SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JUNE 19, 1999
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CGI HOLDING CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA 33-19980-D 87-0450450
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(State of (Commission file (IRS Employer
incorporation) Number) Identification Number)
8400 BROOKFIELD AVENUE, BROOKFIELD, ILLINOIS 60513
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 387-0900
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ITEM 5. OTHER EVENTS
This 8-K/A is an amendment to the 8-K dated March 19, 1999 related to the
acquisition by CGI Holding Corporation (the "Company") of substantially all of
the assets (the "Acquired Assets") of Salle International, L.L.C. ("Salle"). The
purpose of this amendment is to report on the agreement entered into by and
among the parties that amended certain terms and provisions of the previously
reported Asset Purchase Agreement dated March 2, 1999 (the "Purchase Agreement")
by and between the Company and Salle, and the related agreements.
On May 14, 1999 the Company, it's subsidiary, Personal Care Products, Inc., an
Illinois corporation ("PCP"), Salle, Michael Balkin ("Balkin"), Neal Seltzer
("Seltzer") and PCP Partners, an Illinois general partnership of which Mr.
Balkin is the managing partner ("PCP Partners"), entered into an agreement
effective and dated as of March 31, 1999 (the "Agreement"). Pursuant to the
Agreement, the parties agreed that all the remaining and outstanding payment and
performance obligations of the Company and PCP under the Purchase Agreement, the
agreement dated March 5, 1999 by and between PCP and Balkin (the "Balkin
Agreement"), the agreement dated March 5, 1999 by and between PCP and Seltzer
(the "Seltzer Agreement"), and the Subscription Agreement dated March 8, 1999 by
and between PCP and PCP Partners (the "Subscription Agreement") were completely
fulfilled, liquidated and replaced by the following payment and issuance
obligations:
(a) PCP will pay $263,000 to be paid and applied in the following order -
(i) first to the remaining amount of Salle's indebtedness owed to its senior
secured creditor, Harris Bank, Chicago, Illinois ("Harris Bank") by June 15,
1999,
(ii) second to the amount of Salle's indebtedness owed to its secured creditor,
Transcap Trade Financing by June 30, 1999, and
(iii) third the balance, if any, to Balkin by June 30, 1999;
(b) PCP will pay to or for the benefit of Salle certain of Salle's trade debt
with its unsecured trade creditors an amount in the aggregate not to exceed
$84,400 in accordance with the formula and requirements contained in the
Agreement; and
(c) the Company will issue 1,600,000 restricted and not registered shares of its
common stock to PCP Partners.
Additionally and pursuant to the Agreement, the parties released and discharged
each other from all causes of action and claims they have or may have against
one another arising out of or in any way connected with the Purchase Agreement,
the Balkin Agreement, the Seltzer Agreement and the Subscription Agreement.
Further, PCP Partners agreed to deliver a certificate representing the 35,000
shares of Class B common stock of PCP with an assignment signed in blank to the
Company.
The payment obligations of PCP under the Agreement are being funded pursuant to
loans extended by the Company to PCP. The Company has funded such loans from
moneys made available to it by its subsidiaries, Roli Ink Corporation ("RIC")
and Safe Environment Corp. ("SECO"). SECO has funded its loans to the Company by
drawing upon its $1.35 million revolving line of credit with CIB Bank and RIC
has funded its loans to the Company by drawing upon its $150 thousand revolving
line of credit with CIB Bank.
Payments made prior to the Agreement
Prior to the May 14, 1999 execution of the Agreement, PCP had paid no moneys to
either Balkin or Seltzer. However, PCP had paid Salle $240,000 and Harris Bank
$299,953.
Current Circumstances and Forward Looking Statement
PCP has been operating the business and the Acquired Assets from Salle since
March 5, 1999. During this time, a new management team has been installed and
financial controls have been instituted. The acquired business is the specialty
contract manufacturing and distribution business and provides private label
packaging services.
As a consequence of the new management team, the Company expects that PCP will
realize for the second half of 1999 revenues of approximately $2.5 million and
net earning of approximately $100 thousand.1
Related Agreement
As an inducement and a precondition to entering into the Agreement and
concurrent with the May 14, 1999 execution of the Agreement, the Company, PCP
and Balkin entered into a letter agreement (the "Letter Agreement") pursuant to
which:
i. the Company and PCP indemnified Balkin and PCP Partners against certain
claims, causes of action, losses, costs and expenses as set forth therein made
by or due to (A) Harris Bank, (B) creditors of Salle, (C) Suzanne Mancini,
Gregory Mancini and Herbanario and (D) Ray Schumer, Steve Groya and/or Bonzer
Business Associates, Inc.;
ii. except for the indemnify provided by the Company and PCP for claims of
Harris Bank and creditors of Salle, Balkin indemnified the Company and PCP
against all actions, causes of action, losses, damages, claims, costs or
expenses incurred by them arising from the payment of or defense against any
obligations of Salle; and
iii. except for the foregoing indemnities, the Company, PCP and Balkin mutually
released and discharged each other from, among other things, all manner of
actions, judgments and claims which they now have, may have had or may
thereafter have arising out of or in any way connected with the purchase and
sale of assets of Salle to PCP.
The Company, PCP and Balkin also agreed that the indemnities and the mutual
release and discharge in the Letter Agreement would supersede and not be
affected by the release contained in the Agreement. Further, the Company, PCP
and Balkin agreed that PCP Partners is a third party beneficiary to the Letter
Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Exhibits
2.1 Agreement dated as of March 31, 1999, by and between CGI Holding
Corporation, Personal Care Products, Inc., Salle International, L.L.C., Michael
Balkin, Neal Seltzer and PCP Partners
2.2 Letter Agreement by CGI Holding Corporation, Personal Care Products, Inc.
and Michael Balkin
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: June 19, 1999
CGI HOLDING CORPORATION
(Registrant)
By: /s/ John Giura
John Giura, President and Director
(Principal Executive Officer)
EXHIBIT INDEX
Number Subject Matter
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2.1 Agreement dated as of March 31, 1999, by and between CGI
Holding Corporation, Personal Care Products, Inc., Salle
International, L.L.C., Michael Balkin, Neal Seltzer and PCP
Partners
2.2 Letter Agreement by CGI Holding Corporation, Personal Care
Products, Inc. and Michael Balkin
EXHIBIT 2.1
Agreement dated as of March 31, 1999, by and between CGI Holding Corporation,
Personal Care Products, Inc., Salle International, L.L.C., Michael Balkin, Neal
Seltzer and PCP Partners.
AGREEMENT
AGREEMENT made as of the 31st day of March 1999 by and between CGI HOLDING
CORPORATION ("CGI"), PERSONAL CARE PRODUCTS, INC. ("PCP"), SALLE INTERNATIONAL,
LLC ("Salle"), MICHAEL BALKIN ("Balkin"), NEAL SELTZER ("Seltzer") and PCP
PARTNERS ("Partners").
W I T N E S S E T H:
Pursuant to an Asset Purchase Agreement dated March 2, 1999 between CGI and
Salle, as amended, PCP purchased certain assets from Salle and agreed to pay
certain amounts. By Agreements between PCP and Balkin and Seltzer dated March 5,
1999, as amended, PCP acquired certain indebtedness owed by Salle to such
parties which under certain circumstances could be converted into common stock
of CGI. By a Subscription Agreement between PCP and Partners, Partners
subscribed for certain shares of stock of PCP which under certain circumstances
could be converted into common stock of CGI. Various disputes have arisen
between the parties and to settle such disputes the parties desire to amend such
Agreements in certain respects so that PCP will make certain payments and CGI
will currently issue certain shares of its common stock in complete fulfillment
and liquidation of any and all amounts owed and conversion rights under the
Asset Purchase Agreement with Salle, under the Agreements with Balkin and
Seltzer and under the Subscription Agreement with Partners.
NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. PAYMENT OF CASH
(a) PCP agrees to pay, and will complete payment of (i) below by June 15, 1999
and (ii) and (iii) below by June 30, 1999, the sum of $263,000 which shall be
paid and applied in the following order:
(i) Harris Bank, Chicago, Illinois: Such amount as is required for Harris Bank
to at PCP's option either release the security interests granted to Harris Bank
by Salle on the assets of Salle purchased by PCP or assign such security
interests to PCP or such party designated by PCP and, in either event, obtain
the release of Balkin from all obligations to Harris Bank in connection with
Salle's obligations.
(ii) Transcap Trade Financing: Such amount as is required for Transcap Trade
Financing to release the security interests granted to Transcap Trade Financing
by Salle on the assets of Salle purchased by PCP and to transfer to PCP title to
any and all products ordered by Salle through Transcap Trade Financing.
(iii) The balance, if any, to Balkin.
(b) Salle agrees to seek to reach a settlement with its trade creditors listed
on Exhibit A attached hereto on the basis of $.20 per each $1.00 of debt. To the
extent Salle is able to obtain the agreement of such creditors to such
settlement and such creditors execute and deliver a full and complete release of
any and all claims related to such indebtedness, PCP agrees to promptly fund the
required amount and/or cause such shares to be issued. Such disbursements shall
be made to Salle for such payment or funded through an escrow as determined by
PCP. PCP's commitment to fund such amount or direct the delivery of such shares
shall expire as to all creditors who have not executed and delivered such
releases in form satisfactory to PCP by 5:00 p.m. on May 29, 1999 and is
conditioned upon Salle obtaining such releases from creditors representing at
least seventy-five percent (75%) in dollar amount and fifty percent (50%) in
number of the creditors listed on Exhibit A.
(c) Except as provided in 1(b) above, it is agreed that no other amounts are due
from PCP or CGI to Salle or any other parties to this Agreement. Without
limiting the foregoing, it is agreed that no additional amounts are due by PCP
under paragraph II (D) of the Asset Purchase Agreement.
2. ISSUANCE OF CGI STOCK
(a) Concurrent with the payment under paragraph 1 above, CGI shall direct its
transfer agent to issue 1,600,000 shares of its common stock to PCP Partners.
(b) Such shares shall be issued in exchange for any and all amounts due and
agreements of PCP and CGI under the Agreements between PCP and Balkin and
Seltzer and under the Subscription Agreement between PCP and Partners and the
35,000 shares of Class B Common stock which are the subject matter of such
Subscription Agreement. Partners shall deliver the certificate representing such
shares of PCP to CGI together with an assignment signed in blank at the time CGI
issues its direction to the transfer agent. It is acknowledged and agreed that
the shares of CGI have not and will not be registered under any federal or state
securities laws, rules or regulations and shall not be transferable except
according to applicable law and the Certificates therefor shall bear legends to
such effect and to the other agreements herein contained. The recipients of such
shares shall each acknowledge such restrictions as a condition to the receipt of
their respective certificates. In the event that CGI files a registration
statement after the issuance of such shares of CGI, CGI will permit such shares
to piggy back on such registration on the conditions of and to the extent the
underwriter permits the same. CGI agrees that for a period of two years from the
date hereof it will not issue addition shares of its common stock if the effect
thereof is to dilute the above shares other than on a prorata basis with other
shares of CGI's then outstanding shares of its common stock.
3. RESIGNATIONS
Upon the first payments under paragraph 2 above Balkin shall and Balkin shall
cause Mark Fuller to resign as directors and officers of PCP, to be effective
immediately.
4. RELEASES
Except for the matters set forth herein PCP and CGI on behalf of themselves and
their successors and assigns on the one part and Salle, Balkin, Seltzer and
Partners and their respective heirs, legatees, personal representatives,
members, partners, successors, and assigns on the other part, mutually release
and discharge each other and their respective heirs, legatees, personal
representatives, successors, assigns, officers, directors, members, partners,
employees and agents of and from all manner of actions, causes of action, suits,
debts, covenants, controversies, agreements, promises, damages, judgments,
claims and demands which they now have, may have had or may hereafter have
arising out of or in any way connected with the purchase and sale of assets of
Salle to PCP, the organization of PCP and the issuance of stock of CGI.
5. MISCELLANEOUS
(a) Captions.
The captions, headings and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit, amplify or modify the
terms and provisions hereof.
(b) Number and Gender of Words.
Whenever herein the singular number is used, the same shall include the plural
where appropriate, and words of any gender shall include each other gender where
appropriate.
(c) Notices.
All notices, demands, requests and other communications required or permitted
hereunder shall be in writing, and shall be personally delivered or mailed by
certified mail, first class postage prepaid, or by prepaid Federal Express or
other messenger service, to the party to which directed at its address as it
appears below, and shall be deemed to have been give on the date actually
received or refused. Any party may change its address for purposes of this
paragraph by giving written notice of such change to all other parties in the
manner hereinabove provided.
If to the PCP or CGI:
John Giura
8400 Brookfield Avenue
Brookfield, Illinois 60513
With copy to:
David J. Jolivette
Jolivette & Templer, P.C.
10 South LaSalle Street
Suite 1017
Chicago, Illinois 60603
If to the other parties:
Michael Balkin
_ William Blair & Company
222 West Adams
Chicago, Illinois 60606
With copy to:
Jeffrey Hechtman
Horwood, Marcus & Berk, Chtd.
333 West Wacker Drive
Suite 2800
Chicago, Illinois 60606
(d) Governing Law.
This Agreement is intended to be performed in the State of Illinois and the laws
of such State, excluding its choice of laws provisions, shall govern the
validity, construction, enforcement and interpretation of this Agreement, and
all parties agree to the venue and jurisdiction of any Court in Cook County,
Illinois.
(e) Entirety and Amendments.
This Agreement embodies the entire Agreement between the parties and supersedes
all prior agreements and understandings, if any, relating to the transaction
contemplated herein, and may be amended or supplemented only by an instrument in
writing executed by the party against whom such amendment is asserted.
(f) Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of the Agreement
and the remaining provisions of the Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be legal, valid or enforceable.
(g) Multiple Counterparts.
This Agreement may be executed in a number of identical counterparts. If so
executed, each of such counterparts is to be deemed an original for all
purposes, and all such counterparts shall, collectively, constitute one
Agreement, but, in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(h) Parties Bound.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
CGI HOLDING CORPORATION
By: /s/ John Giura
Its: President
PERSONAL CARE PRODUCTS, INC.
By: /s/ John Giura
Its: Vice President
SALLE INTERNATIONAL, L.L.C.
By: /s/ Michael Balkin
Michael Balkin, Manager
/s/ Neal Seltzer
NEAL SELTZER
PCP PARTNERS
By: /s/ Michael Balkin
Michael Balkin
EXHIBIT 2.2
Letter Agreement by CGI Holding Corporation, Personal Care Products, Inc. and
Michael Balkin.
CGI HOLDING CORPORATION
PERSONAL CARE PRODUCTS, INC.
8400 Brookfield Avenue
Brookfield, Illinois 60513
Telephone Facsimile
(708) 387-0900 (708) 387-2599
Mr. Michael Balkin
_ William Blair & Company
222 West Adams
Chicago, Illinois 60603
Re: Salle International, LLC.
Dear Michael:
In order to settle certain disputes which have arisen between Personal Care
Products, Inc., ("PCP") CGI Holding Corporation ("CGI"), Salle International,
LLC ("Salle"), Neil Seltzer ("Seltzer"), PCP Partners ("Partnership") and
Michael P. Balkin ("Balkin") concerning PCP's purchase of certain assets of
Salle and PCP's Agreement with Balkin concerning such transaction, all of such
parties, including PCP, CGI and Balkin and the Partnership are currently
entering onto an Agreement, a copy of which is attached hereto as Exhibit 1, to
settle such disputes. In such regard PCP, CGI and Balkin and the Partnership
have, as an inducement and precondition to each of us entering into such
Agreement, made certain other agreements set forth as follows:
1. PCP and CGI agree to indemnify, defend and hold Balkin and the Partnership
harmless from and against any claims, actions, causes of action, losses, costs
and expenses made by or due to (a) Harris Bank, Chicago, Illinois against Balkin
in connection with the indebtedness of Salle which Balkin guaranteed or (b) the
creditors of Salle against Balkin or the Partnership who are listed on Exhibit A
of such Agreement to the extent of the amount of trade debt listed on such
Exhibit including any claims by a bankruptcy trustee or similar claim in any
bankruptcy or similar proceeding which is initiated by such creditor and which
results in the surrender of some or all of the stock of CGI being issued to
Partnership under the Agreement attached hereto as Exhibit 1, provided, however,
such indemnity relating to a preference or similar claim in any bankruptcy or
similar proceeding shall not exceed the number of shares so surrendered times
$0.21 less any amounts paid to Balkin and/or Partnership or their heirs,
legatees, partners, successors or assigns through such preceding or (c) Suzanne
Mancini, Gregory Mancini and Herbanario up to an aggregate of $27,500.00 or (d)
claims by Ray Schumer, Steve Groya and/or Bonzer Business Associates, Inc. up to
an aggregate of $25,000.00. This indemnity does not extend to any claims made by
Harris Bank with regard to any other matters or by such creditors for any
matters other than such trade debt in the amounts listed on the Exhibit. This
indemnity shall be effective even if the minimum threshold requirement for PCP's
funding are not met and whether or not PCP funds any amounts to pay such trade
debt or otherwise pays or obtains settlements of such amounts due by Salle.
Balkin agrees to cooperate in the efforts to obtain settlements with such trade
creditors including but not limited to promptly sending an offer of settlement
to such creditors on behalf of Salle in a form mutually agreed upon however,
failure of cooperation shall not in any way limit or eliminate the obligations
under this paragraph. The indemnity shall further include reasonable attorneys
fees incurred by you after the date of the Agreement if and to the extent Balkin
and/or the Partnership are personally named as a defendant in any suit by Harris
Bank or any such trade creditors in connection with such indebtedness for which
Balkin or the Partnership are indemnified. The attorneys handling such matters
are subject to PCP's reasonable approval and in PCP's option it shall designate
the attorneys to handle the matter on your behalf. PCP shall have the sole right
to settle any such claims in a manner which it deems reasonable. Balkin and the
Partnership agree to cooperate in the defense of any such actions and agree to
direct your attorneys to make full disclosure to us or the attorneys designated
by PCP with regard to such matters. Balkin represents and warrants that the only
legal actions of which Balkin is aware which are pending against Salle and/or
listed on Exhibit 2 attached hereto. The above indemnities shall superceed the
indemnities contained in the Agreement between PCP and Balkin dated March 5,
1999.
2. Except for the claims of Harris Bank and Salle's creditors for which we have
agreed to indemnify Balkin and the Partnership as set forth above, Balkin agrees
to indemnify and hold harmless PCP and CGI and their officers, directors,
employees and agents against any and all action, causes of action, losses,
damages, claims, costs or expenses incurred by PCP or CGI, including reasonable
attorney fees, asserted against or incurred by PCP or CGI arising from the
payment of or defense against any obligations of Salle. Without limiting the
foregoing, such claims shall include any claims made by any taxing authorities,
creditors of Salle (except set forth above), employees of Salle (except as set
forth above), customers of Salle or purchasers or users of products produced by
Salle or any claims for environmental matters or any claims arising out of any
litigation filed against Salle. PCP and CGI shall have the sole right to settle
any such claims in a manner which they deem reasonable.
3. Except for the matters set forth in paragraphs 1 and 2 above, PCP and CGI on
behalf of themselves and their successors and assigns and you on behalf of
themselves and their respective heirs, legatees, personal representatives,
partners, successors and assigns mutually release and discharge each other and
our respective heirs, legatees, personal representatives, successors, assigns,
officers, directors, employees and agents of and from all manner of actions,
causes of action, suits, debts, covenants, controversies, agreements, promises,
damages, judgments, claims and demands which they now have, may have had or may
hereafter have arising out of or in any way connected with the purchase and sale
of assets of Salle to PCP. As between the parties hereto, the agreements in this
letter and the releases herein shall superceed and not be affected by the mutual
release contained in the Agreement attached hereto as Exhibit 1.
4. The Partnership is intended to be a third party beneficiary of this Agreement
and shall be entitled to rely hereon.
Please indicate that you have agreed to the foregoing by signing and returning a
copy of this letter. The foregoing agreements shall be binding on PCP, CGI and
you when the attached Agreement and this letter have been signed and delivered
by all their respective parties.
PERSONAL CARE PRODUCTS, INC.
By: /s/ John Giura
Its: Vice President
CGI HOLDING CORPORATION
By: /s/ John Giura
Its: President
I hereby agree to the foregoing
/s/ Michael Balkin
Michael Balkin
EXHIBIT 1
AGREEMENT
AGREEMENT made as of the 31st day of March 1999 by and between CGI HOLDING
CORPORATION ("CGI"), PERSONAL CARE PRODUCTS, INC. ("PCP"), SALLE INTERNATIONAL,
LLC ("Salle"), MICHAEL BALKIN ("Balkin"), NEAL SELTZER
("Seltzer") and PCP PARTNERS ("Partners").
W I T N E S S E T H:
Pursuant to an Asset Purchase Agreement dated March 2, 1999 between CGI and
Salle, as amended, PCP purchased certain assets from Salle and agreed to pay
certain amounts. By Agreements between PCP and Balkin and Seltzer dated March 5,
1999, as amended, PCP acquired certain indebtedness owed by Salle to such
parties which under certain circumstances could be converted into common stock
of CGI. By a Subscription Agreement between PCP and Partners, Partners
subscribed for certain shares of stock of PCP which under certain circumstances
could be converted into common stock of CGI. Various disputes have arisen
between the parties and to settle such disputes the parties desire to amend such
Agreements in certain respects so that PCP will make certain payments and CGI
will currently issue certain shares of its common stock in complete fulfillment
and liquidation of any and all amounts owed and conversion rights under the
Asset Purchase Agreement with Salle, under the Agreements with Balkin and
Seltzer and under the Subscription Agreement with Partners.
NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. PAYMENT OF CASH
(a) PCP agrees to pay, and will complete payment of (i) below by June 15, 1999
and (ii) and (iii) below by June 30, 1999, the sum of $263,000 which shall be
paid and applied in the following order:
(i) Harris Bank, Chicago, Illinois: Such amount as is required for Harris Bank
to at PCP's option either release the security interests granted to Harris Bank
by Salle on the assets of Salle purchased by PCP or assign such security
interests to PCP or such party designated by PCP and, in either event, obtain
the release of Balkin from all obligations to Harris Bank in connection with
Salle's obligations.
(ii) Transcap Trade Financing: Such amount as is required for Transcap Trade
Financing to release the security interests granted to Transcap Trade Financing
by Salle on the assets of Salle purchased by PCP and to transfer to PCP title to
any and all products ordered by Salle through Transcap Trade Financing.
(iii) The balance, if any, to Balkin.
(b) Salle agrees to seek to reach a settlement with its trade creditors listed
on Exhibit A attached hereto on the basis of $.20 per each $1.00 of debt. To the
extent Salle is able to obtain the agreement of such creditors to such
settlement and such creditors execute and deliver a full and complete release of
any and all claims related to such indebtedness, PCP agrees to promptly fund the
required amount and/or cause such shares to be issued. Such disbursements shall
be made to Salle for such payment or funded through an escrow as determined by
PCP. PCP's commitment to fund such amount or direct the delivery of such shares
shall expire as to all creditors who have not executed and delivered such
releases in form satisfactory to PCP by 5:00 p.m. on May 29, 1999 and is
conditioned upon Salle obtaining such releases from creditors representing at
least seventy-five percent (75%) in dollar amount and fifty percent (50%) in
number of the creditors listed on Exhibit A.
(c) Except as provided in 1(b) above, it is agreed that no other amounts are due
from PCP or CGI to Salle or any other parties to this Agreement. Without
limiting the foregoing, it is agreed that no additional amounts are due by PCP
under paragraph II (D) of the Asset Purchase Agreement.
2. ISSUANCE OF CGI STOCK
(a) Concurrent with the payment under paragraph 1 above, CGI shall direct its
transfer agent to issue 1,600,000 shares of its common stock to PCP Partners.
(b) Such shares shall be issued in exchange for any and all amounts due and
agreements of PCP and CGI under the Agreements between PCP and Balkin and
Seltzer and under the Subscription Agreement between PCP and Partners and the
35,000 shares of Class B Common stock which are the subject matter of such
Subscription Agreement. Partners shall deliver the certificate representing such
shares of PCP to CGI together with an assignment signed in blank at the time CGI
issues its direction to the transfer agent. It is acknowledged and agreed that
the shares of CGI have not and will not be registered under any federal or state
securities laws, rules or regulations and shall not be transferable except
according to applicable law and the Certificates therefor shall bear legends to
such effect and to the other agreements herein contained. The recipients of such
shares shall each acknowledge such restrictions as a condition to the receipt of
their respective certificates. In the event that CGI files a registration
statement after the issuance of such shares of CGI, CGI will permit such shares
to piggy back on such registration on the conditions of and to the extent the
underwriter permits the same. CGI agrees that for a period of two years from the
date hereof it will not issue addition shares of its common stock if the effect
thereof is to dilute the above shares other than on a prorata basis with other
shares of CGI's then outstanding shares of its common stock.
3. RESIGNATIONS
Upon the first payments under paragraph 2 above Balkin shall and Balkin shall
cause Mark Fuller to resign as directors and officers of PCP, to be effective
immediately.
4. RELEASES
Except for the matters set forth herein PCP and CGI on behalf of themselves and
their successors and assigns on the one part and Salle, Balkin, Seltzer and
Partners and their respective heirs, legatees, personal representatives,
members, partners, successors, and assigns on the other part, mutually release
and discharge each other and their respective heirs, legatees, personal
representatives, successors, assigns, officers, directors, members, partners,
employees and agents of and from all manner of actions, causes of action, suits,
debts, covenants, controversies, agreements, promises, damages, judgments,
claims and demands which they now have, may have had or may hereafter have
arising out of or in any way connected with the purchase and sale of assets of
Salle to PCP, the organization of PCP and the issuance of stock of CGI.
5. MISCELLANEOUS
(a) Captions.
The captions, headings and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit, amplify or modify the
terms and provisions hereof.
(b) Number and Gender of Words.
Whenever herein the singular number is used, the same shall include the plural
where appropriate, and words of any gender shall include each other gender where
appropriate.
(c) Notices.
All notices, demands, requests and other communications required or permitted
hereunder shall be in writing, and shall be personally delivered or mailed by
certified mail, first class postage prepaid, or by prepaid Federal Express or
other messenger service, to the party to which directed at its address as it
appears below, and shall be deemed to have been give on the date actually
received or refused. Any party may change its address for purposes of this
paragraph by giving written notice of such change to all other parties in the
manner hereinabove provided.
If to the PCP or CGI:
John Giura
8400 Brookfield Avenue
Brookfield, Illinois 60513
With copy to:
David J. Jolivette
Jolivette & Templer, P.C.
10 South LaSalle Street
Suite 1017
Chicago, Illinois 60603
If to the other parties:
Michael Balkin
_ William Blair & Company
222 West Adams
Chicago, Illinois 60606
With copy to:
Jeffrey Hechtman
Horwood, Marcus & Berk, Chtd.
333 West Wacker Drive
Suite 2800
Chicago, Illinois 60606
(d) Governing Law.
This Agreement is intended to be performed in the State of Illinois and the laws
of such State, excluding its choice of laws provisions, shall govern the
validity, construction, enforcement and interpretation of this Agreement, and
all parties agree to the venue and jurisdiction of any Court in Cook County,
Illinois.
(e) Entirety and Amendments.
This Agreement embodies the entire Agreement between the parties and supersedes
all prior agreements and understandings, if any, relating to the transaction
contemplated herein, and may be amended or supplemented only by an instrument in
writing executed by the party against whom such amendment is asserted.
(f) Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of the Agreement
and the remaining provisions of the Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be legal, valid or enforceable.
(g) Multiple Counterparts.
This Agreement may be executed in a number of identical counterparts. If so
executed, each of such counterparts is to be deemed an original for all
purposes, and all such counterparts shall, collectively, constitute one
Agreement, but, in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(h) Parties Bound.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
CGI HOLDING CORPORATION
By: /s/ John Giura
Its: President
PERSONAL CARE PRODUCTS, INC.
By: /s/ John Giura
Its: Vice President
SALLE INTERNATIONAL, L.L.C.
By: /s/ Michael Balkin
Michael Balkin, Manager
By: /s/ Neal Seltzer
Neal Seltzer
PCP PARTNERS
By: /s/ Michael Balkin
Michael Balkin, General Partner
EXHIBIT 2
LITIGATION
1. Team Packaging, Inc. v. Laboratory Dynamics, LLC In the Circuit Court of Cook
County, Illinois 99 M1 - 102648
2. Suzanne Mancini and Gregory Mancini v. Salle International, LLC State of
Rhode Island and Providence Plantations, Superior Court 99 -
3. Kiwi Brands v. Salle International, LLC In the Circuit Court of Cook County,
- --------
1 This 8-K/A includes forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. These
statements contain information regarding growth and earnings expectations based
on the Company's current assumptions involving a number of risks and
uncertainties. There are certain important factors that can cause actual results
to differ materially from the forward-looking statements, including, without
limitation, adverse business or market conditions; the ability of the Company to
secure and satisfy customers; and adverse competitive developments. Readers are
cautioned not to place undue reliance on forward-looking statements.
