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UNITED STATES
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): September 5, 1997
ROMAC INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-26058 59-3264661
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
120 West Hyde Park Place, Suite 150, Tampa, Florida 33606
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 251-1700
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N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 5, 1997, Romac International, Inc. ("Romac") entered into a
stock purchase agreement (the "Agreement") with the shareholders of Uni*
Quality System Solutions, Inc. ("UQ Solutions"), to purchase all of the
outstanding capital stock of UQ Solutions. UQ Solutions, an Illinois
corporation, is a business engaged in providing information technology
personnel on a contract basis. The purchase price, which was determined
pursuant to negotiations between the parties, is approximately $19.6 million
and is subject to adjustment upon attainment of certain operating results. The
purchase price is also subject to certain indemnity obligations contained in
the Agreement. The transaction was financed with the proceeds of Romac's
secondary public offering, which have been invested in short-term government
securities since May 1996.
The foregoing is subject to the actual provisions of the above-referenced
Stock Purchase Agreement, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impracticable to
provide the financial statements relative to the acquired business described in
Item 2 at the time this report on Form 8-K is filed. The Registrant intends to
file the required financial statements as soon as practicable, but no later
than 60 days from the date of this filing.
(b) PRO FORMA FINANCIAL INFORMATION. It is impracticable to provide the
pro forma financial information relative to the acquired business described in
Item 2 at the time this report on Form 8-K is filed. The Registrant intends to
file the require pro forma financial information as soon as practicable, but no
later than 60 days from the date of filing.
(c) EXHIBITS.
Exhibit Number Description
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2.1 Stock Purchase Agreement between Romac International,
Inc. and The Sellers of Uni* Quality Systems Solutions,
Inc.
Page 2 of 3 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROMAC INTERNATIONAL, INC.
(Registrant)
By: /s/ Thomas M. Calcaterra
-------------------------------------
Thomas M. Calcaterra, Chief Financial
Officer and Secretary
Date: September 19, 1997
Page 3 of 5 Pages
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Agreement entered into on September 5, 1997, to be effective as
of July 1, 1997, by and among Romac International, Inc., a Florida corporation
(the "Buyer"), and Scott M. Johnsen ("Johnsen"), Donald J. O'Brien ("O'Brien"),
and John E. Sweeney ("Sweeney") (individually a "Seller," and collectively the
"Sellers"). The Buyer and the Sellers are referred to collectively herein as
the "Parties."
The Sellers in the aggregate own all of the outstanding capital stock
of Uni*Quality Systems Solutions, Inc. d/b/a UQ Solutions, Inc., an Illinois
corporation (the "Target").
This Agreement, including all schedules and exhibits referenced herein
(the "Agreement") contemplates a transaction in which the Buyer will purchase
from the Sellers, and the Sellers will sell to the Buyer, all of the issued and
outstanding capital stock of the Target in return for cash.
Now, Therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, and Taxes, liens, losses,
expenses, and fees, including court costs and reasonable expert witness and
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Sec. 1504.
"Annualized EBITA" means the annualized amount of the EBITA of the UQ
Solutions Profit Center from the first day of July, 1997, or 1998,
respectively, through the end of the calendar month immediately preceding the
date on which Buyer and/or Target terminates the employment of Johnsen or
O'Brien without Cause, as Cause (hereinafter "Cause") is defined in those
certain Employment And Noncompetition Agreements set forth in Exhibits B and C
attached hereto (together the "Employment Agreements" and individually an
"Employment Agreement") divided by the number of
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months from the end of such calendar month from the first day of July 1, 1997,
or 1998, respectively, for any annual period, multiplied by twelve (12).
"Applicable Rate" means the prime rate of interest announced from time
to time by NationsBank, N.A.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyer" has the meaning set forth in the preface.
"Closing" has the meaning set forth in Section 2(e).
"Closing Date" has the meaning set forth in Section 2(e).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target that is not already generally available to
the public at the Closing Date.
"Controlled Group of Corporations" has the meaning set forth in Code
Sec. 1563.
"Deferred Intercompany Transaction" has the meaning set forth in
Treas. Reg. Section 1.1502-13.
"Earnout" has the meaning set forth in Section 2(b)(iii).
"EBITA" means earnings before interest, taxes, and amortization as
determined in accordance with GAAP, as more fully described, including examples
thereof as of June 30, 1997, and July 31, 1997, respectively in Schedule
2(b)(i). The EBITA for the UQ Solutions Profit Center shall include:
(a) all revenues from (i) all sources, including from the
clients of Target currently in existence and hereinafter acquired, and
(ii) if Johnsen and O'Brien, on the one hand, and the Buyer, on the
other hand, agree to consolidate Buyer's existing Chicago office
information technology consultants business into the UQ Solutions
Profit Center, all revenues from clients for contract and time and
material services provided by such information technology consultants
from Buyer's existing Chicago office; and
(b) all direct operating expenses and all capital
expenditures, and if Johnsen and O'Brien, on the one hand, and the
Buyer, on the other hand, agree to consolidate Buyer's existing
Chicago office information technology consultants
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business into the UQ Profit Center, all direct personnel expenses
related to such consultants, and the following expenses if, and only
if, Johnsen or O'Brien consent in writing, or if only one of such
individuals is then employed by the Target or the Buyer, then only
such employed individual shall be the one empowered to provide such
written consent:
(i) any administrative, financing or other corporate or
management charges of the Buyer; or
(ii) any operating expenses or capital expenditures
required by the Buyer in type or amount not
previously incurred by the Target.
"Effective Date" has the meaning set forth in Section 2(f).
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Escrow Agreement" has the meaning set forth in Section 9(b)(iv).
"Escrow Agent" means NationsBank, N.A.
"Excess Loss Account" has the meaning set forth in Treas. Reg. Section
1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in Section 5(g).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 9(d).
"Indemnifying Party" has the meaning set forth in Section 9(d).
"Intellectual Property" means (a) all inventions, whether patentable
or unpatentable and whether or not reduced to practice, all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations- in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"Knowledge" means actual knowledge after reasonable investigation of
any of the Sellers.
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"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 5(g).
"Most Recent Fiscal Month End" has the meaning set forth in Section
5(g).
"Most Recent Fiscal Year End" has the meaning set forth in Section
5(g).
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Net Tangible Asset Value" means the net tangible assets of Target in
excess of liabilities as of June 30, 1997, as determined in accordance with
GAAP.
"Ordinary Course of Business" means the ordinary course of business of
Target consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 2(b).
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which the Target
owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.
"Target" has the meaning set forth in the preface.
"Target Share" means any share of the Common Stock, par value $10.00
per share, of the Target.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"UQ Solutions Profit Center" means the profit center of Target after
the Closing that is expected to be conducted from Target's offices in Oak
Brook, Illinois, under the day-to-day direction and management of Johnsen
and/or O'Brien, but which profit center shall be subject to the overall
management of Buyer.
2. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to the Buyer, all of his Target
Shares for the consideration specified in Section 2(b).
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(b) Purchase Price.
The Purchase Price for the Shares shall be the sum of the
following (the "Purchase Price"):
(i) $19,409,250.00, which represents seven (7)
times the annualized adjusted and normalized EBITA of the
Target based upon the six (6) months ended June 30, 1997, as
determined and described in Schedule 2(b)(i); plus
(ii) $223,149.00, which represents the amount that
the Net Tangible Asset Value of the Target as of June 30,
1997, of $1,223,149.00, is in excess of $1,000,000.00; plus
(iii) an Earnout in such amounts as are determined
as follows:
(A) For the twelve (12) month period
beginning July 1, 1997, and ending
June 30, 1998, seven and one-half
(7.5) times the amount that the
EBITA for the UQ Solutions Profit
Center for the twelve (12) month
period beginning on July 1, 1997 and
ending June 30, 1998, exceeds
$2,772,750.00, provided, however,
that if the employment of Johnsen or
O'Brien is terminated without Cause
by the Buyer or the Target prior to
June 30, 1998, then the Earnout
shall be the greater of the
foregoing amount, or seven and
one-half (7.5) times the amount that
the Annualized EBITA for the UQ
Solutions Profit Center for the
twelve (12) month period beginning
on July 1, 1997, and ending June 30,
1998, exceeds $2,772,750.00, plus
(B) For the twelve (12) month period
beginning July 1, 1998 and ending
June 30, 1999, three (3) times the
amount that the EBITA for the UQ
Solutions Profit Center for the
twelve (12) month period beginning
July 1, 1998, and ending June 30,
1999, exceeds the greater of (i)
$2,772,750.00, or (ii) EBITA for the
UQ Solutions Profit Center for the
twelve (12) month period beginning
July 1, 1997, and ending June 30,
1998, provided, however, that if the
employment of Johnsen or O'Brien is
terminated without Cause by the
Target or the Buyer between
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July 1, 1998, and June 30, 1999,
then the Earnout shall be the
greater of the foregoing amount, or
three (3) times the amount that the
Annualized EBITA, for the UQ
Solutions Profit Center for the
twelve (12) month period beginning
July 1, 1998 and ending June 30,
1999, exceeds the greater of (i)
$2,772,750.00, or (ii) EBITA for the
UQ Solutions Profit Center for the
twelve (12) month period beginning
July 1, 1997, and ending June 30,
1998.
(c) Payment of Purchase Price. Buyer agrees to pay
to Sellers the purchase price in proportion to their respective
holdings of Target Shares as set forth in Schedule 5(b)(i) as follows:
(i) $17,669,159.00 at the Closing by wire
transfer or delivery of other immediately available funds to a
concentration account designated by the Sellers;
(ii) $1,963,240.00 at the Closing by wire transfer
or delivery of other immediately available funds to the Escrow
Agent pursuant to the Escrow Agreement set forth in Exhibit A,
to be distributed pursuant to the terms of said Escrow
Agreement; and
(iii) Subject to the determination of EBITA as set
forth in Section 2(d), the amount of the Earnout pursuant to
Section 2(b)(iii), on or before August 31, 1998, for the
twelve (12) month period beginning July 1, 1997, and ending
June 30, 1998, and on or before August 31, 1999, for the
twelve (12) month period beginning July 1, 1998, and ending
June 30, 1999.
(d) Post Closing Determination of EBITA for the UQ
Solutions Profit Center.
(i) On or before the 15th day of August in 1998
and 1999, the Buyer shall deliver to the Sellers and the Buyer
the amount of the EBITA and/or the Annualized EBITA, as the
case may be, for the UQ Solutions Profit Center for the twelve
(12) month periods ending June 30, 1998, and June 30, 1999.
The Buyer and the Sellers each shall designate a
representative to assist and shall cooperate with each other
and the accountants in preparing such EBITA amounts for each
of said years as applicable.
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(ii) The determination of such EBITA amounts for
each of said years shall be accompanied by a report of Buyer
stating that it has been prepared in accordance with GAAP
applied on a consistent basis (subject only to such exceptions
thereto as agreed upon by the Buyer and the Sellers).
(iii) Within ten (10) days after the Buyer delivers
the determination of such EBITA amounts to the Sellers,
Sellers shall give the Buyer written notice that they either
agree and accept such EBITA amounts, or that they dispute one
or more items set forth in the determination of such EBITA
amounts, describing in reasonable detail the amount or item
disputed and the basis for disputing the item, in which event
the Buyer and such Sellers shall attempt in good faith to
resolve the dispute. If the Parties are unable to resolve the
dispute within thirty (30) days after the date the Buyer
receives notice of the dispute from the Sellers, the Buyer and
the Sellers shall submit the dispute to binding arbitration in
accordance with the following procedures:
(A) Any arbitration proceeding shall
take place in Chicago, Illinois, and shall be
conducted in accordance with the then current rules
of the American Arbitration Association, except as
otherwise specifically provided in this Section 2(d).
(B) The parties shall have ten (10) days
after the expiration of the thirty (30) day mutual
resolution period described above to agree upon an
arbitrator to conduct such proceeding. If the
parties fail to so agree within such ten (10) day
period, then within five (5) days after the end of
such ten (10) day period, each party shall select an
arbitrator and, within ten (10) days after the end of
such five (5) day period, such two (2) arbitrators
shall select a third arbitrator. Each arbitrator
must either have professional experience relating to
the business, accounting or legal aspects of the
subject of the arbitration. No arbitrators shall (1)
have any material interest in the result of the
arbitration or (2) be, or shall ever have been, an
affiliate, equity holder or creditor of, or an
attorney, accountant, agent or consultant for, any
Party to such arbitration proceeding.
(C) Each arbitration proceeding shall
start as soon as reasonably practical after the
selection of the arbitrator(s). Specific timing,
including the setting of the dates for hearings,
shall be
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subject to the mutual agreement of each Party,
including the arbitrator(s); provided, however, that
if agreement cannot be reached within a
reasonable time, the arbitrator(s) shall have the
sole authority to settle all timing issues after
taking into account the needs of each Party to
prepare for, resolve and dispose of the matter as
soon as reasonably practicable.
(D) The decision of the arbitrator (or,
if there are three (3) arbitrators, the decision of
any two (2) arbitrators) shall be final and binding
upon the Parties, and judgment may be entered upon
any such decision in any court having jurisdiction.
(E) Except as otherwise specifically
provided herein, all costs incurred in connection
with any arbitration proceeding, including the
American Arbitration Association fees, the
arbitrator(s) fees, the cost of using any facilities
for the arbitration hearings and the reasonable fees
and expenses of expert witnesses, legal counsel and
accountants of the prevailing party shall be paid by
the non-prevailing party.
(F) The payments based upon such EBITA
amounts delivered by the Buyer to the Sellers shall
be paid by the Buyer to the Sellers notwithstanding
the existence of the dispute, except that the amount
in dispute shall not be included and no payment by
the Buyer of the amount in dispute shall be required
until the dispute has been resolved by agreement of
such Parties or by the arbitration procedure
described herein.
(e) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Holland & Knight LLP in Tampa, Florida, or at such other
location as the Parties may mutually determine, commencing at 9:00
A.M. local time on the business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the
Closing itself), or such other earlier date as the Parties may
mutually determine, but in any event not later than September 6, 1997.
(the "Closing Date").
(f) Effective Date. The Parties agree that the effective
date of the Closing of the transactions contemplated by this Agreement
shall be as of July 1, 1997 (the "Effective
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Date") notwithstanding that the Closing will occur on a later date.
(g) Deliveries at the Closing. At the Closing:
(i) the Sellers will deliver to the Buyer:
(A) the various certificates,
instruments, and documents referred to in Section
8(a); and
(B) the stock certificates representing
all of their Target Shares, endorsed in blank or
accompanied by duly executed assignment documents;
and
(ii) the Buyer will deliver to the Sellers:
(A) the various certificates,
instruments, and documents referred to in Section
8(b); and
(B) the consideration specified in
Section 2(b)(i) and Section 2(b)(ii).
3. Representations and Warranties of the Sellers. Each of the
Sellers represents and warrants to the Buyer that the statements contained in
this Section 3 are true and correct as of the date of this Agreement and will
be true and correct as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 3) with respect to himself, except as set forth in the Schedules
that correspond to the particular sections.
(a) Authorization of Transaction. He has full power and
authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of him, enforceable in accordance with its
terms and conditions. He is not required to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(b) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which any Seller is subject or, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement,
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contract, lease, license, instrument, or other arrangement to which he
is a party or by which he is bound or to which any of his assets is
subject.
(c) Brokers' Fees. He does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which the Buyer could become liable or obligated.
(d) Target Shares. He holds of record and owns
beneficially the number of Target Shares set forth next to his name in
Schedule 5(b)(i), free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. He is not a party to any option, warrant, purchase right, or
other contract or commitment that could require him to sell, transfer,
or otherwise dispose of any capital stock of the Target (other than
this Agreement). He is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any
capital stock of the Target.
4. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers that the statements contained in this
Section 4 are true and correct as of the date of this Agreement and will be
true and correct as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in Schedules that correspond to the particular
section.
(a) Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, in good standing under the laws
of the jurisdiction of its incorporation and qualified to do business in all
jurisdictions where it is required to be qualified.
(b) Authorization of Transaction. The Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions. The Buyer need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment,
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order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its articles of incorporation or by-laws, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject.
(d) Brokers' Fees. Except for the commission that Buyer
has agreed to pay to DeBellas & Company, the Buyer has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any Seller
could become liable or obligated.
(e) Investment. The Buyer is not acquiring the Target
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
5. Representations and Warranties Concerning the Target. The
Sellers represent and warrant to the Buyer that the statements contained in
this Section 5 are true and correct as of the date of this Agreement and will
be true and correct as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 5), except as set forth in the Schedules that correspond to the
particular sections. Notwithstanding the foregoing, the Parties understand and
agree that the information set forth in the various Schedules is as of the
dates set forth in each specific Schedule and that said Schedules will not be
updated as of the date this Agreement is executed or closed. Sellers further
represent and warrant that any changes in the information set forth in said
Schedules through the date this Agreement is executed are in the Ordinary
Course of Business.
(a) Organization, Qualification, and Corporate Power.
The Target is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. The Target
is duly authorized to conduct business and is in good standing under the laws
of each jurisdiction where such qualification is required, except where the
failure to be so qualified would not have a materially adverse effect on
Target. The Target has full corporate power and authority, and to Sellers'
Knowledge, and all licenses, permits and authorizations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Schedule 5(a)
lists the directors and officers of the Target. The Sellers have delivered to
the Buyer correct and complete copies of the articles of incorporation and
bylaws of the Target and all amendments thereto. The minute books containing
the records of meetings of the stockholders, the board
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<PAGE> 14
of directors, and any committees of the board of directors, the stock
certificate books, and the stock record books of the Target are correct and
complete in all material respects. The Target is not in default under or in
violation of any provision of its articles of incorporation or bylaws.
(b) Capitalization. The entire authorized capital stock
of the Target consists of one thousand (1,000) Target Shares, of which six
hundred (600) Target Shares are issued and outstanding. There are no Target
Shares held in treasury. All of the issued and outstanding Target Shares have
been duly authorized, are validly issued, fully paid, and nonassessable, and
are held of record by the respective Sellers as set forth in Schedule 5(b)(i).
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Target to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of the Target.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Target is subject or any provision of the charter or bylaws of the Target, or
(ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Target is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). The Target does
not need to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(d) Brokers' Fees. The Target has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Target has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it and located on its premises, that are shown on the Most Recent Balance Sheet
or acquired after the date thereof, free and clear of all Security Interests,
except for properties and
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<PAGE> 15
assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) Subsidiaries. The Target has no Subsidiary
corporations.
(g) Financial Statements. Schedule 5(g) sets forth:
(i) unaudited balance sheets and statements of
income, as of and for the fiscal years ended December 31,
1994, December 31, 1995, and December 31, 1996 (the "Most
Recent Fiscal Year End") for the Target; and
(ii) unaudited balance sheet and statement of
income, as of and for the six (6) months ended June 30, 1997
(the "Most Recent Fiscal Month End") for the Target
(collectively the "Financial Statements"). The Financial
Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, present fairly the financial
condition of the Target as of such dates and the results of
operations of the Target for such periods, are correct and
complete, and are consistent with the books and records of the
Target, which books and records are correct and complete.
(h) Events Subsequent to June 30, 1997. Since June 30,
1997, there has not been any materially adverse change in the business,
financial condition, operations or results of operations of the Target.
Without limiting the generality of the foregoing, since that date:
(i) the Target has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other
than for a fair consideration;
(ii) except for contracts entered into with
independent contractors and other contracts in the Ordinary
Course of Business, the Target has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more
than $10,000.00;
(iii) except in the Ordinary Course of Business, no
party, including the Target, has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or
license, or series of related agreements, contracts, leases,
and licenses, to which the Target is a party or by which it is
bound;
(iv) the Target has not imposed any Security
Interest upon any of its assets, tangible or intangible;
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<PAGE> 16
(v) the Target has not made any capital
expenditure, or series of related capital expenditures, in
excess of $10,000.00;
(vi) the Target has not made any capital
investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
(vii) the Target has not issued any note, bond, or
other debt security, or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized
lease obligations;
(viii) the Target has not delayed or postponed the
payment of accounts payable and other Liabilities;
(ix) the Target has not cancelled, compromised,
waived, or released any material right or claim (or series of
related rights and claims);
(x) the Target has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(xi) there has been no change made or authorized
in the articles of incorporation or by-laws of the Target;
(xii) the Target has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain, including
upon conversion, exchange, or exercise, any of its capital
stock;
(xiii) the Target has not declared, set aside or paid
any dividend or made any distribution with respect to its
capital stock whether in cash or in kind, or redeemed,
purchased or otherwise acquired any of its capital stock;
(xiv) the Target has not experienced any material
damage, destruction or loss, whether or not covered by
insurance, to its property;
(xv) the Target has not made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees;
(xvi) except for employment and independent
contractor agreements entered into or modified in the Ordinary
Course of Business, the Target has not entered into any
employment contract or collective bargaining
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<PAGE> 17
agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xvii) except for adjustments to compensation for
non-shareholder employees in the Ordinary Course of Business,
the Target has not granted any other increase in the base
compensation of any of its directors, officers and employees;
(xviii) except for adjustments to compensation for
non-shareholder employees in the Ordinary Course of Business,
the Target has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its
directors, officers, and employees, or taken any such action
with respect to any other Employee Benefit Plan;
(xix) except for adjustments to compensation for
non-shareholder employees in the Ordinary Course of Business
and reduction of salaries of the Sellers retroactive to July
1, 1997, in accordance with Schedule 5(h)(xix), the Target has
not made any other change in employment terms for any of its
directors, officers, and employees;
(xx) the Target has not made or pledged to make
any charitable or other capital contribution in excess of
$1,000.00 in the aggregate;
(xxi) outside the Ordinary Course of Business,
there has not been any other material occurrence, event,
incident, action, failure to act, or transaction involving
the Target; and
(xxii) except in the Ordinary Course of Business,
the Target has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Target has no Liability
(and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand against it giving rise to any Liability), except for:
(i) Liabilities set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto); and
(ii) Liabilities which have arisen after the Most
Recent Fiscal Month End in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in
the nature of, or was caused by any
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<PAGE> 18
breach of contract, breach of warranty, tort, infringement, or
violation of law by the Target).
(j) Legal Compliance. To Sellers' knowledge, the Target
has complied in all material respects with all applicable laws,
including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder, of federal, state,
local, and foreign governments, and all agencies thereof, and no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(k) Tax Matters.
(i) The Target as of the date hereof has filed
all Tax Returns that it was required to file. All such Tax
Returns were correct and complete in all respects. All Taxes
owed by the Target, whether or not shown on any Tax Return,
have been paid. The Target currently is not the beneficiary
of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction
where the Target does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Target that
arose in connection with any failure, or alleged failure, to
pay any Tax.
(ii) The Target has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(iii) No Seller is aware of any facts that would
cause any of them to expect any authority to assess any
additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax
Liability of the Target either:
(A) claimed or raised by any authority in writing; or
(B) as to which any of the Sellers and the directors
and officers of the Target has Knowledge based upon
personal contact with any agent of such authority.
Schedule 5(k)(iii) lists all federal, state, local, and
foreign income Tax Returns filed with respect to the Target
for taxable periods ended after the date of its incorporation,
indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently
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<PAGE> 19
are the subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all filed federal income
Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Target
after the date of its incorporation.
(iv) The Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(v) The Target has not filed a consent under Code
Sec. 341(f) concerning collapsible corporations. The Target
has not made any payments, is obligated to make any payments,
or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will
not be deductible under Code Sec. 280G. The Target has not
been a United States real property holding corporation within
the meaning of Code Sec. 897(c)(2) during the applicable
period specified in Code Sec. 897(c)(1)(A)(ii). The Target
has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of
Code Sec. 6662. The Target is not a party to any Tax
allocation or sharing agreement. The Target:
(A) has not been a member of an
Affiliated Group filing a consolidated federal income
Tax Return (other than a group the common parent of
which was the Target); or
(B) has no Liability for the Taxes of
any Person (other than the Target) under Treas. Reg.
Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(vi) Schedule 5(k)(vi) sets forth the following
information with respect to the Target:
(A) the basis of the Target's assets;
(B) the amount of any net operating
loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable
contribution allocable to the Target; and
(C) the amount of any deferred gain or
loss allocable to the Target arising out of any
Deferred Intercompany Transaction.
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(vii) The unpaid Taxes of the Target:
(A) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax
Liability, rather than any reserve for deferred Taxes
established to reflect timing differences between
book and Tax income, set forth in the Most Recent
Balance Sheet, including notes thereto; and
(B) do not exceed that reserve as
adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice
of the Target in filing its Tax Returns.
(l) Real Property.
(i) The Target does not own any real property.
(ii) Schedule 5(l)(ii) lists and describes briefly
all real property leased or subleased to the Target. The
Sellers have delivered to the Buyer correct and complete
copies of the leases and subleases listed in Schedule
5(l)(ii), including all amendments thereto. With respect to
each lease and sublease listed in Schedule 5(l)(ii):
(A) the lease or sublease is in full
force and effect and to the Sellers' Knowledge,
legal, valid, binding, and enforceable;
(B) subject to any required notices or
consents that are set forth in Schedule 5(l)(ii), the
lease or sublease will continue in full force and
effect, and to Sellers' Knowledge, to be legal,
valid, binding and enforceable, on identical terms
following the consummation of the transactions
contemplated hereby;
(C) To Sellers' Knowledge, no party to
the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease
has repudiated any provision thereof;
(E) there are no disputes, oral
agreements, or forbearance programs in effect as to
the lease or sublease;
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(F) with respect to each sublease, the
representations and warranties set forth in
subsections (A) through (E) herein are true and
correct with respect to the underlying lease;
(G) the Target has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or
subleasehold;
(H) to Sellers' Knowledge, all
facilities leased or subleased thereunder have
received all approvals of governmental authorities,
including licenses and permits, required in
connection with the operation thereof, and to
Sellers' Knowledge, have been operated and maintained
in all material respects in accordance with
applicable laws, rules, and regulations; and
(I) all facilities leased or subleased
thereunder are supplied with utilities and other
services necessary for the operation of said
facilities.
(m) Intellectual Property.
(i) The Target owns or has the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property used in the operation of the businesses
of the Target as presently conducted. Subject to any required
notices or consents that are listed in Schedule 5(m), each
item of Intellectual Property owned or used by the Target
immediately prior to the Closing hereunder will be owned or
available for use by the Target on identical terms and
conditions immediately subsequent to the Closing hereunder.
The Target has taken all necessary action to maintain and
protect each item of Intellectual Property that it owns or
uses.
(ii) The Target has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties, and none of
the Sellers has ever received any charge, complaint, claim,
demand, or notice alleging any such interference,
infringement, misappropriation, or violation, including any
claim that the Target must license or refrain from using any
Intellectual Property rights of any third party. To Sellers'
Knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Target.
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(iii) Schedule 5(m)(iii) identifies each patent or
registration which has been issued to the Target with respect
to any of its Intellectual Property, identifies each pending
patent application or application for registration which the
Target has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which the Target has granted to any third party
with respect to any of its Intellectual Property, together
with any exceptions. The Sellers have delivered to the Buyer
correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and
permissions (as amended to date). Schedule 5(m)(iii) also
identifies each trade name or unregistered trademark used by
the Target in connection with any of its businesses. With
respect to each item of Intellectual Property required to be
identified in Schedule 5(m)(iii):
(A) To Sellers' Knowledge, the Target
possesses all right, title, and interest in and to
the item, free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree,
ruling, or charge;
(C) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or
demand is pending, or to Sellers' Knowledge, is
threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) the Target has not ever agreed to
indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict
with respect to the item.
(iv) Schedule 5(m)(iv) identifies each item of
Intellectual Property that any third party owns and that the
Target uses pursuant to license, sublicense, agreement, or
permission. The Sellers have delivered to the Buyer correct
and complete copies of all such licenses, sublicenses,
agreements, and permissions and all amendments thereto. With
respect to each item of Intellectual Property required to be
identified in Schedule 5(m)(iv):
(A) the license, sublicense, agreement,
or permission covering the item is legal, valid,
binding, enforceable, and in full force and effect;
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<PAGE> 23
(B) subject to any required notices or
consents that are listed in Schedule 5(m)(iv) the
license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms
following the Closing;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and
no event has occurred which with notice or lapse of
time would constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision
thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in
subsections (A) through (D) are true and correct with
respect to the underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding
injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or
demand is pending or is threatened which challenges
the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(H) the Target has not granted any
sublicense or similar right with respect to the
license, sublicense, agreement, or permission.
(v) To Sellers' Knowledge, the Target will not
interfere with, infringe upon, misappropriate, or otherwise
come into conflict with, any Intellectual Property rights of
third parties as a result of the continue operation of its
business as presently conducted.
(n) Tangible Assets. Except for employee and independent
contractor consultants of the Target who use the clients' equipment on the
clients' premises, the Target owns or leases all real property, furniture,
equipment, and other tangible assets necessary for the conduct of its
businesses as presently conducted. Each such tangible asset, has been
maintained in accordance with normal industry practice, is in operating
condition
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and repair, subject to normal wear and tear, and is suitable for the purposes
for which it presently is used.
(o) Contracts. Schedule 5(o) lists the following
contracts and other agreements to which the Target is a party:
(i) any agreement, or group of related
agreements, for the lease of personal property to or from any
Person providing for lease payments;
(ii) any agreement, or group of related
agreements, for the purchase or sale of commodities, supplies,
products, other personal property, services, the performance
of which will extend over a period of more than one (1) year;
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement, or group of related
agreements, under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or any
capitalized lease obligation, or under which it has imposed a
Security Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with any of the Sellers and
their Affiliates, other than the Target;
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation,
severance, or other plan or arrangement for the benefit of its
current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual or entity on a full-time, part-time, consulting, or
other basis;
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xi) any agreement with its clients; or
(xii) any other agreement, or group of related
agreements, the performance of which involves
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consideration in excess of $10,000.00 or extends over a
period of more than one (1) year.
The Sellers have made available to Buyer correct and complete copies of each
written agreement listed in Schedule 5(o) and a written summary setting forth
the terms and conditions of each oral agreement referred to in Schedule 5(o)
involving more than $10,000 per month or extending over a period of more than
one (1) year. With respect to each such agreement:
(i) to Sellers' Knowledge, the agreement is
legal, valid, binding, enforceable, and in full force and
effect;
(ii) subject to any required notices and consents
that are listed in Schedule 5(o), to Sellers' Knowledge the
agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(iii) to Sellers' Knowledge, no party is in breach
or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the
agreement; and
(iv) no party has repudiated any provision of the
agreement.
(p) Notes and Accounts Receivable. All notes and
accounts receivable of the Target are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts set forth
on the face of the Most Recent Financial Statements (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Target.
(q) Powers of Attorney. There are no outstanding powers
of attorney executed on behalf of the Target.
(r) Insurance. Schedule 5(r) sets forth the following
information with respect to each insurance policy, including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements, to which the Target has been a party, a named insured, or
otherwise the beneficiary of coverage at any time:
(i) the name, address, and telephone number of
the agent;
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(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope, including the amount and whether
the coverage was on a claims made, occurrence, or other basis;
and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy:
(i) to Sellers' Knowledge, the policy is legal,
valid, binding, enforceable, and in full force and effect;
(ii) subject to any required notices and consents
that are listed in Schedule 5(r), to Sellers' Knowledge the
policy will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
(iii) to Sellers' Knowledge, neither the Target nor
any other party to the policy is in breach or default,
including with respect to the payment of premiums or the
giving of notices, and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration,
under the policy; and
(iv) no party to the policy has repudiated any
provision thereof.
The Target has been covered since the time it commenced doing
business by insurance it believed in scope and amount to have been
customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Schedule 5(r) also describes any
self-insurance arrangements affecting the Target.
(s) Litigation. Schedule 5(s) sets forth each instance
in which the Target:
(i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; or
(ii) is a party, or to Sellers' Knowledge, is
threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before
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any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator.
(t) Employees. Schedule 5(t) is a list of the employees
of the Target. Except for Sweeney, to Seller's Knowledge, no
executive, key employee, or group of employees has any plans to
terminate employment with the Target. The Target is not a party to or
bound by any collective bargaining agreement, nor has it experienced
any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. To Sellers' Knowledge, the Target has
not committed any unfair labor practice. The Sellers are not aware of
any organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of the Target.
(u) Employee Benefits.
(i) Schedule 5(u) lists each Employee Benefit
Plan that the Target maintains or to which the Target
contributes:
(A) To Sellers' Knowledge, each such
Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in
operation in all material respects with the
applicable requirements of ERISA, the Code, and other
applicable laws.
(B) To Sellers' Knowledge, all required
reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such
Employee Benefit Plan. To Sellers' Knowledge, the
requirements of Part 6 of Subtitle B of Title I of
ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
(C) To Sellers' Knowledge, all
contributions (including all employer contributions
and employee salary reduction contributions) which
are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and
all contributions for any period ending on or before
the Closing Date which are not yet due have been paid
to each such Employee Pension Benefit Plan or accrued
in accordance with the past custom and practice of
the Target. All premiums or other payments for all
periods ending on or before the
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Closing Date have been paid with respect to each such
Employee Benefit Plan which is an Employee Welfare
Benefit Plan or accrued in accordance with the past
custom and practice of the Target.
(D) Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Code Sec.
401(a) and a request for a favorable determination
letter from the Internal Revenue Service is currently
pending.
(E) The Sellers have delivered to the
Buyer complete copies of the plan documents and
summary plan descriptions, the most recent Form 5500
Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan
that the Target maintains or ever has maintained or to which
the Target contributes, ever has contributed to, or ever has
been required to contribute:
(A) No such Employee Benefit Plan is an
Employee Pension Benefit Plan subject to the
jurisdiction of the PBGC.
(B) To Sellers' Knowledge, there have
been no Prohibited Transactions with respect to any
such Employee Benefit Plan. To Sellers' Knowledge, no
Fiduciary has any Liability for breach of fiduciary
duty or any other failure to act or comply in
connection with the administration or investment of
the assets of any such Employee Benefit Plan. To
Sellers' Knowledge, no action, suit, proceeding,
hearing, or investigation with respect to the
administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened. To Seller's
Knowledge there is no Basis for any such action,
suit, proceeding, hearing, or investigation.
(iii) The Target does not contribute to, never has
contributed to, or never has been required to contribute to
any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) Other than the Code Section 125 Plan
identified in Schedule 5(u) the Target does not maintain or
ever has maintained or contributes, ever has contributed, or
ever
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has been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980B).
(v) Guaranties. The Target is not a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(w) Environment, Health, and Safety.
(i) To Sellers' Knowledge, the Target has
materially complied with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding
sentence, to Sellers' Knowledge, the Target has obtained and
been in material compliance with all of the terms and
conditions of all permits, licenses, and other authorizations
which are required under, and has materially complied with all
other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health,
and Safety Laws.
(ii) To Sellers' Knowledge, the Target has not
handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated
any property or facility in any manner in violation of any
Environmental, Health, and Safety Law.
(iii) To Sellers' Knowledge, all properties and
equipment used in the business of the Target have been free of
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
(x) Certain Business Relationships with the Target.
Except as an employee, officer, or director, none of the Sellers or their
Affiliates have been involved in any business arrangement or relationship with
the Target within the past twelve (12) months, and none of the Sellers or their
Affiliates owns any asset, tangible or intangible, which is used in the
business of the Target.
(y) Business Names and Addresses. Since the date of
incorporation, the Target has not used a business name other than
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UQ Solutions, Inc., Uni*Quality System Solutions, Inc., and Uni*Quality and
variations thereof, and has not had a business address other than the addresses
that are set forth in Schedule 5(y).
(z) Existing Customers and Agreements with Customers. No
Seller has Knowledge that any material existing client of the Target will not
continue to do business with the Target after the Closing Date. None of the
contracts or agreements with any of Target's clients or customers prohibit the
transactions contemplated by this Agreement or require the consent or approval
of any such clients or customers to transactions contemplated by this
Agreement. None of the Target's clients or customers are serviced more than
one hundred (100) miles from Target's current offices in Oak Brook, Illinois
other than FCNBD who is located in Detroit, Michigan.
(aa) Disclosure. To Sellers' Knowledge, the
representations and warranties contained in this Section 5 do not contain any
untrue statement of a fact or omit to state any fact necessary in order to make
the statements and information contained in this Section 5 not misleading.
6. Pre-Closing Covenants. Subject to Section 10, the Parties agree
as follows with respect to the period between the execution of this Agreement
and the Closing.
(a) General. Each of the Parties will use his or its
best efforts to take all reasonable action and to do all reasonable things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section 8 below).
(b) Notices and Consents. The Sellers will cause the
Target to give any required notices to third parties, and will cause the Target
to use its best reasonable efforts to obtain any required third-party consents,
that the Buyer may reasonably request in connection with the matters referred
to in Section 5(c) above. Each of the Parties will (and the Sellers will cause
the Target to) give any required notices to, make any required filings with,
and use its best reasonable efforts to obtain any required authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 4(b) and Section 5(c)above. Without
limiting the generality of the foregoing, each of the Parties will file (and
the Sellers will cause the Target to file) any Notification and Report Forms
and related material that he or it may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Act, will use his or its best efforts to
obtain (and the Sellers will cause the Target to use its best efforts to
obtain) an early termination
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of the applicable waiting period, and will make (and the Sellers will cause the
Target to make) any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith.
(c) Operation of Business. Subject to the other
provisions of this Agreement, including those in Section 8(a)(xi), the Sellers
will not cause or permit the Target to engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Sellers will not cause or permit
the Target to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock, or (ii) otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 5(h) above.
(d) Preservation of Business. The Sellers will cause the
Target to use commercially reasonable efforts to keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) Reasonable Access. Until the Closing or the
termination of this Agreement pursuant to Section 10, whichever first occurs,
each of the Sellers will permit, and the Sellers will cause the Target to
permit, representatives of the Buyer to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Target, to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
the Target.
(f) Notice of Developments. The Sellers will give prompt
written notice to the Buyer of any materially adverse development causing a
breach of any of the representations and warranties in Section 3 and Section 5.
Each Party will give prompt written notice to the others of any materially
adverse development causing a breach of any of his or its own representations
and warranties in Section 3, Section 4, and Section 5. No disclosure by any
Party pursuant to this Section 6(f), however, shall be deemed to amend or
supplement the Schedules or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(g) Exclusivity. None of the Sellers will (and the
Sellers will not cause or permit the Target to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of, the Target (including any acquisition
structured as a merger, consolidation, or share exchange), or (ii) participate
in any discussions or negotiations regarding, furnish any information with
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<PAGE> 32
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. None of
the Sellers will vote their Target Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange.
7. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 9 below). The Sellers acknowledge and agree that from
and after the Closing the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Target, except the Buyer shall give the
Sellers access to such materials (to the extent relating to periods prior to
the Closing Date) for all reasonable purposes.
(b) Litigation Support. In the event and for so long as
any Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement, or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Target, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor under
Section 9).
(c) Transition. None of the Sellers will knowingly take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the Target
from maintaining the same business relationships with the Target after the
Closing as it maintained with the Target prior to the Closing. Each of the
Sellers will refer all customer inquiries relating to the businesses of the
Target to the Buyer from and after the Closing.
(d) Confidentiality. Each of the Sellers will treat and
hold as such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with
32
<PAGE> 33
this Agreement or his position as a company officer, director, or employee of
Target, and deliver promptly to the Buyer or destroy, at the request and option
of the Buyer, all tangible embodiments (and all copies) of the Confidential
Information which are in his or its possession. In the event that any of the
Sellers is requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, that Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 7(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, any of the Sellers is,
on the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, that Seller may disclose the
Confidential Information to the tribunal; provided, however, that the
disclosing Seller shall use his or its best efforts to obtain, at the request
of the Buyer, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall not
apply to any Confidential Information which is generally available to the
public immediately prior to the time of disclosure or in the public domain
other than pursuant to a breach by the Sellers of this Agreement.
(e) Covenant Not to Compete. For a period of five (5)
years from and after the Closing Date, none of the Sellers will engage directly
or indirectly in any business that the Target conducts as of the Closing Date
with FCNBD in Detroit, Michigan, and within one hundred (100) miles of Target's
current offices in Oak Brook, Illinois; provided, however, that no owner of
less than one percent (1%) of the outstanding stock of any publicly traded
corporation shall be deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 7(e) is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(f) Solicitation. For a period of five (5) years from
and after the Closing Date, none of the Sellers will solicit the business of
FCNBD in Detroit, Michigan, or any other client of the Target relating to the
business conducted by the Target within one hundred miles (100) miles of
Target's current offices in Oak Brook,
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Illinois, or disclose any confidential information regarding the business of
the Target, provided, however, that this shall not restrict any of the Sellers
from doing business with (i) any Client, excluding FCNBD in Detroit, Michigan,
who is serviced from a Client office that is located outside of one hundred
(100) miles of Target's current office of Oak Brook, Illinois, or (ii) any
other company that is located outside of one hundred (100) miles of Target's
current office in Oak Brook, Illinois. For the purposes of this paragraph, the
word "Client" means organizations (whether corporations, partnerships, or
otherwise) or persons who have done business of any nature with the Target
since its date of incorporation.
(g) Solicitation of Employees. The Sellers agree that
for a period of five (5) years after the Closing Date, they will not, without
the Buyer's prior written consent, hire as an employee or enter into any type
of consulting agreement with any current non-shareholder employees of Target
(or any of their lineal descendants) for a period of one (1) year after the
termination of employment of any such employee with Target.
(h) Books and Records of UQ Solutions Profit Center. On
an annual basis and after Buyer presents to Sellers the report of the EBITA of
the UQ Solutions Profit Center that is required by Section 2(d)(i), Buyer
agrees to provide each of the Sellers, his attorneys, accountants and agents,
access to the books, records and financial statements of the UQ Solutions
Profit Center. Each Seller who wishes access to such books, records and
financial statements pursuant to this paragraph, agrees to provide Buyer
advance written notice thereof, agrees that any such inspection will be during
normal business hours, agrees not to interfere with Target's or Buyer's
business, and Buyer shall make such documents available to said Seller, his
attorneys, accountants and/or agents within a reasonable period of time, which
period shall not exceed five (5) business days.
(i) EBITA Calculations for UQ Profit Center. Until the
Earnout has been paid in full by the Buyer to the Sellers, Buyer shall provide
Sellers with determinations of the EBITA for the UQ Profit Center for each
month commencing with the month of August of 1997, within forty-five (45) days
after the end of each such month.
(j) Credit for Previous Service in Buyer Retirement Plan.
Buyer covenants to provide credit for previous service with the Target in
Buyer's 401(k) Profit Sharing Plan to all current employees of the Target after
the Closing.
(k) Reimbursement of Seller Advancements. Within one
business day of the Closing, each of the Sellers shall reimburse the Target for
the amount of the following items paid by the Target between July 1, 1997, and
Closing:
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(i) the salary he received and all payroll taxes of the
Target related thereto;
(ii) the payment of his vehicle lease;
(iii) the payment of his automobile insurance;
(iv) the payment of the premium on his life insurance to
fund the Cross Purchase Buy-Sell Agreement; and
(v) one-third (1/3) of all of the Sellers' legal fees and
expenses in connection with this Agreement and any of the transactions
contemplated hereby.
8. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3 and Section 5 shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all
of their covenants hereunder in all material respects through the
Closing;
(iii) the Target shall have procured all of the third party
consents specified in Section 6(b);
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Target Shares and to control the Target, or (D) affect adversely the
right of the Target to own its assets and to operate its businesses
(and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(v) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 8(a)(i)-(iv) is satisfied in all respects;
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(vi) the Parties and the Target shall have
received all other authorizations, consents, and approvals of
governments and governmental agencies referred to in Section 4(b) and
Section 5(c) above;
(vii) Johnsen and O'Brien shall have executed and
delivered to Buyer employment agreements in the forms set forth as
Exhibit B and C respectively;
(viii) the Buyer shall have received from counsel to
the Sellers an opinion in form and substance as set forth in Exhibit D
attached hereto, addressed to the Buyer, and dated as of the Closing
Date;
(ix) the Buyer shall have received the
resignations, effective as of the Closing, of each director and
officer of the Target other than those whom the Buyer shall have
specified in writing at least five (5) business days prior to the
Closing; and
(x) all actions to be taken by the Sellers in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 8(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The
obligation of the Sellers to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth
in Section 4 above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, or (B) cause any of the transactions contemplated by this
Agreement to be rescinded
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following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers
a certificate to the effect that each of the conditions specified
above in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) the Parties shall have received all other
authorizations, consents, and approvals required of governments and
governmental agencies referred to in Section 4(b) and Section 5(c)
above;
(vi) the Buyer shall have executed and delivered
to Johnsen and O'Brien the employment agreements in the forms set
forth in Exhibits B and C respectively;
(vii) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Sellers.
(viii) The Sellers shall have received from counsel
to the Buyer an opinion in the form and substance as set forth in
Exhibit E attached hereto addressed to the Sellers, and dated as of
the Closing Date.
The Sellers may waive any condition specified in this Section 8(b) if
they execute a writing so stating at or prior to the Closing.
9. Remedies for Breach of this Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Sellers and the Buyer
contained herein shall survive the Closing hereunder and continue in full force
and effect for eighteen (18) months following the Closing Date, except with
respect to Section 5(k) and for any Adverse Consequences suffered by Buyer from
the fraud of any Seller which shall continue in effect until the expiration of
the applicable statute of limitations, provided that the Sellers' obligation to
indemnify the Buyer and the Buyer's obligation to indemnify the Sellers shall
be subject to the limitations set forth in Section 9(b)(iv).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) Subject to the limitations set forth in
Section 9(b)(iv), if any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the
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<PAGE> 38
Sellers has breached) any of the representations and warranties set
forth in Section 3 and Section 5, and subject to any applicable
survival period pursuant to Section 9(a), provided that the Buyer
makes a written claim for indemnification against any of the Sellers
pursuant to Section 11(h) below within such survival period, then
Sellers, jointly and severally, agree to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including
any Adverse Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or the alleged breach).
(ii) Subject to the limitations set forth in
Section 9(b)(iv), if any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the Sellers
has breached) any of his post-closing covenants in Section 7, and
provided that the Buyer makes a written claim for indemnification
against the responsible Seller pursuant to Section 11(h), then only
said responsible Seller severally agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end
of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged
breach).
(iii) Each of the Sellers, jointly and severally,
agree to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer resulting from, arising out
of, relating to, in the nature of, or caused by any Liability of the
Target for the unpaid Taxes of any Person (other than any of the
Target and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(iv) The following limitations shall apply to the
foregoing indemnities:
(A) $1,963,240.00 shall be deposited in
escrow for a period of eighteen (18) months from the
Closing Date to secure the indemnification
obligations of Sellers pursuant to this Agreement
(the "Escrowed Funds"). One-half (1/2) of the
Escrowed Funds shall be released from escrow one (1)
year from the Closing Date if no claims are pending
against the Escrowed Funds and if no claims have been
paid from the Escrowed Funds as of such date. If any
claims are pending or have been paid
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as of such date, one-half (1/2) of the Escrowed Funds
less the amount of pending or paid claims shall be
released from escrow and paid to the Sellers in
proportion to their respective holdings of Target
Shares as set forth in Schedule 5(b)(i). The balance
of the Escrowed Funds shall be released from escrow
eighteen (18) months from the Closing Date unless
there are claims pending against them. If there are
claims pending against the Escrowed Funds, any amount
in excess of such pending claims shall be released
from such Escrowed Funds and paid to the Sellers.
The balance shall be released from escrow as soon as
such pending claims are resolved. Buyer, Sellers
and Escrow Agent agree to execute the Escrow
Agreement set forth in Exhibit A, which Escrow
Agreement shall govern the disbursement of the funds
that have been deposited in escrow.
(B) Buyer agrees that the Sellers shall
not have any obligation to indemnify Buyer from and
against any Adverse Consequences resulting from,
arising out of, relating to, in the nature of, or
caused by any breach, or alleged breach, of any
representations, warranties, or covenants of Sellers
until the Buyer shall have suffered Adverse
Consequences by reason of all such breaches, or
alleged breaches, in excess of $50,000.00 in the
aggregate (at which point the Sellers shall indemnify
Buyer from and against all such Adverse Consequences
in excess of $50,000.00).
(C) Except for any Adverse Consequences
of Buyer that arise from any fraud of the Sellers or
any breaches by Sellers pursuant to Section 5(k)
above, Buyer agrees that the maximum amount of
Adverse Consequences that it may recover from Sellers
pursuant to Section 9 for breaches of representations
or warranties of Section 3 or Section 5 shall be
limited to $3,000,000.00.
(D) The Sellers shall not be liable to
the Buyer under this indemnification provision to the
extent that:
(1) the Buyer acted in bad faith or
failed to reasonably attempt to mitigate the
Buyer's damages;
(2) the Buyer receives indemnity
for any Adverse Consequences under the terms
of any insurance policy then in force;
provided that the Buyer must seek recovery
under insurance
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policies if such policies are occurrence based
policies that were issued to the Target
prior to the Closing and the Adverse
Consequences relate to facts, events or
circumstances existing prior to the Closing;
(3) such Adverse Consequences would
not have arisen but for the Buyer's breach of
this Agreement;
(4) a provision for such Adverse
Consequences is shown on the Closing Balance
Sheet; or
(a) the Adverse Consequences
experienced by the Buyer are not
reasonably foreseeable; or
(b) Target or Buyer did not suffer a
true income loss as a result of a
tax audit and/or any such loss is
the result of a timing difference
rather than a permanent difference,
for example, if a deduction is
disallowed in one year but permitted
in another year.
(c) Indemnification Provisions for Benefit of the
Sellers. In the event the Buyer breaches (or in the event any third party
alleges facts that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained herein, and, if there is
an applicable survival period pursuant to Section 9(a) above, provided that any
of the Sellers makes a written claim for indemnification against the Buyer
pursuant to Section 11(h) within such survival period, then the Buyer agrees to
indemnify each of the Sellers from and against the entirety of any Adverse
Consequences the Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller may suffer after
the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
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unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced and provided further that the notification is delivered
prior to expiration of any survival period set forth in Section 9(a).
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice satisfactory to the Indemnified Party so long
as:
(A) the Third Party Claim involves only money
damages and does not seek an injunction or other
equitable relief and that such Third Party Claim when
aggregated with all other claims against the
applicable Party or Parties does not exceed any
limitations of recovery of Adverse Consequences that
is set forth in Section 9(b)(iv);
(B) the Indemnifying Party notifies the
Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim;
(C) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the
Third Party Claim and fulfill its indemnification
obligations hereunder;
(D) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice
adverse to the continuing business interests of the
Indemnified Party; and
(E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with
Section 9(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense
of the Third Party Claim, (B) the
41
<PAGE> 42
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party, and (C)
the Indemnifying Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party.
(iv) In the event any of the conditions in Section
9(d)(ii) above is or becomes unsatisfied, however, (A) the Indemnified
Party may defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party Claim in
any manner it may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim.
(e) Adjustments of Purchase Price. All indemnification
payments under this Section 9 shall be deemed adjustments to the Purchase
Price.
(f) Other Indemnification Provisions. Buyer agrees that
the indemnification provided for in this Section 7 is the sole remedy Buyer has
against Sellers with respect to any breaches of representations, warranties, or
covenants that are set forth in Section Section 3 and 5. Sellers agree that
Buyer may pursue any remedies available to it under applicable law for any
breaches of the covenants that are set forth in this Section 9, including, but
not limited to, any injunctive or equitable relief. Each of the Sellers hereby
agrees that he will not make any claim for indemnification against the Target
by reason of the fact that he or it was a director, officer, employee, or agent
of any such entity or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
the Buyer against such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable law, or
otherwise).
42
<PAGE> 43
10. Termination.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement prior to Closing as provided below:
(i) the Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Sellers at any time prior to the
Closing:
(A) in the event any of the Sellers has
breached any material representation, warranty, or
covenant contained in this Agreement in any material
respect, the Buyer has notified the Sellers of the
breach, and the breach has continued without cure for
a period of 30 days after the notice of breach; or
(B) if the Closing shall not have
occurred on or before September 6, 1997, by reason of
the failure of any condition precedent under Section
8(a) hereof (unless the failure results primarily
from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement).
(iii) the Sellers may terminate this Agreement by
giving written notice to the Buyer at any time prior to the
Closing:
(A) in the event the Buyer has breached
any material representation, warranty, or covenant
contained in this Agreement in any material respect,
any of the Sellers has notified the Buyer of the
breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of
breach; or
(B) if the Closing shall not have
occurred on or before September 6, 1997, by reason of
the failure of any condition precedent under Section
8(b) hereof (unless the failure results primarily
from any of the Sellers themselves breaching any
representation, warranty, or covenant contained in
this Agreement).
43
<PAGE> 44
(iv) either party may terminate this Agreement by
giving written notice to the other party if the consents
required by Section 6(b) are not obtained prior to the Closing
Date.
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to Section 10(a) above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).
11. Miscellaneous.
(a) Nature of Certain Obligations.
(i) The covenants of each of the Sellers in
Section 2(a) above concerning the sale of his Target Shares to the
Buyer and the representations and warranties of each of the Sellers in
Section 3 concerning the transaction and the post-closing covenants in
Section 7 are several obligations. This means that the particular
Seller making the representation, warranty, or covenant will be solely
responsible to the extent provided in Section 9 for any Adverse
Consequences the Buyer may suffer as a result of any breach thereof.
(ii) The remainder of the representations,
warranties, and covenants in this Agreement are joint and several
obligations. This means that each Seller will be responsible to the
extent provided in Section 9 above for the entirety of any Adverse
Consequences the Buyer may suffer as a result of any breach thereof.
(b) Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to or after the Closing without the
prior written approval of the Buyer and the Sellers; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best efforts to advise the other Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or
44
<PAGE> 45
oral, to the extent they related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written approval of the Buyer and the Sellers; provided,
however, that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the performance of all
of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(g) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if
(and then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Sellers:
John E. Sweeney
26229 8th Street
Salem, Wisconsin 53168
Donald J. O'Brien
180 Millers Crossing
Itasca, Illinois 60143
Scott M. Johnsen
3307 Tussell
Naperville, Illinois 60564
45
<PAGE> 46
With a copy to:
Brien J. Nagle
Nagle & Higgins, P.C.
1755 Park Street
Suite 260
Naperville, Illinois 60563
If to the Buyer:
Romac International, Inc.
120 West Hyde Park Place
Suite 200
Tampa, Florida 33606
Attn: Howard W. Sutter, Vice-President
With a copy to:
Holland & Knight LLP
400 N. Ashley Street, Suite 2050
Tampa, Florida 33602
Attn: David R. Singleton, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Florida
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Florida.
(j) Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Sellers. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
46
<PAGE> 47
(k) Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(l) Expenses. Other than the legal fees of Sellers that
have been paid by Target on or before June 30, 1997, each of the Parties and
the Target will bear his or its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. Except as set forth in the preceding sentence and except
for the expenses of Target that have been paid to Sellers' attorneys and will
be repaid by Sellers to Target pursuant to Section 7(k), Sellers agree that
Target has not borne and will not bear any of the Sellers' costs and expenses
(including any of their legal fees and expenses) in connection with this
transaction or any other transactions contemplated hereby.
(m) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation. The
Parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which
the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) Specific Performance. Each of the Parties
acknowledges and agrees that the other Parties may be damaged irreparably in
the event any of the provisions of Section 7 of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Parties shall be
entitled to seek an injunction or injunctions to prevent breaches of such
provisions of
47
<PAGE> 48
this Agreement and to enforce specifically such provisions of this Agreement
and the terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the Parties and
the matter, in addition to any other remedy to which they may be entitled, at
law or in equity.
(p) Termination of Shareholder Agreement. The Sellers agree,
that effective as of the closing of this Agreement, they waive all of their
rights pursuant to that certain Cross Purchase Buy-Sell Agreement dated
February 26, 1996, as amended, among the Sellers, and agree that said Buy-Sell
Agreement shall thereafter be null and void.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
ROMAC INTERNATIONAL, INC., a
Florida corporation
By:/s/ Howard W. Sutter
--------------------------------
Howard W. Sutter, as its
Vice President
SELLERS:
/s/ Scott M. Johnsen
-----------------------------------
Scott M. Johnsen
/s/ Donald J. O'Brien
-----------------------------------
Donald J. O'Brien
/s/ John E. Sweeney
-----------------------------------
John E. Sweeney
48
<PAGE> 49
ESCROW AGREEMENT
This is an Escrow Agreement, dated as of September 5, 1997 (this
"Agreement"), by and among Romac International, Inc., a Florida corporation
(the "Buyer"), Scott M. Johnsen, Donald J. O'Brien, and John E. Sweeney
(individually , a "Seller" and collectively the "Sellers") and NationsBank,
N.A. as Escrow Agent (herein called "Escrow Agent").
BACKGROUND. The Buyer and the Sellers are parties to a Stock Purchase
Agreement dated as of September ___, 1997 (the "Purchase Agreement"), pursuant
to which, and subject to the conditions therein, the Buyer will purchase from
the Sellers all of the outstanding shares of common stock of Uni*Quality
Systems Solutions, Inc. d/b/a UQ Solutions, Inc., an Illinois Corporation (the
"Company"). The Sellers and the Buyer desire to appoint the Escrow Agent to
act for and on behalf of the Buyer and the Sellers, and to receive, in escrow,
a certain portion of the purchase price as partial security for the performance
of certain obligations of the Sellers, as provided herein. Capitalized terms
that are used herein without definition shall have the meanings attributed in
the Purchase Agreement.
THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Establishment of Escrow. On the date of execution of this
Agreement, the Sellers and the Buyer shall deposit $1,963,240.00 of the
Purchase Price in escrow with the Escrow Agent. Such amount and all interest
and earnings thereon (the "Escrow Fund") shall be held in escrow and disbursed
in accordance with the terms and conditions of this Agreement. The Escrow Fund
is being deposited with Escrow Agent as partial security for the performance by
the Sellers of their obligations under the indemnification provisions contained
in the Purchase Agreement.
2. Claims on Escrow Fund. If, during the term of this Agreement,
the Buyer wishes to assert a claim against the Escrow Fund pursuant to the
Purchase Agreement, the Buyer shall deliver a notice of claim pursuant to
Article 9 of the Purchase Agreement (a "Notice of Claim") to Sellers and Escrow
Agent, which Notice of Claim shall state (the amount sought for the Adverse
Consequences suffered by the Buyer) and the circumstances in reasonable detail.
If (i) Escrow Agent has not received, within 30 days after the receipt by it of
such Notice of Claim, a copy of a notice from Sellers that they deny or dispute
the claim in whole or in part, as asserted in such Notice of Claim from the
Buyer, or (ii) Escrow Agent receives at any time notice from the Sellers that
they accept the obligation(s) described in such Notice of Claim from the Buyer
(in whole or in part), the Escrow Agent will transfer cash from the Escrow Fund
in an amount equal to the Adverse Consequences suffered by the Buyer pursuant
to the Notice of Claim which has been accepted by the Sellers or which has not
been timely
(EXHIBIT "A" PAGE 1 OF 7)
<PAGE> 50
disputed or denied. If Escrow Agent has received, within any 30-day period
after the receipt of a Notice of Claim, a copy of a notice from the Sellers
that they deny or dispute such claim or the amount thereof, Escrow Agent shall
disburse the disputed portion of such Notice of Claim only upon the joint
written instructions of Buyer and Sellers or a final order from a court of
competent jurisdiction.
3. Investment of Escrow Fund. The Escrow Agent shall invest and
reinvest moneys on deposit in the Escrow Fund, unless joint written notice to
the contrary is received from the Sellers and the Buyer, in any combination of
the following or any: (a) direct obligations of the Government of the United
States or any agency or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the government of the United States,
maturing within 6 months from the date of purchase, (b) insured
interest-bearing accounts or certificates of deposit of, or time deposits with,
any commercial bank that is a member of the Federal Reserve System and which
issues (or the parent of which issues) commercial paper rated as described in
clause (c), is organized under the laws of the United States or any state
thereof and has combined capital and surplus of at least $1 billion, and
maturing within 6 months from the date of purchase, (c) commercial paper issued
by any corporation organized under the laws of any state of the United States,
rated at least "Prime-1" (or the then equivalent grade) by Moody's Investors
Services, Inc, or "A-1" (or the then equivalent grade) by Standard & Poors,
Inc. or (d) interests in an investment company or fund registered under the
Investment Company Act of 1940 which invests solely in the foregoing.
4. Obligations of Escrow Agent. The Escrow Agent shall have no
duty or obligation to collect any amounts at any time due in respect of the
Purchase Agreement, and shall not be responsible for any defaults thereunder.
It is further agreed that should a controversy arise before, during or after
the term of this Agreement, with respect to this Agreement or the right of any
of the parties hereto or of any third person or any money or property deposited
herein or affected hereby, the parties expressly agree and consent that Escrow
Agent shall have the right to do either or both of the following:
(a) Withhold further performance of this Agreement on its
part until such controversy is resolved to the satisfaction of Escrow Agent, or
(b) Commence or defend any action or proceeding for the
determination of such controversy. Except for usual and customary fees of the
Escrow Agent (as provided in Section 7 below), the Sellers, jointly and
severally on the one hand, and the Buyer on the other hand, each agree to pay
one-half of all costs, damages, judgments, and expenses, including a reasonable
attorney's fee, suffered or incurred by Escrow Agent in connection with or
arising out of this Agreement, including, but without limiting the generality
of the foregoing any suit or proceeding for or in the nature of interpleader
brought by or against Escrow Agent. In the event of any such action or
2
(EXHIBIT "A" PAGE 2 OF 7)
<PAGE> 51
proceeding, Escrow Agent shall be entitled to deliver all funds and other
property held by it into the appropriate court and shall thereupon be released
and discharged from all obligations and liabilities created by this Agreement.
5. Limitations on Liability of Escrow Agent. The Buyer and the
Sellers agree that Escrow Agent shall not be liable for the failure of any
condition of this Agreement or the Purchase Agreement, or for damage caused or
omission done in good faith, or for any claim or loss, claimed or suffered by
any party hereto by the exercise of Escrow Agent's discretion, or for any other
reason except negligence or willful or wanton misconduct on the part of Escrow
Agent, and the Sellers and the Buyer jointly and severally agree, in the
absence of any such negligence or willful or wanton misconduct on the part of
Escrow Agent, to hold Escrow Agent harmless and to indemnify Escrow Agent for
all loss, costs, expense or liability, including reasonable attorneys' fees and
other expenses that may be incurred, sustained or asserted against it in
connection with this Agreement, or court action ensuing therefrom.
6. Termination. This Agreement will terminate as to one-half
(1/2) of the Escrow Funds one year after the Closing Date, unless at such time
there is an unsatisfied Notice of Claim of Buyer pursuant to Section 2 hereof
or if Notices of Claims of Buyer have been paid pursuant to Section 2 hereof.
If at such time Notices of Claim of Buyer have been paid pursuant to Section 2
hereof or if there are one or more outstanding Notices of Claim of Buyer
pursuant to Section 2 hereof, one-half (1/2) of the Escrow Funds less the
amount of pending or paid Notices of Claim of Buyer shall be released from
escrow and paid to Sellers. This Agreement will terminate as to the remaining
amounts in the Escrow Fund eighteen (18) months after the Closing Date, unless
at such time there is outstanding an unsatisfied Notice of Claim of the Buyer
pursuant to Section 2 hereof. If at such time there are one or more
outstanding Notices of Claim of the Buyer pursuant to Section 2 hereof, the
Escrow Agent shall retain an amount of the Escrow Fund equal to the amount
specified by the Buyer in one or more Notices of Claim with respect to such
unsatisfied claims (or a lesser amount, if so instructed by the Buyer), and
this Agreement shall terminate with respect to any excess over said amount.
All remaining portions of the Escrow Fund that are not subject to an
outstanding claim, together with all interest or other income earned on the
Escrow Fund shall be transferred to the Sellers eighteen (18) months from the
Closing Date. With respect to any portion of the Escrow Fund retained by the
Escrow Agent, this Agreement will terminate after such portion of the Escrow
Fund has been distributed to the Buyer and, if applicable, the Sellers after
all unsatisfied claims of the Buyer have been finally resolved. At such time
as the Escrow Agent has been notified by the Buyer and the Sellers of the
amount of the final determination of all such outstanding claims of the Buyer,
the Escrow Agent shall transfer such amount of the remaining portion of the
Escrow Fund to the Buyer, and will distribute to the Sellers the balance, if
any, remaining in the Escrow Fund after the distribution to the Buyer
contemplated by this Section 6.
3
(EXHIBIT "A" PAGE 3 OF 7)
<PAGE> 52
7. Expenses of Escrow Agent. The Buyer on the one hand and the
Sellers, jointly and severally, on the other hand, each agrees to pay to Escrow
Agent reasonable compensation for its services hereunder and to reimburse
Escrow Agent for reasonable expenses incurred by it in connection herewith,
one-half being paid by the Buyer and one-half by the Sellers.
8. Remedies; Governing Law. The validity, interpretation,
construction, and enforcement of this Agreement are governed by the laws of the
State of Florida and the federal laws of the United States of America,
excluding the laws of those jurisdictions pertaining to resolution of conflicts
with laws of other jurisdictions. In any mediation, arbitration, litigation,
or other legal proceeding arising out of this Agreement, the losing party shall
reimburse the prevailing party, on demand, for all costs incurred by the
prevailing party in connection with the proceeding. Absent an agreement among
all parties to this Agreement otherwise, jurisdiction for all claims brought
under this Agreement shall lie exclusively in the appropriate state court in
Hillsborough County, Florida or in the appropriate federal court in the Middle
District of Florida, Tampa Division.
9. Notices. Every notice, consent, demand, approval, and request
required or permitted by this Agreement will be valid only if it is in writing,
delivered personally or by telecopy, commercial courier, or first class,
postage prepaid certified United States mail, and addressed by the sender to
the party who is the intended recipient at its address set forth below its
signature or to the address most recently designated to the other party by
notice given in accordance with this Section. A validly given notice, consent,
demand, approval, or request will be effective on the earlier of its receipt,
if delivered personally, by telecopy, or by commercial courier, or the third
day after it is postmarked by the United States Postal Service, if it is
delivered by United States mail. Each party promptly shall notify the other
parties of any change in its principal mailing address.
10. Form and Interpretation. The headings preceding the text of
the sections of this Agreement are solely for convenient reference and neither
constitute a part of this Agreement nor affect its meaning, interpretation, or
effect. Unless otherwise expressly indicated, all references in this Agreement
to a section are to a section of this Agreement. As used in this Agreement,
the word "including" is always without limitation, the word "days" refers to
calendar days, including Saturdays, Sundays, and holidays, words in the
singular number include words of the plural number and vice versa, the word
"person" includes, in addition to a natural person, a trust, corporation,
partnership, joint venture, association, unincorporated organization, public
body or authority, and a government or any governmental body, agency,
authority, department, or subdivision, and the word "costs" includes the fees,
costs, and expenses of agents, experts, attorneys, witnesses, mediators,
arbitrators, and supersedeas bonds, whether incurred before or after demand or
commencement of any legal proceedings, and whether incurred pursuant to trial,
appellate, mediation, arbitration, bankruptcy,
4
(EXHIBIT "A" PAGE 4 OF 7)
<PAGE> 53
administrative, or judgment-execution proceedings. Whenever possible, each
provision of this Agreement should be construed and interpreted so that it is
valid and enforceable under applicable law. However, if a provision in this
Agreement is held by a court to be invalid or unenforceable under applicable
law, that provision will be deemed separable from the remaining provisions of
this Agreement and will not affect the validity, interpretation, or effect of
other provisions of this Agreement or the application of that provision to
circumstances in which it is valid and enforceable.
11. Integration; Modification. Together with the Purchase
Agreement, this Agreement records the final, complete, and exclusive
understandings among the parties regarding the subject matter of this Agreement
and supersedes any prior or contemporaneous agreement, understanding, or
representation, oral or written, by any of them. A waiver, amendment,
discharge, extension, termination, or modification of this Agreement will be
valid and effective only if it is in writing and signed by the parties to this
Agreement. A written waiver of a right, remedy, or obligation under any
provision of this Agreement will not constitute a waiver of the provision
itself, a waiver of any succeeding right, remedy, or obligation under the
provision, or a waiver of any other right, remedy, or obligation under this
Agreement.
12. Execution; Effective Date. The parties may execute this
Agreement in counterparts. Each executed counterpart will constitute an
original document, and all of them, together, will constitute the same
agreement. This Agreement will become effective on the execution date stated
below, when each party has executed and delivered a counterpart to the other
parties.
DULY EXECUTED by each of the undersigned, as of the day and year first
written above.
THE BUYER:
ROMAC INTERNATIONAL, INC.,
a Florida Corporation
By:___________________________________
Howard W. Sutter, Vice President
Address for Notices:
120 West Hyde Park Place
Suite 1200
Tampa, Florida 33606
Attention: Howard Sutter, Vice President
5
(EXHIBIT "A" PAGE 5 OF 7)
<PAGE> 54
with a copy to:
David R. Singleton, Esq.
Holland & Knight LLP
400 North Ashley Drive
Suite 2300
Tampa, Florida 33602
THE SELLERS:
______________________________________
Scott M. Johnsen
Address for Notices:
3307 Tussell
Naperville, IL 60564
______________________________________
Donald J. O'Brien
Address for Notices:
180 Millers Crossing
Itasca, IL 60143
______________________________________
John E. Sweeney
Address for Notices:
26229 8th Street
Salem, WI 53168
6
(EXHIBIT "A" PAGE 6 OF 7)
<PAGE> 55
with a copy to:
Brien Nagle, Esq.
Nagle & Higgins, P.C.
1755 Park Street
Suite 260
Naperville, IL 60563
THE ESCROW AGENT:
NATIONSBANK, N.A.
_______________________________________
By: Shari B. Sawyers
Title: Vice President
Address for Notices:
400 North Ashley Drive
6th Floor
Tampa, Florida 33602
(813) 224-5228
7
(EXHIBIT "A" PAGE 7 OF 7)
<PAGE> 56
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This is an Employment and Noncompetition Agreement (the "Agreement"),
dated as of September 5, 1997, between ROMAC INTERNATIONAL, INC., a Florida
corporation (the "Company"), and SCOTT M. JOHNSEN (the "Employee").
BACKGROUND
Simultaneously with the execution of this Agreement, the Company is
acquiring all the stock of UQ Solutions, Inc. ("UQ") pursuant to a certain
Stock Purchase Agreement (the "Stock Agreement"). The Employee has been a
shareholder and key employee of UQ. The Company wishes to retain the Employee's
services in connection with its acquisition of UQ's business and to obtain
certain non-compete and non-disclosure protections from the Employee. The
Employee is willing to accept such employment on the terms and conditions set
forth herein.
Accordingly, the parties agree as follows:
TERMS
1. EMPLOYMENT. The Company agrees to employ the Employee, and the
Employee hereby accepts such employment, upon the terms and
conditions set forth in this Agreement.
2. TERM. Subject to the provisions for termination contained in
Section 6, the term of employment under this Agreement shall
commence effective as of July 1, 1997, and shall terminate on
June 30, 1999.
3. DUTIES AND AUTHORITY. The Employee shall be engaged as a
full-time employee in the position of Information Technology
Division Vice-President. The Company shall not reduce the dignity,
responsibility, authority, importance or scope of such position
during the term of this Agreement.
The Employee shall perform substantially the same duties as he
performed with his previous employer, UQ, prior to its acquisition
by the Company, and such other duties as may be reasonably assigned
to him by the Company and accepted by the Employee, which duties
shall be consistent with his senior management position, compatible
with his physical and mental health at the time, not require him to
relocate from the Chicago, Illinois area and not require him to
travel away from his present city of residence more than sixty (60)
days during either of the twelve (12) month periods ending June 30,
1998, and June 30, 1999.
The Employee shall have full access to all of the financial
information with
1
(EXHIBIT "B" PAGE 1 OF 8)
<PAGE> 57
regard to the EBITA for the UQ Solutions Profit Center, as "EBITA"
and the "UQ Solutions Profit Center" are defined in the Stock
Agreement. In conjunction with DONALD J. O'BRIEN, if he is employed
by the Company, otherwise individually, and subject to the overall
management and control of the Company, the Employee shall have
authority and be allowed to exercise his own discretion, with
regard to the day-to-day operation, administration and management
of the business, including, but not limited to, the following:
(a) the recruitment, selection, management, retention,
termination and compensation of all existing employees and
independent contractor consultants;
(b) the recruitment, selection, hiring, management, retention,
termination and compensation of all new employees and
independent contractor consultants consistent with the
policies of the Company;
(c) the management of customer solicitations, sales, contracts,
terms and conditions; and
(d) the control of the EBITA for the UQ Solutions Profit Center,
as "EBITA" and the "UQ Solutions Profit Center" are defined
in the Stock Agreement.
4. COMPENSATION.
(a) As compensation for services rendered by the Employee to the
Company, the Company shall pay the Employee a salary of
$100,000.00 per year ("Salary"), payable $20,833.35 on or
about September 15, 1997, and thereafter in equal
semi-monthly installments of $4,166.67 per installment, plus
additional compensation in the amount of twelve percent (12%)
of the Earnout determined pursuant to the Stock Agreement,
if either the Employee, or DONALD J. O'BRIEN, is terminated
by Employer without Cause, as hereinafter defined, payable
on or before the due date of the earnout as set forth in the
Stock Agreement.
(b) The Company, at its expense, less any Employee contributions
required of all other senior management employees by the
Company from time to time, agrees to provide to the Employee
and his family the comprehensive health, medical, and dental
insurance coverage in effect from time to time at the Company
during the term of this Agreement. The Employee shall be
entitled to participate in (i) such qualified employee stock
option and benefit plans of the Company pursuant to the
terms of such plans, and (ii) such other nonqualified
benefits plans
2
(EXHIBIT "B" PAGE 2 OF 8)
<PAGE> 58
as are offered to any other senior management employee.
(c) The Company shall reimburse the Employee on a monthly basis
for all business expenses reasonably incurred by the Employee
in the performance of his duties under this Agreement in
accordance with the Company's written guidelines; provided,
however, that the Employee shall furnish to the Company an
itemized list of receipts and invoices in substantiation of
such expenditures in accordance with such guidelines.
5. VACATION. During the term of this Agreement, the Employee shall
be entitled to all recognized national holidays, a maximum of four
(4) weeks per contract year of paid vacation and up to four (4)
additional weeks per contract year of unpaid vacation, provided the
Employee's immediate supervisor approves when such unpaid vacation
may be taken.
6. TERMINATION.
(a) This Agreement shall be terminated by:
(i) the parties upon written agreement of the
parties at any time;
(ii) the Company upon the death of the Employee;
(iii) the Employee upon sixty (60) days' written
notice to the Company by the Employee of his
voluntary resignation;
(iv) the Employee upon failure to cure any breach of
this Agreement by the Company within thirty (30)
days of notice of such breach from the
Employee; and
(v) the Company upon failure to cure any "Cause," as
defined in Subsection 6(b), by the Employee
within thirty (30) days of notice of such
"Cause" from the Company.
(b) For purposes of this Agreement, "Cause" shall mean:
(i) the Employee performs his duties in an
unreasonable and negligent or intentional
manner that has a material adverse effect on
the financial condition of the UQ Solutions
Profit Center;
3
(EXHIBIT "B" PAGE 3 OF 8)
<PAGE> 59
(ii) the repetitive or material violation by the
Employee of the Company's written policies and
procedures;
(iii) the failure of the Employee to follow the lawful
and ethical written instructions of the
Company in a timely manner;
(iv) the failure of the Employee to be working for
the Company for more than five (5) consecutive
business days other than as a result of
vacation, personal days or illness;
(v) the conviction or plea agreement of the Employee
of a felony; or
(vi) the admitted or proven theft or embezzlement by
the Employee of Company funds.
7. NON-COMPETITION AND NON-DISCLOSURE.
(a) The Employee acknowledges that in the course of his
employment hereunder, he may obtain knowledge of confidential
matters essential to the business and competitive position of
the Company, including, without limitation, customer and
candidate lists, business strategies, financial information
and trade secrets that could unfairly disadvantage the
Company were the Employee to engage in business activities
competitive with the Company.
(b) The Employee therefore agrees that he shall not, at any time
during his employment hereunder and for a period of one (1)
year thereafter, accept employment as an officer, director or
employee of, or be or become the owner of ten percent (10%)
or more of the outstanding equity interest of, or otherwise
consult with or participate in the business of, any entity
engaged in business competitive with that of the Company,
within one hundred (100) miles of Oak Brook, Illinois, and
any other location of the Company in which the Employee has
supervisory management and control and the revenues are
included in the EBITA for the UQ Solutions Profit Center, as
such terms are defined in the Stock Agreement, provided,
however, that this shall not restrict the Employee from doing
business with any such entity outside of said areas. For
purposes of this Agreement, Employee acknowledges and agrees
that business competitive with that of Company shall include
any business that provides for the placement of employee and
independent contractor information technology
4
(EXHIBIT "B" PAGE 4 OF 8)
<PAGE> 60
consultants to clients.
(c) The Employee recognizes and acknowledges that all records,
documents, customer and candidate lists, referral sources,
financial information, trade secrets, methods, techniques,
processes, marketing and acquisition strategies and plans,
intellectual property (regardless of whether patentable or
copyrightable), formulas, computer print-outs, and other
information of any kind, whether or not complete and whether
or not reduced to writing (collectively, the "Confidential
Information"), obtained by the Employee with regard to the
Company (or its affiliates, employees, principals, customers,
or business associates) during the course of the Employee's
employment, and not generally known in the public domain, may
constitute valuable, special, and unique and proprietary
assets of the Company's business. The Employee agrees that
during the Employee's employment hereunder, and following the
termination of the Employee's employment, the Employee will
not at any time, directly or indirectly, disclose,
disseminate or publish any Confidential Information not in
the public domain to or for any other person, group, firm,
corporation or other entity, or utilize the same for any
reason or purpose whatsoever other than (i) for the benefit
and at the request of the Company, (ii) as may be required by
law, or (iii) in connection with obtaining advice from the
Employee's legal counsel. Upon termination of this Agreement,
or at any time upon the request of the Company, the Employee
shall promptly deliver to the Company all memoranda, notes,
records, reports, manuals, drawings, lists, formulas, and
other documents (and all copies thereof) relating to the
business of the Company and all property associated
therewith, then possessed or under the control of the
Employee.
(d) The Employee further agrees that during the Employee's
employment hereunder and for one (1) year following the
termination of the Employee's employment, the Employee will
not, in any manner or at any time, solicit or encourage (i)
any person, firm, corporation or other entity that is a
customer of the Company to cease doing business with the
Company and/or (ii) any other employees of the Company to
terminate their employment with the Company, provided,
however, that nothing in this Subsection 7(d) shall prevent
the Employee from associating with DONALD J. O'BRIEN or the
lineal descendants of DONALD J. O'BRIEN.
(e) If any covenant or provision contained in this Section 7 is
found by a court of competent jurisdiction to be unreasonable
in duration, geographical scope, or other character of
restriction, the covenant or
5
(EXHIBIT "B" PAGE 5 OF 8)
<PAGE> 61
provision shall not be rendered unenforceable thereby, but
rather the duration, geographical scope, or deemed
automatically reduced or modified with retroactive effect to
the extent necessary to render such covenant or provision
enforceable, and such covenant or provision shall be enforced
as modified.
(f) The parties acknowledge and agree that damages in the event
of a breach of the provisions of this Section 7 by the
Employee may be difficult to ascertain, and therefore the
Company, in addition to and without limitation by any other
remedy, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction,
enjoining any such breach.
(g) This Section 7 shall not apply in the event that the
Employee is terminated by Employer without Cause.
8. ASSIGNMENT, BINDING EFFECT. The Company may not assign its rights
or delegate its duties hereunder without the Employee's written
consent, except in connection with a merger or acquisition pursuant
to which the acquiring entity assumes the Company's obligation
hereunder (in any or all of which cases, the Company nonetheless
shall remain responsible and guarantee the performance of all of
its obligations hereunder). The Company shall as part of any merger
or acquisition transaction guaranty that the Company's obligations
under this Agreement shall be assumed by any and all successors and
assigns during the term of the Agreement. The Employee may not
delegate his duties or assign his rights hereunder, without the
Company's prior written consent. This Agreement shall inure to the
benefit of and be binding upon the Company's permitted successors
and assigns, and shall inure to the benefit of and be binding upon
the Employee's heirs, distributees and personal representatives.
9. SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal, or unenforceable, in whole or in part, such
invalidity shall not affect any otherwise valid provision, and
all other valid provisions shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one document.
11. TITLES. The titles and headings preceding the text of the
sections of this Agreement have been inserted solely for
convenience of reference and do not constitute a part of this
Agreement or affect its meaning, interpretation, or effect.
6
(EXHIBIT "B" PAGE 6 OF 8)
<PAGE> 62
12. WAIVER. The failure of either party to insist in any one or more
instances upon performance of any terms or conditions of this
Agreement shall not be construed as a waiver of future performance
of any such term, covenant, or condition, and the obligations of
either party with respect to such term, covenant, or condition
shall continue in full force and effect.
13. ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes all
previous negotiations between the Employee and this Company with
respect to the subject matter hereof. This Agreement cannot be
amended, modified, or supplemented in any respect except by a
subsequent written agreement entered into by both parties.
14. NOTICE. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by
the United States Postal Service, postage prepaid, or such
nationally recognized overnight delivery service as may be allowed
from time to time pursuant to Section 7502 of the Internal Revenue
Code, and addressed as follows:
If to the Company:
ROMAC INTERNATIONAL, INC.
120 West Hyde Park Place
Suite #120
Tampa, Florida 33606
Attn: HOWARD W. SUTTER, Vice-President
If to the Employee:
SCOTT M. JOHNSEN
3307 Tussell
Naperville, Illinois 60564
15. COSTS AND EXPENSES. In the event either party breaches its
performance obligations under this Agreement, the breaching party
shall be responsible for costs and expenses (including reasonable
legal fees) of the non-breaching party in any litigation or action,
whether legal or equitable, in which the non-breaching party
prevails.
16. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois, without giving
effect to any choice or conflict of law provision or rule, whether
of the State of Illinois or any other jurisdiction that would cause
the application of the laws of any jurisdiction other than the
State of Illinois.
7
(EXHIBIT "B" PAGE 7 OF 8)
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ROMAC INTERNATIONAL, INC.
By:
--------------------------------
HOWARD W. SUTTER,
Vice President
EMPLOYEE
-----------------------------------
SCOTT M. JOHNSEN
8
(EXHIBIT "B" PAGE 8 OF 8)
<PAGE> 64
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This is an Employment and Noncompetition Agreement (the "Agreement"),
dated as of September 5, 1997, between ROMAC INTERNATIONAL, INC., a Florida
corporation (the "Company"), and DONALD J. O'BRIEN (the "Employee").
BACKGROUND
Simultaneously with the execution of this Agreement, the Company is
acquiring all the stock of UQ Solutions, Inc. ("UQ") pursuant to a certain
Stock Purchase Agreement (the "Stock Agreement"). The Employee has been a
shareholder and key employee of UQ. The Company wishes to retain the Employee's
services in connection with its acquisition of UQ's business and to obtain
certain non-compete and non-disclosure protections from the Employee. The
Employee is willing to accept such employment on the terms and conditions set
forth herein.
Accordingly, the parties agree as follows:
TERMS
1. EMPLOYMENT. The Company agrees to employ the Employee, and the
Employee hereby accepts such employment, upon the terms and
conditions set forth in this Agreement.
2. TERM. Subject to the provisions for termination contained in
Section 6, the term of employment under this Agreement shall
commence effective as of July 1, 1997, and shall terminate on
June 30, 1999.
3. DUTIES AND AUTHORITY. The Employee shall be engaged as a
full-time employee in the position of Information Technology
Division Vice-President. The Company shall not reduce the dignity,
responsibility, authority, importance or scope of such position
during the term of this Agreement.
The Employee shall perform substantially the same duties as he
performed with his previous employer, UQ, prior to its acquisition
by the Company, and such other duties as may be reasonably assigned
to him by the Company and accepted by the Employee, which duties
shall be consistent with his senior management position, compatible
with his physical and mental health at the time, not require him to
relocate from the Chicago, Illinois area and not require him to
travel away from his present city of residence more than sixty (60)
days during either of the twelve (12) month periods ending June 30,
1998, and June 30, 1999.
1
(EXHIBIT "C" PAGE 1 OF 8)
<PAGE> 65
The Employee shall have full access to all of the financial
information with regard to the EBITA for the UQ Solutions Profit
Center, as "EBITA" and the "UQ Solutions Profit Center" are defined
in the Stock Agreement. In conjunction with SCOTT M. JOHNSEN, if
he is employed by the Company, otherwise individually, and subject
to the overall management and control of the Company, the Employee
shall have authority and be allowed to exercise his own discretion,
with regard to the day-to-day operation, administration and
management of the business, including, but not limited to, the
following:
(a) the recruitment, selection, management, retention,
termination and compensation of all existing employees and
independent contractor consultants;
(b) the recruitment, selection, hiring, management, retention,
termination and compensation of all new employees and
independent contractor consultants consistent with the
policies of the Company;
(c) the management of customer solicitations, sales, contracts,
terms and conditions; and
(d) the control of the EBITA for the UQ Solutions Profit Center,
as "EBITA" and the "UQ Solutions Profit Center" are defined
in the Stock Agreement.
4. COMPENSATION.
(a) As compensation for services rendered by the Employee to the
Company, the Company shall pay the Employee a salary of
$100,000.00 per year ("Salary"), payable $20,833.35 on or
about September 15, 1997, and thereafter in equal
semi-monthly installments of $4,166.67 per installment, plus
additional compensation in the amount of twelve percent (12%)
of the Earnout determined pursuant to the Stock Agreement,
if either the Employee, or SCOTT M. JOHNSEN, is terminated
by Employer without Cause, as hereinafter defined, payable
on or before the due date of the earnout as set forth in the
Stock Agreement.
(b) The Company, at its expense, less any Employee contributions
required of all other senior management employees by the
Company from time to time, agrees to provide to the Employee
and his family the comprehensive health, medical, and dental
insurance coverage in effect from time to time at the Company
during the term of this Agreement. The Employee shall be
entitled to participate in (i) such qualified employee stock
option and benefit plans of the Company pursuant to
2
(EXHIBIT "C" PAGE 2 OF 8)
<PAGE> 66
the terms of such plans, and (ii) such other nonqualified
benefits plans as are offered to any other senior
management employee.
(c) The Company shall reimburse the Employee on a monthly basis
for all business expenses reasonably incurred by the Employee
in the performance of his duties under this Agreement in
accordance with the Company's written guidelines; provided,
however, that the Employee shall furnish to the Company an
itemized list of receipts and invoices in substantiation of
such expenditures in accordance with such guidelines.
5. VACATION. During the term of this Agreement, the Employee shall
be entitled to all recognized national holidays, a maximum of four
(4) weeks per contract year of paid vacation and up to four (4)
additional weeks per contract year of unpaid vacation, provided the
Employee's immediate supervisor approves when such unpaid vacation
may be taken.
6. TERMINATION.
(a) This Agreement shall be terminated by:
(i) the parties upon written agreement of the
parties at any time;
(ii) the Company upon the death of the Employee;
(iii) the Employee upon sixty (60) days' written
notice to the Company by the Employee of his
voluntary resignation;
(iv) the Employee upon failure to cure any breach of
this Agreement by the Company within thirty (30)
days of notice of such breach from the
Employee; and
(v) the Company upon failure to cure any "Cause," as
defined in Subsection 6(b), by the Employee
within thirty (30) days of notice of such
"Cause" from the Company.
(b) For purposes of this Agreement, "Cause" shall mean:
(i) the Employee performs his duties in an
unreasonable and negligent or intentional
manner that has a material adverse effect on
the financial condition of the UQ Solutions
Profit Center;
3
(EXHIBIT "C" PAGE 3 OF 8)
<PAGE> 67
(ii) the repetitive or material violation by the
Employee of the Company's written policies and
procedures;
(iii) the failure of the Employee to follow the lawful
and ethical written instructions of the
Company in a timely manner;
(iv) the failure of the Employee to be working for
the Company for more than five (5) consecutive
business days other than as a result of
vacation, personal days or illness;
(v) the conviction or plea agreement of the Employee
of a felony; or
(vi) the admitted or proven theft or embezzlement by
the Employee of Company funds.
7. NON-COMPETITION AND NON-DISCLOSURE.
(a) The Employee acknowledges that in the course of his
employment hereunder, he may obtain knowledge of confidential
matters essential to the business and competitive position of
the Company, including, without limitation, customer and
candidate lists, business strategies, financial information
and trade secrets that could unfairly disadvantage the
Company were the Employee to engage in business activities
competitive with the Company.
(b) The Employee therefore agrees that he shall not, at any time
during his employment hereunder and for a period of one (1)
year thereafter, accept employment as an officer, director or
employee of, or be or become the owner of ten percent (10%)
or more of the outstanding equity interest of, or otherwise
consult with or participate in the business of, any entity
engaged in business competitive with that of the Company,
within one hundred (100) miles of Oak Brook, Illinois, and
any other location of the Company in which the Employee has
supervisory management and control and the revenues are
included in the EBITA for the UQ Solutions Profit Center, as
such terms are defined in the Stock Agreement, provided,
however, that this shall not restrict the Employee from doing
business with any such entity outside of said areas. For
purposes of this Agreement, Employee acknowledges and agrees
that business competitive with that of Company shall include
any business that provides for the placement of employee and
independent contractor information technology
4
(EXHIBIT "C" PAGE 4 OF 8)
<PAGE> 68
consultants to clients.
(c) The Employee recognizes and acknowledges that all records,
documents, customer and candidate lists, referral sources,
financial information, trade secrets, methods, techniques,
processes, marketing and acquisition strategies and plans,
intellectual property (regardless of whether patentable or
copyrightable), formulas, computer print-outs, and other
information of any kind, whether or not complete and whether
or not reduced to writing (collectively, the "Confidential
Information"), obtained by the Employee with regard to the
Company (or its affiliates, employees, principals, customers,
or business associates) during the course of the Employee's
employment, and not generally known in the public domain, may
constitute valuable, special, and unique and proprietary
assets of the Company's business. The Employee agrees that
during the Employee's employment hereunder, and following the
termination of the Employee's employment, the Employee will
not at any time, directly or indirectly, disclose,
disseminate or publish any Confidential Information not in
the public domain to or for any other person, group, firm,
corporation or other entity, or utilize the same for any
reason or purpose whatsoever other than (i) for the benefit
and at the request of the Company, (ii) as may be required by
law, or (iii) in connection with obtaining advice from the
Employee's legal counsel. Upon termination of this Agreement,
or at any time upon the request of the Company, the Employee
shall promptly deliver to the Company all memoranda, notes,
records, reports, manuals, drawings, lists, formulas, and
other documents (and all copies thereof) relating to the
business of the Company and all property associated
therewith, then possessed or under the control of the
Employee.
(d) The Employee further agrees that during the Employee's
employment hereunder and for one (1) year following the
termination of the Employee's employment, the Employee will
not, in any manner or at any time, solicit or encourage (i)
any person, firm, corporation or other entity that is a
customer of the Company to cease doing business with the
Company and/or (ii) any other employees of the Company to
terminate their employment with the Company, provided,
however, that nothing in this Subsection 7(d) shall prevent
the Employee from associating with SCOTT M. JOHNSEN or the
lineal descendants of DONALD J. O'BRIEN.
(e) If any covenant or provision contained in this Section 7 is
found by a court of competent jurisdiction to be unreasonable
in duration, geographical scope, or other character of
restriction, the covenant or
5
(EXHIBIT "C" PAGE 5 OF 8)
<PAGE> 69
provision shall not be rendered unenforceable thereby, but
rather the duration, geographical scope, or deemed
automatically reduced or modified with retroactive effect to
the extent necessary to render such covenant or provision
enforceable, and such covenant or provision shall be enforced
as modified.
(f) The parties acknowledge and agree that damages in the event
of a breach of the provisions of this Section 7 by the
Employee may be difficult to ascertain, and therefore the
Company, in addition to and without limitation by any other
remedy, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction,
enjoining any such breach.
(g) This Section 7 shall not apply in the event that the
Employee is terminated by Employer without Cause.
8. ASSIGNMENT, BINDING EFFECT. The Company may not assign its rights
or delegate its duties hereunder without the Employee's written
consent, except in connection with a merger or acquisition pursuant
to which the acquiring entity assumes the Company's obligation
hereunder (in any or all of which cases, the Company nonetheless
shall remain responsible and guarantee the performance of all of
its obligations hereunder). The Company shall as part of any merger
or acquisition transaction guaranty that the Company's obligations
under this Agreement shall be assumed by any and all successors and
assigns during the term of the Agreement. The Employee may not
delegate his duties or assign his rights hereunder, without the
Company's prior written consent. This Agreement shall inure to the
benefit of and be binding upon the Company's permitted successors
and assigns, and shall inure to the benefit of and be binding upon
the Employee's heirs, distributees and personal representatives.
9. SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal, or unenforceable, in whole or in part, such
invalidity shall not affect any otherwise valid provision, and
all other valid provisions shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one document.
11. TITLES. The titles and headings preceding the text of the
sections of this Agreement have been inserted solely for
convenience of reference and do not constitute a part of this
Agreement or affect its meaning, interpretation, or effect.
6
(EXHIBIT "C" PAGE 6 OF 8)
<PAGE> 70
12. WAIVER. The failure of either party to insist in any one or more
instances upon performance of any terms or conditions of this
Agreement shall not be construed as a waiver of future performance
of any such term, covenant, or condition, and the obligations of
either party with respect to such term, covenant, or condition
shall continue in full force and effect.
13. ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes all
previous negotiations between the Employee and this Company with
respect to the subject matter hereof. This Agreement cannot be
amended, modified, or supplemented in any respect except by a
subsequent written agreement entered into by both parties.
14. NOTICE. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by
the United States Postal Service, postage prepaid, or such
nationally recognized overnight delivery service as may be allowed
from time to time pursuant to Section 7502 of the Internal Revenue
Code, and addressed as follows:
If to the Company:
ROMAC INTERNATIONAL, INC.
120 West Hyde Park Place
Suite #120
Tampa, Florida 33606
Attn: HOWARD W. SUTTER, Vice-President
If to the Employee:
DONALD J. O'BRIEN
180 Millers Crossing
Itasca, Illinois 60143
15. COSTS AND EXPENSES. In the event either party breaches its
performance obligations under this Agreement, the breaching party
shall be responsible for costs and expenses (including reasonable
legal fees) of the non-breaching party in any litigation or action,
whether legal or equitable, in which the non-breaching party
prevails.
16. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois, without giving
effect to any choice or conflict of law provision or rule, whether
of the State of Illinois or any other jurisdiction that would cause
the application of the laws of any jurisdiction other than the
State of Illinois.
7
(EXHIBIT "C" PAGE 7 OF 8)
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ROMAC INTERNATIONAL, INC.
By:
--------------------------------
HOWARD W. SUTTER,
Vice President
EMPLOYEE
-----------------------------------
DONALD J. O'BRIEN
8
(EXHIBIT "C" PAGE 8 OF 8)
<PAGE> 72
[NAGLE & HIGGINS, P.C. LETTERHEAD]
September 5, 1997
Romac International, Inc.
120 West Hyde Park Place
Suite 1200
Tampa, Florida 33606
ATTN: Howard V. Sutter, Vice-President
Re: Stock Purchase Agreement dated September 5, 1997, between
Romac International, Inc. ("the Buyer") and Scott M.
Johnsen, Donald J. O'Brien, and John E. Sweeney
("the Sellers")
Dear Sirs:
We have acted as counsel to the Sellers, the sole shareholders of
Uni*Quality Systems Solutions, Inc. d/b/a UQ Solutions, Inc., an Illinois
corporation (hereinafter "the Corporation"), in connection with their sale to
you of six hundred (600) shares of common capital stock in the Corporation
(hereinafter "the Transaction") pursuant to the Stock Purchase Agreement dated
September 5, 1997, entered into by you and the Sellers (hereinafter "the
Agreement"). We have participated on behalf of the Sellers in the preparation
of the Agreement and the Schedules to the Agreement.
Capitalized terms used in this Opinion Letter and not otherwise defined
in this Opinion Letter are defined as set forth in the Accord (as defined
below). Pursuant to Section 21 of the Accord, the term "Other Agreement" as
used in the Accord for purposes of applying to this Opinion Letter shall include
only those contracts and agreements identified by certain officers of the
Sellers as contracts or agreements, the breach or default of which would result
in a material adverse effect on the business or financial condition of the
Corporation. Pursuant to Section 21 of the Accord, the term "Court Orders" as
used in the Accord for purposes of applying to this Opinion Letter shall
include only those court orders identified by certain officers of the Sellers as
court orders, the violation of which could result in a material adverse effect
on the business or financial condition of the Corporation.
(EXHIBIT "D" PAGE 1 OF 4)
<PAGE> 73
Romac International, Inc.
September 5, 1997
Page 2
In connection with this Opinion Letter, we have examined the following:
1. An executed copy of the Agreement;
2. A Certificate of Good Standing for the Corporation issued
by the Secretary of State of Illinois;
3. The Articles of Incorporation dated January 18, 1994;
4. The Bylaws of the Corporation;
5. Stock Certificate Number 1 of the Corporation evidencing
Donald J. O'Brien's ownership of two hundred (200) shares
of the Corporation's common capital stock;
6. Stock Certificate Number 2 of the Corporation evidencing
Scott M. Johnsen's ownership of two hundred (200) shares
of the Corporation's common capital stock; and
7. Stock Certificate Number 3 of the Corporation evidencing
John E. Sweeney's ownership of two hundred (200) shares
of the Corporation's common capital stock.
Collectively, these documents are referred to as the "Transaction
Documents".
We have considered such matters of law and fact, and relied upon the
accuracy of the Representations and Warranties of the Sellers made in Articles
3 and 5 of the Agreement, the Certificate of the Sellers and other information
as we have deemed appropriate as a basis for our opinions set forth below.
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction with the Accord. The law covered by the
opinions expressed in the Opinion Letter is limited to the Federal law of the
United States and the law of the State of Illinois.
(EXHIBIT "D" PAGE 2 OF 4)
<PAGE> 74
Romac International, Inc.
September 5, 1997
Page 3
Based upon the foregoing, and subject to the qualifications and
exceptions set forth below, we are of the opinion that:
1. The Corporation is incorporated and validly existing under
the laws of the State of Illinois;
2. The Shareholders are the owners, beneficially and of
record, of all of the issued and outstanding stock of the Corporation
and have full power to transfer such stock to you pursuant to the
Agreement;
3. Each Transaction Document to which each Seller is a party
has been duly executed and delivered by each Seller;
4. The Transaction Documents are each enforceable against the
Sellers, provided, however, no opinion is expressed about the
enforceability of the post-closing covenants in Article 7 of the
Agreement dealing with the Covenant Not to Compete, Solicitation, and
Solicitation of Employees; and
5. The execution and delivery by each Seller of, and
performance of each Seller's obligations under, the Transaction
Documents do not violate the Corporation's Articles of Incorporation
or Bylaws, or based and relying upon the Representations and Warranties
of Seller in Articles 3 and 5 of the Agreement, to our knowledge,
breach or result in a default under, any existing obligation of any
Seller under any Other Agreement or Court Order listed herein.
Based and relying upon the Representations and Warranties of Sellers in
Article 3 and 5 of the Agreement, we hereby confirm to you that there are no
material actions against the Corporation, pending or overtly threatened in
writing, before any court, governmental agency, or arbitrator.
Pursuant to Section 21 of the Accord, the Opinions set forth in this
letter are subject to the following qualifications, limitations and
assumptions, in addition to those set forth elsewhere in this letter:
1. The General Qualifications of the Accord apply to each of
the Opinions set forth in this Opinion Letter.
(EXHIBIT "D" PAGE 3 OF 4)
<PAGE> 75
Romac International, Inc.
September 5, 1997
Page 4
2. The enforceability of the Transaction Documents may be
limited or otherwise affected by applicable law of the State of
Illinois, which may render certain of the remedies and waivers in the
documents unenforceable, but the inclusion of which do not affect the
validity of any of the documents taken as a whole or make the remedies
generally afforded thereunder inadequate for the practical realization
of the principal benefits intended to be provided by those documents;
and
3. The Opinions expressed in this Opinion Letter are matters
of professional judgment and are not a guarantee of results.
This Opinion Letter is solely for your use in connection with the
Transaction and may be relied upon by you only in connection with the
Transaction and may not be used or relied upon by any other person for any
purpose whatsoever, other than in connection with regulatory requirements or in
response to a court order, without in each instance our prior written consent.
Very truly yours,
Nagle & Higgins, P.C.
By:
-----------------------------------
Brien J. Nagle,
Vice-President
(EXHIBIT "D" PAGE 4 OF 4)
<PAGE> 76
<TABLE>
<S> <C> <C>
Law Offices
HOLLAND & KNIGHT LLP
400 North Ashley Drive, Suite 2300 Atlanta Orlando
P.O. Box 1288 (ZIP 33601-1288) Boca Raton San Francisco
Tampa, Florida 33602-4300 Fort Lauderdale St. Petersburg
Jacksonville Tallahassee
Lakeland Tampa
813-227-8500 Miami Washington, D.C.
FAX 813-229-0134 New York West Palm Beach
</TABLE>
September 5, 1997
Scott M. Johnsen
Donald J. O'Brien
John F. Sweeney
2211 South York Road
Suite 310
Oak Brook, Illinois 60529
Gentlemen:
We have acted as counsel to Romac International, Inc., a Florida
corporation (the "Company"), in connection with the execution and delivery of a
Stock Purchase Agreement, dated September 5, 1997 (the "Agreement"), between
the Company and Scott M. Johnsen, Donald J. O'Brien, and John E. Sweeney (the
"Sellers").
We are delivering this opinion pursuant to Section 8(b)(viii) of the
Agreement. Unless otherwise defined in this letter, capitalized terms used in
this letter have the meanings set forth in the Agreement.
This letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business
Law (1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this letter should be read in
conjunction therewith.
As used in this opinion, the term "knowledge" means the conscious
awareness of facts or other information by the individual signing this opinion
or any lawyer in this firm who has had actual involvement in preparing this
opinion.
With respect to factual matters underlying the opinions expressed
below, we have relied upon representations from an officer of the Company, as
set forth in Attachment 1 hereto.
The law covered by the opinions expressed below is limited to the laws
of the State of Florida and the federal laws of the United States, and we
assume no responsibility as to the applicability of the law of any other
jurisdiction to the subject transaction or the effects of such laws thereon.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation organized under the laws of
Florida and its status is active.
2. The Company has the requisite corporate power and authority
to execute and deliver the Agreement and other documents the Company is required
thereby to execute and deliver to the Seller at Closing (the "Closing
Documents") and to consummate the transactions contemplated thereby. The
execution, delivery, and performance of the Closing Documents by the Company
will not conflict with, or result in a breach of, the Articles of Incorporation
or Bylaws of the Company, or, to our knowledge, any material instrument or
agreement to which the
(EXHIBIT "E" PAGE 1 OF 3)
<PAGE> 77
Company is a party or by which its assets are bound. The execution and
delivery of each Closing Document and the performance of the transactions
contemplated thereby have been duly authorized and approved by all requisite
corporate action on the part of the Company.
3. Each Closing Document to which the Company is a party has been
duly executed and delivered on behalf of the Company and represents a valid and
binding obligation of the Company, enforceable against it in accordance with
its terms.
This opinion is furnished to you solely for your benefit and may not
be delivered to or relied upon by any other person without our prior written
consent.
Very truly yours,
HOLLAND & KNIGHT LLP
(EXHIBIT "E" PAGE 2 OF 3)
<PAGE> 78
ATTACHMENT 1
FACTUAL CERTIFICATE
The undersigned person is supplying this Certificate to Holland &
Knight LLP to permit Holland & Knight LLP to deliver an opinion of counsel in
connection with the closing of the transactions contemplated by a Stock
Purchase Agreement, dated September 5, 1997 (the "Agreement"), between Romac
International, Inc. (the "Company") and Scott Johnsen, Donald J. O'Brien, and
John E. Sweeney (the "Sellers"). The undersigned person is delivering the
representations and warranties set forth below with the understanding that
Holland & Knight LLP intends to rely upon such representations and warranties
in delivering its opinion.
1. The company represents and warrants that the execution, delivery,
and performance of the Agreement by the Company will not conflict with, or
result in a breach of, or require the consent of a party to, any material
agreement or instrument to which the Company is a party or by which its assets
are bound, and will not violate or conflict with any decision, judgment,
decree, order, regulation, rule of court, or governmental authority to which
the Company is a party or is subject.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
September 5, 1997.
ROMAC INTERNATIONAL, INC.
By:________________________
Howard W. Sutter, Vice President
(EXHIBIT "E" PAGE 3 OF 3)
<PAGE> 79
THE DISCLOSURE SCHEDULES TO THIS AGREEMENT HAVE BEEN OMITTED PURSUANT
TO ITEM 601(b)(2) OF REGULATION S-K. ROMAC INTERNATIONAL, INC. AGREES TO
FURNISH THESE SCHEDULES TO THE COMMISSION UPON REQUEST.
