ASSET PURCHASE AGREEMENT
DATED MAY 15, 1998
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER,
RESOURCE DIMENSIONS, INC.
AS SELLER
AND
EARL M. PICK
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 15th
day of May, 1998 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation or its designee ("Buyer"), Resource Dimensions,
Inc., an Illinois corporation ("Seller") and Earl M. Pick ("Pick").
RECITALS:
WHEREAS, Seller operates temporary industrial and clerical help
businesses in the State of Illinois with two (2) offices in the locations set
forth on SCHEDULE 1 hereto (the "Business").
WHEREAS, Pick is a principal shareholder of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, certain of the assets
of Seller, as hereinafter described, which together constitute the assets that
are used in connection with, necessary for, or beneficial to, the operation of
the Business.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 SALE OF ASSETS OF SELLER. Subject to the terms and conditions
hereof, Seller will sell, convey, assign, transfer and deliver to Buyer at the
Closing (as hereafter defined), and Buyer will purchase and accept at the
Closing, all assets, properties, privileges, rights, interests, business and
goodwill owned by Seller or in which Seller has an interest (except the Excluded
Assets, as hereinafter defined), and used or held for use in connection with the
operation of the Business, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (such assets, properties,
privileges, rights, interests, business and goodwill being transferred hereunder
are hereinafter referred to collectively as the "Assets"). Without limiting the
generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following (except to the extent any of the
following constitute Excluded Assets):
(a) All supplies, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements and other tangible property owned by Seller or used by
Seller in connection with the Business, including, without limitation, the
tangible assets listed on SCHEDULE 1.1 hereto;
(b) All of Seller's right, title and interest under all agreements or
contracts to which it is a party or by which it or the Assets are bound or which
otherwise relate to the Business, including, without limitation, the documents
listed on SCHEDULE 3.7 hereto;
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(c) All of Seller's right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business;
(d) All proprietary knowledge, trade secrets, technical information,
quality control data, processes (whether secret or not), methods, and other
similar know-how or rights used in the Business;
(e) All rights of Seller in and to its trade names and trademarks used
in the Business, and variants thereof and all goodwill associated therewith;
(f) The Business as a going concern, its Permits (as hereinafter
defined) which are subject to assignment or transfer under applicable law, and
the Business' licenses, telephone numbers, customer lists, vendor lists,
advertising material and data, restrictive covenants, lists of temporary
employees, choses in action, rights of recovery, rights of recoupment, together
with all books, computer software, files, papers, records and other data of
Seller relating to its respective assets, properties, business and operations;
(g) All of Seller's utility, security and other deposits and prepaid
expenses; and
(h) All other property and rights of every kind or nature owned by
Seller or used in the Business, including but not limited to the employment
applications of temporary staff (the "Applications").
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following as set forth in SCHEDULE 1.2
(collectively, the "Excluded Assets"):
(a) All of Seller's cash, cash equivalents, accounts receivable, and
prepaids in excess of $2,000.00 individually, each as existing on the Closing
Date;
(b) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Seller as a corporation;
(c) Any of the rights of Seller under this Agreement (or under any
agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement);
(d) The personal effects of Pick described in Schedule 1.2; and
(e) Any indebtedness due Seller from any shareholder of Seller.
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1.3 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume, and
shall agree to satisfy and discharge as the same become due only those
liabilities and obligations of Seller specifically listed on SCHEDULE 1.3 hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume, agree to perform
or discharge, indemnify the Seller against, otherwise be responsible at any time
for any liability, obligation, debt or commitment of Seller, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise, that is
not expressly listed on SCHEDULE 1.3 hereto. Without limiting the generality of
the foregoing sentence, Buyer shall not assume or be responsible for any of the
following: any amounts due to any of Seller's creditors listed on SCHEDULE 1.3
hereto in excess of the amounts expressly listed thereon; any matured
obligations under leases, licenses, contracts or agreements in excess of the
amounts expressly listed on SCHEDULE 1.3 hereto; any liabilities, obligations,
debts or commitments of Seller incident to, arising out of, or incurred with
respect to, this Agreement and the transactions contemplated hereby; any and all
sales, use, franchise, income, gross receipts, excise, payroll, personal
property (tangible or intangible), real property, ad-valorem, value added,
leasing, leasing use, or other taxes, levies, imposts, duties, charges or
withholdings of any nature arising out of the transactions contemplated hereby.
Seller further agrees to satisfy and discharge as the same shall become due all
of its obligations and liabilities not specifically assumed by Buyer hereunder.
Buyer's assumption of the Assumed Obligations shall in no way expand the rights
and remedies of third parties against Buyer as compared to the rights and
remedies which such parties would have had against Seller or Pick had this
Agreement not been consummated.
Effective as of the Closing Date, all of Seller's employees shall be
terminated by Seller. On or shortly after the Closing Date, Buyer shall make
offers of employment, on the same terms and conditions as existing immediately
prior to Closing, to all of Seller's employees, except that Buyer may choose not
to make an offer of employment to any of Seller's employees with respect to
which Buyer is in possession of information that would justify the refusal to
hire an employee in the exercise of Buye s reasonable discretion. With respect
to any employee of Seller that accepts an offer of employment from Buyer, Buyer
agrees to indemnify Seller and hold Seller harmless from any severance or
similar type liability arising from any subsequent termination of that
employee's employment by Buyer; however, Buyer shall have no such liability with
respect to any employee of Seller who refuses an offer of employment with Buyer
or with respect to any employee of Seller for whom Buyer, in the exercise of its
reasonable discretion as set forth above, chooses not to make an offer of
employment.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of Seller with respect to
any lease or leasehold interest (the "Assumed Leases") shall be subject to the
terms of the Lease Assignment and Assumption Agreements to be delivered pursuant
to Sections 2.2(i) and 2.3(e) of the Agreement. SCHEDULE 1.4 hereto contains a
complete list of all Assumed Leases. Seller shall use reasonable efforts to
cause the landlords of each of the properties listed on SCHEDULE 1.4 to execute
the Estoppel Certificate and Consent to Assignment of Lease attached hereto as
EXHIBIT A.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a maximum
aggregate purchase price (the "Purchase Price") of Three Million Seven Hundred
Thousand and 00/100 Dollars
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($3,700,000.00), payable in accordance with Section 1.6 hereto, subject to
post-closing adjustment in accordance with Section 1.7 hereto.
1.6 PAYMENT OF PURCHASE PRICE. At Closing, Buyer shall pay the Purchase
Price as follows:
(a) Cash at Closing in the amount of One Million Seven Hundred Fifty
Thousand and 00/100 Dollars ($1,750,000.00) via bank wire transfer;
(b) The issuance and delivery at Closing of a Junior Subordinated Note
in the principal amount of One Million Seven Hundred Fifty Thousand and 00/100
Dollars ($1,750,000.00), bearing simple interest at the rate of Six Percent (6%)
per annum on the unpaid principal balance from time to time outstanding,
substantially in the form attached hereto as EXHIBIT J. The principal and
interest shall be paid in three (3) equal installments of principal, together
with interest thereon, due on January 1, 1999, July 1, 1999, and January 1,
2000.
(c) The balance of the Purchase Price shall be paid as an "Earnout
Payment" in an amount not to exceed Two Hundred Thousand Dollars ($200,000.00)
on or before September 1, 1999, if (i) the operations of the Business by Buyer
during the full twelve (12) month period commencing on the first day of the
month immediately following the month in which the Closing occurs (the "Twelve
Month Period"), result in a "Minimum Gross Profit" of no less than Two Million
Three Hundred Thousand Dollars ($2,300,000.00) and (ii) Seller enters into a
binding and enforceable agreement with Paul Hermes and Larry Gillespie requiring
that such persons will be paid by Seller the sum of Thirty Three Thousand
Dollars ($33,000.00) each at the Closing, plus approximately Four Percent (4%)
each of the post-Closing value of the net retained assets of the Seller within
Sixty (60) days of the Closing, and, if the Minimum Gross Profit is achieved
within the Twelve Month Period, Paul Hermes and Larry Gillespie will be paid by
Seller the sum of Twenty One Thousand Four Hundred Dollars ($21,400.00) each on
July 1, 1999 and January 1, 2000. Such persons shall be employees of Buyer and
their activities, duties and responsibilities shall be determined solely by
Buyer. Failure by Seller to make any of such payments shall relieve Buyer of any
responsibility to make payments of the Earnout Payment, unless Seller's failure
to make any of such payments results from Buyer's default of its obligations
under the Junior Subordinated Note described in Section 1.6(b). If the
conditions set forth in (i) and (ii) above are satisfied (including payment by
Seller of the amounts set forth in (ii) to be paid to Paul Hermes and Larry
Gillespie at Closing, 60 days post-Closing, and July 1, 1999), the Earnout
Payment will be paid as follows: Fifty Thousand Dollars ($50,000.00) to Paul
Hermes; Fifty Thousand Dollars ($50,000.00) to Larry Gillespie; and One Hundred
Thousand Dollars ($100,000.00) to Pick.
If the actual Gross Profit from Buyer's operation of the Business in
the Twelve Month Period is less than the Minimum Gross Profit stated above, the
Earnout Payment will be reduced by One Dollar ($1.00) for each Dollar that the
actual Gross Profit is less than the Minimum Gross Profit. Such reduction shall
be distributed pro rata between the shares of the Earnout Payment accruing to
Paul Hermes, Larry Gillespie, and Pick, such that each One Dollar ($1.00)
reduction in the Earnout
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Payment shall reduce Paul Hermes's and Larry Gillespie's shares of the Earnout
Payment by Twenty-Five Cents ($0.25) each, and shall reduce Pick's share of the
Earnout Payment by Fifty Cents ($0.50).
In the event that either Paul Hermes or Larry Gillespie, or both, is
(are) not employed for the full Twelve Month Period, the share(s) of the Earnout
Payment, if any, accruing to such individual(s) not remaining employed for the
full Twelve Month Period shall revert to and be payable to Pick.
For purposes of this paragraph, Gross Profit shall mean (i) "Revenue"
less (ii) "Cost of Sales", as such terms are defined on Exhibit "C-1" attached
hereto.
1.7 POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price and
other payments due under this Agreement shall be subject to the following
post-closing adjustments:
(a) SET-OFF. The Junior Subordinated Note and the Earnout Payment
shall be subject to set-off for any damage resulting from Pick's or Seller's
breach of this Agreement, including a breach of any warranty or representation,
provided that the amount of any such set-off shall not exceed the principal sum
of One Million and 00/100 Dollars ($1,000,000.00). As set forth in the Junior
Subordinated Note, any setoff of principal shall also include a setoff of any
interest accruing from the original date of the Junior Subordinated Note on the
setoff amount.
(b) RETAINED ASSETS. At least ten (10) business days prior to Closing,
Seller shall make a full accounting to Buyer in regard to any personal property
which Seller retains with Buyer's consent and which Buyer, in its sole
discretion, determines is not necessary for the operation of the Business
("Retained Assets"). The Retained Assets shall be limited to those listed on
SCHEDULE 1.2. Any adjustments to the Purchase Price shall be mutually agreed to
by the parties and shall be made at the closing.
1.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT C hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") and applicable Treasury regulations. Buyer
and Seller shall: (i) be bound by the Allocation for purposes of determining any
Taxes (as hereafter defined); (ii) prepare and file tax returns on a basis
consistent with the Allocation; and (iii) take no position inconsistent with the
Allocation in any proceeding before any taxing authority or otherwise. In the
event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice. Seller and Buyer each shall timely after the
Closing file form 8594 with the Internal Revenue Service detailing this
allocation. In the event that Buyer determines that any adjustments to such
allocation are necessary, and Seller consents to such adjustments, Seller shall
make such modifications as are necessary in Seller's form 8594 or any tax report
or return filed or to be filed by Seller in order to conform to Buyer's
allocation as adjusted.
1.9 ENCUMBRANCES. The Assets shall be sold and conveyed to Buyer free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, title
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defects, pledges, encroachments and burdens of every kind or nature whatsoever,
except for the matters set forth in SCHEDULE 1.9 hereto (the "Permitted Liens").
1.10 PRORATION. Seller shall pay at Closing all applicable transfer,
sales, use, bulk sales and other taxes, and all documentary, filing, recording
and vehicle registration fees payable as a result of the transfer of the Assets,
except for any taxes or charges which are the obligation of Buyer under
applicable law. All ad valorem and property taxes, and any similar assessment
based upon or measured by Seller's ownership interest in the Assets, shall be
prorated between Seller and Buyer as of the Closing Date based upon such taxes
assessed against the Assets for the tax period in question, or if there is
insufficient information for such tax period, based upon taxes assessed for the
immediately preceding tax period. All such taxes shall be prorated on the basis
of a 365-day year. Seller shall be charged for all such taxes and assessments
based upon or measured by Seller's ownership prior to the Closing Date and Buyer
shall be charged for all such taxes and assessments based upon or measured by
Buyer's ownership on or after the Closing Date. All such prorations and payments
shall be made within 30 days of the Closing.
2. CLOSING DATE.
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase of
the Assets (the "Closing") will take place at the offices of Laser, Pokorny,
Schwartz, Friedman and Economos, P.C., 205 N. Michigan Avenue, Suite 3800,
Chicago, Illinois, 60801, at am[pm] Daylight Time, on May 15, 1998, or at such
other time and place as the parties may establish (the date of the Closing being
hereinafter referred to as the "Closing Date"). The transactions contemplated
hereby shall be deemed to be effective as of 12:01 a.m., Eastern Daylight Time,
on May 15, 1998.
2.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
execute and deliver or cause to be executed and delivered to Buyer the
following:
(a) A Bill of Sale, in substantially the form attached as EXHIBIT D
hereto;
(b) An Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(c) Noncompetition Agreements in substantially the form attached as
EXHIBIT F hereto executed by Seller and Pick, pursuant to which they shall agree
not to compete with Buyer for a five year period from the effective date of this
Agreement (up to and including May 15, 2003) or, if later, for a five year
period from the date of termination of any employment or consulting on behalf of
Buyer.
(d) Noncompetition Agreements in substantially the form attached as
EXHIBIT F-1 hereto executed by Paul Hermes and Larry Gillespie, pursuant to
which each such person shall agree not to compete with Buyer for a one year
period from the effective date of this agreement (up to and including May 15,
1999), or if later, for a one year period from the date of termination of any
employment or consulting on behalf of Buyer.
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(e) An Assignment of Applications, in substantially the form attached
as EXHIBIT G hereto;
(f) An Assignment of Trademarks substantially in the form attached
hereto as EXHIBIT H;
(g) A Certificate executed as of the Closing Date by a duly authorized
officer of Seller certifying: (i) the resolutions of the Board of Directors and
Shareholders of Seller approving the transactions contemplated hereby, and (ii)
as to the accuracy of Seller's representations and warranties and as to the
performance and compliance of all of the terms, provisions and conditions to be
performed or complied with by Seller at or before Closing;
(h) The documents required pursuant to Sections 6 of this Agreement;
and
(i) Such other instruments of sale, transfer, conveyance and assignment
as Buyer and its counsel may reasonably request.
2.3 DELIVERIES BY BUYER. At or prior to Closing, Buyer shall execute
and deliver or cause to be executed and delivered to Seller the following:
(a) The Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(b) A Certificate executed as of the Closing Date by a duly authorized
officer of Buyer certifying: (i) the resolutions of the Board of Directors of
Buyer approving the transactions contemplated hereby, and (ii) as to the
accuracy of Buyer's representations and warranties and as to the performance and
compliance of all of the terms, provisions and conditions to be performed or
complied with by Buyer at or before Closing;
(c) Junior Subordinated Note in substantially the form attached as
EXHIBIT J hereto;
(d) An Opinion of Buyer's Counsel in substantially the form attached as
EXHIBIT K hereto;
(d) Such other instruments of assumption as Seller and its counsel may
reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND PICK. Seller and Pick,
jointly and severally, as a material inducement to Buyer to enter into this
Agreement and consummate the transactions contemplated hereby, make the
following representations and warranties to Buyer. Any action for a breach of
these representations and warranties must be commenced within six (6) years of
the effective date of this Agreement. This six (6) year limitation for
commencing an action shall not apply to an action for indemnification resulting
from a claim asserted by a third party against Buyer.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 1.9 hereto, Seller
has good, marketable and unencumbered title to the Assets (or, with respect to
any real or personal property leases included in the Assets, a valid leasehold
interest therein), free and clear of all mortgages,
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security interests, liens, claims, encumbrances, title defects, pledges,
charges, assessments, covenants, encroachments and burdens of any kind or nature
whatsoever, and have full right and authority to transfer and deliver all the
Assets. Except as described in SCHEDULE 1.9 hereto, upon consummation of the
transactions contemplated hereby, Seller will have transferred to Buyer good and
unencumbered title to the Assets (or with respect to any real or personal
property leases included in the Assets, a valid leasehold interest therein),
free and clear of all mortgages, security interests, liens, claims,
encumbrances, title defects, pledges, charges, assessments, covenants,
encroachments and burdens of any kind or nature whatsoever. The Assets
constitute all of the assets that are used in connection with, necessary for, or
beneficial to the operation of the Business, except for the Excluded Assets.
3.2 CORPORATE STATUS OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois.
Seller is qualified to do business and in good standing in each jurisdiction
where the operation of its business requires that it be so qualified. Seller has
all requisite corporate power and authority to own, operate and lease its
properties and assets, to conduct its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. An accurate and complete copy
of the Articles of Incorporation and Bylaws of Seller, as presently in effect,
are included as an attachment to SCHEDULE 3.2 hereto.
3.3 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Seller of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized and approved by all necessary corporate action of Seller. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Seller and Pick, and
enforceable against Seller and Pick in accordance with their respective terms
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency or moratorium laws, or other laws
affecting the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies.
All of the Shareholders of Seller other than Pick have entered into a
"Stock Purchase Proposal and Disclosure Statement" by which each such
Shareholder consented, after full and fair disclosure, to the purchase of Seller
by Buyer on substantially the terms set forth in this Asset Purchase Agreement,
and by which each Shareholder sold all of his or her shares and interest in
Seller to Pick. An accurate and complete copy of the Stock Purchase Proposal and
Disclosure Statement, executed by all Shareholders of Seller, is included as an
attachment to SCHEDULE 3.3 hereto.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. Seller does not
own any real property. All real property leased by Seller and used in the
operation of the Business is listed and described in SCHEDULE 3.4 hereto. To the
best of Seller's and Pick's knowledge and belief, all buildings and improvements
located thereon are in good condition and repair, subject only to normal wear
and tear. Seller has delivered to Buyer accurate and complete copies of all
leases relating to real
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and personal property leased by Seller and used in the operation of the Business
and, except as described in SCHEDULE 3.4, all such leases are in full force and
effect, no event of default has been declared thereunder and, to the Seller's
knowledge, no basis for any default exists. To the best of Seller's and Pick's
knowledge and belief, no such lease of real or personal property is subject to
termination or modification as a result of the transactions contemplated hereby,
unless and except as explicitly set forth on SCHEDULE 3.4. All material items of
tangible personal property and assets owned or leased by Seller and used in the
operation of the Business are described in SCHEDULE 1.1 hereto. All machinery
and equipment listed in SCHEDULE 1.1 conforms to all applicable ordinances,
regulations, and other laws. To the best of Seller's and Pick's knowledge and
belief, except as described in SCHEDULE 1.1, all items listed on SCHEDULE 1.1
are in good operating condition and repair, subject only to normal wear and
tear, and are adequate to conduct the Business as it is now being conducted.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's unaudited compiled financial statements
for the years ended December 31, 1994, 1995, 1996 and 1997 (the "Financial
Statements"). The Financial Statements: (a) present fairly the financial
position and results of operations of the Seller for the dates or periods
indicated thereon; (b) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the period
indicated; and (c) accurately reflect the transactions, assets and liabilities
of Seller as of the dates and for the periods presented. Except as set forth in
the Financial Statements or on SCHEDULE 3.5 hereto, Seller has no debts,
liabilities or obligations, whether direct or indirect, accrued, absolute,
contingent, matured, known, unknown or otherwise, and whether or not of a nature
required to be reflected or reserved against in a balance sheet in accordance
with generally accepted accounting principles, except for obligations incurred
in the ordinary course of business after December 31, 1997. Neither Seller nor
Pick are aware of any basis for the assertion of any claims or liabilities of
any nature which are not fully reflected or reserved against in the Financial
Statements or otherwise disclosed in SCHEDULE 3.5 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 3, 1998, Seller
has conducted the Business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and has used all
reasonable efforts consistent with normal business practices to preserve and
promote the Business and to avoid any act that might have a material adverse
effect upon the value of the Business as a going concern or upon the Assets. No
event has occurred to prevent the Business from operating in a normal and usual
manner and in substantially the same manner as heretofore operated. Except as
expressly set forth in SCHEDULE 3.6 hereto, since April 3, 1998:
(a) there has not been any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the Business or the
Assets;
(b) there has not been any increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (i) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents; (ii) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
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with any of such officers, employees or agents; or (iii) other material change
in the employment terms of any officer, employee or agent of Seller;
(c) there has not been any sale, transfer or other disposition of any
tangible or intangible asset, or real or personal property or interest therein,
or any mortgage, lien or encumbrance placed thereon except in the ordinary
course of business and consistent with past practice;
(d) there have not been any capital expenditures, capital additions,
capital improvements or charitable contributions made, or committed to be made,
involving, individually or in the aggregate, Two Thousand Five Hundred Dollars
($2,500.00) or more;
(e) there has not been any failure to maintain any of Seller's books,
accounts and records in the usual, regular and ordinary manner and in accordance
with good business practices and consistent with past practice;
(f) there has not been any action taken or omitted to be taken by
Seller which could cause (with or without the giving of notice or the passage of
time, or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement (as hereinafter defined) or the
imposition of any lien, encumbrance, mortgage or other claim or charge against
the Assets;
(g) there has not been any liability, obligation or commitment incurred
by Seller involving, individually or in the aggregate, more than Two Thousand
Five Hundred Dollars ($2,500.00);
(h) there are no pending claims for worker's compensation submitted by
any employee of Seller with respect to services performed on behalf of Seller,
or facts or state of facts existing which could give rise to claims for workers'
compensation by any employee of Seller with respect to services performed on
behalf of Seller which exceed individually or in the aggregate Two Thousand Five
Hundred and 00/100 ($2,500.00).
(i) Seller has not entered into, nor has Seller or the Assets become
subject to, any contracts, agreements, commitments, indentures, mortgages,
notes, bonds, license, real or personal property leases or other obligations of
the type required to be disclosed in SCHEDULE 3.7 hereto that are not otherwise
disclosed herein;
(j) Seller has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(k) there has been no change made or authorized in the charter or
bylaws of Seller;
(l) Seller has not issued, sold or otherwise disposed of any of its
capital stock or granted any options, warrants or other rights to purchase or
obtain any of its capital stock;
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(m) Seller has not declared, set aside or paid any dividend nor made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(o) there has not been any other event or condition of any character
which, individually or in the aggregate, has had or could reasonably be expected
to have a material adverse effect on the Assets, the Business, or on the
financial condition or operations of Seller; and
(p) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. SCHEDULE 3.7 hereto includes a true,
correct and complete list of all material contracts, agreements, commitments,
indentures, mortgages, notes, bonds, licenses, real and personal property leases
and other obligations to which Seller is a party, by which Seller or its assets
or properties are bound or may be affected or which otherwise relate to the
Business (the "Material Agreements"). Without limiting the generality of the
foregoing, the term Material Agreement includes: (a) any lease or license with
respect to any Assets, whether Seller is tenant, landlord, licensor or licensee
thereunder; (b) any agreement, contract, indenture or other instrument relating
to the borrowing of money or the guarantee of any obligation or the deferred
payment of the purchase price of any Assets; (c) any agreement concerning a
partnership or joint venture; (d) any agreements between Seller on the one hand
and any of its shareholders, officers, directors or employees on the other; (e)
any agreement relating to confidentiality or noncompetition; (f) any
preferential purchase right, right of first refusal or similar agreement; (g)
any agreement entered into outside of the ordinary course of business; or (h)
any other agreement (or group of related agreements) which could involve
expenditures (in cash or in kind) by Seller in excess of $2,500.00 per year.
True and complete copies of all of the Material Agreements are included as part
of SCHEDULE 3.7 hereto. Each of the Material Agreements listed in SCHEDULE 3.7
are valid, binding and enforceable in accordance with their respective terms and
are in full force and effect and were entered into in the ordinary course of
business on an "arms length" basis. No part of Seller's rights or benefits under
any Material Agreement has been assigned, transferred, or in any way encumbered.
Seller is not in breach of nor has Seller defaulted under any of the Material
Agreements and no occurrence or circumstance exists which constitutes (with or
without the giving of notice or the passage of time or both) a breach or default
by Seller under any Material Agreement. To Seller's and Pick's knowledge, the
other parties to the Material Agreements are not in default thereunder and no
occurrence or circumstance exists which constitutes or would constitute (with or
without the giving of notice or the passage of time or both) a breach or default
by the other party thereunder. Except as set forth on SCHEDULE 3.7 hereto,
neither Seller nor any of the Assets are bound by or subject to any contract,
agreement, commitment, indenture, mortgage, note, bond, license, real or
personal property lease or other obligation which on the Closing Date cannot be
terminated upon thirty (30) days' written notice by Seller or Buyer without
penalty or other obligation being incurred upon such termination.
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3.8 ASSISTANCE. Pick shall assist OutSource with the transition of
ownership for a period of two (2) months following the Closing Date on an as
needed basis.
3.9 INTELLECTUAL PROPERTY. Seller owns or is licensed to use all
patents, trademarks, copyrights, trade names, service marks and other trade
designations, including common law rights, registrations, applications for
registration, technology, know-how or processes (the "Intellectual Property")
necessary to conduct the Business, free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by Seller
immediately prior to the Closing shall be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing. Seller has
not interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property rights of third parties, and Seller has
not received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation. To the knowledge of
Seller and Pick, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of Seller. SCHEDULE 3.9 hereto contains a true and correct description of
the following:
(a) All Intellectual Property currently owned, in whole or in part, by
Seller, and all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which Seller is a party; and
(b) All agreements relating to Intellectual Property that Seller is
licensed or authorized to use from others or which Seller licenses or authorizes
others to use.
3.10 TAXES. All federal, state, local and foreign tax returns
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state, local or foreign
agency, authority or body to be filed have been duly filed by such Seller.
Seller has either: (i) paid all federal, state, county, local, foreign and other
taxes (hereinafter "Taxes" or individually a "Tax") required to be paid by it
through the Closing Date and all deficiencies or other additions to Tax,
including interest or penalties owed in connection with any such Taxes; or (ii)
included adequate provision for all such Taxes and deficiencies or other
additions to Tax applicable to Seller in the Seller's Financial Statements. All
Taxes and other assessments and levies required to be collected or withheld by
Seller with respect to the operation of its business from customers with respect
to sales of products or from employees for income taxes, social security taxes
and unemployment insurance taxes have been collected or withheld, and either
paid to the respective governmental agencies, or set aside in an account owned
by Seller and established for that purpose.
Seller is not a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. No action or
proceeding regarding assessment or collection of Taxes is threatened against
Seller. There are no facts or state of facts existing that (with or without the
giving of notice or the passage of time or both) could form the basis for any
such action or proceeding. Seller has not executed or filed any agreement with
the Internal Revenue Service or any other taxing authority extending the period
for the assessment or collection of any Taxes.
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3.11 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or threatened against or affecting
in any way the assets, properties or property interests of Seller. There are no
facts or state of facts existing that (with or without the giving or notice or
the passage of time or both) could form the basis for any such suit, proceeding,
action, claim or investigation. Neither Seller nor any of its assets, property
or property interests is subject to any judgement, order, writ, injunction or
decree of any court or any federal, state, municipal, foreign or other
governmental authority, department, commission, board, bureau, agency or other
instrumentality.
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.12 contains a true and complete list of each pension,
retirement, profit sharing, deferred compensation, stock option, stock purchase,
bonus, medical, welfare, disability, severance or termination pay, insurance or
incentive plan, and each other employee benefit plan, program, agreement or
arrangement, whether funded or unfunded, sponsored, maintained or contributed to
or required to be contributed to by Seller or by any trade or business, whether
or not incorporated, that together with Seller would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (a "Company ERISA
Affiliate"), for the benefit of any employee or terminated employee of Seller or
any Seller ERISA Affiliate (the "Plans"). SCHEDULE 3.12 identifies each Plan
that is an "employee benefit plan," within the meaning of Section 3(3) of ERISA
(the "ERISA Plans").
(b) Seller does not participate currently and has never participated in
and is not required currently and has never been required to contribute to or
otherwise participate in any "multi-employer plan," as defined in Sections
3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the Code.
(c) True and complete copies of each of the Plans and related trusts
have been furnished to Buyer. With respect to each of the Plans, Seller has
delivered to Buyer the most recent financial statement and the most recent
actuarial report prepared with respect to any of such Plans that is funded, the
most recent Internal Revenue Service ("Service") determination letter, the most
recent Summary Plan Description and the most recent Annual Report together with
a statement setting forth any such documents which cannot be furnished; and any
such documents furnished and the nature of the documents which cannot be
furnished shall be reasonably satisfactory to Buyer.
(d) With respect to each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code, a determination letter from the Service
has been received to the effect that the Plan is qualified under Section 401 of
the Code and any trust maintained pursuant thereto is exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred or will occur
through the Closing Date (including without limitation the transactions
contemplated by this Agreement) which would cause the loss of such qualification
or exemption or the imposition of any penalty or tax liability.
(e) All contributions required by each Plan or by law with respect to
all periods through the Closing Date shall have been made by such date (or
provided for by Seller by adequate reserves
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on its financial statements) and no excise or other taxes have been incurred or
are due and owing with respect to the Plan because of any failure to comply with
the minimum funding standards of ERISA and the Code.
(f) No "accumulated funding deficiency", as defined in Section 302 of
ERISA, has been incurred with respect to any Plan, whether or not waived. No
"reportable event" of the type set forth in Section 4043 of ERISA has occurred
and is continuing with respect to any Plan. There are no violations of ERISA or
the Code with respect to the filing of applicable reports, documents, and
notices regarding any Plan with the Secretary of Labor, Secretary of the
Treasury, or the Pension Benefit Guaranty Corporation (the "PBGC") or furnishing
such documents to participants or beneficiaries, as the case may be. No Plan is
under audit by the Service or the Department of Labor. No claim, lawsuit,
arbitration, or other action has been threatened, asserted, or instituted
against any Plan, any trustee or fiduciaries thereof, Seller, or any of the
assets of any trust maintained under any Plan. Seller has not incurred nor
reasonably expects to incur, any liability to the PBGC.
(g) All amendments required to bring any Plan into conformity with any
of the applicable provisions of ERISA and the Code have been duly adopted. Any
bonding required with respect to any ERISA Plan in accordance with applicable
provisions of ERISA has been obtained and is in full force and effect.
(h) Each Plan has been operated and administered in accordance with its
terms and the terms and the provisions of ERISA and the Code (including rules
and regulations thereunder) applicable thereto and in practice is tax qualified
under Sections 401(a) and 501 of the Code. Each Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the trusts
maintained under such Plan are exempt from taxation under section 501(a) of the
Code.
(i) No "prohibited transaction," as such term is defined in Section
4975 of the Code and Section 406 of ERISA, has occurred with respect to any Plan
(and the transactions contemplated by this Agreement will not constitute or
directly or indirectly result in such a "prohibited transaction") which could
subject Seller, Buyer, or any officer, director or employee of any of the
foregoing, or any trustee, administrator or other fiduciary, to a tax or penalty
on prohibited transactions imposed by either Section 502 of ERISA or Section
4975 of the Code.
(j) The present value, determined on a termination basis, of all
accrued benefits, vested and unvested, under each Plan, determined using the
actuarial valuation assumptions and methods (including interest rates) contained
in the most recent actuarial report for such Plan, does not exceed the assets
thereof allocable to such benefits.
(k) No welfare benefit plan (within the meaning of Section 3(1) of
ERISA) provides for continuing benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment,
except as may be required by COBRA at the expense of the participant or the
beneficiary of the participant.
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(l) Seller does not currently maintain or contribute to any severance
pay plan. No individual shall accrue or receive any additional benefits,
service, or accelerated rights to payment of benefits under any Plan as a result
of the actions contemplated by this Agreement.
(m) Seller has complied with all of the requirements of COBRA.
3.13 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution nor
delivery by Seller of this Agreement, or any agreement, document or instrument
executed and delivered or to be executed and delivered in connection with the
transactions contemplated hereby, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
of the provisions hereof or thereof, will: (a) conflict with or result in a
breach of any provision of Seller's Articles of Incorporation or Bylaws; (b)
result in the breach of, or conflict with, any of the terms and conditions of,
or constitute a default (with or without the giving of notice or the passage of
time or both) with respect to, or result in the cancellation or termination of,
or the acceleration of the performance of any obligations or of any indebtedness
under, any Material Agreement; (c) result in the creation of a lien, security
interest, charge or encumbrance upon any of the Assets; or (d) violate any law
or any rule or regulation of any administrative agency or governmental body, or
any order, writ, injunction or decree of any court, administrative agency or
governmental body to which the Seller or its properties or assets may be
subject. No approval, authorization, consent or other action of, or filing with,
or notice to any court, administrative agency or other governmental authority or
any other person or entity is required for the execution and delivery by Pick or
the Seller of this Agreement or any agreement, document or instrument executed
and delivered or to be executed and delivered in connection with the
transactions contemplated hereby or thereby, or the consummation of the
transactions contemplated hereby or thereby.
3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy, approvals or other authorizations from and
registrations with federal, state, municipal and foreign governmental agencies
and private associations necessary to operate its business (collectively the
"Permits") and all such Permits are in full force and effect and no suspension
or cancellation of any such Permit is threatened. A list of the Permits is
included in SCHEDULE 3.14 hereto.
3.15 INSURANCE. SCHEDULE 3.15 hereto contains a complete list of all
insurance policies maintained by Seller with respect to the Business or the
Assets. Such insurance: (i) is in full force and effect; (ii) will remain in
full force and effect up to the Closing Date; and (iii) is sufficient for
compliance with all requirements of law and any agreements to which Seller is a
party or by which the Assets are bound.
3.16 GUARANTEES. Except as set forth in SCHEDULE 3.16 attached hereto,
neither the Business nor any of the Assets is nor will be at the Closing,
directly or indirectly: (i) liable, by guarantee or otherwise, upon or with
respect to, (ii) obligated, by discount or repurchase agreement or in any other
way, to provide funds in respect of; or (iii) obligated to guarantee or assume,
any debt, dividend or other obligation of, any person, corporation, association,
partnership or other entity including, without limitation, Seller or any of its
affiliates.
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3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Seller is in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Seller, including
those relating to terms and conditions of employment and wages. There are no
complaints pending, or to Seller's or Pick's knowledge threatened, against
Seller in connection with any employment related matters. SCHEDULE 3.17 hereto
contains a list of the names, office locations, compensation, and years of
credited service for vacation and pension plan purposes of all full- and
part-time employees of Seller as of March 5, 1998 and a description of all
employee "perks" or other benefit practices. No strike or labor dispute
involving Seller has occurred or is threatened. None of Seller's employees are
covered by any union or collective bargaining agreement. No key employee of
Seller has indicated to Seller that he or she is considering terminating his or
her employment except as noted on SCHEDULE 3.17. SCHEDULE 3.17 includes a
monthly report which accurately reflects Seller's entire current monthly payroll
obligations to its employees. SCHEDULE 3.17 also includes a list of the names
and compensation levels of any consultants, independent contractors or temporary
employees regularly utilized by Seller in core functions of the Business
(excluding employees supplied to clients for revenue generation purposes).
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted its business and the Assets have
been held in compliance with all applicable laws, regulations, ordinances,
orders and other requirements of governmental authorities having jurisdiction
over Seller. Seller has not received any formal or informal notice, advice,
claim or complaint alleging that Seller has violated or may have violated any
law, regulation, ordinance or order and no such notice, advice, claim or
complaint of any type is threatened. Seller has at all times complied and
presently complies with all applicable federal, state, local and foreign laws,
rules and regulations respecting occupational safety and health standards and
Seller has not received complaints from any employee or any federal, state,
local or foreign agency alleging any violation of any federal, state, local or
foreign laws respecting occupational safety and health standards.
(b) Without limiting the generality of the foregoing, (i) to the best
of Seller's and Pick's knowledge and belief, all real property owned or leased
by Seller and all buildings, fixtures, equipment and other improvements located
thereon and the present use thereof comply in all respects with applicable fire
codes, building codes, health codes, ordinances and regulations; (ii) the
business operations of Seller (including without limitation its leased and owned
real property) are in compliance with all applicable statutes, regulations,
ordinances, decrees or orders of governmental authorities relating to the
environment (collectively the "Environmental Laws") including without limitation
those relating to Hazardous Materials (as hereinafter defined); (iii) no
Hazardous Material has been spilled, released, deposited or discharged on any of
Seller's owned or leased real property, no such real property has been used as a
landfill or waste disposal site, and such real property is free from pollution;
(iv) no notice, information, request, citation, summons or order has been
received by Seller and no complaint has been filed and no penalty has been
assessed or threatened by any governmental authority with respect to (a) any
alleged violation by Seller of any Environmental Law, (b) any alleged failure by
Seller to have any environmental permit required in connection with the
17
operation of their business, or (c) any generation, treatment, storage,
recycling, transportation of disposal of any Hazardous Material; and (v) there
have not previously been and are not presently any claims of any nature pursuant
to any Environmental Law on any properties owned or leased by Seller. As used in
this Agreement, the term Hazardous Material means any hazardous or toxic
substance, material or waste or pollutants, contaminants or asbestos containing
material which is regulated by any authority in any jurisdiction in which Seller
does business.
3.19 WORKER'S COMPENSATION CLAIMS. SCHEDULE 3.19 contains a true,
correct and complete list of all claims or pending claims for worker's
compensation submitted or expected to be submitted by any employee of Seller
from January 1, 1995 to the Closing with respect to services performed on behalf
of Seller (the "Worker's Compensation Claims"). Each claim listed shall include
the total reserve amount established for such claim by the Seller's worker's
compensation carrier (the "Carrier"). Except as set forth on SCHEDULE 3.19,
there are no facts or state of facts existing which could give rise to Worker's
Compensation Claims by any employee of Seller with respect to services performed
on behalf of Seller.
3.20 CUSTOMER LIST. Attached hereto as Schedule 3.20 is a true, correct
and current list of all customers, clients and businesses which are now, or have
within the last year, received temporary or permanent staffing from the Seller,
including the address, telephone number, fax number, principal contact person
and account number for each such customer, client or business.
3.21 NO FURTHER INTERESTS. Other than the Business and Assets as
defined herein, neither Seller nor Pick has, nor will acquire prior to the
Closing, any interest, direct or indirect, in any temporary industrial or
clerical help company located within, operating within, or providing services
within the State of Illinois.
3.22. NO COMPETING INTERESTS OF MINORITY SHAREHOLDERS OF SELLER. The
Shareholders of Seller other than Pick listed on the Stock Purchase Proposal and
Disclosure Statement attached as part of SCHEDULE 3.3 are passive investors in
Seller and are not actively employed in Seller's business. To Seller's and
Pick's knowledge, such shareholders are neither investors in, nor employed in,
any other temporary industrial or clerical help business competitive with Seller
or with OutSource's Labor World or Tandem businesses, and do not intend to
invest in or be employed in such businesses subsequent to the execution of this
Asset Purchase Agreement.
3.23 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement or any Exhibit or Schedule attached hereto, and no statement contained
in any certificate or other instrument or document furnished by or on behalf of
Seller pursuant to this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact that is
necessary to make the statements contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material inducement for
Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer makes the following representations and warranties to
Seller. Any action for a breach of these representations and warranties must be
commenced within six (6) years of the effective date of this Agreement. This
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six (6) year limitation shall not apply to any action for indemnification
arising from the assertion of a claim against Seller by a third party.
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Buyer has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now being conducted and to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Buyer of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all necessary corporate action of Buyer. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Buyer, and enforceable
against Buyer in accordance with their respective terms except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or the principles governing the availability of
equity remedies.
4.3 NO PROHIBITION. No Agreement or Contract has been entered by Buyer
which would prohibit Buyer from entering or performing this Agreement.
4.4 PERMISSION. No permission of any person, individual, group,
committee, body or entity outside the Board of Directors of the Buyer is or will
be required in order for Buyer to lawfully enter or perform this Agreement or
any Agreement referenced herein, however this transaction was previously
approved by BankBoston, Triumph Capital Group and Bachow and Associates.
4.5 SENIOR INDEBTEDNESS. As of the Closing Date, the Buyer is in good
standing as to its obligations in regards to the Senior Indebtedness, as defined
in EXHIBIT J the Junior Subordinated Note A, is not in default as to the Senior
Indebtedness, and has no knowledge of any existing facts which would render it
to be in default as to the Senior Indebtedness.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLER AND PICK. Seller and Pick,
jointly and severally, hereby agree to defend, indemnify and hold harmless Buyer
from, against and in respect of any loss, cost, damage or expense, including but
not limited to, legal and accounting fees and expenses (and sales taxes thereon,
if any) asserted against, imposed upon or paid, incurred or suffered by Buyer
("Loss[es]"):
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(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller or Pick in this
Agreement or in any agreement, document or instrument executed and delivered in
connection with the transactions contemplated hereby; or
(b) any misrepresentation or inaccuracy in, or omission from any
certificate, schedule, exhibit, statement, document or instrument furnished by
Seller or Pick to Buyer in connection with the transactions contemplated by this
Agreement;
(c) any action by the present or former shareholders of Seller listed
on the Stock Purchase Proposal and Disclosure Statement attached as part of
SCHEDULE 3.3 hereto, which, if performed by Seller or Pick, would constitute a
breach of Seller's and Pick's non-competition or non-solicitation obligations
under the Noncompetition Agreements attached as Exhibit F hereto; except that no
such obligation shall apply with respect to any such shareholder who has entered
into a noncompetition agreement with OutSource substantially in the form
attached as Exhibit F-2 hereto.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller and Pick from, against and in respect of any
Loss or Losses as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Buyer in this Agreement
or in any agreement, document or instrument executed and delivered in connection
with the transactions contemplated hereby.
5.3 INDEMNITY PROCEDURE.
(a) A party hereto agreeing to be responsible for or to indemnify
against any matter pursuant to this Agreement is referred to herein as the
"Indemnifying Party" and the other party claiming indemnity is referred to as
the "Indemnified Party." The Indemnified Party under this Agreement shall give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim of indemnity under this Agreement; provided, however, that
any failure to give such notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are actually
prejudiced. As to any claim, action, suit or proceeding by a third party, the
Indemnifying Party shall be entitled to assume defense thereof (at its expense)
provided that counsel for the Indemnifying Party who shall conduct the defense
of such claim shall be approved by the Indemnified Party. The Indemnified Party
shall provide such cooperation and such access to its books, records and
properties as the Indemnifying Party shall reasonably request with respect to
such matter; and the parties hereto agree to cooperate with each other in order
to ensure the proper and adequate defense thereof. If, in the Indemnified
Party's reasonable judgment, a conflict of interest between the Indemnified
Party and the Indemnifying Party exists in respect of a claim, or, if the
Indemnifying Party, after written notice from the Indemnified Party, fails to
take timely action to defend a claim, the Indemnified Party may assume defense
of such claim or action with counsel of its choosing at the Indemnifying Party's
cost.
(b) An Indemnifying Party shall not make any settlement of any claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a
20
settlement: (i) involving injunctive or other equitable relief against the
Indemnified Party or its assets, employees or business; or (ii) which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
5.4 PAYMENT. The Indemnifying Party shall pay to the Indemnified Party
any amounts owed to the Indemnified Party pursuant to this Section 5 within
twenty (20) days after written request from the Indemnified Party to the
Indemnifying Party to make such payment accompanied by appropriate
substantiating documentation. In determining the amount owed hereunder, the
parties shall make appropriate adjustments for tax benefits and insurance
proceeds. Upon the payment in full of any claim, the Indemnifying Party shall be
subrogated to the rights of the Indemnified Party against any person, firm or
entity with respect to the subject matter of the claim or litigation.
5.5. LIMITATIONS ON INDEMNITY OBLIGATIONS. No party shall have any
obligation to indemnify any other party pursuant to this Section 5 until and
unless the aggregate total of all Losses (as defined above) suffered by the
Indemnified Party exceeds Ten Thousand Dollars ($10,000.00), at which point the
Indemnifying Party shall be responsible as set forth in this Section 5 for the
portion of the aggregate Losses of the Indemnified Party exceeding Ten Thousand
Dollars ($10,000.00).
Prior to seeking indemnification as set forth in this Section 5, a
party must first exercise all rights of set-off available to that party as set
forth in this Asset Purchase Agreement.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's
obligation to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to Closing, of each of the following
conditions precedent (any or all of which may be waived in writing, in whole or
in part, by Buyer):
6.1 PERFORMANCE OF OBLIGATIONS. Seller and Pick shall have performed
all of the obligations and complied with all of the covenants required to be
performed or to be complied with by them under this Agreement on or prior to the
Closing Date.
6.2 APPROVALS. Seller shall have delivered to Buyer any and all
approvals, consents or assignments necessary for the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required: (i) by any governmental or administrative body; and (ii) under any
Material Agreement.
6.3 ACCESS. Buyer shall have had full and complete access during normal
business hours to the properties, assets, books, agreements, files and records
of Seller for the purpose of verifying the information set forth herein. Buyer's
due diligence investigation shall not relieve Seller or Pick from any liability
in connection with their representations and warranties set forth in this
Agreement.
6.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements and the Seller's most recent unaudited financial statements
(the "Interim Statements"). Each of the
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Financial Statements and the Interim Statements shall be accompanied by a
certificate of an officer of Seller in form and substance satisfactory to Buyer.
6.5 PROPERTY. All of Seller's real and personal property shall be in
good operating condition, structurally sound and in good repair.
6.6 APPROVAL. The board of directors and shareholders of Seller shall
have approved Seller entering into this Agreement and the consummation of the
transactions contemplated hereby. The board of directors of Buyer shall have
approved Buyer entering into this Agreement and consummation of the transactions
contemplated hereby.
6.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller or Pick, any suit, action or other proceeding by any
private party or governmental agency, commission, bureau or body seeking to
restrain or prohibit any of the transactions contemplated by this Agreement.
6.8 ACCRUED EXPENSES AND CONTINGENT LIABILITIES. Seller shall have
resolved, in a manner satisfactory to Buyer in its sole and absolute discretion,
any issues relating to the accrued expenses and contingent liabilities of
Seller.
6.9 NONCOMPETITION AGREEMENTS. Buyer, Seller, and Pick shall have
entered into Noncompetition Agreements prohibiting the Seller and Pick from
competing with Buyer, for a five year period from the effective date of this
Agreement (up to and including May 15, 2003) or, if later, for a five year
period from the termination date of any employment or consulting on behalf of
Buyer, within the State of Illinois.
In addition, Paul Hermes and Larry Gillespie, who are key employees of
Seller, shall have entered into Noncompetition Agreements prohibiting them from
competing with Buyer for a one year period from the effective date of this
Agreement (up to and including May 15, 1999), or, if later, for a one year
period from the termination date of any employment or consulting on behalf of
Buyer, within the State of Illinois.
6.10 DELIVERIES. Seller and Pick shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
6.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller and Pick contained in this Agreement shall be true and correct both at
the date on which this Agreement is signed and at and as of the Closing Date as
if made anew at and as of such time.
6.12 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion
from counsel of Seller dated as of the Closing Date and in substantially the
form attached as EXHIBIT I hereto.
7. CONDITIONS PRECEDENT TO SELLER'S AND PICK'S OBLIGATION TO CLOSE.
Seller's and Pick's obligation to consummate the transactions contemplated by
this Agreement shall be subject to
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the fulfillment, at or prior to Closing, of each of the following conditions
precedent (any or all of which may be waived in writing, in whole or in part, by
Seller or Pick):
7.1 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all of its
obligations and complied with all of its covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement shall be true and correct both at the date on
which this Agreement is signed and at and as of the Closing Date as if made at
and as of such time.
7.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
7.4 OPINION OF BUYER'S COUNSEL. Buyer shall have delivered an opinion
of Buyer's counsel dated as of the Closing date and substantially in the form
attached as Exhibit K to this Agreement.
8. CERTAIN ADDITIONAL COVENANTS OF SELLER. Seller and Pick covenant and
agree with Buyer as follows:
8.1 CONDUCT AND TRANSACTIONS PRIOR TO CLOSING. From and after the date
of this Agreement until the Closing Date, except to the extent contemplated by
this Agreement or otherwise consented to in writing by Buyer:
(a) Seller shall operate its business in the same manner as presently
conducted and only in the ordinary and usual course and consistent with past
practice, and will use all reasonable efforts to preserve intact its present
business organization and to keep available the services of all employees,
representatives and agents. Seller shall use all reasonable efforts, consistent
with its past practices, to promote its business and shall not take or omit to
take any action which causes, or which is likely to cause, any deterioration of
their present business or relationships with suppliers or customers.
(b) Seller will maintain all of its properties and assets, tangible or
intangible, in substantially the same condition and repair as such properties
and assets are maintained as of the date hereof, ordinary wear and tear
excepted, and shall take all reasonable steps necessary to maintain and protect
its intangible assets. Seller shall not sell, lease or otherwise dispose of any
of its assets except in the ordinary course of business consistent with past
practice.
(c) Without the prior written consent of Buyer, Seller shall not grant
any salary increase to any employee, or enter into any new or amend or alter any
existing employment agreement or bonus, incentive compensation, medical
reimbursement, life insurance, deferred compensation, profit sharing,
retirement, pension, stock option, group insurance, death benefit or other
fringe benefit plans or other arrangements for its employees.
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(d) Seller shall keep its properties and business insured to the same
extent as insured on the date hereof.
(e) Seller shall not take any action or omit to take any action that
could cause (with or without the giving of notice or the passage of time or
both) the breach, default, acceleration, amendment, termination or waiver of or
under any Material Agreement or the imposition of any lien, encumbrance,
mortgage or other claim or charge against the Assets.
(f) Seller will maintain its books, accounts and records in accordance
with good business practice and generally accepted accounting principles
consistently applied.
(g) Neither Seller nor Pick shall take any action that would cause
their representations and warranties set forth herein not to be true and correct
at and as of the Closing Date as if made at and as of such time.
(h) Seller shall not declare, set aside or pay any dividend or make any
distribution with respect its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock.
(i) Seller and Pick will use their best efforts to obtain the approvals
referred to in Section 6.2 hereto.
(j) Seller shall assume responsibility for the payment of all Federal
and State income tax liabilities incurred through the Closing Date.
(k) In the event that Buyer desires to use and retain the benefit of
Seller's unemployment insurance rating with respect to any employees of Seller
whom Buyer desires to employ, Seller and Pick shall cooperate with Buyer with
respect to the taking of any actions which may reasonably be necessary to
effectuate or facilitate the transfer of such rating and to allow Buyer to
retain the full benefit thereof.
(l) Neither Seller nor Pick shall otherwise engage in any practice,
take any action or enter into any transaction of the sort described in Section
3.6 of this Agreement.
8.2 POST-CLOSING COVENANTS.
(a) For a period of Two (2) Years subsequent to the Closing, Seller and
Pick covenant and agree to provide to Buyer or Buyer's auditors prompt access to
Seller's books, files, records, and financial information; to cause any of
Seller's accountants, attorneys, agents, employees, or representatives to
provide to Buyer or Buyer's auditors prompt access to records, books, files, and
financial information of Seller; and to provide such other prompt cooperation as
may be necessary for Buyer or Buyer's auditors to prepare, at Buyer's cost, such
financial statements of Seller as may be necessary or desirable in the conduct
of Buyer's business, including but not limited to such
24
financial statements or opinions as may be necessary in any required filings
with the Securities and Exchange Commission.
(b) Seller and Pick covenant and agree, at their sole cost and expense,
to pay, within two weeks of the Closing Date, all accrued vacation pay due and
owing to any of Seller's employees as of the Closing Date.
(c) Seller and Pick covenant and agree, at their sole cost and expense,
to notify Buyer, for a period of twelve (12) months after the Closing Date, of
any Worker's Compensation Claims reported to Seller or Carrier.
(d) Seller and Pick covenant and agree with Buyer, its successors and
assigns, that they will do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, any and all such further acts,
instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of this Agreement.
(e) Buyer covenants and agrees with Seller and Pick to allow Seller and
Pick, for the purpose of preparing and generating necessary business documents
and reports relating to Seller, reasonable access to Seller's software and data
currently maintained on the computer hardware facilities previously owned by
Seller, up to and including April 1, 1999. However, Buyer shall not be liable
for the loss, corruption, damage, or destruction of any of such software or
data, and Buyer undertakes no responsibility with respect to the operation,
maintenance, or condition of Seller's software or data, or with respect to the
computer hardware facilities on which such software or data of Seller is stored
or maintained. Seller and Pick hereby release Buyer from any liability with
respect to damage, loss, corruption, or destruction of said software, data, and
computer hardware, including without limitation any damage, loss, corruption, or
destruction occurring as the result of a negligent, willful, wanton, malicious,
or criminal act of Buyer or any agent of Buyer.
(f) Each party hereby covenants and agrees that it shall promptly
transmit to the other party, together with appropriate supporting documentation,
any payment received by that party on an account receivable owned by the other
party pursuant to this Asset Purchase Agreement and related documents.
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules to
this Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings, agreements, arrangements and understandings, both oral and
written, between the parties hereto with respect to such subject matter. The
Exhibits and Schedules to this Agreement are incorporated into and constitute
part of this Agreement.
9.2 AMENDMENT. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
25
9.3 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
9.4 SURVIVABILITY. Notwithstanding any investigation made by or on
behalf of any party to this Agreement, the representations and warranties made
under and in connection with this Agreement shall be true and correct on and as
of the Closing Date with the same effect as if made on and as of such date and
shall survive the Closing and consummation of all the transactions contemplated
hereby.
9.5 WAIVERS AND REMEDIES. The waiver by any of the parties hereto of
any other party's prompt and complete performance, or breach or violation, of
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or violation, and the waiver by any of the parties
hereto to exercise any right or remedy which it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
9.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part hereof, all of which are inserted conditionally on their being valid
in law, and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
9.7 DESCRIPTIVE HEADINGS/RECITALS. Descriptive headings contained
herein are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. The recitals are incorporated
into and made a part of this Agreement.
9.8 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts by the separate parties hereto, all of which shall be
deemed to be one and the same instrument. Facsimile signatures shall have the
same effect as original signatures.
9.9 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given: (i) when
delivered by hand; (ii) when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
(iii) five (5) days after being deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
on the second business day after being sent (prepaid for next day delivery), via
Federal Express, United Parcel Service, DHL or other nationally recognized
delivery service, as follows:
26
If to Seller or to Pick:
Resource Dimensions, Inc.
310 W. Roosevelt Road
Lombard, IL 60148
With a copy to:
Laser, Pokorny, Schwartz, Friedman & Economos
205 N. Michigan Avenue
Suite 3800
Chicago, Illinois 60601
Attention: Bruce M. Friedman
Fax: (312) 540-0610
Kenneth Solomon
Mega Capital Corporation
18 S. Michigan
Chicago, Illinois 60603
Fax: (312) 419-1390
If to Buyer:
OutSource International of America, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: Chief Executive Officer
Phone: (954) 418-6200
Fax: (954) 418-3365
With copies to:
Brian M. Nugent, Esquire
Vice President and General Counsel
OutSource International, Inc.
Deerfield Beach, Florida 33442
Phone: (954) 418-6580
and
John C. Lovett, Esquire
Katz, Kutter, Haigler, Alderman, et al.
106 East College Avenue
Suite 1200
Tallahassee, Florida 32301
Phone: (850) 224-9634
27
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the parties hereto shall assign any of its rights
or obligations hereunder without the express written consent of the other party
hereto.
9.11 APPLICABLE LAW. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in Accordance with, the laws of the State of
Florida.
9.12 BROKERS AND AGENTS. Seller acknowledges that it has retained R.A.
Cohen as an agent with respect to the transactions contemplated by this
Agreement and is solely responsible for the payment of all the fees and expense
of said agent. Buyer has not retained any agent or broker with respect to the
transaction contemplated pursuant to this Agreement. Seller and Pick agree to
indemnify Buyer with respect to any claims made by any third party claiming a
brokerage fee or commission arising out of the transaction contemplated by this
Agreement from Buyer.
9.13 EXPENSES. Except as otherwise provided herein, each of the parties
hereto agrees to pay all of the respective expenses incurred by it in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
including accountants' and attorneys' fees.
9.14 CONFIDENTIALITY. No party hereto shall divulge the existence of
the terms of this Agreement, the transactions contemplated hereby or any
information about another party that such party may have acquired in connection
with the transaction, without the prior written approval of all of the parties
hereto, except and as to the extent: (i) obligated by law, or (ii) necessary for
such party to defend or prosecute any litigation in connection with the
transactions contemplated hereby. The parties hereto acknowledge that any breach
of the foregoing will give rise to irreparable injury that is not compensable in
damages and agree that any party may seek and obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary or
permanent injunction, or any other equitable remedy that may then be available
to such party against the breach or threatened breach of such covenants, in
addition to any other legal remedies which may be available. In addition to the
foregoing, the confidentiality obligations set forth in Paragraph 9 (including
subparts a. through j.) of the April 8, 1998 letter of intent between the
parties are expressly incorporated herein, and, irrespective of any other
provision of this Agreement, shall survive the execution of this Agreement
9.15 CERTAIN INTERPRETATIONS. Words such as "herein," "hereof,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular Section or subsection of this Agreement. The word
"material" as used in this Agreement shall mean a deviation of more than five
(5%) percent.
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9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that
any claim, suit, action or proceeding, brought by any party, arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
submitted for adjudication exclusively in any Florida state or federal court
sitting in Broward County, Florida, and each of the parties hereto expressly
agrees to be bound by such selection of jurisdiction and venue for purposes of
such adjudication. Each party: (i) waives any objection which it may have that
such court is not a convenient forum for any such adjudication; (ii) agrees and
consents to the personal jurisdiction of such court with respect to any claim or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby; and (iii) agrees that process issued out of such court or
in accordance with the rules of practice of such court shall be properly served
if served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court. In the event of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby the prevailing party thereunder shall be
entitled to recover reasonable attorneys' and paralegals' fees (for
negotiations, trials, appeals and collection efforts) and costs incurred in
connection therewith in addition to any other relief to which such party may be
entitled. The prevailing party shall be the party that prevails on its claim
whether or not an award or judgement is entered in its favor.
9.17 EQUITABLE RELIEF. The parties hereto acknowledge and agree that
any party's remedy at law for any breach or threatened breach of this Agreement
which relates to requiring that the breaching party take any action or refrain
from taking any action, would be inadequate and such breach or threatened breach
shall be per se deemed as causing irreparable harm to such party. Therefore, in
the event of such breach or threatened breach, the parties hereto agree that in
addition to any available remedy at law, including but not limited to monetary
damages, an aggrieved party shall be entitled to obtain equitable relief in the
form of specific enforcement, temporary restraining order, temporary permanent
injunction, or any other equitable remedy that may then be available to the
aggrieved party.
9.18. TERMINATION. The parties may terminate this agreement under the
following circumstances: (a) Buyer, Seller, and Pick may terminate this
Agreement by written consent of all of the parties at any time prior to the
Closing; (b) Buyer may terminate this Agreement by giving written notice to the
Seller and Pick on or before May 25, 1998 if Buyer is not satisfied with the
results of its continuing business, legal and accounting due diligence review of
the Seller and the Business; (c) Buyer may terminate this Agreement by giving
written notice to Seller and Pick at any time prior to the Closing (A) if Seller
or Pick has breached any representation, warranty or covenant contained in this
Agreement in any material respect, Buyer has notified the Seller and Pick of the
breach, and (if curable) the breach has continued without cure for a period of
ten days after the notice of breach, or (B) if the Closing shall not have
occurred on or
29
before , 1998, by reason of the failure of any condition precedent under Section
6 hereof to have been satisfied by such date (unless the failure results
primarily from Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement ); and (d) Seller and Pick may terminate this
Agreement by giving written notice, executed by Seller and Pick, to Buyer at any
time prior to the Closing (A) if Buyer has breached any representation, warranty
or covenant contained in this Agreement in any material respect, the Seller and
Pick have notified Buyer of the breach, and (if curable) the breach has
continued without cure for a period of ten days after the notice of breach, or
(B) the Closing shall not have occurred on or before , 1998, by reason of the
failure of any condition precedent under Section 7 hereof to have been satisfied
by such date (unless the failure results primarily from Seller or Pick breaching
any representation, warranty or covenant contained in this Agreement). If any
party terminates this Agreement pursuant to this Section 9.18, all rights and
obligations of the parties hereunder shall terminate without any liability of
any party to any other party (except for any liability of any party then in
breach).
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
BUYER:
Witness: OutSource International
of America, Inc.
/S/ MICHELE GRABASCH By: /S/ DAVID SPARKMAN
- -------------------------- ------------------------------
Name: DAVID SPARKMAN
----------------------------
Title: ZONE VICE-PRESIDENT
---------------------------
SELLER:
Witness:
Resource Dimensions, Inc.
/S/ MICHELE MORRIS-SAKALICK By: /S/ EARL M. PICK
- ----------------------------- ------------------------------
Earl M. Pick, President
PICK:
/S/ EARL M. PICK
----------------------------------
Earl M. Pick
30