SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 19, 1996
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SOS Staffing Services, Inc.
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(Exact name of registrant as specified in its charter)
Utah 0-26094 87-0295503 .
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1415 South Main Street
Salt Lake City, Utah 84115 .
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(Address of principal executive offices, including zip code)
(801) 484-4400 .
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(Registrant's telephone number, including area code)
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TABLE OF CONTENTS
Page
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Item 2. Acquisition or Disposition of Assets 3
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Item 7. Financial Statements and Exhibits 3
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SIGNATURES 4
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Item 2. Acquisition or Disposition of Assets,
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Pursuant to an agreement entered into on August 19, 1997 to be effective
August 27, 1997, SOS Staffing Services, Inc. (the "Company") completed the
acquisition of substantially all of the assets and assumed certain liabilities
of Execusoft, Inc. ("Execusoft"). Execusoft. is engaged in providing temporary
employees in the information technology field to businesses in the Orange
County, California and Salt Lake City, Utah areas. The assets purchased from
Execusoft consist principally of office furniture and equipment, customer lists,
employee lists, and goodwill. Used in Execusoft's information technology
staffing business. The Company intends to use all such assets to continue and
expand its information technology staffing business.
The purchase price for the assets was $5.0 million in cash plus future
earnouts not to exceed an additional $3.5 million based on profitability. In
connection with the purchase, the Company assumed a real property lease, certain
contracts, and entered into noncompetition agreements with previous owners. The
purchase price for the assets and business was determined in arms'-length
negotiations conducted by principals of the Company and representatives of
Execusoft. There was no material relationship between the owners of Execusoft,
Inc and the Company or any of its affiliates, any director or officer of the
Company, or any associate of any such director or officer.
Item 7. Financial Statements and Exhibits
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(a) Financial statements of business acquired
Not applicable
(b) Pro forma financial information
Not applicable
(c) Exhibits
2.1 Acquisition agreement
99.1 Press Release dated August 19, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned thereto duly authorized.
SOS STAFING SERVICES, INC.
\S\ Gary B. Crook .
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Gary B. Crook
Vice President, Chief Financial Officer
and Treasurer
Date: August 27, 1997
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ASSET PURCHASE
AGREEMENT
EXECUSOFT, INC.
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ASSET PURCHASE AGREEMENT
COME NOW, SOS Staffing Services, Inc., a Utah corporation at 1415 S. Main,
Salt Lake City, UT 84115 (hereinafter referred to as "Buyer"); Execusoft, Inc.,
a California corporation at 301 North Rampart Street, Suite F, Orange,
California, 92668 (hereinafter referred to as "Seller"); and David A. Thomas and
Cathy D. Thomas (hereinafter collectively referred to as "Principals") and agree
as follows:
WITNESSETH:
WHEREAS, Seller owns the assets and business set out in Article 1 and
Exhibits A and B herein and desires to sell them to Buyer;
WHEREAS, Principals are officers of Seller, are authorized to vote all of
the outstanding shares of Seller, are Seller's sole shareholders and stand to
benefit from Seller transferring said assets to Buyer;
WHEREAS, Buyer desires to purchase said assets and business from Seller
for cash and other consideration;
WHEREAS, the parties desire to enter into a written Agreement describing
and setting forth the terms and conditions under which they will transfer
ownership of said assets and business;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and conditions hereinafter set forth, and for other good and valuable
consideration, the parties agree as follows:
1. Buyer agrees to purchase and Seller agrees to sell, convey, transfer, and
deliver to Buyer the business and assets as set out more specifically in
Exhibits A and B which are hereby incorporated by reference as if fully set
forth herein (the "Assets" or "Business"). Buyer is only purchasing the assets
set forth on Exhibits A and B. Seller is conveying to Buyer only the assets
listed on Exhibits A and B. The Assets specifically exclude cash, cash
equivalents, accounts receivable, workers' compensation deposits, bank accounts
and personal property of the Principals as of the Closing date of this Agreement
and shall not be transferred hereby to Buyer. All Judgments granted in favor of
Seller in connection with the Davis County, State of Utah, District Court Action
- - Civil No. 940700282CV (Execusoft, Inc v. Intraspace and Execusoft, Inc. v.
Pleiades Software Development, Inc.) are specifically excluded from the Assets
and shall not be transferred hereby to Buyer. Assets not referenced or
identified on Exhibits A or B shall not be transferred to Buyer.
Seller agrees to sell or convey to Buyer and Buyer hereby agrees to
purchase and assume the equipment leases, third party contracts and/or other
liabilities listed in Exhibit C of this Agreement. Seller shall remain fully
responsible and liable for all liabilities, except for the liabilities
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specifically identified on Exhibit C, which Buyer hereby agrees to assume. With
respect to the liabilities identified in Exhibit C, Buyer is assuming only those
liabilities arising after the Closing of this Agreement. Seller shall remain
responsible for all liabilities, including those listed in Exhibit C, to the
extent performance is required before the Closing. Buyer does not in any way or
manner assume any debt, liability, or obligation of Seller, other than those set
forth in Exhibit C, whether known or unknown, whether asserted or un-asserted,
whether absolute or contingent. Buyer hereby specifically assumes the
obligations for real property leases, contingent upon each respective landlord's
approval, arising after Closing for the real property referenced in Exhibit A,
to wit: the real property leases for the demised premises located at 301 North
Rampart Street, Suite F, Orange, California, 92668 and 9 Exchange Place, Suite
900, Salt Lake City, Utah, 84111.
Seller shall be responsible for all expenses related to the operation of the
Business prior to the Closing Date. Seller shall be responsible to pay all wages
and benefits earned prior to the Closing Date, but to be paid after Closing.
For transition purposes, Buyer at its option may utilize Seller's existing
payroll bank accounts. All cash in said account shall remain the property of
Seller. Buyer shall fund and maintain the account after Closing. Within thirty
(30) days from the Closing date of this Agreement, said a account shall be
reconciled and the Buyer shall reimburse the Seller for the reconciled balance.
2. In consideration for receiving said assets and in consideration of the
representations, warranties, and covenants of Seller set forth herein, Buyer
agrees to pay Seller the following amounts on the conditions set forth herein:
(a) The total purchase price for the assets, non-competition covenants
and all earnouts made pursuant to this Article 2 shall in no event
be less than Five Million Dollars ($5,000,000.00) or exceed Eight
Million Five Hundred Thousand Dollars
($8,500,000.00).
(b) At the time of execution of this Agreement, Buyer shall pay
Seller Five Hundred Thousand Dollars ($500,000.00) by direct wire
transfer to an account designated by Seller. If the transaction
contemplated hereby does not close for any reason other than breach
of the representations and warranties made by Seller or Principal in
Article 7, failure of the Seller and Principal to deliver at Closing
the items described in Article 5(a), or failure of Buyer to enter
into an employment agreement with Alex Salottolo, as described in
Article 15 herein, prior to the Closing Date, then such payment
shall be non-refundable and shall be considered liquidated damages.
The parties agree that it would be impractical and extremely
difficult to prove or fix the actual damages that would be suffered
if Buyer fails to perform the obligations to close hereunder. The
parties agree that $500,000.00 is a reasonable approximation of the
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damages Seller may suffer as a result of Buyer's failure to close
for any reason other than hereinabove stated.
(c) At the Closing of this Agreement, Buyer shall pay Seller, in
addition to the Five Hundred Thousand Dollar ($500,000.00) deposit
described in Article 2 (b),Four Million Four Hundred eighty Thousand
Dollars ($4,480,000.00) by direct wire transfer to an account which
has been designated by Seller.
(d) At the Closing of this Agreement, Buyer shall pay each Principal Ten
Thousand Dollars ($10,000.00) by direct wire transfer to an account
which has been designated by Principal.
(e) The "Earnout Period" shall commence on the date of Closing of the
Agreement and continue to January 3, 1999 (the end of Buyer's
1998 fiscal year). Buyer shall pay Seller five (5) times the
amount of EBITDA (as defined in Article 2 (f) herein) which is
greater than the "Base Profit" earned by the Business during the
Earnout Period. The "Base Profit" shall be $880,000 multiplied
by the number of weeks in the Earnout Period divided by 52. For
example, if the Closing Date is August 18, 1997, there would be
72 week in the Earnout Period and the Base Profit would be
$1,218,462.00 ($880,000.00 x 72/52 = $1,218,462.00); and if the
Business generated $1,500,000.00 of EBITDA during the Earnout
Period, the Earnout paid by Seller would be $1,407,690
($1,500,000 - $1,218,462 = $281,538; $281,538 x 5 = 1,407,690).
Such payments shall be made no later than forty-five (45) days
from the close of the Earnout Period. If the Earnout payment is
not paid as by paid by the due date, the principal amount of such
payment shall bear interest at the lesser of the prime rate, as
reported by the Wall Street Journal, plus two percent (2%) as of
the date the payment is due or the maximum amount permitted by
law.
Alternatively, the Earnout Payment may be based upon such
other profit calculations, such as Branch Profit as used by Buyer,
if all parties agree to an adjusted Base Profit and a definition of
the profit calculation to be used.
(f) (i) "EBITDA" as used in this Agreement means gross sales (total
sales of goods and services) less adjustments and discounts; the
cost of sales (temporary employee programs, direct costs, temporary
payroll, temporary payroll taxes, i.e. FICA, unemployment, etc.,
temporary worker's compensation, drug testing and bonding
insurance); branch staff expenses (branch staff payroll, temporary
staff payroll, commissions and bonuses, branch staff and temporary
staff payroll taxes, i.e. FICA, unemployment insurance, etc., branch
staff worker's compensation, sales and travel, group insurance,
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background checks, and drug testing); advertising expenses
(specialty items, classified ads, yellow pages, promotional events,
other advertising); operation expenses (telephone, office supplies,
legal, , professional, postage and delivery, petty cash, training
expenses, and other operating expenses); facilities expenses (rent,
repair and maintenance, and utilities); bad debt (to constitute a
bad debt the receivable must be actually written off. No receivable
aged less than one hundred twenty (120) days shall be written off
without the permission of Seller. Any receivable aged over one
hundred twenty (120) days, which shall be considered a delinquent
account, may be written off at the sole discretion of Buyer; however
any recovery made on such an account shall be added back to total
sales. Any account receivable aged over one hundred twenty (120)
days at the close of the Earnout Period shall be considered bad debt
for purposes of determining EBITDA); miscellaneous expenses (dues
and subscriptions, adjustments/recoveries, and reimbursements);
printing expenses; computer expenses; consultation expenses; taxes
(exclusive of federal, state and local income tax) and insurance;
gain or loss on disposal of assets; and other expenses (career fair;
services fees, internal expenses, etc.); plus other income (bad debt
recovery, finance charges collected and other income). EBITDA
excludes an allocation of Buyer's corporate overhead or home office
expense. EBITDA excludes depreciation of assets and amortization.
(ii) Seller acknowledges and agrees that EBITDA will be based
on Buyer's operation of the Business and acknowledges that Buyer's
workers' compensation insurance, unemployment insurance, bonding
insurance, cost of employee benefits and other costs differ from
Seller's and past performance will not necessarily be indicative of
future profits. Seller acknowledges that staff employee's group
health insurance shall be charged to EBITDA on a pro rated per
capita basis without regard to actual participation. Seller
acknowledges that as reported on Buyer's branch statements payroll
taxes are not adjusted for purposes of calculating EBITDA for limits
on FICA or federal or state unemployment insurance (FUTA, SUTA);
however, for purposes of calculating the EBITDA upon which the
Earnout is based, the branch statements shall be adjusted to reflect
actual expenditures for FICA, FUTA and SUTA.
(iii) The parties agree that if there is a dispute
regarding the calculation of EBITDA as it relates to the Earnout
which cannot be resolved through good faith negotiations of the
parties, that the parties will submit to binding arbitration to
determine EBITDA. The parties shall select one of the following Big
6 accounting firms to arbitrate and determine the EBITDA for the
Earnout Period: Price Waterhouse, LLP; Deloitte & Touche, LLP; or
Coopers & Lybrand, LLP. Preference shall be given first to Price
Waterhouse, LLP; then to Deloitte & Touche, LLP; and finally to
Coopers & Lybrand, LLP. If the preferred firm has provided any
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services to any party during the Earnout Period, has a conflict, or
for any reason is not willing to act as the arbitrator, the next
firm in the specified order of preference shall be appointed as
arbitrator subject to the same conflict conditions. The selection
process shall be completed and the arbitration/review shall have
commenced no later than ninety (90) days following the end of the
Earnout Period. Notwithstanding any such dispute, Buyer shall pay
Seller any amount that it does not dispute on the due date as
described above.
(g) During the Earnout Period, Buyer shall use its best efforts to
conduct the Business in a manner consistent with good business
judgement and consistent with Buyer's ordinary business
practices. Buyer shall not incur any unnecessary expense in
order to diminish the EBITDA of the Business. Buyer shall not
open other offices conducting the same business as Seller, i.e.
information technology and information system staffing services,
within one hundred fifty (150) miles of Orange, California or
Salt Lake City, Utah during the Earnout Period without the
approval of Seller. Seller acknowledges that Buyer currently
operates an information technology and information system
staffing service office in San Diego, California under the name
"Impact Staffing." Upon the consent of Seller, Buyer shall
include its San Diego - Impact office in the operations upon
which EBITDA is calculated. In such event, no loss shall be
charged to EBITDA prior to December 28, 1997; however, any EBITDA
profit earned during the period from the time of Closing (or
other such time that the Impact office comes under control of the
Orange California office) shall be included in EBITDA for
purposes of computing the Earnout.
(h) The parties agree that the payments made at Closing, totaling
Five Million Dollars ($5,000,000.00), shall be allocated as follows:
to Goodwill: $4,902,000.00;
to Customer Lists $10,000.00;
to Employee Lists $10,000.00;
to the Non-Competition Covenant $20,000.00 (paid directly to
Principals); and
to Property, Facilities and Equipment $58,000.00.
All other payments made pursuant to this Article 2 will be allocated
to Goodwill.
All parties agree to file IRS Form 8594 reflecting the
purchase price allocation contained herein.
(i) Buyer shall assume and pay all sales taxes, if any, related to the
transfer and sale of the Assets hereunder.
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3. As further consideration for Buyer to enter into this Agreement and in
consideration for Buyer making payments to Principals and Seller pursuant to
Article 2 and in consideration for Principals benefiting from this Agreement,
Principals agree to the following:
(a) For a period commencing at the Closing Date of this Agreement and
continuing for a period of (36) months thereafter, Principals
shall not, for any reason, within one hundred and fifty (150)
miles of Orange California or Salt Lake City, Utah (i) engage in
the temporary staffing, consulting personnel, staff leasing,
payrolling, executive placement, permanent placement, or employee
testing business, or provide any other related service; (ii)
enter the employ of, or render any services to or consult with,
any person engaged in competition with the Buyer; (iii) become
associated with or interested in any such person in any capacity,
including, without limitation, as an individual, partner,
shareholder, officer, director, principal, agent or trustee;
provided, however, Principals may own, directly or indirectly,
solely as an investment, securities of any person traded on any
national securities exchange or over-the-counter if Principals
are not controlling persons of, or a member of a group which
controls, such person and does not, directly or indirectly, own
5% or more of any class of securities of such person, (iv)
solicit or otherwise deal with any client of the Buyer in a
manner designed to (or that could) take business away from the
Buyer; (v) solicit or otherwise induce any employee of the Buyer
to terminate his/her employment with the Buyer; or (vi) hire or
solicit any consultant under contract with the Buyer or encourage
such consultant to terminate such relationship.
(b) The Principals agree not to disclose to any unauthorized person
any confidential information they may obtain or have obtained
regarding Seller's, Buyer's, their successors' services, products,
customers, employees or methods of doing business, nor use such
information in violation of Article 3 (a) during said period.
(c) The Principals acknowledge that each of them will be able to
earn a livelihood without violating the foregoing restrictions. The
Principals further acknowledge: (1) that compliance with the
restrictive covenant contained in this Article 3 is necessary to
protect the business and goodwill of the Buyer or its successors in
interest, and (2) that a breach will result in irreparable and
continuing damage to the Buyer or its successors in interest, for
which money damages may not provide adequate relief. Consequently,
the Principals agree that, in the event that any of them breaches or
threatens to breach the restrictive covenant of this Article 3, the
Buyer or its successors in interest shall be entitled to seek: (1) a
preliminary or permanent injunction to prevent the continuation of
harm, and (2) money damages insofar as they can be determined.
Nothing in this Agreement shall be construed to prohibit the Buyer
or its successors in interest from also pursuing any other remedy,
the parties having agreed that all remedies are cumulative.
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(d) The parties have attempted to limit the Principals' right to
compete only to the extent necessary to protect the Buyer or its
successors in interest from unfair competition. The parties
recognize that reasonable people may differ in making a
determination. Consequently, the parties agree that, if the scope or
enforceability of the restrictive covenant is in any way disputed at
any time, a court, arbitrator or other trier of fact may modify and
enforce the covenant to the extent that it believes to be reasonable
under the circumstances existing at the time.
4. The "Closing" of the transactions contemplated by this Agreement shall
take place at 1:30 p.m. (Pacific Daylight Time) on August 25, 1997 (the "Closing
Date") at the law offices of Yates & Greer, 505 South Main Street, Suite 1000,
Orange, California, 92868. Closing may also take place on any other Monday at a
time and place mutually agreed to in writing by the parties.
This Agreement shall be effective on upon execution; ; however, for all
purposes, the transfer of the Assets and Business herein described to Buyer is
hereby recognized as occurring on the Closing Date, regardless of the date when
this Agreement shall be executed. On the Closing Date, Buyer will also commence
operation of Seller's Business with respect to the Assets purchased. 5. (a) At
Closing, Seller and Principals shall deliver to Buyer the following:
(i) A Bill of Sale for all items of personal and tangible
property to transferred hereby;
(ii) An assignment of all trademarks and trade names to be
transferred hereby;
(iii) All Assets to be transferred hereby;
(iv) Lien releases for any encumbered Asset; and
(v) Consents to the assignment of all leases and contracts
to be assumed by Buyer.
(d) At Closing, Buyer shall deliver to Seller or Principals the
following:
(i) All funds or monies described in Article 2 herein; and
(ii) Certificate that all necessary consents have been
obtained.
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6. In the event the transaction contemplated by this Agreement does not
close, for a period of five (5) years from the date of this Agreement, Buyer
will maintain as confidential all written proprietary information and shall not
use for any reason any written proprietary information which it or any of its
representatives may obtain from Seller, any of its employees or the Principals.
This restriction shall not apply, however, (i) as may otherwise be required by
law (if such disclosure is required by legal process, Buyer shall notify Seller,
prior to any response to such legal process. Thereafter, Seller, at its sole
cost and expense, may oppose such disclosure), (ii) to the extent such
information (A) shall be or have become publicly available, (B) was legally
available to Buyer on a non-confidential basis prior to its disclosure by Seller
or (C) becomes available to Buyer on a non-confidential basis from a person
other than Seller or (iii) with respect to disclosure by Buyer to parties to
whom disclosure may be required or desirable in connection with the transactions
contemplated by this Agreement, provided such parties agree to be bound by the
provisions of this Article 6. This confidentiality Agreement will also apply to
any proprietary information not purchased by Buyer regardless of whether the
transaction closes.
7. Seller and Principals represent and warrant to the Buyer that the
statements made in Article 1 and below are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date. As
used in this Article 7, "material" shall mean any discrepancy in the financial
statements or representations that in the aggregate have an impact of more than
fifty thousand dollars ($50,000.00).
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the state of California. Seller has
full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
Seller is not in default under or in violation of any provision of
its charter, articles of incorporation, or bylaws.
(b) Seller has good and marketable title to all the assets listed in
Article 1 and Exhibits A and B. All assets are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities, or
claims, except for leases of the following equipment: .
(c) Neither the execution nor the delivery of this Agreement will
(i) violate any statute, regulation, judgment, order, or other
restriction of any governmental agency or court; or (ii) conflict
with, result in a breach or default under any Agreement, contract,
license, or other arrangement to which Seller is a party.
(d) Seller has filed all income tax returns that it was required to
file, has paid in full all taxes associated with such tax returns
and is not deficient on any tax payments or liabilities.
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(e) Seller has complied with all environmental, health, and safety
laws in all material respects and does not have any material
liability relating to any environmental, health, and safety laws.
(f) Seller has complied with all federal, state and local equal
employment opportunity and anti-discrimination laws in all material
respects and does not have any material liability relating to any
federal, state and local equal employment opportunity and
anti-discrimination laws.
(g) Seller has complied with Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in all material respects and does not
have any material liability relating to ERISA.
(h) Seller has complied with the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") in all material
respects and does not have any material liability relating to COBRA.
(i) Seller has paid all payroll taxes and other withholdings
mandated by federal, state and local laws.
(j) Seller has complied with all other employment and labor laws not
specifically enumerated in all material respects and does not have
any material liability relating to any employment or labor law.
(k) Seller has disclosed all lawsuits, claims or causes of actions
that have arisen against Seller that are known or that it should
reasonably be expected to know. All such lawsuits, claims or causes
of action are disclosed and described in Schedule 7(k).
(l) Seller warrants that all financial information and records
provided to Buyer during its due diligence review which are attached
hereto as Schedule 7(l) are true and complete in all material
respects.
8. Buyer represents and warrants to Seller and Principals that the
statements made below are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date.
(a) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the state of Utah. Buyer has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
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Buyer is not in default under or in violation of any provision of
its charter, articles of incorporation, or bylaws.
(b) The Buyer's board of directors have approved the terms of this
Agreement and the officers of Buyer have been duly authorized to
enter into and execute this Agreement.
(c) The Buyer has obtained all necessary consents to enter into this
Agreement.
9. Seller and Principals agree to indemnify Buyer and hold Buyer harmless
from any material loss, damage, expense, liability, or claim, including without
limitation, attorney's fees and expenses of litigation, to which Buyer may
become subject arising out of: (a) any material misstatement of the Seller or
Principals as warranted in Article 7; (b) any material failure of Seller or
Principals to perform any of its covenants, Agreements or undertakings contained
in this Agreement or in any other Agreement executed in connection with the
transactions contemplated herein; or (c) any other action or inaction of Seller,
Principals, or their designees, which action or inaction is not a result of any
fault on the part of Buyer.
Seller and Principals further agree to indemnify Buyer and hold
Buyer harmless from any material loss, damage, expense, liability, or claim
(whether known or unknown, whether asserted or un-asserted, whether absolute or
contingent), including without limitation, attorney's fees and expenses of
litigation, for any claim arising or occurring prior to the Closing Date for
which Buyer may be liable because of its purchase of Seller's assets.
Buyer shall notify Seller and Principals within ten (10) days of
receipt of any written demand or the commencement of any suit for any loss,
damage, expense, liability, or claim for which Buyer seeks indemnification from
Seller or Principals. Seller and Principals shall have the right to defend any
such demand or suit.
As used in this Article 9, "material" shall mean losses, damages,
expenses, liabilities or claims, including without limitation, attorney's fees
and expenses of litigation which are fifty thousand dollars ($50,000.00) in the
aggregate.
10. Buyer agrees to indemnify Seller and Principals and hold Seller and
Principals harmless from any material loss, damage, expense, liability, or
claim, including without limitation, attorney's fees and expenses of litigation,
to which Seller and Principals may become subject arising out of: (a) any
material failure of Buyer to perform any of its covenants, Agreements or
undertaking contained in this Agreement or in any other Agreement executed in
connection with the transactions contemplated herein; (b) any material breach or
misstatement of any representation or warranty of Buyer; or (c) any other action
or inaction of Buyer, or its designees, which action or inaction is not a result
of any fault on the part of Seller or Principals.
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Buyer agrees to indemnify Seller and Principals and hold Seller and
Principals harmless from any material loss, damage, expense, liability, or claim
(whether known or unknown, whether asserted or un-asserted, whether absolute or
contingent), including without limitation, attorney's fees and expenses of
litigation, for any claim arising or occurring after the Closing Date by reason
of Buyer's failure to perform any assumed liability or for which Seller or
Principals may be otherwise liable because of Buyer's operation of the Business.
Seller or Principals shall notify Buyer within ten (10) days of
receipt of any written demand or the commencement of any suit for any loss,
damage, expense, liability, or claim for which Seller or Principals seek
indemnification from Buyer. Buyer shall have the right to defend any such demand
or suit.
As used in this Article 10, "material" shall mean losses, damages,
expenses, liabilities or claims, including without limitation, attorney's fees
and expenses of litigation which are fifty thousand dollars ($50,000.00) in the
aggregate.
11. Seller agrees from the time of the execution of this Agreement through
the effective date that Seller will conduct its Business only in the ordinary
course consistent with past practices and will not enter into any agreement
which would materially affect the business or the assets to be purchased which
would binding upon Buyer after the closing, without Buyer's consent.
12. Principal, David A. Thomas, shall provide consultation services
to Buyer during the Earnout Period as an independent contractor pursuant to a
separate agreement, the form of which is attached hereto as Exhibit D.
13. For each of Seller's former employees hired by Buyer, Buyer shall
recognize time of service with Seller as time of service with Buyer for purposes
of non-health, life or disability benefits, such as, 401(k) eligibility and
matching contribution vesting, C-125, etc. Seller acknowledges that Buyer
maintains a drug-free workplace policy and that all of Seller's former employees
hired by Buyer will be subject to such policy. Such staff employees shall be
exempt from the pre-employment drug screen, but shall be subject to all other
provisions of the policy, including random drug screens or post incident
screening. After the Closing, each of Seller's employees hired by Buyer will be
subject to post incident screening. Buyer's policy currently limits random
testing in the state of California. However, after 180 days from the Closing,
each of Seller's employees hired by Buyer may be subject to random screening
pursuant to Buyer's policy, if Buyer, at its sole discretion, implements random
testing in California. Buyer may modify its policy at any time to reflect
changes in statutory or case law or for any other reason consistent with good
business judgment.
14. Buyer shall issue options to purchase a combined forty thousand
(40,000) shares of Buyer's common stock to the Principals or certain key
11
<PAGE>
employees of Seller which as a result of this Agreement are subsequently
employed by Buyer. At least twenty thousand (20,000) options shall be granted to
Alex Salottolo, a key employee of Seller. Such stock options will be issued
under a separate agreement pursuant to and in accordance with the Buyer's May
1995 Incentive Stock Option Plan and shall vest over a period of five (5) years
pursuant to such separate agreement (the form of such agreement is attached
hereto as Exhibit E). If any grant is made to a Principal, the vesting schedule
shall be modified to be fully vested at the close of the Earnout Period. Said
plan requires that any specific grant be approved by the compensation committee
of Buyer' board of directors. Seller shall provide to Buyer as a list of key
employees and number of shares to be granted each such employee or Principal as
indicated in Exhibit F.
15. Buyer agrees that it shall employ Alex Salottolo for a period of three
(3) years following the Closing Date pursuant to the terms and conditions of a
separate employment agreement. The form of such agreement is attached hereto as
Exhibit G.
The closing of this Agreement is contingent upon Buyer entering into
above-described employment agreement with Mr. Salottolo. If for any reason Buyer
does not enter into an employment agreement with Mr. Salottolo prior to the
Closing Date, then Buyer at its sole discretion may terminate this Agreement and
all obligations hereunder except for those terms and covenants set forth in
Article 6 hereof.
16. Buyer agrees that if it terminates Joe Wade, currently Seller's
Controller, or if Mr. Wade resigns during the Earnout Period, for any reason,
with or without cause, that it shall pay, at Seller's request, Mr. Wade up to
four (4) months severance pay. Fifty percent (50%) of such payment shall be
included as an expense for purposes of calculating EBITDA. The remaining fifty
percent (50%) shall be excluded from EBITDA and shall be borne solely by the
Buyer. Buyer shall notify Seller five (5) days prior to any termination of Mr.
Wade during the Earnout Period.
17. Within five (5) days from the date of Closing, Principal, David
Thomas, shall interview Kevin Green, an employee of Buyer. If the Principal
approves, Mr. Green shall be transferred from Buyer's Salt Lake operation to the
Seller's Business in Salt Lake. Seller acknowledges that Mr. Green's continued
employment shall be at the sole discretion of Buyer subject to the limitations
of Article 2(f) hereof. Seller agrees that the salary and expenses related to
Mr. Green shall be included in the EBITDA calculation for determining the
Earnout based on the following: The parties acknowledge that Mr. Green is
currently paid a salary of $60,000.00. During the Earnout Period, EBITDA shall
only include Mr. Green's annual base salary of $26,000.00 plus an incentive of
fifteen percent (15%) of the gross profit generated by business sold by Mr.
Green. Any difference in actual compensation and the foregoing shall be excluded
from EBITDA for purposes of calculating the Earnout. For example, if during the
twelve month period following Closing, Mr. Green sells $200,000 worth of
business, his incentive would be $30,000.00 (15% x $200,000 = $30,000); the
12
<PAGE>
charge to EBITDA would be $56,000.00 ($26,000 (base) + $30,000 (incentive) =
$56,000). All other expenses and benefit costs related to Mr. Green shall be
included in EBITDA.
18. Seller shall pay all staff and temporary employee benefits, costs and
expenses earned prior to the Closing date of this Agreement. Seller agrees to
pay before the Closing Date or to accrue and maintain adequate reserves for any
staff and temporary employee benefits earned prior to the Closing Date of this
Agreement, but to be paid after the Closing Date. For those employee benefits,
costs or expenses which a specific date can not be determined, Buyer and Seller
shall share the payment of the benefit, cost or expense on a pro-rated basis.
Seller's share shall be the ratio of hours worked before the Closing Date to the
total hours worked and Buyer's share shall be the ratio of hours worked after
the Closing Date to the total hours worked.
19. Buyer agrees to assist Seller to collect accounts receivable. Such
assistance shall be limited to turning over payments due Seller which are
received by Buyer within five (5) business days from the date of Buyer's receipt
of any such payment. If Buyer receives payment for both its services as well as
Seller's, Buyer will deposit said funds in its accounts and pay the amount due
Seller to Seller. Payments for which no invoice is designated shall be applied
to the oldest outstanding invoice. Additionally, Buyer shall pay Seller, within
five (5) business days of Buyer's receipt of any monies related to the Judgments
in Seller's favor with respect to the Davis County, State of Utah, District
Court Action - Civil No. 940700282CV (Execusoft, Inc v. Intraspace and
Execusoft, Inc. v. Pleiades Software Development, Inc.)
Seller agrees if it receives any payment for any account receivable
due Buyer that it will turn over such payment to Buyer within five (5) business
days from the date of Seller's receipt of any such payment . If Seller receives
payment for both its services as well as Buyer's, Seller will deposit said funds
in its accounts and pay the amount due Buyer to Buyer. Payments for which no
invoice is designated shall be applied to the oldest outstanding invoice.
Any payment hereunder not paid by the due date shall bear interest
at the lesser of the prime rate, as reported by the Wall Street Journal, plus
two percent (2%) as of the date such payment is due or the maximum rate
permitted by law.
20. Buyer, Seller, and Principals agree to take such further action as is
necessary to carry out the purpose of this Agreement, including the execution
and delivery of such further instruments and documents as any party reasonably
may request.
21. Except for disputes arising under Article 2 (d) and (e), the EBITDA
calculation and Earnout Payment, which shall be subject to binding arbitration
as described in Article 2 (e)(iii), Buyer and Seller agree that prior to the
commencement of any action for breach of this agreement they will submit to
non-binding mediation or arbitration in accordance with the Commercial
13
<PAGE>
Arbitration Rules of the American Arbitration Association in effect at the time
of the action. The parties agree to negotiate in good faith to resolve the
breach or enter a settlement. An arbitrator will be chosen by the Buyer and
Seller. If the parties are unable to agree upon an arbitrator, within ninety
(90) days of such impasse, an arbitrator shall be selected pursuant to the rules
of the American Arbitration Association then in effect. Arbitration shall take
place in Salt Lake City, Utah or Orange, California.
22. This Agreement and all documents executed and delivered hereunder
shall be deemed to be contracts under the laws of the State of Utah, and for all
purposes shall be construed and governed in accordance with such laws. Any suit
or other action to enforce any provision of this Agreement or to obtain any
remedy with respect hereto shall be brought in any federal or state court with
competent jurisdiction sitting in Salt Lake County, State of Utah or Orange
County, State of California.
23. In the event of the commencement of any litigation or arbitration to
enforce any provision of this Agreement or that is related to this Agreement,
the prevailing party shall be entitled to its costs for such action, including
reasonable attorney's fees, expert witness fees and other reasonable costs
incurred related to such action.
24. Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, telegraphed, telexed,
sent by facsimile transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile transmission or, if
mailed, five days after the date of deposit in the United States mail, as
follows:
(i) if to Buyer, to:
SOS Staffing Services, Inc.
1415 South Main Street
Salt Lake City, Utah 84115
Attn: Legal Department
(ii) if to Seller to:
Execusoft, Inc.
--------------------------
--------------------------
(iii) if to Principals to:
David A. Thomas and
Cathy D. Thomas
--------------------------
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<PAGE>
--------------------------
(iv) If to Principals or Seller, copy to:
Robert A. Greer
Yates & Greer, LLP
505 South Main Street, Suite 1000
Orange, CA 92868
Any party may change its address for notice hereunder by written
notice to the parties hereto.
25. Any term or provision of this Agreement that is invalid or
unenforceable shall not affect the validity and enforceability of the remaining
terms and provisions of this Agreement.
26. Each party shall bear its own costs and expenses incurred in
connection with this Agreement.
27. Each party acknowledges that it has sought the advice (or has had the
opportunity to do so) of competent legal counsel and tax advisors with respect
to the subject matter of this Agreement and the legal and tax consequences of
entering this Agreement.
28. This Agreement, together with the exhibits incorporated herein,
constitutes the entire agreement of the parties with respect to the subject
matter herein. This Agreement may only be modified by written instrument
executed by the parties hereto.
29. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all such
counterparts shall constitute one and the same instrument. As used herein,
"counterparts" shall include full copies of this Agreement signed and delivered
by facsimile transmission, as well as photocopies of such facsimile
transmission.
30. In the event of the commencement of any litigation or arbitration to
enforce any provision of this Agreement or that is related to this Agreement,
the prevailing party shall be entitled to its costs for such action, including
reasonable attorney's fees, expert witness fees and other reasonable costs
incurred related to such action.
31. Time is of the essence of this Agreement and all its provisions.
15
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement.
DATED this day of , 1997. DATED this day of , 1997.
----- -------- ----- --------
Buyer Seller
SOS Staffing Services, Inc. by: Execusoft, Inc.
- ------------------------------------ ------------------------------------
Richard D. Reinhold, Chairman David A. Thomas, in his capacity as
CEO and as an individual Principal
DATED this day of , 1997.
----- --------
Principal
- ------------------------------------
Cathy D. Thomas
16
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT A
The following assets are to be purchased by Buyer from Seller:
(a) The real property leases for the demised premises located at 301 North
Rampart Street, Suite F, Orange, California, 92668 and 9 Exchange Place, Suite
900, Salt Lake City, Utah, 84111together with all rights and privileges under
said leases to real property subject to said leases; and
(b) All papers and records in Seller's care, custody or control relating to the
operational aspects of Seller's staffing business or any of the Assets to be
transferred under this Agreement, including but not limited to all personnel and
labor relations records, environmental control records, sales records,
accounting and financial records, maintenance and production records, except
that Seller shall either have unlimited access to or copies of such records for
the purpose of preparing governmental reports and tax returns; and
(c) All records in any way related to Seller, excluding corporate books and
records, its customers, business, employees, etc. that are maintained at any
location;
(d) Telephone numbers of Seller, to wit: (714) 634-9444, (800) 648-6777,
(801) 521-2955 and all other; and
(e) Facsimile telephone numbers of Seller, to wit: (714) 978-1843 and
(801) 521-3014; and
(f) E-mail addresses of Seller; and
(g) All of Seller's Intangibles relating to its staffing business,
including:
(i) all assumed business or trade names to the extent such trade names are
used in connection with providing staffing services, including temporary help
services, payroll services, permanent placement or employee leasing. Such names
to be transferred include but are not limited to: "Execusoft" all other assumed
business names and trade names owned or used by Seller; and all other slogans,
trademarks and service marks related to Seller; and
(ii) all employee lists, including, but not limited to complete personnel
files, work histories, employment agreements between Seller and employees of
Seller, employee Confidentiality and non-compete agreements between Seller and
employees of Seller, and all other documents related to employees of Seller; and
(iii) all customer lists, including but not limited to all telephone
numbers, credit histories, sales histories and other documents related to
Seller's customers; and
(iv) Seller's goodwill; and
<PAGE>
(v) all other intangibles of Seller; and
(h) All proprietary and other software and hardware; and
(i) All prepaid expenses relating to any of the assets, facilities, and
operations being taken over by Buyer, including, but not limited to any deposits
used in the normal operation of Seller's business such as deposits for rent,
utilities, etc.; and
(j) All operational assets of Seller including, but not limited to all
inventory, office furniture, phones, electronic and computer equipment and all
other equipment used by Seller to conduct business which are listed in Exhibit
B;
<PAGE>
EXHIBIT B
<PAGE>
[Exhibit B shall consist of the asset inventory provided by Seller]
<PAGE>
EXHIBIT C
<PAGE>
[Exhibit C shall consist of leases and third party contracts provided by
Seller]
<PAGE>
EXHIBIT D
<PAGE>
CONSULTING AND INDEPENDENT CONTRACTOR AGREEMENT
This Consulting and Independent Contractor Agreement (the "Agreement") is
entered into this ___ day of August 1997, by and between SOS Staffing Services,
Inc., a Utah Corporation (the "Company") and David Thomas
("Thomas").
WHEREAS, the Company desires to engage Thomas as an independent contractor and
consultant, based on the terms and conditions of this Agreement;
WHEREAS, Thomas desires to work as an independent contractor and consultant
on the terms and conditions of this Agreement;
WHEREAS, on or about August ___, 1997, the Company, Execusoft, Inc., Thomas and
Cathy Thomas entered into that certain Asset Purchase Agreement, wherein the
Company agreed to purchase substantially all the assets of Execusoft, Inc;
WHEREAS, Thomas was a principal and shareholder of Execusoft, Inc, and is
familiar with the customers and operations of Execusoft, Inc.; and
WHEREAS, Thomas and the Company desire a smooth transition related to the
transfer of such assets.
Accordingly, the parties agree as follows:
1) The terms of this Agreement shall commence on August 25, 1997 (the
"Commencement Date") and continue until January 3, 1999. The purpose of this
Agreement is to ensure a smooth transition of the Execusoft business to the
Company, and to maximize the EBITDA profit as described in the Asset Purchase
Agreement.
For a period of ninety (90) days following the Commencement Date hereof, Thomas
shall on a full-time basis (forty [40] hours per week) visit existing Execusoft
customers and introduce them to representatives of the Company for the purpose
of maintaining the business relationship between the Company and such customers.
Thomas shall provide information and training on Execusoft systems, and work
with Company representatives to transfer or adopt such systems to the Company's.
Thomas shall perform all other services and acts, as the Company may reasonably
request, which are related to the transfer of Execusoft's business to the
Company.
After ninety (90) days from the Commencement Date, until the end of the term of
this Agreement, Thomas shall perform the same duties on an as needed basis (not
to exceed ten [10] hours per month) as might be requested by the Company.
2) Thomas's compensation for such services shall be one dollar ($1.00) per year.
Thomas acknowledges and agrees that he is not an employee of the Company and
shall not be entitled to any employee benefit offered to Company's employees.
<PAGE>
Thomas shall be responsible for all taxes and withholdings related to
compensation for services provided hereunder.
3) The Company shall indemnify Thomas and hold Thomas harmless from any loss,
damage, expense, liability or claim, including, without limitation, attorney's
fees and expenses of litigation, to which Thomas may become subject, arising out
of the activities in which Thomas engages for the benefit of the Company, to the
extent such activities are within the scope of the duties assigned by the
Company. Thomas shall give Company reasonable notice of any such claim. The
Company shall have the right to defend any such claim.
4) This Agreement shall be governed by and construed in accordance with the laws
of the state of Utah, applicable to the agreements made and to be performed
entirely within such state.
5) The parties agree that with respect to any dispute related to or arising out
of this Agreement, that the parties shall submit to binding arbitration in
accordance with the rules of the American Arbitration Association in effect at
the time of the action. The parties agree to negotiate in good faith to resolve
a breach or enter a settlement. An arbitrator will be chosen by the parties. If
the parties are unable to agree upon an arbitrator within ninety (90) days, an
arbitrator shall be selected pursuant to the rules of the American Arbitration
Association then in effect. Arbitration shall take place in Salt Lake City, Utah
or Orange, California.
6) . In the event the arbitration provision of Article 5 is unenforceable, the
parties shall submit themselves to the jurisdiction of the federal and state
courts located in Salt Lake County, state of Utah or Orange County, state of
California, and that any action arising or related to this Agreement shall be
brought and maintained within such courts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SOS Staffing Services, Inc.; by
Richard D. Reinhold David Thomas
Chairman of the Board
<PAGE>
EXHIBIT E
<PAGE>
STOCK OPTION AGREEMENT
for the
SOS STAFFING SERVICES, INC.
STOCK INCENTIVE PLAN
<PAGE>
STOCK OPTION AGREEMENT
for the
SOS STAFFING SERVICES, INC.
STOCK INCENTIVE PLAN
This Stock Option Agreement (the "Agreement") is made and entered into
effective as of the ____ day of _____, 19__, by and between SOS Staffing
Services, Inc., a Utah corporation (the "Corporation"), and _____ (the
"Optionee"). Capitalized terms used herein without definition shall have the
meanings set forth in the SOS Staffing Services, Inc. Stock Incentive Plan, as
amended from time to time (the "Plan").
R E C I T A L S :
A. The Plan has been adopted by the Board and has been approved by
the shareholders of the Corporation;
B. The Optionee is an employee to whom the Committee has determined
to grant or has granted options (the "Options") to purchase Common Shares
under the Plan; and
C. The Committee, on behalf of the Corporation, and the Optionee now
desire to set forth the terms and conditions that will govern the issuance,
holding and exercise of the Options to be granted to the Optionee, subject in
all respects to the provisions contained in the Plan.
NOW, THEREFORE, upon these premises and in consideration of the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Number of Stock Options. The Corporation hereby acknowledges and
confirms the grant to the Optionee, upon the terms and conditions set forth
in this Agreement, of the following Options:
_____ Incentive Stock Options ("ISOs").
Each Option shall entitle the Optionee to purchase, upon the terms and
conditions set forth in this Agreement, one Common Share. The number of Common
Shares to which each Option pertains shall be adjusted, as necessary, in
accordance with the provisions of Article 11 of the Plan.
1
<PAGE>
2. Exercise Price. The price f or which each Option granted to the
Optionee may be exercised shall be payable in any manner provided under Article
6 of the Plan in the following amounts: $__._____ per Common Share.
3. Time for Exercise. The Options granted to the Optionee shall be
exercisable during the following periods of time:
(a) Incentive Stock Options. Subject to any provisions
contained in the Plan regarding the exercisability of ISOs, the ISOs shall be
exercisable in accordance with the following schedule:
[20%] options shall be exercisable on or after _____ __, 1997;
[16%] options shall be exercisable on or after _____ __, 1998;
[16%] options shall be exercisable on or after _____ __, 1999;
[16%] options shall be exercisable on or after _____ __, 2000;
[16%] options shall be exercisable on or after _____ __, 2001;
and
[16%] options shall be exercisable on or after _____ __, 2002.
All such ISOs shall be exercisable until _____ __, 2007, unless the period of
exercise is sooner terminated in accordance with the provisions of the Plan or
as set forth below. Unless the Committee provides otherwise in writing, upon the
termination of an Optionee's employment with the Company for any reason, (i) the
Optionee shall have no rights with respect to that portion of the ISOs which has
not yet vested and become exercisable in accordance with the above schedule or
paragraph (b) below, and (ii) the Optionee may for a period of ninety (90) days
after such termination exercise his or her ISOs to the extent, and only to the
extent, that such ISOs or portion thereof were vested and exercisable as of the
date the Optionee's employment was terminated, after which time the unexercised
portion of any ISOs shall automatically terminate in full. The preceding
sentence shall not be construed to extend the term of any Option or to permit
anyone to exercise any Option after the expiration of its term.
(b) Change in Control. In the event a Change in Control occurs with
respect to the Company, all outstanding Options evidenced by this Agreement
shall become fully exercisable as to all Common Shares subject to the Options.
(c) Right to Exercise. The Optionee understands and hereby agrees
that he or she has no right whatsoever to exercise any Option except during the
times provided herein and except as may be limited by any provisions of the
Plan.
2
<PAGE>
4. Governing Documents. This Agreement hereby incorporates by reference
all of the provisions of the Plan, as presently existing and as hereafter
amended. The Optionee expressly acknowledges and agrees that the terms and
conditions of this Agreement are subject in all respects to the provisions of
the Plan; that the terms and conditions of this Agreement in no way limit or
modify any provision of the Plan; and that in case of any conflict between the
provisions of the Plan and the terms and conditions of this Agreement, the
provisions of the Plan, as the case may be, shall control and shall bind the
parties hereto. The Optionee also hereby expressly agrees and represents as
follows:
(a) Optionee acknowledges receipt of a copy of the Plan, and
represents that he or she is familiar with the provisions of the Plan.
(b) Optionee acknowledges and understands that the establishment of
the Plan and the existence of this Agreement are not sufficient, in and of
themselves, to cause ISOs granted pursuant to the Plan to qualify for the
favorable tax treatment described in Section 422 of the Code, and that to be
entitled to such treatment, the Optionee must comply with all of the applicable
requirements of Section 422 of the Code, including without limitation, the
following requirements:
(1) Holding Period. The Optionee must not sell or otherwise
dispose of any Common Shares acquired through the exercise of an ISO
before the later of (i) two years after the date on which the Optionee was
granted the ISO or (ii) one year after the date on which the Optionee
received Common Shares pursuant to the exercise of the ISO.
(2) Employment. At all times during the period of time
beginning on the date on which an ISO is granted to the Optionee and
ending on the day that is three months before the date on which the
Optionee exercises the ISO, the Optionee must be an employee of the
Corporation or of a corporation (or parent or subsidiary corporation of
such corporation) issuing or assuming such ISOs in a transaction to which
Section 424(a) of the Code applies.
(c) Optionee acknowledges and understands that the establishment of
the Plan and the existence of this Agreement are not sufficient, in and of
themselves, to exempt the Optionee from the reporting requirements and
short-swing liability provisions of Section 16 of the Exchange Act and any rules
or regulations promulgated thereunder, and that Optionee shall not be exempt
from the short-swing liability provisions pursuant to Rule 16b-3 unless and
until Optionee shall comply with all applicable requirements of Rule 16b-3,
including without limitation, the requirement that the Optionee must not sell or
otherwise dispose of any Common Shares acquired upon exercise of an Option
unless and until a period of at least six months shall have elapsed between the
date upon which such Option was granted to the Optionee and the date upon which
the Optionee desires to sell or otherwise dispose of any Common Shares acquired
upon exercise of such Option.
3
<PAGE>
(d) Optionee acknowledges and understands that the exercise of an
Option could have substantial adverse tax consequences to the Optionee, and that
the Corporation recommends that the Optionee consult with a knowledgeable tax
advisor before exercising any Option.
5. Representations and Warranties. As a condition to the exercise
of any Option, the Corporation may require the Optionee to make any
representations and warranties to the Corporation that legal counsel for the
Corporation may reasonably determine to be advisable for the Corporation.
6. Restrictions on Encumbrances. During the lifetime of Optionee, the
Optionee agrees and covenants that no Options will be pledged or otherwise
encumbered in any manner, whether voluntarily or involuntarily, by operation of
law or otherwise. The foregoing sentence shall not be deemed or construed,
however, to prohibit any transfer otherwise allowed by will or by the laws of
descent and distribution.
7. Notices.
(a) All notices, demands or requests provided for or permitted to be
given pursuant hereto must be in writing. All notices, demands and requests
shall be deemed to have been properly given or served when deposited in the
United States mail, addressed to the individual or entity to whom notice is
given, postage prepaid and registered or certified with return receipt
requested, at the last known address of such individual or entity.
(b) By giving at least fifteen days prior written notice, the
Corporation and the Optionee shall have the right from time to time and at any
time during the term of this Agreement to change their addresses and to specify
any other address within the United States of America.
8. Titles and Captions. All Section and Paragraph titles and
captions in this Agreement are for convenience or reference only, and shall
in no way define, limit, extend or describe the scope or intent of any
provision hereof.
9. Applicable Law. This Agreement shall be construed in accordance
with and shall be governed by the laws of the State of Utah, without
reference to choice of law rules.
10. Binding Effect. This Agreement shall be binding upon the
Optionee and upon the Optionee's heirs, executors, administrators, successors
and legal representatives. This Agreement shall be binding upon and shall
inure to the benefit of the Corporation, its successors and assigns.
11. Creditors. None of the provisions of this Agreement shall be for
the benefit of or shall be enforceable by any creditor of the Optionee.
12. Entire Agreement. This Agreement, including the provisions of the Plan
incorporated herein, constitutes the entire understanding and agreement between
the Corporation and the Optionee regarding the subject matter hereof. Any prior
agreement, commitment, negotiation or understanding concerning any stock option,
4
<PAGE>
stock appreciation right or similar award to be granted by the Corporation and
not reflected herein or in a separately executed Stock Option Agreement is
hereby superceded and cancelled in all respects. This Agreement may not be
amended or supplemented in any manner except in a writing duly executed by both
parties hereto.
13. Severability. In the event that any condition, covenant or other
provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the remainder of
this Agreement and shall in no way affect any other covenant, condition or
provision herein contained. If such condition, covenant or other provision shall
be deemed invalid due to its scope or breadth, such condition, covenant or
provision shall be deemed valid to the extent of the scope or breadth permitted
by law.
IN WITNESS WHEREOF, the Corporation and the Optionee have executed this
Agreement effective as of the date first set forth above.
"Corporation"
SOS STAFFING SERVICES, INC.,
a Utah corporation
By:
-------------------------------
Title:
----------------------------
Attest:
- ----------------------------
Secretary
"Optionee"
Name:
----------------------------
5
<PAGE>
EXHIBIT F
<PAGE>
[Exhibit F shall be a list of Key Employees of Seller to be granted stock
options. List to be provided by Seller]
<PAGE>
EXHIBIT G
<PAGE>
EMPLOYMENT, NONDISCLOSURE AND NON-COMPETITION AGREEMENT
-------------------------------------------------------
THIS EMPLOYMENT, NONDISCLOSURE AND NON-COMPETITION AGREEMENT (the
"Agreement") is entered into this day of August, 1997 by and between SOS
Staffing Services, Inc., a Utah corporation (the "Company"), and Alex Salottolo
("Salottolo").
WHEREAS, the Company desires to employ Salottolo based on the terms and
conditions of this Agreement; and
WHEREAS, Salottolo desires to accept such employment on the terms and
conditions of this Agreement.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
----------------------------------
1.1 Employment by the Company. The Company hereby agrees to employ
Salottolo as a full-time employee of the Company in the position of District
Manager of the Company's Information Technology ("IT") Southern California
District in Orange, California for the Term as hereinafter defined, to render
such services and to perform such duties as the Management of the Company shall
reasonably request (for purposes of this agreement, "Management" means any
officer of the Company or any person designated by the officers of the Company
at their sole discretion to whom Salottolo reports). Notwithstanding the
foregoing, Salottolo's position and duties may be reasonably modified or changed
from time to time at the discretion of the Management without additional
compensation. Any material change to Salottolo's position or duties must be
agreed to by Salottolo. Salottolo shall also serve during all or any part of the
Term in any other office (office refers to a title such as District Manager and
does not refer to any physical office) to which he may be appointed or elected
without any compensation therefor other than that specified in this Agreement.
1.2 Acceptance of Employment by Salottolo. Salottolo hereby accepts
such continued employment and shall render the services described above.
Salottolo will faithfully, and at all times, and to the best of his ability,
experience and talents, perform all of the duties which are required of him
under this Agreement, including devoting of his full business time to and for
the exclusive benefit of the Company, and shall keep free from conflicting
enterprises or any other activities which would be detrimental to or interfere
with the business of the Company or the devotion of his full time to the
business of the Company. Salottolo agrees to use his best efforts to comply with
any and all instructions that Management may give him from time to time, and to
promote and maintain the success, quality, professionalism and reputation of the
Company.
2. Term of Agreement and Employment. The term of this Agreement and
Salottolo's employment hereunder (the "Term") shall commence on August 25, 1997
<PAGE>
(the "Commencement Date") and shall continue until the third (3rd) anniversary
thereof or as otherwise terminated as provided in Article 5 hereof. Thereafter,
employment may continue pursuant to such terms and conditions as the parties may
then agree.
3. Compensation and Other Benefits.
--------------------------------
3.1 Compensation. As compensation for services to be rendered
pursuant to this Agreement, the Company shall pay Salottolo from the
Commencement Date through December 31, 1997 on a straight commission basis at
the same rate as he was earning with Execusoft, Inc.. Thereafter, for the
remainder of the Term, the Company shall pay Salottolo an annual salary which
shall be Salottolo's total gross income for 1997 as reflected on Forms W-2 for
the Company and Execusoft, Inc. for 1997 (the "Annual Salary"); however, the
salary shall not be greater than $240,000.00 per year.
3.2 Bonus and Branch Profit
-----------------------
3.2.1 Bonus. From the Commencement Date hereof through
December 31, 1997, Salottolo shall not be entitled to any bonus. Thereafter,
Salottolo shall be entitled to a bonus of ten percent (10%) of the Branch Profit
generated each year by the Orange County Execusoft Office in excess of the
Branch Profit generated by the Orange County Execusoft Office for the entire
1997 calendar year, as operated by both Execusoft, Inc. and the Company. All
other offices assigned to Salottolo shall have a bonus floor based on their
performance in 1997 or current annualized run rate as established by agreement
of the parties for offices not operating for a full calendar year. For offices
assigned to Salottolo in 1997, no loss shall be included in Branch Profit until
1998; however, any profit from such offices shall immediately be included in
Branch Profit for bonus purposes. The same bonus percentage shall apply to any
such office. For any offices assigned to Salottolo in 1997, Salottolo shall have
the option to elect, prior to January 1, 1998, whether the profit or loss shall
be included in the Branch Profit for bonus purposes in 1998. Commencing in 1999
and each year thereafter, Salottolo shall be entitled to an additional five
percent (5%) bonus of the Branch Profit generated by all offices for which
Salottolo is responsible which is in excess of the Branch Profit generated by
all offices for which Salottolo was responsible in preceding year. For example,
if the total Branch Profit for the Orange County Execusoft Office in 1997, as
operated by Execusoft, Inc. and the Company, is $600,000, then in 1998, and each
year thereafter, Salottolo shall be paid 10% of Branch Profit in excess of
$600,000. So if the Branch Profit in 1998 was $900,000, the Company would pay
Salottolo a $30,000 bonus ($900,000 - $600,000 = $300,000 x 10% = $30,000). If
using the same assumptions for Branch Profit for 1997 and 1998, and the Branch
Profit in 1999 is $1,100,000, then the Company would pay Salottolo a bonus of
$60,000 for 1999 ($1,100,000 - $600,000 = $500,000 x 10% = $50,000; and
$1,100,000 - $900,000 = $200,000 x 5% = $10,000; thus $50,000 + $10,000 =
$60,000). If using the same assumptions for Branch Profit in 1997, 1998 and
1999, and the Branch Profit in 2000 is $1,400,000, then, assuming the Term of
this Agreement has been extended, the Company would pay Salottolo a bonus of $
($1,400,000 - $600,000 = $800,000 x 10% = $80,000; and $1,400,000 - $1,100,000 =
$300,000 x 5% = $15,000; thus $80,000 + $15,000 = $95,000).
2
<PAGE>
3.2.2 Branch Profit. "Branch Profit" as used in this Agreement
means gross sales (total sales of goods and services) less adjustments and
discounts; the cost of sales (temporary employee programs, direct costs,
temporary payroll, temporary payroll taxes, i.e. FICA, unemployment, etc.,
temporary worker's compensation, drug testing and bonding insurance); branch
staff expenses (branch staff payroll, temporary staff payroll, commissions and
bonuses, branch staff and temporary staff payroll taxes, i.e. FICA, unemployment
insurance, etc., branch staff worker's compensation, sales and travel, group
insurance, background checks, and drug testing); advertising expenses (specialty
items, classified ads, yellow pages, promotional events, other advertising);
operation expenses (telephone, office supplies, legal, interest on accounts
receivable, professional, postage and delivery, petty cash, training expenses,
and other operating expenses); facilities expenses (rent, repair and
maintenance, utilities, depreciation and leasehold amortization); bad debt (to
constitute a bad debt the receivable must be actually written off. Any
receivable aged over one hundred twenty (120) days, which shall be considered a
delinquent account, may be written off at the sole discretion of Company;
however any recovery made on such an account shall be added back to total sales;
miscellaneous expenses (dues and subscriptions, adjustments/recoveries, and
reimbursements); printing expenses; computer expenses; consultation expenses;
taxes (exclusive of federal, state and local income tax) and insurance; gain or
loss on disposal of assets; depreciation of assets and other expenses (career
fair; services fees, internal expenses, etc.); plus other income (bad debt
recovery, finance charges collected and other income). Branch Profit excludes an
allocation of the Company's overhead or home office expense. Salottolo
acknowledges that Company's workers' compensation insurance, unemployment
insurance, bonding insurance, cost of interest, cost of employee benefits and
other costs differ from Execusoft's and past performance will not necessarily be
indicative of future profits. Salottolo further acknowledges that Company's
branch statements do not reflect adjustments for FICA, FUTA or SUTA limits, but
that Branch Profit for purposes of determining Salottolo's bonus shall be based
on adjusted branch statements reflecting only actual expenditures for FICA, FUTA
and SUTA.
3.3 Stock Options. The Company shall issue to Salottolo options to
purchase a minimum of twenty thousand (20,000) shares of the Company's common
stock. Such stock options will be issued under a separate agreement pursuant to
and in accordance with the Company's May 1995 Incentive Stock Option Plan and
shall vest over a period of five (5) years pursuant to such separate agreement.
Such stock options to be issued hereby shall be granted on the Commencement Date
and shall bear an exercise price which is equivalent to the closing trading
price of the Company's stock on the Commencement Date as reported by the Wall
Street Journal.
3.4 Automobile Allowance. The Company shall pay Salottolo
$800.00 per month as an automobile allowance. Such payment shall be treated
as income for tax purposes and withholdings.
3
<PAGE>
3.5 Expenses. Salottolo shall be entitled to reimbursement of his
reasonable expenses incurred related to the performance of his duties hereunder
pursuant to the Company's expense reimbursement program. The expenses covered by
such policy include reimbursement for business related travel (other than
automobile expenses), entertainment of potential and current customers of the
Company, etc. Salottolo shall submit to the Company receipts and the Company's
expense reimbursement report. The Company shall reimburse Salottolo within a
reasonable time after the appropriate Company employee receives the expense
reimbursement report and supporting documentation.
3.6 Other Compensation. Salottolo shall be eligible for such other
compensation, whether in the form of additional stock options, stock
appreciation rights, restricted stock awards or otherwise, in such amounts and
upon such terms and conditions as the Management may, at its discretion,
approve. All compensations described in Articles 3.2 through 3.6 shall be
collectively referred to as "Additional Compensation."
3.7 Payment. The Annual Salary and the Additional Compensation shall
be payable in accordance with the applicable payroll and/or other compensation
policies and plans of the Company as from time to time in effect, less such
deductions as shall be required to be withheld by applicable law and
regulations. In consideration of Salottolo agreeing to the terms of Article 4
hereof, the parties agree that Salottolo shall be entitled to receive twelve
(12) months of compensation, if the Company terminates his employment during the
Term other than pursuant to Article 5 hereof.
3.8 Participation in Employee Benefit Plans. Salottolo shall be
permitted, during the Term to participate in any group life, hospitalization or
disability insurance plan, health program, pension plan, nonqualified deferred
compensation plan, similar benefit plan or other so-called "fringe benefits" of
the Company, which may be available to all other employees of the Company
generally on the same terms as such other employees. The Company shall pay one
hundred percent (100%) of the premiums for the health insurance program normally
provided to Company's employees.
4. Non-Competition.
----------------
4.1 Acknowledgments. Salottolo acknowledges that: (i) the Company,
including any subsidiaries and affiliates that may be formed or incorporated
during the Covenant Period (as defined in Section 4.2), is currently engaged in
the business of providing temporary staffing and permanent placement services to
customers through its Orange County Execusoft Office and other offices in
Southern California, including clerical, industrial, technical, information
technology, information system, professional, construction and manufacturing
personnel, as well as related services, such as staff leasing, payrolling,
employee testing and risk management consulting, and does now and may in the
future expand its business during the Term of this Agreement to include other
activities and to operate in other areas for which Salottolo may have
4
<PAGE>
supervision or management responsibility. All areas within one hundred (100)
miles of any office which Salottolo supervises or manages for the Company or
which Salottolo supervises or manages for the Company in the future during the
Term of Salottolo's employment with the Company, and all activities in which the
Company engages through any office supervised or managed by Salottolo in such
geographic area, whether currently or in the future during the Term of
Salottolo's employment with the Company, are collectively referred to herein as
the "Business"; (ii) Salottolo is one of a limited number of persons who will
perform a significant role in the management and development of the Business,
and whose services will be unique and extraordinary, and will contribute to and
enhance the goodwill of the Company; (iii) Salottolo's work for the Company will
give him access to "know-how," trade secrets, customer lists, employee lists,
details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, business acquisition plans, new
personnel acquisition plans, and financial information and general confidential
business information (collectively, "Trade Secrets") that are confidential and
unique, not generally known in the industry, and which will give the Company a
competitive advantage and significantly enhance the Company's goodwill; (iv) the
agreements and covenants contained in this Article 4 are essential to protect
the Business and goodwill of the Company, to prevent competitors from acquiring,
appropriating, or discovering the Company's Trade Secrets, and to maintain and
protect the Company's competitive advantage in the industry; and (v) Salottolo
has means to support himself and his dependents other than by engaging in the
Business, and the provisions of this Article 4 will not appear such ability.
Accordingly, Salottolo covenants and agrees as follows:
4.2 Covenants and Reformation.
--------------------------
4.2.1. Non-Solicitation Covenants. For a period commencing on
the Commencement Date hereof and continuing for one year after the date of
termination of Salottolo's employment with the Company, for any reason, with or
without cause, and whenever such termination may occur, whether prior to,
concurrently with, after the expiration of this Agreement, or after the early
termination of this Agreement (the "Covenant Period"), Salottolo shall not,
within one hundred (100) miles of any office which Salottolo manages or
supervises for the Company whether now or in the future, directly or indirectly,
(i) engage in the Business with any company or account which billings with the
Company of $50,000 or more during the twelve (12) month period prior to the
termination of Salottolo's employment with the Company ; (ii)solicit or
otherwise induce any employee of the Company to terminate his/his employment
with the Company; or (iii) hire or solicit any consultant under contract with
the Company or encourage such consultant to terminate such relationship.
4.2.2. Reformation or "Blue-Penciling". The Company intends to
restrict legitimate business under Section 4.2.1 only to the extent necessary to
protect the Company's legitimate business interests. Salottolo and the Company
agree that the terms and conditions hereof should be enforced to the fullest
extent permitted by law. If any court determines that any provision of Section
4.2.1, or any part thereof, is unenforceable because of the scope, duration or
geographic breadth of such provision, such court shall have the power to reform
such provision to the maximum scope, duration or geographical breadth, as the
case may be, that such court has determined is enforceable in accordance with
the law.
5
<PAGE>
4.3 Nondisclosure Covenant. During the Covenant Period and forever
thereafter, Salottolo shall not, without the prior written consent of the
Company, intentionally or unintentionally, reveal, make accessible, or
disseminate to any person not an employee of the Company, or to any other
entity, or use for the benefit of himself or others, the Trade Secrets and any
and all other confidential matters of the Company.
4.4 Property of the Company. All of the Company's Trade Secrets, and
all tangible items, including, without limitation, all memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including such
items stored in computer memories, on microfiche or by any other means, made or
compiled by or on behalf of Salottolo, or made available to Salottolo relating
to the past, existing, or contemplated business or work of the Company, other
than purely personal matters, are and shall remain the Company's exclusive
property and shall be delivered to the Company promptly upon the termination of
Salottolo's employment (whether for Cause or otherwise) or at any other time on
request of the Company.
4.5 Rights and Remedies upon Breach. If Salottolo breaches, or
threatens to commit a breach of, any of the provisions of Sections 4.2.1, 4.3,
or 4.4 (collectively, the "Restrictive Covenants"), the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity:
4.5.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed by the parties hereto that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an adequate remedy to the
Company.
4.5.2 Accounting. The right and remedy to require Salottolo to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by Salottolo as the
result of any transactions constituting a breach of the Restrictive Covenants.
4.6 Severability of Covenants. Salottolo acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in scope, and
geographical and temporal breadth and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions.
4.7 Enforceability in Jurisdictions. The Company and Salottolo
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
6
<PAGE>
upon the courts of any jurisdiction within the geographical scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of their scope or
otherwise, it is the intention of the Company and Salottolo that such
determination not bar or in any way affect the Company's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of the Restrictive Covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
5. Termination of Agreement and Employment.
----------------------------------------
5.1 Termination upon Death. If Salottolo dies during the Term, this
Agreement and Salottolo's employment hereunder shall terminate, except that
Salottolo's legal representatives, successors, heirs or assigns shall be
entitled to receive the Annual Salary, the Additional Compensation and other
accrued benefits, if any, earned up to the date of Salottolo's death; provided,
however, if any Additional Compensation or other benefits are governed by the
provisions of any written employee benefit plan or policy of the Company, any
written agreement contemplated thereunder, or any other separate written
agreement entered into between Salottolo and the Company, the terms and
conditions of such plan, policy or agreement shall control in the event of any
discrepancy or conflict with the provisions of this Agreement regarding such
Additional Compensation or other benefit upon the death, termination or
disability of Salottolo pursuant to this Article 5.
5.2 Termination for Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by serving
notice, effective in accordance with its terms, to terminate this Agreement and
Salottolo's employment hereunder and discharge Salottolo for "Cause" (as
hereinafter defined). If such right is exercised, the Company's obligation to
Salottolo shall be limited to the payment of any unpaid Annual Salary,
Additional Compensation and other benefits, if any, accrued up to the effective
date (which shall not be retroactive) specified in the Company's notice of
termination. As used in this Section 5.2, the term "Cause" shall mean and
include (i) material breach by Salottolo of the terms of this Agreement, (ii)
wrongful misappropriation of any money or other assets or properties of the
Company or any subsidiary or affiliate of the Company, (iii) the conviction of
Salottolo for any felony or other serious crime, (iv) use of illegal drugs, (v)
use of alcohol if such use renders Salottolo unable to perform the essential
functions of his job, (vi) Salottolo's gross moral turpitude relevant to his
office or employment with the Company or any subsidiary or affiliate of the
Company, (vii) any act or omission by Salottolo that materially harms the
Company's business reputation, trade name(s) or goodwill.
5.3 Suspension upon Disability. If during the Term, Salottolo
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of (2) competent physicians licensed to
practice medicine in the United States, so that Salottolo is unable to
substantially perform his services hereunder for (i) a period of six consecutive
months, or (ii) for shorter periods aggregating six months during any
7
<PAGE>
twelve-month period, the Company may at any time after the last day of the six
consecutive months of disability, or on the day on which the shorter periods of
disability equal an aggregate of six months, by written notice to Salottolo,
suspend Salottolo's employment and the performance of the Company's obligations
hereunder, including payments of the Annual Salary, Additional Compensation and
other benefits. If at any time Salottolo shall no longer be disabled, as
evidenced by the written statement of two (2) competent physicians licensed to
practice medicine in the United States, the Company may, at its election, fully
reinstate this Agreement and Salottolo's employment hereunder, and all of the
terms of this Agreement, including payment of the Annual Salary, shall resume in
full force for the balance of the Term. Nothing in this Section 5.3 shall be
deemed, however, to extend the Term. Additionally, nothing in this Section 5.3
shall limit or diminish Company's obligations towards Salottolo with respect to
the Americans with Disabilities Act of 1990, as amended, the Family and Medical
Leave Act of 1993, as amended, or any similar state laws.
5.4 Termination other than for Cause. If Salottolo is terminated
other than for cause as defined in Article 5.2 herein, Company's liability shall
be limited to twelve (12) months compensation as described in Article 3.7
herein.
6. Insurance. The Company may, from time to time, apply for and take out,
in its own name and at its own expense, naming itself or others as the
designated beneficiary (which is may change from time to time), policies for
health, accident, disability or other insurance upon Salottolo in any amount or
amounts that it may deem necessary or appropriate to protect its interest.
Salottolo agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and delivering
such applications and other instruments in writing as may reasonably be required
by an insurance company or companies to which any application or applications
for insurance may be made by or for the Company.
7. Continuing Obligations. Notwithstanding the expiration or early
termination of the Term of this Agreement pursuant to Section 2 or Section 5
hereof, respectively, any provision of this Agreement calling for performance by
any party after such expiration or termination, including, without limitation,
the obligations of Salottolo set forth in Section 4 hereof, shall continue in
full force and effect.
8. Other Provisions.
8.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, five days after the date of deposit in the United States mail, as
follows:
8
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(i) if to the Company, to:
SOS Staffing Services, Inc.
1415 South Main Street
Salt Lake City, Utah 84115
(ii) if to Salottolo to:
Alex Salottolo
--------------
--------------------------
--------------------------
Any party may change its address for notice hereunder by written
notice to the parties hereto.
8.2 Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
8.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
8.4 Governing Law. This Agreement, except for Article 4 hereof,
shall be governed by and construed in accordance with the laws of the State of
Utah applicable to agreements made and to be performed entirely within such
State.
8.5 Arbitration. Except for actions brought for breach of the
covenants contained in Article 4, each party agrees that with respect to any
dispute related to or arising out of this Agreement or Salottolo's employment
with the Company that the parties shall submit to binding arbitration in
accordance with the Arbitration Rules for Employment Contracts of the American
Arbitration Association in effect at the time of the action. The parties agree
to negotiate in good faith to resolve the breach or enter a settlement. An
arbitrator will be chosen by the parties. If the parties are unable to agree
upon an arbitrator, an arbitrator shall be selected pursuant to the rules of the
American Arbitration Association then in effect. Arbitration shall take place in
Salt Lake City, Utah.
9
<PAGE>
8.6 Venue and Jurisdiction. In the event the arbitration provision
of Article 8.5 is unenforceable, the parties submit themselves to the
jurisdiction of the federal and state courts located in Salt Lake County, State
of Utah and that any action arising out of or relating to this Agreement (other
than Article 4) or Salottolo's employment with the Company shall be brought and
maintained within such courts.
8.7 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.9 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SOS STAFFING SERVICES, INC.
By:
-----------------------------
Richard D Reinhold
Chairman of the Board
- --------------------------------
Alex Salottolo
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[Schedule 7(k), Disclosure of all known claims, causes of actions and lawsuits]
<PAGE>
[Schedule 7(l) - All financial statements and records relied on by Buyer in
its due diligence review]
FOR IMMEDIATE RELEASE: Tuesday, August 19, 1997
CONTACT: Gary B. Crook Madeleine Franco
Chief Financial Officer or Andrew Graft
801-484-4400 Jordan Richard Assoc.
801-595-8611
SOS STAFFING SERVICES, INC. TO INCREASE CALIFORNIA PRESENCE
WITH AGREEMENT TO PURCHASE EXECUSOFT, INC.
SALT LAKE CITY, UTAH--SOS Staffing Services, Inc. (NASDAQ/NMS: SOSS) announced
today that it has signed an agreement to purchase Execusoft, Inc., an
information technology (IT) staffing company headquartered in Orange, Calif.
Formal completion of the acquisition is expected to take place by the end of
August.
Founded in 1976, Execusoft serves the software and engineering industries in the
Southern California and Intermountain markets. The company specializes in
emerging and cutting-edge technologies, supplying technical personnel in a broad
spectrum of information technology fields. Over the last 12 months, Execusoft's
two offices have generated approximately $10 million in revenue.
"This acquisition of Execusoft represents a natural fit in our information
technology division and has notably strengthened our ability to service the
growing information technology markets throughout the western United States,"
said Howard W. Scott, Jr., chief executive officer of SOS Staffing Services. "We
look forward to capitalizing upon the IT staffing and consulting synergies
between Execusoft and our neighboring Wolfe & Associates location in Orange
County."
SOS Staffing Services, Inc. offers a full range of staffing services through its
network of offices located in the states of Arizona, California, Colorado,
Idaho, Minnesota, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Oregon,
Texas, Utah, Washington and Wyoming.
# # #
