating to any of their employees or any other
agreement, trust, plan, fund, or other arrangement of Seller or Oxford that
provides for employee benefits or perquisites (collectively, "Employment
Arrangements"), and Buyer shall have no liability or obligation whatsoever under
any Employment Arrangement to Seller or Oxford or to any employees of Seller or
Oxford, whether or not any of such employees are offered employment by or become
employees of Buyer. Buyer is not obligated to replace any of the Employment
Arrangements for any employees of Seller who become employees of Buyer, nor is
Buyer obligated to provide such persons with any similar agreements, plans, or
arrangements.
(c) Seller and Oxford will comply after the Closing Date with the
requirements of Sections 601 through 608 of ERISA and Section 4980B of the Code
with respect to any employee or former employee of Seller or Oxford (and any
dependent or former dependent thereof) whose employment with Seller terminates
in connection with Buyer's purchase of the Assets.
5.14 Subservicer Agreement . At (and subject to the occurrence of) the
Closing, the Subservicer Agreement dated March 1, 1999 between Seller and Buyer
(the "Subservicer Agreement") shall terminate, automatically, in all respects,
and no additional sums shall be due thereunder by Buyer (other than any
contractual weekly payment obligations which are then due and unpaid).
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER AND OXFORD
The obligations of Seller and Oxford to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
6.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct on and as of the Closing
Date as if made on and as of such date, except as affected by transactions
contemplated or permitted by this Agreement and except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty shall have been true and correct as of such
specified date.
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6.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
the Agreement to be performed or complied with by it on or prior to the Closing
Date.
6.3 Certificate. Seller shall have received a certificate executed on
behalf of Buyer by the president and the controller of Buyer, dated the Closing
Date, representing and certifying, in such detail as Seller may reasonably
request, that the conditions set forth in Sections 6.1 and 6.2 have been
fulfilled and that Buyer to the best of its knowledge is not in breach of any
provision of this Agreement.
6.4 Legal Proceeding. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
6.5 Other Documents. Seller and Oxford shall have received (unless waived)
the certificates, instruments, documents and payments listed below:
(a) A copy of the resolutions of the Board of Directors or similar
governing body of Buyer authorizing the execution, delivery, and performance by
Buyer of this Agreement, certified by the secretary or an assistant secretary of
Buyer.
(b) Certificates from the Secretary of State of Delaware and the
Comptroller of Public Accounts of the State of Texas, each dated not more that
ten days prior to the Closing Date, as to the legal existence and good standing,
respectively, of Buyer under the laws of such states.
(c) Such other certificates, instruments, and documents as may be
reasonably requested by Seller or Oxford prior to the Closing Date to carry out
the intent and purposes of this agreement.
6.6 Approval of Counsel to Oxford and Seller. All legal matters in
connection with the consummation of the transactions contemplated hereby and all
agreements, instruments, and documents delivered in connection therewith shall
be reasonably satisfactory in form and substance to Vanderkam and Sanders,
Counsel to Seller and Oxford.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Seller and Oxford contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such specified date.
7.2 Covenants and Agreements Performed. Except as otherwise disclosed
herein, Seller and Oxford shall have performed and complied with in all material
respects all covenants and agreements required by this Agreement to be performed
or complied with by them on or prior to the Closing Date. Buyer, Oxford and the
other parties shall have executed and delivered asset purchase agreements and
other definitive documentation relative to the sale to Buyer of substantially
all the assets of Crest Outsourcing, Inc. El Dorado Staff Leasing, Inc., Buyer
and Robert Cheney shall have executed and delivered a mutually agreeable
Consulting and Nonsolicitation Agreement.
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7.3 Certificate. Buyer shall have received a certificate executed on behalf
of Seller and Oxford by the chairman or president and the vice president-finance
of Seller and Oxford, representing and certifying, in such detail as Buyer may
reasonably request, that the conditions set forth in Sections 7.1 and 7.2 have
been fulfilled and that Seller and Oxford are not in breach of any provision of
this Agreement.
7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be pending
or threatened seeking to restrain, prohibit, or obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.5 Consents. All consents and approvals of third parties (including
Governmental Entities) required to be obtained by or on the part of the parties
hereto or otherwise reasonably necessary for the consummation of the
transactions contemplated hereby shall have been obtained, and all thereof shall
be in full force and effect at the time of Closing.
7.6 No Material Adverse Change . Since December 31, 1998, except as
contemplated by the Subservicer Agreement referred to herein, there shall not
have been any material adverse change in the business, assets, results of
operations, condition (financial or otherwise), or prospects of Seller, the
Assets or the Business.
7.7 [reserved] Due Diligence .
7.8 Other Documents. Buyer shall have received the certificates,
instruments, and documents listed below:
(a) The written opinion of Vanderkam and Sanders, and Kroney, Silverman and
Mincey, counsel to Oxford and Seller, respectively, in the form of Exhibits
7.8(a)(1)-(2) hereto.
(b) A copy of the resolutions of the Board of Directors and shareholders of
Oxford authorizing the execution, delivery, and performance by Oxford of this
Agreement, certified by the Secretary or an assistant secretary of Oxford.
(c) A copy of the resolutions of the Board of Directors and shareholder of
Seller authorizing the execution, delivery, and performance by Seller of this
Agreement, certified by the secretary or an assistant secretary of Seller.
(d) A certificate from the appropriate governmental authorities of the
States of Texas and of Nevada, each dated not more than five days prior to the
Closing Date, as to the legal existence and good standing, respectively, of
Seller under the laws of such states.
(e) Certificates from the Secretaries of State of the states listed on
Exhibit 3.2 in which Seller is qualified or licensed to do business, as to the
due qualification or licensing of Seller to do business in such states, dated
not more than ten days prior to the Closing Date.
(f) Certificates from the Secretary of State of Texas and Nevada and the
Comptroller of Public Accounts of the State of Texas, each dated not more than
five days prior to the Closing Date, as to the legal existence and good
standing, respectively, of Oxford under the laws of such states.
(g) Lien search reports, each dated not more than two days prior to the
Closing Date, showing that no financing statements or other liens (or notices
with respect to liens) naming Oxford or Seller as debtor are on file in the
Uniform Commercial Code or other relevant records of the office of the Secretary
of State of Nevada and Texas or the county clerk's office of Harris, Dallas, or
Travis Counties, except to the extent previously reviewed and approved by Buyer.
Seller and Oxford shall also evidence to Buyer that the Assets are not subject
to any accrued, potential or threatened Encumbrances, including the IRS, Liberty
Mutual Insurance, CNA, health plan providers or others.
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(h) A certificate or receipt from the Comptroller of Public Accounts of the
State of Texas, dated not more than five (5) days prior to the Closing Date,
stating that no amount is due by Seller under Title 2 of the Texas Tax Code or
showing that all such amounts have been paid.
(i) Documentation, in form for filing with the appropriate state
authorities, to change the corporate name of Seller to a dissimilar name.
(j) Such other certificates, instruments, and documents as may be
reasonably requested by Buyer to carry out the intent and purposes of this
Agreement.
7.9 Approval of Counsel to Buyer. All legal matters in connection with the
consummation of the transactions contemplated hereby and all agreements,
instruments, and documents delivered in connection therewith shall be reasonably
satisfactory in form and substance to Thompson & Knight, P.C., legal counsel to
Buyer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Seller, Oxford and Buyer; or
(b) by Oxford, if, on the Closing Date, any of the conditions set forth in
Article VI shall not have been satisfied and shall not have been waived by
Oxford; or
(c) by Buyer, if, on the Closing Date, any of the conditions set forth in
Article VII shall not have been satisfied and shall not have been waived by
Buyer.
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 by Seller and Oxford, on the one hand, or
Buyer, on the other, written notice thereof shall forthwith be given to the
other party specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, except that
the agreements contained in this Section and in Section 5.2., 5.8 and 5.9 and
Article IX shall survive the termination hereof. Nothing contained in this
Section shall relieve any party from liability for damages actually incurred as
a result of any breach of this Agreement.
8.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of all the parties hereto.
8.4 Waiver. Seller and Oxford, on the one hand, and Buyer, on the other,
may (i) waive any inaccuracies in the representations and warranties of the
other contained herein or in any document, certificate, or writing delivered
pursuant hereto or (ii) waive compliance by the other with any of the other's
agreements or fulfillment of any conditions to its own obligations contained
herein. Any agreement on the part of a party hereto to any such waiver shall be
valid only if set forth in an instrument in writing signed by or on behalf of
such party. No failure or delay by a party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party.
9.2 Indemnification by Seller et al.
(a) Seller and Oxford jointly and severally shall indemnify, defend, and
hold harmless Buyer and USP, the subsidiaries of Buyer, each director and
officer of Buyer or any of its subsidiaries, partners or parent corporations,
and each affiliate thereof, and their respective heirs, legal representatives,
successors, and assigns (collectively, the "Buyer Group"), from and against any
and all claims, actions, causes of action, demands, assessments, losses,
damages, liabilities, judgments, settlements, penalties, costs, and expenses
(including costs of investigation and reasonable attorneys' fees and expenses),
of any nature whatsoever, whether actual or consequential (collectively,
"Damages"), asserted against, resulting to, imposed upon, or incurred by any
member of the Buyer Group, directly or indirectly, by reason of or resulting
from (i) any breach by Seller or Oxford of any of their representations,
warranties, covenants, or agreements contained in this Agreement or in any
certificate, instrument, or document delivered pursuant hereto; (ii) any
liability or obligation of Seller, Oxford or their affiliates (whether accrued,
absolute, contingent, unliquidated, or otherwise, whether or not known to Seller
or Oxford, and whether due or to become due), other than the Assumed
Liabilities; (iii) the noncompliance by Seller or Buyer with any bulk sales or
bulk transfer laws of any jurisdiction in connection with the sale of the Assets
to Buyer; (iv) the ownership, management, or use of the Assets prior to the
close of business on the Closing Date; (v) the operation of the Business prior
to the close of business on the Closing Date; or (vi) any acts or omissions of
Seller or Oxford prior to the close of business on the Closing Date or any
events or occurrences involving the Assets, the operation of the Business, or
the employees or former employees of Seller or their affiliates taking place
prior to the close of business on the Closing Date.
9.3 Indemnification by Buyer. Buyer and USP jointly and severally shall
indemnify, defend, and hold harmless Seller and Oxford, subsidiaries of Seller
or Oxford, each director and officer of Seller or Oxford or any of its
subsidiaries or parent corporations and each affiliate thereof, and their
respective heirs, legal representatives, successors, and assigns (collectively,
the "Seller Group"), from and against any and all Damages asserted against,
resulting to, imposed upon, or incurred by the Seller Group, directly or
indirectly, by reason of or resulting from (i) any breach by Buyer or USP of any
of their representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto; (ii) any liability or obligation of Buyer, USP or their affiliates
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether or
not known to Buyer and USP, and whether due or to become due), other than the
Assumed Liabilities or other liabilities asserted against Buyer or USP, if any,
as a result of this transaction; (iii) the ownership, management, or use of the
Assets after the Closing Date; (iv) the operation of the Business after the
Closing Date; or (v) any acts or omissions of Buyer and USP or their affiliates
taking place prior to the close of business on the Closing Date.
9.4 Procedure for Indemnification. Promptly after receipt by an indemnified
party under Section 9.2 or 9.3 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure so to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party. In case any such action shall be brought against an indemnified party and
it shall give written notice to the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may wish, to assume the defense thereof, subject to the
provisions of this Section, with counsel reasonably satisfactory to such
indemnified party, and after written notice from the indemnifying party to such
indemnified party of the indemnifying party's election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such Section 9.2 or 9.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of such action with counsel reasonably satisfactory to the indemnified
party; provided, however, that the fees and expenses of the indemnified party's
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party or (ii) the named parties to such action (including any impleaded parties)
include both the indemnified party and the indemnifying party and such
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to such indemnified party which are not available
to the indemnifying party (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for the indemnified party, which firm
shall be designated in writing by the indemnified party). If the indemnifying
party elects to assume the defense of such action, (a) no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party's written consent (which shall not be unreasonably withheld)
unless (i) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claims that may
be made against the indemnified party and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (b) the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its written consent (which shall not be
unreasonably withheld). If notice is given to an indemnifying party of the
commencement of any action and it does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of the
indemnifying party's election to assume the defense thereof, the indemnifying
party shall be bound by any determination made in such action or any compromise
or settlement thereof effected by the indemnified party. Notwithstanding the
foregoing provisions of this Section, if an indemnified party determines in good
faith that there is a reasonable probability that an action may adversely affect
it or its affiliates other than as a result of monetary damages, such
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such action, but the indemnifying party
shall not be bound by any determination of an action so defended or any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld). It is further agreed that (i) any amounts
to which an indemnified party is entitled under this Article IX shall be paid by
the indemnifying party upon request and (ii) upon its receipt of any amount paid
by an indemnifying party pursuant to this Article IX the indemnified party shall
deliver to the indemnifying party such documents as it may reasonably request
assigning to the indemnifying party any and all rights the indemnified party may
have against third parties with respect to the claim for which indemnification
is being received.
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9.5 Exclusivity. The parties hereto agree that, in relation to any breach,
default, or nonperformance of any representation, warranty, covenant, or
agreement made or entered into by a party hereto pursuant to this Agreement or
any certificate, instrument, or document delivered pursuant hereto, the only
relief and remedy available to the other party hereto in respect of said breach,
default, or nonperformance shall be:
(a) termination, but only if said termination is expressly permitted under
the provisions of Article VIII; or
(b) damages, but only to the extent properly claimable hereunder pursuant
to this Article IX or otherwise hereunder; or
(c) specific performance if a court of competent jurisdiction in its
discretion grants the same; or
(d) injunctive or declaratory relief if a court of competent jurisdiction
in its discretion grants the same.
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ARTICLE X
10.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, telefax, or telex, to the parties at the
following addresses ( or at such other addresses as shall be specified by the
parties by like notice):
If to Buyer:
Brae Leasing, LLC
U.S. Personnel, Inc.
1600 Airport Freeway, Suite 208
Bedford, Texas 76022
Attention: President
Phone: (817)354-7785
Telefax: (817)354-3186
with a copy to:
Thompson & Knight, P.C.
1700 Pacific Ave., Suite 3300
Dallas, Texas 75214
Attention: James R. Peacock III
Phone: (214)969-1700
Telefax: (214)969-1751
If to Seller:
Webster Leasing, Inc.
dba Staffing Systems, Inc.
4245 N. Central Expressway, Suite 300
Dallas, TX 75205
Attention: Chairman
Phone: (214)520-0100
Telefax: (214)520-1881
with a copy to:
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, TX 77002
Attention: Hank Vanderkam
Phone: (713)547-8900
Telefax: (713)547-8910
If to Oxford:
4245 N. Central Expressway, Suite 300
Dallas, TX 75205
Attention: Chairman
Phone: (214)520-0100
Telefax: (214)520-1881
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with a copy to:
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, TX 77002
Attention: Hank Vanderkam
Phone: (713)547-8900
Telefax: (713)547-8910
10.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits, Annexes, and other writings referred to herein or delivered pursuant
hereto, constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Except as otherwise expressly provided in this Agreement, neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, except that Buyer may assign to any wholly-owned subsidiary of Buyer
any of Buyer's rights, interests, or obligations hereunder. Except as provided
in Article IX, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties hereto, and their respective
heirs, legal representatives, successors and permitted assigns, any rights,
benefits, or remedies of any nature whatsoever under or by reason of this
Agreement.
10.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10.6 Further Assurances. From time to time following the Closing, at the
request of any party hereto and without further consideration, the other party
or parties hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
10.7 Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only, do not constitute part of this Agreement, and
shall not affect in any manner the meaning or interpretation of this Agreement.
10.8 Gender. Pronouns in masculine, feminine, and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
10.9 References. All references in this Agreement to Articles, Sections,
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement unless expressly provided otherwise. The words "this
Agreement", "herein", "hereof", "hereby", "hereunder", and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Whenever the words "include", "includes", and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation". All Schedules, Exhibits, and Annexes
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein.
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10.10 Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
10.11 Right of Setoff. Buyer is hereby authorized at any time and from time
to time following the Closing to set off and apply any and all indebtedness or
other amounts at any time owing by Buyer under Section 1.2 of this Agreement or
the Promissory Note against (a) any of and all the indemnification obligations
of Seller and Oxford hereunder which are actually paid by Buyer and (b) any of
and all the indemnification obligations of Oxford owed to Buyer otherwise than
under this Agreement which are actually paid by Buyer. The rights of Buyer under
this Section are in addition to any other rights and remedies which Buyer may
have, whether under this Agreement or otherwise.
10.12 Jurisdiction and Venue. In respect of any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, each of the parties hereto consents to the jurisdiction and venue of any
federal of state court located within Dallas or Tarrant County, Texas, waives
personal service of any and all process upon it, consents that all such service
of process may be made by first class registered or certified mail , postage
prepaid, return receipt requested, directed to it at the address specified in
Section 10.1 agrees that service so made shall be deemed to be completed upon
actual receipt thereof, and waives any objection to jurisdiction or venue of,
and waives any motion to transfer venue from, any of the aforesaid courts.
ARTICLE XI
11.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the certain meaning given it below:
"affiliate" means, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
"Business" means the staff leasing business conducted by Webster.
"Client Service Agreement" means a written or oral agreement for the
provision of professional employment services by Seller.
"employee" means, unless the context otherwise requires, a person who
is either an Internal Employee or a Worksite Employee.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition, or otherwise), easements, and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign). "Intellectual Property" means
patents, trademarks, service marks, trade names, copyrights, trade secrets,
know-how, inventions, and similar rights, and all registrations,
applications, licenses, and rights with respect to any of the foregoing.
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"Internal Employee" means an employee (including any person acting as
an independent contractor on behalf of Seller) of Seller who is not a
Worksite Employee.
"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents, approvals,
and other amortizations of or from Governmental Entities.
"person" means any individual, corporation, partnership, joint
venture, association, join-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or Governmental
Entity.
"reasonable best efforts" means a party's reasonable best efforts in
accordance with reasonable commercial practice and without incurring
unreasonable expense.
"Taxes" means any income Taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise, or other Tax imposed by any
United States federal, state, or local (or any foreign or provincial)
Taxing authority, including any interest, penalties, or additions
attributable thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"to the best knowledge of Seller and Oxford" (or similar references to
Seller's and Oxford knowledge) means the knowledge of or receipt of notice
(oral or written) by any of Seller's or Oxford's executive officers, as
such knowledge has been obtained in the normal conduct of the business of
Seller or Oxford in connection with the preparation of the Schedules to
this Agreement and the furnishing of information to Buyer as contemplated
by this Agreement, after having made a reasonable investigation of the
accuracy of the representations and warranties made by Seller and Oxford in
this Agreement or in any document, certificate, or other writing furnished
by Seller or Oxford to Buyer pursuant hereto or in connection herewith.
"Worksite Employee" means an active employee of Seller who is under an
explicit co-employment agreement with a client of Seller relating to a
Client Service Agreement that is in full force and effect.
23
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IN WITNESS WHEREOF, the parties have executed this Agreement, or
caused this Agreement to be executed by their duly authorized
representatives, all as of the day and year first above written.
WEBSTER LEASING, INC.
By:
--------------------------------
Name: Robert E. Cheney
Title: President
OXFORD CAPITAL CORP.
By:
--------------------------------
Name: Robert E. Cheney
Title: Chairman/CEO
BRAE LEASING, LLC
By:
--------------------------------
Name: Dennis L. Baker
Title: President
U.S. PERSONNEL, INC.
By:
--------------------------------
Name: Dennis L. Baker
Title: President/Chief Executive Officer
24
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EXHIBIT A
Purchased Assets
All Client Service Agreements ("CSA") owned by Seller at the Closing Date
that are acceptable to Buyer and with respect to which the clients
thereunder sign new CSA's with Buyer no later than the six-month
anniversary of the Closing Date, and all related rights to hire all
Worksite Employees under such new CSA's. Buyer will use its best efforts,
in coordination and cooperation with Seller and Oxford, to sign all
replacement CSA's by the six-month anniversary date.
All goodwill, trade names, client lists and work-site employee
relationships.
All Seller's rights under all non-competition agreements, including those
acquired by Oxford in connection with the acquisition of Seller from prior
owners.
All books, files, documents, papers, customer lists, lists of prospects,
mailing lists, operating systems and procedures, books of account and other
records of Seller relating to or used in the Business for all periods
ending on or before the Closing Date, other than the originals of Seller's
(A) corporate minute books, (B) tax returns, (C) files not related to the
operation of the Business and (D) files relating to Seller's accounts
receivable, copies of which originals shall be included as Assets.
All Permits issued by any Governmental Entity relating to the Business.
All telephone numbers, telephone directory listings, classified and "yellow
pages" advertisements and listings used by or in the Business.
